-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SO87kK0ZS6PJ3rYLIFagsZXUFPfcmUznJTrjsSn0507DtH5OA9lbh4vclkvIo77n qUiCNeXDj7ygWyzZdc9PKA== 0000006284-96-000013.txt : 19961016 0000006284-96-000013.hdr.sgml : 19961016 ACCESSION NUMBER: 0000006284-96-000013 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960731 FILED AS OF DATE: 19961015 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANALOGIC CORP CENTRAL INDEX KEY: 0000006284 STANDARD INDUSTRIAL CLASSIFICATION: INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS [3825] IRS NUMBER: 042454372 STATE OF INCORPORATION: MA FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-06715 FILM NUMBER: 96642970 BUSINESS ADDRESS: STREET 1: 8 CENTENNIAL DR CITY: PEABODY STATE: MA ZIP: 01960 BUSINESS PHONE: 5089773000 10-K 1 FORM 10-K YEAR END 7/31/96 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-K [X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 [Fee Required] For the fiscal year ended: July 31, 1996 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 [No Fee Required] For the transition period from to Commission file number: 0-6715 ANALOGIC CORPORATION (Exact name of registrant as specified in its charter Massachusetts 04-2454372 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 8 Centennial Drive, Peabody, Massachusetts 01960 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (508) 977-3000 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.05 par value (Title of Class) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of the Registrant's Common Stock held by non-affiliates of the Registrant at August 30, 1996 was approximately $193,146,060. Number of shares of Common Stock outstanding at August 30, 1996: 12,500,291 DOCUMENTS INCORPORATED BY REFERENCE: NONE 2 PART I Item 1. Business (a) Developments During Fiscal 1996 Total revenues of Analogic Corporation (hereinafter, together with its subsidiaries, referred to as "Analogic" or the "Company") for the fiscal year ended July 31, 1996, were $230,460,000 as compared to $208,827,000 for fiscal year 1995, an increase of 10%. Net income was $13,065,000, or $1.04 per share as compared to $12,706,000, or $1.02 per share for fiscal year 1995. During June, 1995, the Company loaned Park Meditech, Inc. ("Park") $1,500,000, structured as a Convertible Subordinated Promissory Note, with interest at 8%, payable quarterly, and principal due on or before June 1, 1996. This note was convertible, at the option of the Company, into 600,000 common shares of Park stock until June 1, 1996. In addition, the Company had warrants convertible to 200,000 common shares of Park stock at a price of $2.50 (US) until June 1, 1997. On February 13, 1996, the Company acquired 1,715,384 shares of Park Common Stock and an 11% Convertible Unsecured Subordinated Debenture in the principal amount of $750,000 in consideration of the cancellation of the Convertible Subordinated Promissory Note in the amount of $1,500,000 and 200,000 Common Share purchase warrants. With certain restrictions, the Convertible Unsecured Subordinated Debenture may be converted into Common Shares at a price of $1.20 (Canadian) per Common Share. The Company currently owns 5,715,384 shares or approximately 14% of the outstanding shares of Park. On February 22, 1996, the Company invested $2,000,000 for a 33% interest in a newly formed privately held company which will design and manufacture subassemblies for medical imaging equipment. On July 1, 1996, the Company acquired the remaining 41% minority interest in B&K Ultrasound Systems A/S ("B&K") for $3,416,000 in cash. The Company now owns 100% of the outstanding shares of B&K. (b) Financial Information About Industry Segment The Company's operations are within a single segment within the electronics industry: the design, manufacture and sale of high-technology, high-performance, high-precision, data acquisition, conversion (analog/digital) and signal processing instruments and systems. (c) Narrative Description of Business Analogic designs, manufactures and sells standard and customized high-precision data acquisition, conversion and signal processing equipment. Analogic's principal customers are original equipment manufacturers who incorporate Analogic's state-of-the-art products into systems used in medical, industrial and scientific applications. 3 Analogic is a leader in precision analog-to-digital (A/D) and digital-to-analog (D/A) conversion technology, which involves the conversion of continuously varying (i.e., "analog") electrical signals, such as those representing temperature, pressure, voltage, weight, velocity, ultrasound and x-ray intensity into and from the numeric (or "digital") form required by computers, medical imaging equipment and other data processing equipment and in subsystems and systems based on such technology. In addition to their A/D and D/A conversion capabilities, most of Analogic's products perform calculations on the data being analyzed. Thus, Analogic's products are an integral part of the communications link between various analog sensors, detectors or transducers and the people or systems which interpret or utilize this information. Analogic's products may be divided for discussion purposes into three groupings as described below. These products are classified by product technology and not by application. Signal Processing Technology Products, consisting of A/D and D/A converters and supporting modules, high-speed digital signal processors such as Array Processors, and image processing equipment, accounted for approximately 20% of fiscal 1996 product, service, engineering, and licensing revenue. The technology developed by Analogic and incorporated within these products is fundamental to all of the Company's other products. A/D converters convert continuously varying "analog" signals into the numerical "digital" form required by microprocessors and other data processing equipment. D/A converters transform computer output in digital form into the analog form required by process control equipment. Analogic manufactures a wide variety of interconnecting and supporting modules relating to its A/D and D/A converters. These include signal conditioning devices, which amplify, isolate and filter physical analog signals; multiplexing devices, which permit simultaneous processing of a number of analog signals; and sample and hold devices, which sample rapidly varying phenomena. Analogic specializes in the manufacture of high-precision and high performance, rather than lower-cost, low-precision and minimal performance, data conversion products. Typical applications of these devices include the conversion of industrial and biomedical signals into computer language. The Company also manufactures a line of PC/AT-class high performance data acquisition cards. These plug-in cards provide personal computer users with unprecedented data throughput and flexibility. The series of cards has a library of high level software applications supported by third-party software houses and proprietary set-up and diagnostic software. The Company also manufactures a line of high performance data acquisition products for the PC 104 market. Designed for embedded processor applications normally used in OEM products, these cards provide precision measurement capability between real world signals and the measuring instrument while meeting all of the requirements of the PC 104 form factor and bus structure. 4 Analogic manufactures application accelerator and array processors (special purpose computers) which generally receive information from a host computer or data source, rapidly perform the desired calculations, and return the processed data or results to the host computer. The cost per calculation of array processors, which can compute and/or manipulate data at the rate of hundreds of millions of operations per second, is less than that of general purpose computers. Analogic believes its accelerators and array processors have generally been cost effective when compared with competitive products. The Company is marketing its array processors for applications such as geophysical exploration, speech processing, X-ray imaging, manufacturing testing, and other technical and scientific areas. In addition, the Company sells array processors used for image construction in Magnetic Resonance Imaging (MRI) medical diagnostic systems. The Company also manufactures Digital Signal Processing (DSP) floating point products which are used in the above mentioned markets. Medical Technology Products, consisting primarily of electronic subsystems for medical imaging equipment, accounted for approximately 71% of product, service, engineering, and licensing revenue in fiscal 1996. Analogic's medical imaging data acquisition systems and related computing equipment are incorporated by U.S., European and Asian manufacturers into advanced X-ray equipment known as computer assisted tomography (CAT) scanners. These scanners generate images of the internal anatomy which are used primarily in diagnosing medical conditions. Analogic's data acquisition and signal processing systems have advanced CAT scanner technology by substantially increasing resolution of the image, by reducing the time necessary to acquire the image, and by reducing the computing time required to produce the image. Analogic supplies to its medical imaging customers A/D and D/A conversion equipment and complete data acquisition systems. The Company has completed the design of a complete low cost CAT scanner, incorporating proprietary technology. The Company commenced manufacturing this scanner in January, 1996 and is selling on an OEM basis to medical equipment companies. In addition, the Company manufactures phased array ultrasound systems, key subsystems, and a family of transducers on an OEM basis for ultrasound equipment manufacturers. The Company also designs and manufactures radiology, surgical, and urology ultrasound equipment for the end-user market. The Company manufactures electronics for a family of hard copy laser printers in single and multi-user configurations that address the diagnostic image market. These printers are used in hospitals world wide to print diagnostic quality images on film from the electronic data collected by medical imaging equipment such as CAT scanners and MRI scanners. The Company also designs and manufactures for OEM customers advanced RF amplifiers, gradient coil amplifiers, and spectrometers for use in MRI equipment. These MRI scanners are used primarily to create diagnostic medical images. The Company manufactures fetal monitoring products for conversion and display of biomedical signals. These monitors designed for use in both antepartum and intrapartum applications have the capability to measure, compute, display and print fetal and maternal heart rates, maternal contraction frequency and relative intensity and other maternal vital sign parameters to determine both maternal and fetal well being. 5 The Company recently commenced manufacturing a lightweight portable multi-functional custom patient monitor instrument that acquires, calculates and displays the five most common vital sign parameters. The Company also manufactures a broad line of medical connectivity products that allows medical equipment such as CAT Scanners and MRI and ultrasound equipment to attach to local DICOM, PACS and wide area networks. The products manufactured by Camtronics, a 68% owned subsidiary, are included herein as medical technology products. It designs and manufactures state-of-the-art image processing products for diagnostic and interventional applications in cardiac catheterization laboratories and for other radiology procedures. They also manufacture the ArchiumTM Cardiac Digital Archive System that stores and displays in real time images from cardiac labs at multiple locations. Industrial Technology Products, consisting of digital panel instruments, industrial data acquisition and conversion systems, and test and measurement devices and automation systems, accounted for approximately 9% of fiscal 1996 product, service, engineering, and licensing revenue. Digital panel instruments measure analog inputs and visually display the result in numerical (digital) form. They are sold to original equipment manufacturers to be incorporated in products such as precision thermometers, blood analyzers, and automatic test equipment. Certain of Analogic's digital panel instruments incorporate specialized signal conditioning and computing capabilities, and can transmit the measured value in digital form to remote displays or to computers. The Company's Monitroller line of products extends this capability still further by functioning as single loop process controllers. Industrial digitizing systems condition analog signals, translate them to digital form with a high degree of precision, and perform subsequent computations and calculations. These instruments are available as complete standard instruments or are customized to particular applications for incorporation into customers' products. Typical applications for these systems are in static and dynamic weighing, measurement of pressure, force or temperature, and engine power measurement as well as factory-wide Distributed Control Systems. Analogic's products also include a large number of standard and customized A/D and D/A systems which can accept up to several thousand channels of signals, perform precise signal conditioning, translate the data into digital format and process the information via computer. Certain of the customized subsystems include computing or computer-interfacing sub-units. The Company manufactures complete data acquisition and conversion systems used in a wide variety of industrial applications from process control to emergency recording systems used in nuclear power plants. Also, a family of high speed, 16-bit, multichannel data acquisition boards has been designed to meet the stringent demands of fast and accurate measurements in precision instrumentation environments. 6 Incorporating much of the same technology as the Company's medical equipment, our sophisticated test instruments include general purpose digital multimeters, which measure the basic parameters as voltage, current and resistance, as well as temperature and frequency. The Company's universal waveform analyzer line combines the features of a digital storage oscilloscope, spectrum analyzer, array processor, and computer. The Company is also a supplier of power supply test systems, static and dynamic loads, and AC sources used for testing power supplies and other power devices. The Company manufactures telecommunications products for use in network monitoring and fault reporting. In addition, original equipment manufacturers (OEM) purchase the Company's standard A/D, D/A and digital signal processing products for specific production testing of telecommunications equipment. The Company also manufactures a line of high performance digital signal processor (DSP) boards used in the telephony industry. Marketing and Distribution The Company sells its products domestically and abroad directly through the efforts of its officers and employees and through a network of independent sales representatives and distributors located in principal cities around the world. In addition, Analogic subsidiaries act as its distributors in England and Denmark. Domestically, Analogic has several regional sales offices staffed by salespeople who sell the Company's products in the surrounding areas and supervise independent sales representatives and distributors in their regions. Some of Analogic's distributors also represent manufacturers of competing products. Sources of Components/Raw Materials In general, Analogic's products are composed of company-designed proprietary integrated circuits, printed circuit boards, and precision resistor networks, all manufactured by others in accordance with Analogic's specifications, as well as standard electronic integrated circuits, transistors, displays and other components. Most items procured are believed to be available from more than one source. However, it may be necessary, if a given component ceases to be available, for Analogic to incur additional expense in order to modify its product design to adapt to a substitute component or to purchase new tooling to enable a new supplier to manufacture the component. Also, from time to time the availability of certain electronic components has been disrupted. Accordingly, Analogic carries a substantial inventory of raw material components in an effort to assure its ability to make timely delivery to its customers. Patents and Licenses The Company owns, or is licensee of, a number of patents of varying durations. In the opinion of management, Analogic's present position and its future prospects are a function of the level of excellence and creativity of its engineers; patent protection is useful but of secondary importance. Management is of the opinion that the loss of patent protection would not have a material effect on the Company's competitive position. 7 Seasonal Aspect of Business There is no material seasonal element to the Company's business, although plant closings in the summer, particularly in Europe, tend to decrease the activity of certain buying sources during the first quarter of the Company's fiscal year. Working Capital Matters The Company does not carry a substantial inventory of finished goods but does carry a substantial inventory of raw material components and work-in-process to enable it to meet its customers' delivery requirements. (See Note 4 of Notes to Consolidated Financial Statements.) Material Customers The Company's three largest customers, each of which is a significant and valued customer, were Siemens, a major German manufacturer of electronic and electrical equipment; Phillips and 3M/Imation, which accounted for approximately 14.0%, 9.7%, and 8.8%, respectively, of product, service, engineering, and licensing revenue for the fiscal year ended July 31, 1996. Loss of any one of these customers would have a material adverse effect upon the Company's business. Siemens has no other material relationship with the Company. No other individual customer accounted for as much as 8.8% of the Company's product, service, engineering, and licensing revenue during fiscal 1996. The Company's ten largest customers, including Siemens, Phillips and 3M/Imation accounted for approximately 57% of product, service, engineering, and licensing revenue during fiscal 1996. Backlog The backlog of orders believed to be firm at July 31, 1996 was approximately $58.3 million compared with approximately $50.1 million at July 31, 1995. This increase is principally related to Signal Processing Technology Products. Many of the orders in the Company's backlog permit cancellation by the customer under certain circumstances. To date, Analogic has not experienced material cancellation of orders. The Company reasonably expects to ship most of its July 31, 1996 backlog during fiscal 1997. Government Contracts The amount of the Company's business that may be subject to renegotiation of profits or termination of contracts or subcontracts at the election of the Government is insignificant. Competition Analogic is subject to competition based upon product design, performance, pricing, quality and service. Analogic believes that its innovative engineering and product reliability have been important factors in its growth. While the Company tries to maintain competitive pricing on those products which are directly comparable to products manufactured by others, in many instances Analogic's products will conform to more exacting specifications and carry a higher price than analogous products manufactured by others. 8 Analogic's medical X-ray imaging systems are sufficiently specialized so that Analogic is not aware of products marketed by others which may be deemed directly competitive. The Company considers its selection by its OEM customers for design and manufacture of these products and its other medical products to be much less a function of other competitors in the field than it is of the "make-or-buy" decision of the individual customers. Many OEM customers and potential OEM customers of the Company have the capacity to design and manufacture these products for themselves. In the Company's area of expertise, the continued signing of new contracts indicates continued strength in the Company's relationship with its major customers, although some of these customers continue to commit to shorter term contracts. Analogic's competitors include divisions of some larger, more diversified organizations, as well as several specialized companies. Some of them have greater resources and larger staffs than Analogic. The Company believes that, measured by total sales dollars, it is a leading manufacturer of CAT scanner and MRI electronic sub-systems, industrial digitizing systems for the weighing industry and high-precision (14 bits or greater) A/D and D/A converters. Other companies sell substantially more converters than Analogic, but only a small portion of their products can be used for the high-precision applications for which Analogic's products are sold. Research and Product Development Research and product development is a significant factor in Analogic's business. The Company maintains a constant and comprehensive research and development program directed toward the creation of new products as well as toward the improvement and refinement of its present products and the expansion of their uses and applications. Company funds expended for research and product development amounted to approximately $29,017,000 in fiscal 1996, $29,890,000 in fiscal 1995, and $26,100,000 in fiscal 1994. Analogic intends to continue its emphasis on new product development. As of July 31, 1996, Analogic had approximately 330 employees, including electronic development engineers, software engineers, physicists, mathematicians, and technicians engaged in research and product development activities. These individuals, in conjunction with the Company's salespeople, also devote a portion of their time assisting customers in utilizing the Company's products, developing new uses for these products, and anticipating customer requirements for new products. During fiscal 1996, the Company capitalized $1,985,000 of computer software testing and coding costs incurred after technological feasibility was established. These costs will be amortized by the straight line method over the estimated economic life of the related products, not to exceed three years. Amortization of capitalized software amounted to $2,325,000 in fiscal 1996. Environmental Protection The Company does not anticipate any material effect upon its capital expenditures, earnings or competitive position resulting from compliance by it and its subsidiaries with presently enacted or adopted Federal, State and local provisions regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment. 9 Employees As of July 31, 1996, the Company had approximately 1,500 employees. Financial Information About Foreign and Domestic Operations and Export Revenue Product, service, engineering, and licensing export revenue from companies, primarily in Europe and Asia, amounted to approximately $77,600,000 (36%) in fiscal 1996 as compared to approximately $65,200,000 (34%) in fiscal 1995, and approximately $60,800,000 (34%) in fiscal 1994. Management believes that the Company's export revenue is at least as profitable as its domestic revenue. Most of the Company's foreign revenue is export revenue denominated in U.S. dollars. Management does not believe the Company's foreign export revenue is subject to significantly greater risks than its domestic revenue. See Note 16 of Notes to Consolidated Financial Statements for further information regarding foreign and domestic operations. Item 2. Properties Analogic's principal executive offices and major manufacturing facility are located in a building, owned by the Company, which it constructed on its site in Peabody, Massachusetts (a suburb of Boston). This facility consists of approximately 404,000 square feet of manufacturing, engineering, and office space. The Company owns approximately 65 acres of land at this location, which will accommodate future consolidation and expansion as required. The Company uses approximately 7 1/2 acres of this land for the Peabody Marriott Hotel which is owned by a wholly-owned subsidiary of the Company and managed by the Marriott Corporation. The Company's 68% owned subsidiary, Camtronics, owns a 40,000 square foot manufacturing and office building located in Hartland, Wisconsin. Camtronics owns approximately eleven acres of land at this location which should accommodate any future expansion requirements. The Company leases a modern one-story brick building containing approximately 41,000 square feet of manufacturing, engineering and office space located in Wakefield, Massachusetts. This building is leased for a term expiring on July 31, 2003. The Company leases two modern adjacent brick and concrete block buildings in Danvers, Massachusetts. These two buildings total approximately 170,000 square feet of manufacturing, engineering and office space and are leased for a term expiring on July 31, 2001. Both of these buildings have been sublet on a triple net basis on a self renewing lease to Siemens Medical Electronics, Inc. for a term, which as presently extended will end on December 1, 1998. The Company leases approximately 30,200 square feet of manufacturing, engineering, and office space in Chelmsford, Massachusetts which is occupied by SKY Computers, Inc. The space is leased for a ten-year term expiring June 1, 1999. 10 The Company's 100% owned subsidiary, B&K, leases a modern two-story building containing a total of approximately 41,000 square feet of manufacturing, engineering, and office space. The building is located in Gentofte, Denmark (a suburb of Copenhagen). The building is leased for a term of ten years commencing in January 1993. The lease may be cancelled by B&K after five years. On August 25, 1993 the Company purchased a modern two-story building containing approximately 49,000 square feet of manufacturing and office space in Peabody, Massachusetts, adjacent to the Company's principal executive offices. This building is presently leased to an unrelated party for a term of three years expiring December 15, 1997. See Item 13 of this Report and Note 7 of Notes to Consolidated Financial Statements for further information concerning certain of the aforesaid leases. Analogic and its subsidiaries lease various other facilities used for sales and service purposes. The Company does not consider any of these leases to be material. Analogic owns substantially all of the machinery and equipment used in its business. Management considers that the Company's plant and equipment are in good condition and are adequate for its current needs. Item 3. Legal Proceedings The Internal Revenue Service has notified the Company that it proposes to adjust the Company's tax returns for the years 1990 through 1992. (See Note 11 of Notes to Consolidated Financial Statements.) There are no other material legal proceedings pending against the Company or its subsidiaries or of which any of their property is the subject. Item 4. Submission of Matters to a Vote of Security Holders NONE 11 PART II Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters The Company's Common Stock trades on the NASDAQ Stock Market under the symbol: ALOG. The following table sets forth the range of high and low prices for the Common Stock, as reported by NASDAQ during the quarterly periods indicated: Fiscal Year High Low 1996 First Quarter $21.00 $18.50 Second Quarter 21.75 16.75 Third Quarter 20.50 17.75 Fourth Quarter 30.25 19.75 1995 First Quarter $19.50 $15.25 Second Quarter 20.00 17.00 Third Quarter 21.00 16.75 Fourth Quarter 19.50 16.00 As of August 30, 1996, there were approximately 950 holders of record of the Common Stock. Dividends of $.04 per share were declared for each of the last three quarters of fiscal 1995 and the first quarter of fiscal 1996. Dividends of $.05 per share were declared for each of the second and third quarters of fiscal 1996. The policy of the Company is to retain sufficient earnings to provide funds for the operation and expansion of its business. 12 Item 6. Selected Financial Data (Thousands of dollars, except share data) Year Ended July 31 1996 1995 1994 1993 1992 Total Revenues $230,460 $208,827 $193,745 $177,876 $149,244 Income from operations 16,981 15,155 18,205 18,256 8,054 Net Income 13,065 12,706 14,657 12,445 9,910 Earnings per common and common equivalent share $1.04 $1.02 $1.18 $1.01 $.78 Dividends paid per common share $0.18 $0.08 None None None Number of shares used in computation of per share data 12,562 12,475 12,434 12,301 12,715 Working Capital $168,515 $165,799 $150,571 $139,587 $119,029 Total Assets 265,162 260,198 239,620 223,423 196,966 Long-term debt (including capitalized leases) 9,455 10,236 10,993 13,205 16,482 Stockholders' Equity 211,800 200,893 184,391 168,907 155,859 13 Item 7. Management's Discussion and Analysis of Financial Conditions and Results of Operations Results of Operations Fiscal 1996 Compared to Fiscal 1995 Product, service, engineering, and licensing revenues for fiscal 1996 were $213,781,000 as compared to $194,034,000 for fiscal 1995. The increase of $19,747,000 was principally due to an increased in sales of Medical Technology Products of $12,141,000, and Signal Processing Technology Products of $4,464,000 and Industrial Technology Products of $3,142,000. Other operating revenue of $10,528,000 and $9,720,000 represents revenue from the Hotel operation for fiscal 1996 and 1995, respectively. Interest and dividend income increased primarily due to a distribution from a limited partnership in which the Company has invested. (See Note 5 of Notes to Consolidated Financial Statements.) The percentage of total cost of sales to total net sales for fiscal 1996 and 1995 was 62% and 57%, respectively. The increase was primarily due to higher direct material costs, less favorable product mix, lower selling prices caused by competitive pressures in certain ultrasound medical technology products, and additional manufacturing costs associated with the introduction of the Company's unique, light weight, low-power CT Scanner. Operating costs associated with the Hotel for fiscal years 1996 and 1995 were $5,627,000 and $5,294,000, respectively. General and administrative and selling expenses decreased $596,000, a result of lower selling expenses primarily in the areas of advertising and staff expenses, offset by higher general and administrative expenses relating to staffing. Research and product development expenses decreased $873,000 primarily due to a reduction in the engineering effort applicable to the development of the mobile CT Scanner. Gain on foreign exchange for fiscal 1996 amounted to $524,000, compared to a loss of $666,000 for fiscal 1995, primarily from the Company's subsidiary in Denmark. Computer software costs of $1,985,000 and $3,524,000 were capitalized in fiscal 1996 and 1995, respectively. Amortization of capitalized software amounted to $2,325,000 and $2,355,000 in fiscal 1996 and 1995, respectively. The amortization of the excess of cost over fair value of net assets acquired from Camtronics was $127,000 and $138,000 in fiscal 1996 and 1995, respectively. The amortization of the excess of cost over fair value of net assets acquired from SKY was $179,000 in fiscal 1996 and 1995. The amortization of excess of fair value of net assets over cost acquired from B&K was $542,000 and $533,000 in fiscal 1996 and 1995, respectively. The Company's share of losses of a newly formed privately held company amounted to $821,000 in fiscal 1996. (See Note 5 of Notes to Consolidated Financial Statements.) 14 Fiscal 1996 Compared to Fiscal 1995 (continued) During July 1995 the Company sold 2,300,000 common shares of Park Meditech for a net price of $1.00 per share, resulting in a gain of $1,736,000. (See Note 5 of Notes to Consolidated Financial Statements.) Minority interest in the net income of the Company's consolidated subsidiary, Camtronics, in fiscal 1996 and 1995 amounted to $224,000 and $765,000, respectively. Minority interest in the net loss of the Company's consolidated foreign subsidiary, B&K, in fiscal 1996 and 1995 was $1,370,000 and $247,000, respectively. The effective tax rate for fiscal 1996 was 26% vs. 22% for fiscal 1995. This increase was primarily a result of losses of a foreign subsidiary for which there was no tax benefit offset in part by the utilization of alternative minimum tax credits. Net income for fiscal 1996 was $13,065,000, or $1.04 per share as compared with $12,706,000, or $1.02 per share for fiscal 1995. Fiscal 1995 Compared to Fiscal 1994 Product, service, engineering, and licensing revenues for fiscal 1995 were $194,034,000 as compared to $179,951,000 for fiscal 1994. The increase of $14,083,000 was principally due to an increase in sales of Medical Technology Products of $14,292,000 and Signal Processing Technology Products of $5,888,000 offset by decreased sales of Industrial Technology Products of $6,097,000. Other operating revenue of $9,720,000 and $9,166,000 represents revenue from the Hotel operation for fiscal 1995 and 1994, respectively. The percentage of total cost of sales to total net sales for fiscal 1995 and 1994 was 57% and 55%, respectively. The increase was primarily due to higher direct material costs, less than favorable product mix, lower selling prices caused by competitive pressures in certain medical technology products, and additional manufacturing costs associated with the introduction of new products. Operating costs associated with the Hotel for fiscal years 1995 and 1994 were $5,294,000 and $5,258,000, respectively. General and administrative and selling expenses increased $1,484,000 primarily due to increased staffing and related expenses to support new products. Research and product development expenses increased $3,790,000 primarily due to the Company's efforts in designing and developing newer, more sophisticated complete systems for the medical and industrial technology markets along with a large investment in research and development staff and equipment. The Company anticipates making similar investments over the next several quarters as new products enter production. Loss on foreign exchange for fiscal 1995 amounted to $666,000, primarily from the Company's subsidiary in Denmark. Computer software costs of $3,524,000 and $3,305,000 were capitalized in fiscal 1995 and 1994, respectively. Amortization of capitalized software amounted to $2,355,000 and $1,602,000 in fiscal 1995 and 1994, respectively. 15 Fiscal 1995 Compared to Fiscal 1994 (continued) Interest expense decreased by approximately $350,000 primarily due to a reduction in debt and an increase in the amount of interest capitalized. The amortization of the excess of cost over fair value of net assets acquired from Camtronics was $138,000 and $208,000 in fiscal 1995 and 1994, respectively. The amortization of the excess of cost over fair value of net assets acquired from SKY was $179,000 in fiscal 1995 and 1994. The amortization of excess of fair value of net assets over cost acquired from B&K was $533,000 and $577,000 in fiscal 1995 and 1994, respectively. During July 1995 the Company sold 2,300,000 common shares of Park Meditech for a net price of $1.00 per share, resulting in a gain of $1,736,000. During fiscal 1994 the Company's investment in Analogic Scientific was increased by $2,000,000, reflecting the Company's share of Analogic Scientific's income. In fiscal 1994 the Company's investment was reduced by a cash dividend received of $300,000. During 1995 there was no change in the value of the Company's investment in Analogic Scientific. Equity in net losses of an unconsolidated affiliate located in Canada, amounted to $595,000 during fiscal 1994. (See Note 5 of Notes to Consolidated Financial Statements.) Minority interest in the net income of the Company's consolidated subsidiary, Camtronics, in fiscal 1995 and 1994 amounted to $765,000 and $1,157,000, respectively. Minority interest in the net losses of a domestic subsidiary in fiscal 1994 amounted to $177,000. The Company ceased operations of this sales and marketing organization during the third quarter of fiscal 1994. Minority interest in the net loss of the Company's consolidated foreign subsidiary, B&K, in fiscal 1995 was $247,000. During fiscal 1994, minority interest in the net income of B&K was $935,000. The effective tax rate for fiscal 1995 was 22% vs. 16% for fiscal 1994. Fiscal 1994 includes a tax loss benefit related to the dissolution of a foreign subsidiary for which there was no impact on income before income tax. Net income for fiscal 1995 was $12,706,000, or $1.02 per share as compared with $14,657,000, or $1.18 per share for fiscal 1994. Financial Position The Company's balance sheet at July 31, 1996, reflects a current ratio of 6.0 to 1, compared to 6.4 to 1 at July 31, 1995. Cash, cash equivalents and marketable securities, along with accounts and notes receivable, constitute approximately 73% of current assets at July 31, 1996. Liquidity is sustained principally through funds provided from operations, with short-term time deposits and marketable securities available to provide additional sources of cash. The Company places its cash investments in high credit quality financial instruments and, by policy, limits the amount of credit exposure to any one financial institution. Management does not anticipate any difficulties in financing operations at anticipated levels. The Company's debt to equity ratio was .25 to 1 at July 31, 1996 compared to .30 to 1 at July 31, 1995. 16 Financial Position (continued) On February 22, 1996, the Company invested $2,000,000 for a 33% interest in a newly formed privately held company which will design and manufacture subassemblies for medical imaging equipment. On July 1, 1996, the Company acquired the remaining 41% minority interest in B&K for $3,416,000 in cash. The Company now owns 100% of the outstanding shares of B&K. Capital expenditures for fiscal 1996 totaled approximately $6,233,000. As part of a stock repurchase program authorized by the Board of Directors, the Company made the following purchases of common stock for its treasury: 17,500 shares during fiscal 1996 at an aggregate cost of $345,000; 19,200 shares during fiscal 1995 at an aggregate cost of $326,000 and 97,800 shares during fiscal 1994 at an aggregate cost of $1,543,000. Impact of Inflation Overall, inflation has not had a material impact on the Company's operations during the past three fiscal years. Accounting Standards Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-based Compensation" encourages, but does not require, recognition of compensation expense based on the fair value of employee stock-based compensation instruments. The Company will not adopt the fair value method of accounting for employee stock-based compensation but will instead comply with the pro forma disclosure requirements beginning in fiscal 1997. The Company believes that adoption of SFAS 123 will not have a material impact on the Company's financial position or results of operations. Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," requires that impairment losses be recognized when the carrying value of an asset exceeds its fair value. The Company regularly assesses all of its long-lived assets for impairment and, therefore, does not believe the adoption of the standard in fiscal 1997 will have a material effect on its financial position or results of operations. Item 8. Financial Statements and Supplementary Data The financial statement and supplementary data are listed under PART IV, Item 14 in this Report. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None 17 PART III Item 10. Directors and Executive Officers of the Registrant (a) Directors Other Offices Held Director Expiration As of Name Age Since of Term* August 30, 1996 Bernard M. Gordon 69 1969 1998 Chairman of the Board and Chief Executive Officer Bruce R. Rusch 53 1993 1997 President and Chief Operating Officer John A. Tarello 65 1979 1998 Senior Vice President and Treasurer M. Ross Brown 62 1984 1999 Vice President Edward F. Voboril 53 1990 1999 ---- Gerald L. Wilson 57 1980 1998 ---- Bruce W. Steinhauer 61 1993 1997 ---- *The Board of Directors is divided into three classes, each having a three year term of office. The term of one class expires each year. Directors hold office until the Annual Meeting of Stockholders held during the year noted and until their respective successors have been duly elected and qualified. 18 (b) Executive Officers Name Age Office Held Has been Held Bernard M. Gordon 69 Chairman of the Board and 1969 Chief Executive Officer Bruce R. Rusch 53 President and Chief 1995 Operating Officer John A. Tarello 65 Senior Vice President 1980 & 1985, and Treasurer respectively M. Ross Brown 62 Vice President 1984 Julian Soshnick 64 Vice President 1982 General Counsel, and Clerk Each such officer is elected for a term continuing until the first meeting of the Board of Directors following the annual meeting of stockholders, and in the case of the President, Treasurer and Clerk, until their successors are chosen and qualified; provided that the Board may remove any officer with or without cause. (c) Identification of certain significant employees: None (d) Family relationships: None (e) Business Experience: Bernard M. Gordon has been the Chairman of the Board of Directors of the Company since 1969 and, was President from 1980 to 1995. 19 Bruce R. Rusch was appointed a Vice President of the Company in January 1993 and President in January 1995. Mr. Rusch has been President of SKY Computers, Inc. since 1987. SKY Computers, Inc. was acquired by Analogic effective April 1, 1992. Mr. Rusch is a director of Astea International, Inc. John A. Tarello was the Company's Controller from May 1970 through July 1982, a Vice President of the Company from 1971 to 1980, and has been Senior Vice President since 1980, and Treasurer since 1985. He is also a director of Spire Corporation. M. Ross Brown joined the Company in August 1984 and is responsible for managing its manufacturing operations. He was elected a Vice President in October 1984. Julian Soshnick joined the Company in October 1981 as General Counsel and has served as a Vice President since July 1982 and Clerk since 1988. Dr. Gerald L. Wilson is the former Dean of the School of Engineering at Massachusetts Institute of Technology and the Vannevar Bush Professor of Engineering at the Massachusetts Institute of Technology. Dr. Wilson has served on MIT's faculty since 1965 and currently serves as a Professor of Electrical and Mechanical Engineering. He is a director of Commonwealth Energy Systems and ASECO Corporation. He also served as Vice President of Technology and Manufacturing for Carrier Corporation during 1991 and 1992. Edward F. Voboril has been President and CEO of Wilson Greatbatch Ltd. of Clarence, New York since December 1990. Dr. Bruce W. Steinhauer has been Chief Executive Officer of the Lahey Clinic in Burlington, Massachusetts since early 1992. Prior to that he was Senior Vice President for Medical Affairs and Chairman of the Board of Governors for the Medical Group Practice of the Henry Ford Hospital from 1988 to 1992. (f) Involvement in certain legal proceedings: None (g) Promoters and Control Persons Inapplicable Compliance with Section 16(a) of the Exchange Act Upon review of the forms and representations furnished to the Company pursuant to Item 405 of Regulation S-K, the Company identifies Edmund F. Becker, Jr. as the only "reporting person" (as defined in said Item 405) who failed to file on a timely basis a report required by Section 16(a) of the Exchange Act. Dr. Becker failed to timely file one (1) Form 4 on which one (1) transaction was reported. 20 Item 11. Executive Compensation EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE
The following table sets forth certain compensation information for the Chief Executive Officer and each of the next four most highly compensated executive officers of the Company during the last fiscal year ("Named Officers") for services rendered in all capacities for the last three fiscal years. LONG-TERM ANNUAL COMPENSATION COMPENSATION AWARDS Restricted All Other Name and Total Annual Stock Awards Stock Options Compensation Principal Position Year Salary Bonuses Compensation ($)(A)(B) ($) (C) Bernard M. Gordon 1996 $325,000 $25,000 $350,000 --- --- $3,024 Chairman (CEO) 1995 325,000 50,000 375,000 --- --- 3,186 1994 300,000 50,000 350,000 --- --- 4,698 Bruce R. Rusch 1996 $225,000 $21,000 $246,000 --- --- $2,855 President (COO) 1995 206,519 35,000 241,519 --- --- 3,007 1994 159,958 47,000 206,958 --- --- --- John A. Tarello 1996 $210,000 $21,000 $231,000 --- --- $3,062 Senior Vice President 1995 210,000 35,000 245,000 --- --- 3,225 and Treasurer 1994 195,000 35,000 230,000 --- --- 3,842 M. Ross Brown 1996 $185,000 $18,000 $203,000 --- --- $2,921 Vice President 1995 185,000 30,000 215,000 --- --- 3,076 1994 175,000 30,000 205,000 --- --- 3,316 Julian Soshnick 1996 $185,000 $18,000 $203,000 --- --- $2,949 Vice President and 1995 185,000 30,000 215,000 --- --- 3,106 General Counsel 1994 175,000 30,000 205,000 --- --- 3,345
21 Notes To Summary Compensation Table ___________________________________ (A) Represents stock grants under the Company's Key Employee Stock Bonus Plan dated March 14, 1983, as amended and restated on January 27, 1988, pursuant to which Common Stock of the Company may be granted to key employees to encourage them to exert their best efforts on behalf of the Company. Each Recipient of the Common Stock pursuant to the Bonus Plan is required to execute a noncompetition agreement in a form satisfactory to the Company. The Bonus Plan is administered by a committee appointed by the Board of Directors consisting of the Chairman of the Board and three other Directors who are not eligible to participate in the Bonus Plan. Generally, the Common Stock granted pursuant to the Bonus Plan is not transferable for a period of three years from the date of the grant and is subject to a risk of forfeiture in the event that the recipient leaves the employ of the Company during this period for any reason. Generally, during the subsequent four-year period, the transfer restrictions will lapse with respect to 25% of the Common Stock for each year the recipient remains in the employ of the Company. Failure to remain in the Company's employ during all of the subsequent four-year period will result in a forfeiture of shares as to which restrictions on disposition still exist. The Common Stock granted pursuant to the Bonus Plan is held in escrow by the Company until such restrictions on disposition lapse. However, while in escrow, the recipient has the right to vote such shares of Common Stock and to receive any cash dividends thereon. The Board of Directors, acting upon the recommendation of the Stock Bonus Plan Committee, may at the time of grant designate a different schedule upon which the transfer restrictions lapse. (B) As of July 31, 1996, the following table reflects aggregate stock bonus awards, granted in 1993, for which transfer restrictions have not yet lapsed: Shares Market Value Bruce R. Rusch 33,750 $961,875 M. Ross Brown 22,500 641,250 Julian Soshnick 17,500 498,750 (C) Represents amounts allocated to the Named Officers pursuant to the Company's profit sharing plan under which it may, but is not required to, make contributions to a trust for the purpose of providing retirement benefits to employees. 22 STOCK OPTION GRANTS IN LAST FISCAL YEAR
There were no stock options awarded to named officers under the Company's Key Employee Stock Option Plans during the last fiscal year. STOCK OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES The following table indicates (i) stock options exercised by the Named Officers during the last fiscal year; (ii) the number of shares subject to exercisable (vested) and unexercisable (unvested) stock options as of July 31, 1996; and (iii) the fiscal year-end value of "in-the-money" unexercised options. Number of Value of Unexercised Number of Unexercised Options In-The-Money Options Shares Acquired Value at Fiscal Year End At Fiscal Year End(A)(B) On Exercise Realized (A) Exercisable Unexercisable Exercisable Unexercisable Bernard M. Gordon --- --- --- --- --- --- Bruce R. Rusch --- --- --- --- --- --- John A. Tarello --- --- 10,000 --- $136,250 --- M. Ross Brown --- --- 2,500 7,500 $34,062 $102,188 Julian Soshnick --- --- 2,500 2,500 $34,062 $34,062 ___________________________________ (A) The value realized or the unrealized value of in-the-money options at year-end represents the aggregate difference between the market value on the date of grant and, either the market value on the date of exercise or, in the case of unrealized value, the market value at July 31, 1996. (B) "In-the-money" options are options whose exercise price was less than the market price of Common Shares at July 31, 1996.
23 Compensation of Directors Commencing August 1, 1996, each director who is not an employee of the Company is entitled to an annual fee of $10,000 ($8,000 in fiscal 1996) plus a fee of $1,000 per meeting ($500 in fiscal 1996) for each of the first four meetings of the Board or any Board Committee attended by him, together with reimbursement of travel expenses under certain circumstances. In February 1988, the Board of Directors adopted and stockholders approved at the January 1989 Annual Meeting of Stockholders, the 1988 Non-Qualified Stock Option Plan for Non-Employee Directors (the "1988 Plan"). Pursuant to the 1988 Plan, options to purchase 50,000 shares of common stock may be granted only to directors of the Company or any subsidiary who are not otherwise employees of the Company or any subsidiary. The exercise price of options granted under the 1988 Plan is the fair market value of the Common Stock on the date of grant. The 1988 Plan provides that each Non-Employee director as of the date on which the Board of Directors adopted the 1988 Plan shall be granted an option to acquire 5,000 shares. Each new Non-Employee director who is subsequently elected to the Board of Directors shall be granted an option to acquire 5,000 shares after one year of service. In June, 1996 the Board of Directors amended the 1988 plan to increase the number of options that could be granted to each Non-Employee director to 10,000 shares. Options granted under the 1988 Plan are exercisable for a nine-year period commencing one year after the date of grant. During that exercise period, subject to the occurrence of certain events, options may be exercised only to the extent of (a) 33 1/3% of the number of shares covered by the option one or more years after the date of grant, (b) 66 2/3% of the number of shares subject to the option two or more years after the date of grant, and (c) 100% of the number of shares subject to the option three or more years after the date of grant. The 1988 Plan is administered by members of the Company's Board of Directors. The following table sets forth options granted pursuant to the 1988 plan as of July 31, 1996: Date of Options Option Options Options Options Grant Granted Price Exercised Exercisable Unexercisable Dr. Wilson 2/01/88 5,000 $ 7.125 5,000 --- --- Dr. Wilson 6/12/96 5,000 $27.750 --- --- 5,000 Mr. Voboril 6/12/91 5,000 $10.875 --- 5,000 --- Mr. Voboril 6/12/96 5,000 $27.750 --- --- 5,000 Dr. Steinhauer 10/08/93 5,000 $14.750 --- 3,334 1,666 Dr. Steinhauer 6/12/96 5,000 $27.750 --- --- 5,000 24 Item 12. Security Ownership of Certain Beneficial Owners and Management (a) The following table sets forth information as to all persons (including any "group", as defined in section 13(d)(3) of the Exchange Act) known by the Company to have owned beneficially 5% or more of its Common Stock, $.05 par value, as of August 30, 1996: Amount and Nature of Percent Name and Address Beneficial Ownership of Class Bernard M. Gordon Charitable 4,720,192 shares (1)(2) 37.8% (1)(2) Remainder Unitrust Bernard M. Gordon Julian Soshnick Gerald P. Bonder, Trustees 8 Centennial Drive Peabody, MA 01960 Private Capital Management Inc. 1,281,475 shares (3) 10.3% (3) 3003 Ninth Street Naples, FL 33940 T. Rowe Price 756,000 shares (3) 6.0% (3) 100 East Pratt Street Baltimore, MD 21202 __________________________________ (1) Exclusive of 6,000 shares owned by Mr. Gordon's wife, as to which he disclaims any beneficial interest. (2) Mr. Gordon serves as Trustee of the Bernard Gordon Charitable Remainder Unitrust (the "Trust") along with Julian Soshnick and Gerald P. Bonder. The three Trustees, acting by a majority, have full power to vote or dispose of the shares held by the Trust. Upon the death of Mr. Gordon, all of the assets of the Trust, in general, will be distributed to The Gordon Foundation, a Section 501(c)(3) trust formed by Mr. Gordon with its principal office located at 8 Centennial Drive, Peabody, Massachusetts. (3) The Company has been advised informally by Private Capital Management Inc. and T. Rowe Price that in their capacity as investment advisors they may be deemed a beneficial owner on August 30, 1996, of 1,281,475 shares, or 10.3% of the Company's Common Stock and 756,000 shares, or 6.0% of the Company's Common Stock, respectively. 25 (b) The following table sets forth information as to ownership of the Company's Common Stock, $.05 par value, by its directors and by all directors and executive officers as a group, as of August 30, 1996: Amount and Nature of Percent Identity of Person Beneficial Ownership(1) of Class Bernard M. Gordon 4,720,192 shares (2)(3) 37.8% Bruce R. Rusch 45,000 shares (4) * John A. Tarello 42,500 shares (5) * M. Ross Brown 27,500 shares (4)(5) * Gerald L. Wilson 2,000 shares * Edward F. Voboril 5,000 shares (5) * Bruce W. Steinhauer 3,334 shares (5) * All Directors and Executive Officers as a group (8 persons) 4,874,276 shares (4)(5) 39.0% *Represents less than 1% ownership ______________________________ (1) The amounts shown are based upon information furnished by the individual directors and officers. Unless otherwise noted, the beneficial owners have sole voting and investment power with respect to the shares listed. (2) Exclusive of 6,000 shares owned by Mrs. Gordon, in which Mr. Gordon disclaims all beneficial interest. (3) Mr. Gordon serves as Trustee of the Bernard Gordon Charitable Remainder Unitrust (the "Trust") along with Julian Soshnick and Gerald P. Bonder. The three Trustees, acting by a majority, have full power to vote or dispose of the shares held by the Trust. Upon the death of Mr. Gordon, all of the assets of the Trust, in general, will be distributed to the Gordon Foundation, a Section 501(c)(3) trust formed by Mr. Gordon with its principal office located at 8 Centennial Drive, Peabody, Massachusetts. (4) These amounts include certain shares issued under the Company's Key Employee Stock Bonus Plan which are subject to forfeiture under certain circumstances. (5) These amounts include certain shares deemed beneficially owned under Exchange Act Rule 13d-3(d)(1). 26 Item 13. Certain Relationships and Related Transactions Mr. Bernard M. Gordon and Mr. Bernard L. Friedman, the Company's former Vice Chairman of the Board (Mr. Friedman resigned on July 31, 1993), each own 50% interest in a limited partnership (Audubon Realty), which owns the Danvers, Massachusetts facilities leased by the Company for a term to July 31, 2001. These facilities include a 50,000 square foot building completed in 1978; a 40,000 square foot addition to that building, completed in 1982; and an 80,000 square foot building which the Company moved into during 1980. The fixed annual rent on the entire 170,000 square feet was increased from $1,042,000 to $1,125,000 effective March 1, 1995, and shall be adjusted as of March 1 every third year to reflect increases in the cost of living. Both of the facilities are sublet on a self-renewing lease to Siemens Medical Electronics, Inc. for a term which as presently extended will end on December 1, 1998, subject to an eighteen-month notice of cancellation, on a triple-net basis. Mr. Gordon and Mr. Friedman each own a 50% interest in a limited partnership which owns the facility located at 360 Audubon Road, Wakefield, Massachusetts, which is leased by the Company for a term to July 31, 2003. This facility has been utilized by the Company for manufacturing and office space since May 1, 1981. The fixed annual rent for this facility was increased from $315,000 to $333,000 effective May 1, 1996, and shall be adjusted as of May 1 every third year to reflect increases in the cost of living. All of the foregoing rents are on a net lease basis, and accordingly the Company pays, in addition to the above rental payments, all taxes, maintenance, insurance, and other costs relating to the leased premises. See Item 2 of this Report for information as to the character of the leased premises, and Note 7 of Notes to Consolidated Financial Statements for further information as to the leases. Bernard M. Gordon, Chairman of Analogic, personally owns 72% of the outstanding stock of UltraAnalog, Inc., which he acquired on October 2, 1989. UltraAnalog is a manufacturer of analog-to-digital and digital-to-analog converters, located in Fremont, California. Analogic has the irrevocable right to acquire Mr. Gordon's interest at his cost. (b) Certain Business Relationships: None (c) Indebtedness of Management: None (d) Transactions with Promoters: None 27 PART IV Item 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K Page Number a) 1. Financial Statements Report of independent accountants 29 Consolidated balance sheets at July 31, 1996 and 1995 30 - 31 Consolidated statements of income for the years ended July 31, 1996, 1995, and 1994 32 Consolidated statements of stockholders' equity for the years ended July 31, 1996, 1995, and 1994 33 - 35 Consolidated statements of cash flows for the years ended July 31, 1996, 1995, and 1994 36 - 37 Notes to consolidated financial statements 38 - 51 2. Financial Statement Schedule II - Valuation and qualifying accounts 52 Other schedules have been omitted because they are not required, not applicable, or the required information is furnished in the consolidated statements or notes thereto. 3. Exhibits - See Index to Exhibits 53 - 56 (b) Report on Form 8-K No reports on Form 8-K were filed by the registrant during the quarter ended July 31, 1996. 28 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ANALOGIC CORPORATION By /s/ Bernard M. Gordon Bernard M. Gordon Chairman of the Board and Chief Executive Officer Date: October 9, 1996 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Date: October 9, 1996 /s/ Bernard M. Gordon Chairman of the Board, Chief Executive Officer and Director Date: October 9, 1996 /s/ Bruce R. Rusch President, Chief Operating Officer and Director Date: October 9, 1996 /s/ John A. Tarello Senior Vice President, Treasurer and Director Date: October 9, 1996 /s/ M. Ross Brown Vice President and Director Date: October 9, 1996 /s/ Bruce W. Steinhauer Director Date: October 9, 1996 /s/ Edward F. Voboril Director Date: October 9, 1996 /s/ Gerald L. Wilson Director 29 REPORT OF INDEPENDENT ACCOUNTANTS Board of Directors Analogic Corporation Peabody, Massachusetts We have audited the accompanying consolidated balance sheets of Analogic Corporation and subsidiaries as of July 31, 1996 and 1995 and the related consolidated statements of income, stockholders' equity, and cash flows and the financial statement schedule listed in Item 14(a) of this Form 10-K for each of the three years in the period ended July 31, 1996. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Analogic Corporation and subsidiaries as of July 31, 1996 and 1995, and the results of its operations and its cash flows for each of the three years in the period ended July 31, 1996 in conformity with generally accepted accounting principles. In addition, in our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information required to be included therein. COOPERS & LYBRAND L.L.P. Boston, Massachusetts August 30, 1996 30 Analogic Corporation and Subsidiaries Consolidated Balance Sheets (000 omitted) JULY 31, 1996 1995 Assets Current assets: Cash and cash equivalents $18,040 $12,404 Marketable securities, at market 82,509 87,398 Accounts and notes receivable, net of allowance for doubtful accounts (1996, $1,426 ; 1995, $1,361) 45,207 43,980 Accounts receivable, affiliates 1,608 1,232 Inventories 50,232 46,287 Prepaid expenses and other current assets 4,416 5,108 Total current assets 202,012 196,409 Property, plant and equipment, at cost: Land and land improvements 4,252 4,252 Buildings 36,825 36,768 Property under capital leases 6,251 6,841 Leasehold and capital lease improvements 2,090 2,158 Manufacturing equipment 63,196 60,850 Furniture and fixtures 19,194 18,642 Motor vehicles 998 1,206 132,806 130,717 Less accumulated depreciation and amortization 85,050 80,955 47,756 49,762 Investments in and advances to affiliated companies 8,129 6,574 Excess of cost over acquired net assets, net of accumulated amortization 375 681 Other assets, including unamortized software costs (1996, $6,073 ; 1995, $6,413) 6,890 6,772 $265,162 $260,198 The accompanying notes are an integral part of these financial statements 31 Analogic Corporation and Subsidiaries Consolidated Balance Sheets (000 omitted) JULY 31, 1996 1995 Liabilities and Stockholders' Equity Current liabilities: Mortgage and other notes payable $3,644 $365 Obligations under capital leases 442 393 Accounts payable, trade 11,438 12,467 Accrued employee compensation and benefits 9,822 9,008 Accrued warranty 2,521 1,516 Accrued expenses 3,632 5,029 Accrued income taxes 1,998 1,832 Total current liabilities 33,497 30,610 Long-term debt: Mortgage and other notes payable 6,677 7,016 Obligations under capital leases 2,778 3,220 9,455 10,236 Deferred income taxes 4,832 4,683 Minority interest in subsidiaries 4,268 12,489 Excess of acquired net assets over cost, net 1,310 1,287 Commitments Stockholders' equity: Common stock, $.05 par; authorized 30,000,000 shares; issued 1996, 13,767,614 shares; issued 1995, 13,691,925 shares 688 685 Capital in excess of par value 21,413 20,517 Retained earnings 202,761 191,938 Unrealized holding gains and losses 2,092 2,004 Cumulative translation adjustments 1,539 2,846 228,493 217,990 Less: Treasury stock, at cost (1996, 1,273,073 shares; 1995, 1,269,280 shares) 14,550 14,470 Unearned compensation 2,143 2,627 Total stockholders' equity 211,800 200,893 $265,162 $260,198 The accompanying notes are an integral part of these financial statements. 32 Analogic Corporation and Subsidiaries Consolidated Statements of Income (000 omitted, except share data) YEARS ENDED JULY 31, 1996 1995 1994 Revenues: Product and service, net $205,991 $187,964 $177,175 Engineering and licensing 7,790 6,070 2,776 Other operating revenue 10,528 9,720 9,166 Interest and dividend income 6,151 5,073 4,628 Total revenues 230,460 208,827 193,745 Cost of sales and expenses: Cost of sales: Product and service 125,726 108,203 95,506 Engineering and licensing 7,379 2,769 2,929 Other operating expenses 5,627 5,294 5,258 General and administrative 18,463 17,188 15,492 Selling 27,195 29,066 29,278 Research and product development 29,017 29,890 26,100 Interest expense 832 812 1,167 (Gain) loss on foreign exchange (524) 666 Amortization of excess of cost over acquired net assets 306 317 387 Amortization of excess of acquired net assets over cost (542) (533) (577) Total cost of sales and expenses 213,479 193,672 175,540 Income from operations 16,981 15,155 18,205 Gain on sale of marketable securit 1,736 Equity in net income (losses) of unconsolidated affiliates (821) 1,405 Income before income taxes 16,160 16,891 19,610 Provision for income taxes 4,241 3,667 3,038 Minority interest in net income (loss) of consolidated subsidiaries (1,146) 518 1,915 Net income $13,065 $12,706 $14,657 Earnings per common and common equivalent share $1.04 $1.02 $1.18 The accompanying notes are an integral part of these financial statements. 33 Analogic Corporation and Subsidiaries Consolidated Statements of Stockholders' Equity - Years Ended July 31, 1996, 1995 and 1994 (000 omitted, except share date) Common stock Capital in excess of Shares Amount par value Balance, July 31, 1993 13,517,599 $676 $18,807 Shares issued pursuant to stock grants, net of cancellations 48,750 2 696 Shares issued pursuant to stock options 35,976 2 290 Purchases of treasury stock Amortization of unearned compensation Amounts related to employee stock purchase plan 19 Income tax reduction relating to stock options 99 Translation adjustments for the year Net income for the year Balance, July 31, 1994 13,602,325 680 19,911 Shares issued pursuant to stock grants, net of cancellations 39,500 2 608 Shares issued pursuant to stock options 50,081 3 429 Purchases of treasury stock Amortization of unearned compensation Amounts related to employee stock purchase plan 25 Income tax reduction relating to stock options 126 Translation adjustments for the year Net income for the year Dividends paid ($0.08 per share) Unrealized holding gains and losses for the period Other 19 (582) Balance, July 31, 1995 13,691,925 $685 $20,517 Shares issued pursuant to stock grants, net of cancellations 20,500 1 275 Shares issued pursuant to stock options 55,189 2 521 Purchases of treasury stock Amortization of unearned compensation Amounts related to employee stock purchase plan 31 Income tax reduction relating to stock options 246 Translation adjustments for the year Net income for the year Dividends paid ($0.18 per share) Unrealized holding gains and losses for the period Other (177) Balance, July 31, 1996 13,767,614 $688 $21,413 The accompanying notes are an integral part of these financial statemen 34 Analogic Corporation and Subsidiaries Consolidated Statements of Stockholders' Equity - Years Ended July 31, 1996, 1995 and 1994 (000 omitted, except share date) Unrealized Cumulative Retained holding translation earnings gains and loss adjustments Balance, July 31, 1993 $165,565 (614) Shares issued pursuant to stock grants, net of cancellations Shares issued pursuant to stock options Purchases of treasury stock Amortization of unearned compensation Amounts related to employee stock purchase plan Income tax reduction relating to stock options Translation adjustments for the year 1,172 Net income for the year 14,657 Balance, July 31, 1994 180,222 558 Shares issued pursuant to stock grants, net of cancellations Shares issued pursuant to stock options Purchases of treasury stock Amortization of unearned compensation Amounts related to employee stock purchase plan Income tax reduction relating to stock options Translation adjustments for the year 2,288 Net income for the year 12,707 Dividends paid ($0.08 per share) (991) Unrealized holding gains and losses for the period 2,004 Other Balance, July 31, 1995 $191,938 $2,004 $2,846 Shares issued pursuant to stock grants, net of cancellations Shares issued pursuant to stock options Purchases of treasury stock Amortization of unearned compensation Amounts related to employee stock purchase plan Income tax reduction relating to stock options Translation adjustments for the year (1,307) Net income for the year 13,065 Dividends paid ($0.18 per share) (2,242) Unrealized holding gains and losses for the period 88 Other Balance, July 31, 1996 $202,761 $2,092 $1,539 The accompanying notes are an integral part of these financial statements 35 Analogic Corporation and Subsidiaries Consolidated Statements of Stockholders' Equity - Years Ended July 31, 1996, 1995 and 1994 (000 omitted, except share date) Treasury stock Total Unearned stockholder Shares Amount compensation equity Balance, July 31, 1993 (1,157,761) ($12,822) ($2,705) $168,907 Shares issued pursuant to stock grants, net of cancel (10,000) (698) Shares issued pursuant to stock options 5,000 54 346 Purchases of treasury stock (97,800) (1,543) (1,543) Amortization of unearned compensation 656 656 Amounts related to employee stock purchase plan 7,293 78 97 Income tax reduction relating to stock options 99 Translation adjustments for the year 1,172 Net income for the year 14,657 Balance, July 31, 1994 (1,253,268) (14,233) (2,747) 184,391 Shares issued pursuant to stock grants, net of cancel (5,000) (610) Shares issued pursuant to stock options 432 Purchases of treasury stock (19,200) (326) (326) Amortization of unearned compensation 730 730 Amounts related to employee stock purchase plan 8,188 89 114 Income tax reduction relating to stock options 126 Translation adjustments for the year 2,288 Net income for the year 12,707 Dividends paid ($0.08 per share) (991) Unrealized holding gains and losses for the period 2,004 Other (582) Balance, July 31, 1995 (1,269,280) ($14,470) ($2,627) $200,893 Shares issued pursuant to stock grants, net of cancel (9,500) (1) (275) Shares issued pursuant to stock options 14,100 147 670 Purchases of treasury stock (17,500) (345) (345) Amortization of unearned compensation 759 759 Amounts related to employee stock purchase plan 9,107 102 133 Income tax reduction relating to stock options 246 Translation adjustments for the year (1,307) Net income for the year 13,065 Dividends paid ($0.18 per share) (2,242) Unrealized holding gains and losses for the period 88 Other 17 (160) Balance, July 31, 1996 (1,273,073) ($14,550) ($2,143) $211,800 The accompanying notes are an integral part of these financial statements 36 Analogic Corporation and Subsidiaries Consolidated Statements of Cash flow (000 omitted) Years Ended July 31, 1996 1995 1994 Cash flows from operating activities: Net income $13,065 $12,706 $14,657 Adjustments to reconcile net income to net cash provided by operating activities: Deferred income taxes 177 255 920 Depreciation 6,203 6,365 6,598 Amortization of capitalized software 2,325 2,355 1,602 Amortization of excess of cost over net acquired assets 306 317 387 Amortization of excess of acquired net assets over cost (542) (533) (577) Amortization of other assets (deferred charges) (32) 39 3 Minority interest in net income (losses) of consolidated subsidiaries (1,146) 518 1,915 Provision for losses on accounts receivable 65 21 (179) Gain on sale of marketable securities (1,736) Gain on sale of equipment (40) (34) (30) Excess of equity in losses (income) of unconsolidated affiliates over dividend received 821 (1,105) Compensation from stock grants 759 731 656 Changes in operating assets & liabilities Decrease (increase) in assets: Accounts and notes receivable (1,403) (8,561) (3,543) Inventories (3,945) (5,118) (1,229) Prepaid expenses and other current assets 399 (305) 75 Other assets (426) (17) 74 Increase (decrease) in liabilities: Accounts payable, trade (1,029) 4,899 (928) Accrued expenses and other current liabilities (715) 816 801 Accrued income taxes 412 627 (663) Total adjustments 2,189 639 4,777 Net cash provided by operating activities 15,254 13,345 19,434 Cash flows from investing activities: Investments in and advances to affiliated companies (2,376) (143) (1,583) Additions to property, plant and equipment (6,233) (8,217) (7,326) Capitalized software (1,985) (3,524) (3,305) Proceeds from sale of property, plant and equipment 119 55 114 Purchases of marketable securities (21,650) (24,062) (12,600) Maturities of marketable securities 26,627 10,475 9,115 Proceeds from sale of marketable securities 2,300 Net cash used by investing activities (5,498) (23,116) (15,585) 37 Analogic Corporation and Subsidiaries Consolidated Statements of Cash flow (000 omitted) Years Ended July 31, 1996 1995 1994 Cash flows from operating activities: (continued) Cash flows from financing activities: Proceeds from overdraft facility 3,305 Payments on debt and capital lease obligations (758) (2,331) (631) Purchase of common stock for treasury (345) (325) (1,543) Purchase of common stock of majority owned subsidiary (160) (582) (201) Issuance of common stock pursuant to stock options and employee stock purchase plan 803 546 443 Dividends paid shareholders (2,242) (992) Purchase of minority interest (3,416) Net cash used by financing activities (2,813) (3,684) (1,932) Effect of exchange rate changes on cash (1,307) 2,288 1,172 Net increase (decrease) in cash and cash equivalents 5,636 (11,167) 3,089 Cash and cash equivalents, beginning of year 12,404 23,571 20,482 Cash and cash equivalents, end of year $18,040 $12,404 $23,571 The accompanying notes are an integral part of these financial statements. 38 ANALOGIC CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Summary of business operations and significant accounting policies: Business operations: The Company's operations consist of the design, manufacture and sale of high-technology, high-precision analog/digital signal processing instruments and systems to customers in the medical and industrial industry. Product, service, engineering and licensing export revenue, primarily from customers in Europe and Asia, amounted to approximately $77,600,000 or 36%, $65,200,000 or 34%, and $60,800,000 or 34% of total product, service, engineering and licensing revenue for the years ended July 31, 1996, 1995 and 1994, respectively. Significant accounting policies are as follows: (a) Principles of consolidation: The consolidated financial statements include the accounts of the Company, all wholly-owned and majority-owned subsidiaries. Investments in companies in which ownership interests range from 20 to 50 percent and the Company exercises significant influence over operating and financial policies are accounted for using the equity method. Other investments are accounted for using the cost method. All significant intercompany accounts and transactions have been eliminated. (b) Inventories: Inventories are stated at the lower of cost or market. Cost is determined on a first-in, first-out basis. (c) Property, plant and equipment: For financial reporting purposes, depreciation and amortization are provided utilizing the straight-line method over the estimated useful lives of the assets or lease terms, whichever is shorter, and are computed principally utilizing accelerated methods for income tax purposes. Property under capital leases is amortized over the lease terms. (d) Revenue recognition: Revenues are recognized when a product is shipped or a service is performed. (e) Capitalized software costs: The Company capitalizes certain computer software costs which are amortized utilizing the straight-line method over the economic lives of the related products not to exceed three years. Accumulated amortization approximated $10,001,000 and $7,676,000 at July 31, 1996 and 1995, respectively. 39 ANALOGIC CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 1. Summary of business operations and significant accounting policies: (continued) (f) Warranty costs: The Company provides for estimated warranty costs as products are shipped. (g) Income taxes: The Company does not provide for U.S. Federal income taxes on undistributed earnings of consolidated foreign subsidiaries as such earnings are intended to be permanently reinvested in those operations. (h) Earnings per share: Earnings per common and common equivalent share is based upon the weighted average of common and common equivalent shares outstanding during the year. Primary and fully diluted earnings per share are the same. The number of common and common equivalent shares utilized in the per share computations were 12,562,085, 12,475,035 and 12,433,821 in fiscal 1996, 1995 and 1994, respectively. (i) Cash and cash equivalents: The Company considers all short-term deposits with a maturity of three months or less to be cash equivalents. Cash equivalents amounted to approximately $16,382,000 and $9,004,000 at July 31, 1996 and 1995, respectively. (j) Concentration of credit risk: The Company grants credit to domestic and foreign original equipment manufacturers, distributors and end users. The Company places its cash investments in high credit quality financial instruments and, by policy, limits the amount of credit exposure to any one financial institution. (k) Marketable securities: The Company's marketable securities are categorized as available- for-sale securities, as defined by the Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities." Unrealized holding gains and losses are reflected as a net amount in a separate component of stockholders' equity until realized. For the purpose of computing realized gains and losses cost is identified on a specific identification basis. (l) Accounting Standards: Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-based Compensation" encourages, but does not require, recognition of compensation expense based on the fair value of employee stock-based compensation instruments. The Company will not adopt the fair value method of accounting for employee stock-based compensation but will instead comply with the pro forma disclosure requirements beginning in fiscal 1997. The Company believes that adoption of SFAS 123 will not have a material impact on the Company's financial position or results of operations. 40 ANALOGIC CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 1. Summary of business operations and significant accounting policies: (continued) (l) Accounting Standards: (continued) Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," requires that impairment losses be recognized when the carrying value of an asset exceeds its fair value. The Company regularly assesses all of its long-lived assets for impairment and, therefore, does not believe the adoption of the standard in fiscal 1997 will have a material effect on its financial position or results of operations. (m) Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions and disclosure of contingencies at the date of the financial statements. Actual results could differ from these estimates. (n) Basis of presentation: Certain financial statement items have been reclassified to conform to the current year's format. 2. Business combinations: The Company's subsidiary, Camtronics, has entered into an agreement with the three founding stockholders ("Founders") who are also active employees of Camtronics. The agreement requires Camtronics to purchase up to 5% of the shares of common stock originally issued to the Founders at their option during each fiscal year beginning in 1992 pursuant to a predetermined formula. If a Founder does not exercise his right to cause Camtronics to purchase his outstanding shares, such rights shall not lapse, but shall be cumulative and may be exercised thereafter. The Company's ownership of Camtronics increased from approximately 65% in fiscal 1992 to approximately 68% in fiscal 1996 as a result of the Founders exercising their conversion rights to sell 5% of their shares for the amount of $763,000, $244,000, and $202,000 during fiscal 1996, 1995, and 1994, respectively. The carrying value of the Company's total investment in Camtronics exceeded its portion of underlying equity in net assets by approximately $1,453,000. This excess is being amortized over a 10 year period. Accumulated amortization amounted to $1,197,000 and $1,071,000 as of July 31, 1996 and 1995, respectively. As of January 1, 1993, the Company acquired an interest of approximately 57% in a newly-formed company, B&K Ultrasound Systems A/S ("B&K"), for $3,607,000 in cash and a subordinated interest free short-term loan of $3,500,000 which was converted into equity on July 31, 1993. The Company's ownership interest was adjusted upward to 59% in fiscal 1994 in accordance with the shareholders' agreement. B&K, a Danish Corporation, is primarily engaged in the design and manufacture of ultrasound imaging devices used in urology and various sonographic techniques. The acquisition was accounted for as a purchase and B&K's operations have been included in the Company's consolidated financial statements beginning January 1, 1993. The Company's equity in net assets of B&K exceeded the purchase price by approximately $2,662,000. This excess of acquired net assets over cost is being amortized over a 5 year period beginning in January, 1993. Accumulated amortization amounted to $1,908,000 and $1,376,000 as of July 31, 1996 and 1995, respectively. 41 ANALOGIC CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 2. Business combinations: (continued) As of July 1, 1996, the Company acquired the remaining 41% interest in B&K for $3,416,000 in cash. The Company's equity in net assets of B&K exceeded the purchase price by approximately $565,000. This excess is being amortized over a five year period beginning July 1, 1996. Amortization during fiscal 1996 was $9,000. On April 1, 1992, the Company acquired all of the common stock of SKY Computers, Inc. (SKY) for $3,161,000 in cash. The carrying value of the Company's investment in SKY exceeded its equity in net assets by approximately $895,000. This excess is being amortized over a 5 year period. Accumulated amortization was $776,000 and $597,000 as of July 31, 1996 and 1995, respectively. 3. Marketable securities: Marketable securities are categorized as available-for-sale securities and summarized as follows: Gross Unrealized July 31, 1996 Cost Fair Value Gain Loss Debt securities issued by $78,675,000 $79,651,000 $1,185,000 ($209,000) various state and local municipalities and agencies Equity securities 1,742,000 2,858,000 1,116,000 $80,417,000 $82,509,000 $2,301,000 ($209,000) July 31, 1995 Debt securities issued by $84,413,000 $85,398,000 $1,277,000 ($292,000) various state and local municipalities and agencies Equity securities 981,000 2,000,000 1,019,000 $85,394,000 $87,398,000 $2,296,000 ($292,000) Contractual maturities range from one to nine years, with the majority five years or less. 4. Inventories: The components of inventory are as follows: July 31 1996 1995 Raw materials $19,363,000 $18,883,000 Work-in-process 17,830,000 16,037,000 Finished goods 13,039,000 11,367,000 $50,232,000 $46,287,000 42 ANALOGIC CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 5. Investments in and advances to affiliated companies: The Company owns 50% of Analogic Scientific, Inc. ("Scientific"), a joint venture corporation with Kejian Corporation of The People's Republic of China. The Company's original investment of $1,500,000 has been accounted for using the equity method of accounting. The Company's share of Scientific's income amounted to $2,000,000 in fiscal year 1994. The Company did not report any income in fiscal year 1996 and 1995 related to this investment. Dividends received from Scientific amounted to $300,000 in fiscal 1994. No dividends were received in fiscal year 1996 and 1995. During fiscal 1996 the Company invested an additional $500,000 in Scientific. The carrying value of this investment was $6,200,000 at July 31, 1996 and $5,700,000 at July 31, 1995. Transactions with Scientific for fiscal years 1996, 1995 and 1994 consisted of revenues of approximately $735,000, $1,076,000 and $2,990,000, respectively. At July 31, 1996 and 1995, accounts receivable from this affiliate were $676,000 and $1,232,000, respectively. A charge of $595,000, resulting from the Company's share of losses in a privately-held company, accounted for by the equity method, had been recorded in fiscal year 1994. During fiscal year 1994, the investment in this privately-held company was exchanged for common stock of Park Meditech, Inc. ("Park"). During June 1995, the Company loaned Park $1,500,000, structured as a Convertible Subordinated Promissory Note, with interest at 8%, payable quarterly, and principal due on or before June 1, 1996. This note was convertible, at the option of the Company, into 600,000 common shares of Park stock until June 1, 1996. In addition, the Company had warrants convertible to 200,000 common shares of Park stock at a price of $2.50 (US) until June 1, 1997. On February 13, 1996, the Company acquired 1,715,384 shares of Park Common Stock and an 11% Convertible Unsecured Subordinated Debenture in the principal amount of $750,000 in consideration of the cancellation of the Convertible Subordinated Promissory Note in the amount of $1,500,000 and 200,000 Common Share purchase warrants. With certain restrictions, the Convertible Unsecured Subordinated Debenture may be converted into Common Shares at a price of $1.20 (Canadian) per Common Share. The Company currently owns 5,715,384 shares or approximately 14% of the outstanding shares of Park. Park shares are currently traded on the Montreal Exchange (PKM) as well as the NASDAQ small cap exchange (PMDTF). The investment in Park is included in marketable securities at July 31, 1996 and 1995, respectively. On February 22, 1996, the Company invested $2,000,000 for a 33% interest in a newly formed privately held company which will design and manufacture subassemblies for medical imaging equipment. Transactions with this new formed privately held company consisted of revenues of approximately $2,667,000 during fiscal 1996. At July 31, 1996, accounts receivable from this company were $932,000. The Company's $750,000 investment in a limited partnership is accounted for using the cost method, as the Company is a limited partner, and accordingly, has no influence over the partnership. During fiscal 1996, the Company received a distribution of $623,000 from the limited partnership. 43 ANALOGIC CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 6. Mortgage and other notes payable: Mortgage and other notes payable consists of the following: July 31 1996 1995 3% mortgage note payable, due 2017, payable quarterly, collateralized by land, office and manufacturing facilities $5,516,000 $5,699,000 Business Development Revenue Bonds, interest of approximately 7% payable quarterly, annual principal payments of $150,000 through September 1, 2005, collateralized by land, office and manufacturing facilities; is callable at the Company's option at face value without penalty from September 1, 1996 through August 31, 1997 1,500,000 1,650,000 Term loan, at prime rate, (8.75% at July 31, 1995), due April, 1996, payable in monthly installments, collateralized by computer equipment and software 32,000 Uncollateralized foreign bank overdraft facility with interest at 8.5% per year 3,305,000 10,321,000 7,381,000 Less current portion 3,644,000 365,000 $ 6,677,000 $7,016,000 Principal maturities in each of the next five fiscal years on the above notes are as follows: 1997, $3,644,000; 1998, $344,000; 1999, $350,000; 2000, $356,000; 2001, $363,000. 44 ANALOGIC CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 7. Lease commitments and related party transactions: The Company leases three operating facilities from a partnership in which the Chairman and the former Vice Chairman are partners under leases that have been accounted for as capital leases. Certain leases contain contingent rentals based upon cost of living adjustments. Contingent rentals were not significant in 1996, 1995 and 1994. One of the Company's wholly-owned subsidiaries leased certain machinery and equipment under capital lease agreements which expired in 1996. Property under capital leases is included in property, plant and equipment, as follows: July 31 1996 1995 Land and buildings $ 6,251,000 $ 6,251,000 Machinery and equipment 590,000 6,251,000 6,841,000 Less accumulated amortization 4,781,000 5,017,000 Net capital lease assets $ 1,470,000 $ 1,824,000 Certain of the Company's subsidiaries lease manufacturing and office space under non-cancelable operating leases. These leases expire through 1999 and contain renewal options. The Company leases certain other real property and equipment under operating leases which, in the aggregate, are not significant. Rent expense approximated $534,000, $610,000 and $814,000 (net of sublease income of $1,186,000, $1,179,000 and $1,199,000) in fiscal 1996, 1995 and 1994, respectively. The following is a schedule by year of future minimum lease payments at July 31, 1996: Capital Operating Fiscal Year Leases Leases 1997 $812,000 $850,000 1998 812,000 857,000 1999 812,000 470,000 2000 812,000 40,000 2001 812,000 Last years (through 2003) 578,000 $4,638,000 $2,217,000 Less amount representing interest, at 9.5% - 17.6% 1,418,000 Present value of minimum lease payments (includes current portion of $442,000) $3,220,000 45 ANALOGIC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 7. Lease commitments and related party transactions: (continued) Future minimum lease payments under capital leases have not been reduced for sublease rental income of approximately $1,186,000. Included in accounts and notes receivable are $200,000 of convertible debentures from UltraAnalog, Inc., a manufacturer of analog-to-digital and digital-to-analog converters. Bernard M. Gordon, the Company's Chairman, owns 72% of the outstanding common stock of UltraAnalog, Inc. which the Company, solely at its option, has the right to acquire at his cost. 8. Stock option and stock bonus plans: At July 31, 1996, the Company had three key employee stock option plans; two of which have lapsed as to the granting of options. In addition, the Company has one key employee stock bonus plan, one non-employee director stock option plan and one employee stock purchase plan. Options granted under four stock option plans become exercisable in installments commencing no earlier than one year from the date of grant and no later than five years from the date of grant. Options issued under the plans are non-qualified options or incentive stock options and are issued at prices of not less than 100% of the fair market value at the date of grant. Tax benefits from early disposition of the stock by optionees under incentive stock options, and from exercise of non-qualified options are credited to capital in excess of par value. Under the Company's key employee stock bonus plan, common stock may be granted to key employees under terms and conditions as determined by the Board of Directors. Generally, participants under the stock bonus plan may not dispose or otherwise transfer stock granted for three years from date of grant. Upon issuance of stock under the plan, unearned compensation equivalent to the market value at the date of grant is charged to stockholders' equity and subsequently amortized over the periods during which the restrictions lapse (up to six years). Amortization of $759,000, $730,000 and $656,000 was recorded in fiscal 1996, 1995 and 1994, respectively. Under the employee stock purchase plan, participants are granted options to purchase the Company's common stock twice a year at the lower of 85% of market value at the beginning or end of each period. Calculation of the number of options granted, and subsequent purchase of these shares, is based upon voluntary payroll deductions during each six month period. The number of options granted to each employee under this plan, when combined with options issued under other plans, is limited to a maximum outstanding fair market value of $25,000 during each calendar year. The number of shares issued pursuant to this plan totaled 9,107 in 1996, 8,188 in 1995 and 7,293 in 1994. At July 31, 1996, 959,105 shares were reserved for grant under the above stock option, bonus and purchase plans. 46 ANALOGIC CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 8. Stock option and stock bonus plans: (continued) The following table sets forth the stock option transactions for the years ended July 31, 1996, 1995 and 1994: 1996 1995 1994 Option Number Option Number Option Number price per of price per of price per of share shares share shares share shares Options outstanding, beginning of year $7.125-$18.25 446,502 $7.125-$18.00 359,729 $7.125-$16.125 325,955 Options granted 18.00-27.75 151,000 16.50-18.25 164,850 14.750-18.00 109,125 Options exercised 7.125-16.50 (69,289) 7.125-11.75 (50,081) 7.125-14.00 (40,976) Options cancelled (38,425) (27,996) (34,375) Options outstanding, end of year 8.25-27.75 489,788 7.125-18.25 446,502 7.125-18.00 359,729 Options exercisable, end of year 8.25-27.75 94,964 7.125-16.50 140,406 7.125-11.75 113,791 9. Profit sharing retirement plan: The Company has a qualified Profit Sharing Retirement Plan for the benefit of eligible employees. The plan provides that the Company shall make contributions from current or accumulated earnings as determined by the Board of Directors. The contribution each year shall in no event exceed the maximum allowable under applicable provisions of the Internal Revenue Code. Profit sharing expense amounted to $700,000 in 1996, $700,000 in 1995 and $660,000 in 1994. The Company has 401(K) plans under which employees can contribute up to 15% of their annual base income, not to exceed the maximum amount allowable under the Internal Revenue Code in any one calendar year. 47 ANALOGIC CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 10. Interest: Total interest incurred amounted to $1,002,000, $988,000, and $1,261,000 in 1996, 1995 and 1994, respectively, of which $170,000 in 1996, $176,000 in 1995 and $94,000 in 1994 was capitalized. 11. Income taxes: The components of the provision for income taxes are as follows: July 31 1996 1995 1994 Current income taxes: Federal $ 3,757,000 $2,795,000 $1,747,000 State and Foreign 307,000 617,000 371,000 4,064,000 3,412,000 2,118,000 Deferred income taxes (benefit): Federal 187,000 291,000 915,000 State and foreign ( 10,000) (36,000) 5,000 177,000 255,000 920,000 $4,241,000 $3,667,000 $ 3,038,000 The tax effects of the principal temporary differences resulting in deferred tax expense (benefit) are as follows: July 31 1996 1995 1994 Unrealized equity gain/loss ( $369,000) $493,000 $424,000 Capitalized software 26,000 151,000 325,000 Depreciation 598,000 306,000 370,000 Bad debts ( 59,000) 17,000 6,000 Inventory valuation ( 78,000) ( 42,000) ( 11,000) Benefit Plans ( 175,000) ( 486,000) ( 18,000) Other items, net 234,000 ( 184,000) ( 176,000) $ 177,000 $ 255,000 $ 920,000 Income (loss) before income taxes from domestic and foreign operations is as follows: July 31 1996 1995 1994 Domestic $19,796,000 $17,942,000 $17,356,000 Foreign (3,636,000) (1,051,000) 2,254,000 $16,160,000 $16,891,000 $19,610,000 48 ANALOGIC CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 11. Income taxes: (continued) The components of the deferred tax assets and liabilities are as follows: Deferred Tax Deferred Tax Assets Liabilities July 31, 1996 Depreciation $ 3,212,000 Bad debt allowance $ 204,000 Capitalized interest and other costs 156,000 473,000 Inventory 1,613,000 Warranty 659,000 Benefit plans 1,340,000 Lease transactions 710,000 Unrealized equity gain/loss 828,000 1,689,000 Capitalized software 1,878,000 Net operating loss carryforwards 2,630,000 Alternative minimum tax credit carryforwards 511,000 Miscellaneous 401,000 9,052,000 7,252,000 Valuation allowance (4,231,000) $ 4,821,000 $7,252,000 July 31, 1995 Depreciation $2,614,000 Bad debt allowance 145,000 Capitalized interest and other costs 305,000 452,000 Inventory 445,000 Warranty 589,000 Benefit plans 1,165,000 Lease transactions 720,000 Unrealized equity gain/loss 400,000 1,630,000 Capitalized software 1,852,000 Business credit carry forwards 742,000 Alternative minimum tax credit carryforwards 997,000 Miscellaneous 277,000 5,785,000 6,548,000 Valuation allowance ( 1,491,000) $ 4,294,000 $6,548,000 Included in prepaid expenses and other current assets is $2,401,000 and $2,429,000 of current deferred tax assets at July 31, 1996 and 1995, respectively. 49 ANALOGIC CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 11. Income taxes: (continued) A reconciliation of income taxes at the United States statutory rate to the effective tax rate follows: Year Ended July 31, 1996 1995 1994 U.S. federal statutory tax rate 35% 35% 35% Tax loss on dissolution of foreign subsidiary ( 9 ) Foreign sales corporation tax benefit ( 3 ) ( 3 ) ( 2 ) State income taxes, net of federal tax benefit 2 1 1 Tax exempt interest ( 8 ) ( 8 ) ( 6 ) Net losses (profits) of subsidiaries and affiliates not taxed 7 ( 1 ) General business credit utilized ( 3 ) ( 1 ) Alternative minimum tax ( 3 ) 3 Other items, net ( 1 ) ( 2 ) ( 5 ) Effective tax rate 26% 22% 16% The Internal Revenue Service has examined the Company's federal consolidated income tax returns through fiscal 1992. Following a routine audit, the Company has been notified by the Internal Revenue Service that it proposes to adjust the Company's tax returns for the years 1990 through 1992 by increasing its tax liability for those years by $2,837,473, $2,151,574 and $1,762,849, respectively. The major claims relate to an alleged forgiveness of debt arising from the acquisition of property from a subsidiary of the FDIC and an alleged excess accumulation of earnings. The transaction concerning the forgiveness of debt was conducted in accordance with guidelines established by the Company's independent auditors, which they advised were in compliance with IRS Regulations. Accordingly, the Company believes that the claim is without merit. Similarly, the Company's counsel believes that the claims concerning excess accumulation of earnings are without foundation and are erroneously based upon a lack of understanding of the nature of the Company's business. The Company has filed a protest to the IRS which vigorously contests these ill founded claims and believes that it will prevail. Two of the Company's subsidiaries have elected to be taxed as Foreign Sales Corporations (FSC). The Company has alternative minimum tax credit carryforwards of approximately $511,000 which may be carried forward indefinitely. One of the Company's subsidiaries has a net operating loss carryforward of approximately $1,600,000 expiring in 2009. In addition, certain of the Company's foreign subsidiaries have net operating loss carryforwards of approximately $4,500,000 which may be carried forward indefinitely. 50 ANALOGIC CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 12. Quarterly results of operations (unaudited): The following is a summary of unaudited quarterly results of operations for the years ended July 31, 1996 and 1995. Total Net Earnings revenues income per share 1996 quarters First $ 46,478,000 $ 1,359,000 $ .11 Second 53,146,000 2,000,000 .16 Third 60,486,000 3,762,000 .30 Fourth 70,350,000 5,944,000 .47 Total $230,460,000 $ 13,065,000 $ 1.04 1995 quarters First $ 50,931,000 $ 3,474,000 $ .28 Second 52,537,000 3,132,000 .25 Third 49,104,000 1,866,000 .15 Fourth 56,255,000 4,234,000 .34 Total $208,827,000 $ 12,706,000 $1.02 13. Transactions with major customers and industries: One export customer accounted for approximately $30,000,000 or 14%, $27,700,000 or 14% and $25,700,000 or 14% of total product, service, engineering and licensing revenue in 1996, 1995 and 1994, respectively. Of the total product, service, engineering and licensing revenue, one domestic customer accounted for approximately $18,800,000 or 9%, $20,100,000 or 10% and $23,700,000 or 13% in 1996, 1995 and 1994, respectively. The Company's ten largest customers accounted for approximately 57% of product, service, engineering, and licensing revenue during fiscal 1996. Medical Technology Products, consisting primarily of electronic subsystems for medical imaging equipment, accounted for approximately 71% of product, service, engineering, and licensing revenue in fiscal 1996. 51 ANALOGIC CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 14. Supplemental disclosure of cash flow information: During fiscal years 1996, 1995 and 1994, interest paid amounted to $970,000, $1,371,000 and $1,039,000, respectively. Income taxes paid during fiscal years 1996, 1995 and 1994 amounted to $3,040,000, $2,802,000 and $3,763,000, respectively. 15. Fair value of financial instruments: The carrying amounts of cash, cash equivalents, receivables, mortgages and other notes payable approximate fair value. The Company believes similar terms for mortgage and other notes payable would be attainable. The fair value of marketable securities are estimated based on quoted market prices for these securities. 16. Foreign Operations Financial information relating to the Company's foreign and domestic operations for fiscal years 1996, 1995, and 1994 are as follows: FY 1996 Foreign Domestic Total Revenue $26,377,000 $204,083,000 $230,460,000 Income (loss) from operations (3,791,000) 20,772,000 16,981,000 Identifiable assets 23,891,000 241,271,000 265,162,000 FY 1995 Revenue $31,522,000 $177,305,000 $208,827,000 Income (loss) from operations (1,051,000) 16,206,000 15,155,000 Identifiable assets 29,313,000 230,885,000 260,198,000 FY 1994 Revenue $42,231,000 $151,514,000 $193,745,000 Income from operations 2,254,000 15,951,000 18,205,000 Identifiable assets 32,917,000 206,703,000 239,620,000 52 ANALOGIC CORPORATION AND SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Column A Column B Column C Column D Column E Column F Additions charged to Additions Balance at profit and charged Deductions Balance beginning loss or to other from at end Description of period income accounts reserves Recoveries of period Year ended July 31, 1996: Allowance for doubtful accounts $1,361,000 $185,000 ($120,000) $1,426,000 Deferred tax valuation allowance 1,491,000 3,720,000 (980,000) 4,231,000 Year ended July 31, 1995: Allowance for doubtful accounts $1,339,000 $188,000 ($166,000) $1,361,000 Deferred tax valuation allowance 1,384,000 107,000 1,491,000 Year ended July 31, 1994: Allowance for doubtful accounts $1,518,000 $65,000 ($244,000) $1,339,000 Deferred tax valuation allowance 1,350,000 34,000 1,384,000 53 INDEX TO EXHIBITS TITLE INCORPORATED BY REFERENCE TO 3.1 Restated Articles of Exhibit 3.1 to the Company's Organization, as Amended Annual Report on Form 10-K for March 15, 1988 the fiscal year ended July 31, 1988 3.2 By-laws, as amended January Exhibit 3.2 to the Company's 27, 1988 Annual Report on Form 10-K for the fiscal year ended July 31, 1988 10.1 Lease dated March 5, 1976 Exhibit 6(e) to the Company's from Bernard M. Gordon to Registration Statement on Form Analogic S-14 (File No. 2-61959) 10.2 Amendment of Lease dated Exhibit to the Company's Report May 1, 1977 between Bernard on Form 8-K dated May 1, 1977 M. Gordon and Analogic 10.3 Lease dated January 16, 1976 Exhibit to the Company's Annual from Bernard M. Gordon on Data Report on Form 10-K for the fiscal Precision Corporation and year ended July 31, 1977 related Assignment of Lease dated October 31, 1979 from Data Precision Corporation to Analogic 10.4(a)Lease dated October 31, 1977 Exhibit 6(d) to the Company's from Audubon Realty, Ltd. Registration Statement on Form to Data Precision Corporation S-14 (File No. 2-61959) and related letter agreement dated January 18, 1978 (b)Amendment of Lease dated Exhibit I to the Company's Annual June 19, 1979 between Audubon Report on Form 10-K for the fiscal Realty, Ltd. and Analogic year ended July 31, 1982 (c)Third Amendment of Lease Exhibit to the Company's Annual dated August 2, 1982 Report on Form 10-K for the fiscal year ended July 31, 1982 (d) Fourth Amendment of Lease Exhibit 19.1 to Quarterly Report on dated December 31, 1982 Form 10-Q for the three months ended January 31, 1983 10.5(a)Lease dated March 16, 1981 Exhibit II to the Company's from Audubon Realty Ltd. to Quarterly Report on Form 10-Q Analogic for the three months ended April 30, 1981 (b) Amendment of Lease dated Exhibit to the Company's Annual October 31, 1984 Report on form 10-K for the fiscal year ended July 31, 1985 10.6 Land Disposition Agreement Exhibit to the Company's Annual by and between City of Report on Form 10-K for the fiscal Peabody Community Development year ended July 31, 1981 Authority and Analogic Corporation 10.7 Loan Agreement among the City Exhibit to the Company's Annual of Peabody, its Community Report on Form 10-k for the fiscal Development Authority, and year ended July 31, 1981 Analogic Corporation 54 10.8 Amendments to Urban Development Exhibit 10.13 to the Company's Action Grant Agreement dated Annual Report on Form 10-K for the August 28, 1986 and September fiscal year ended July 31, 1986 30, 1986 10.9 Promissory Note of Analogic Exhibit to the Company's Annual payable to Peabody Community Report on Form 10-K for the fiscal Development Authority year ended July 31, 1981 10.10(a)Stockholder Agreement as of Exhibits to the Company's Report on July 9, 1986 by and among Form 8-K dated July 31, 1986 Siemens AG, SCC, and Analogic including the following exhibits thereto (b) Development Agreement dated as of July 28, 1986 between " Siemens AG and Medical Electronics Laboratories, Inc. (c) Manufacturing Agreement dated as of July 28, 1986 between " Analogic and Medical Electronics Laboratories, Inc. (d) License Agreement dated as of July 28, 1986 between Analogic " and Medical Electronics Laboratories, Inc. (e) License Agreement I dated as Exhibits to the Company's Report of July 28, 1986 between on Form 8-K dated July 31, 1986 Siemens AG and Medical Electronics Laboratories, Inc. (f) License Agreement II dated as of July 28, 1986 between " Siemens AG and Medical Electronics Laboratories, Inc. (g) Sublease dated as of July 28, 1986 between Analogic as sublessor and Medical " Electronics Laboratories, Inc. as sublessee 10.11 Stock Purchase Agreement as Exhibit 10.11 to the Company's of March 11, 1988 by and Annual Report on Form 10-K for among Siemens AG, SCC, SMS, fiscal year ended July 31, 1988 MEL, and Analogic 10.12(a)Anamass Partnership Agree- Exhibit 10.12(a) to the Company's ment dated as of July 5, Annual Report on Form 10-K for 1988 between Ana/dventure fiscal year ended July 31, 1988 Corporation and Massapea, Inc. (b) Ground Lease Agreement dated Exhibit 10.12(b) to the Company's July 5, 1988 between Analogic Annual Report on Form 10-K for and Anamass Partnership fiscal year ended July 31, 1988 (c) Equity Infusion Agreement Exhibit 10.12(c) to the Quarterly Report on Form 10-Q for the three months ended January 31, 1991 (d) Resolution Agreement dated Exhibit 10.12(d) to the Company's July 31, 1991 and ratified Annual Report on Form 10-K for the on August 8, 1991 fiscal year ended July 31, 1987 55 10.13 Key Employee Stock Option Exhibit 10.7 to the Company's Plan dated April 21, 1978 Annual Report on Form 10-K for the as amended and restated fiscal year ended July 31, 1987 December 4, 1981 and further amended on October 9, 1984 and January 28, 1987 10.14 Key Employee Stock Option Exhibit 10.8 to the Company's Plan dated August 8, 1980 Annual Report on Form 10-K for the as amended and restated fiscal year ended July 31, 1987 December 4, 1981 and further amended on October 9, 1984 and January 28, 1987 10.15(a)Analogic Corporation Profit Exhibit 6(c) to the Company's Sharing Plan dated July 26, Registration Statement on Form 1977 S-14 (File No. 2-61959) (b) Amendments 2,3,4 and 5 to Exhibit 10.10(b) to the Company's said Profit Sharing Plan Annual Report on Form 10-K for the fiscal year ended July 31, 1980 (c) Restated Analogic Corporation Exhibit 10.9(c) to the Company's Profit Sharing Plan dated Annual Report on Form 10-k for the July 31, 1985 and Amendment fiscal year ended July 31, 1985 No. 1 thereto dated August 20, 1985 10.16 Key Employee Stock Bonus Plan Exhibit A to definitive proxy dated March 14, 1983 as statement for the Company's amended on January 27, 1988 Special Meeting in lieu of Annual Meeting of Stockholders held January 25, 1984 10.17 Key Employee Incentive Stock Exhibit 10.15 to the Company's Option Plan dated March 14, Annual Report on Form 10-K for 1983, as amended and the fiscal year ended July 31, restated on January 28, 1987 1987 10.18 1985 Non-Qualified Stock Exhibit 10.19 to the Company's Option Plan dated May 13, Annual Report on Form 10-K for the 1985 fiscal year ended July 31, 1985 10.19 Employee Qualified Stock Exhibit G to Company's definitive Purchase Plan dated proxy statement dated December 9, January 22, 1986 1985 for the Company's Special Meeting in lieu of Annual Meeting of Stockholders held January 22, 1986 10.20 Proposed 1988 Non-Qualified Exhibit 10.20 to the Company's Stock Option Plan for Non- Annual Report on Form 10-K for the Employee Directors fiscal year ended July 31, 1988 10.21 Form of Indemnification Exhibit 10.19 to the Company's contract Annual Report on Form 10-K for the fiscal year ended July 31, 1987 10.22 Agreement and Plan Merger Exhibit 10.22 to the Company's Between SKY COMPUTERS, Inc. Annual Report on Form 10-K for the and Analogic Corporation fiscal year ended July 31, 1992 56 10.23(a)Agreement between B&K Medical Exhibits to the Company's Report Holding A/S and Analogic on Form 8-K dated December 18, 1992 Corporation dated October 20, 1992 (b) Addendum dated December 11, 1992 to Agreement between B&K " Medical Holding A/S and Analogic Corporation dated October 20, 1992 (c) Shareholders Agreement between B&K Medical Holding A/S and " Analogic Corporation dated December 11, 1992 10.24 Key Employee Incentive Stock Exhibit A to the Company's Option Plan dated June 11, definitive Proxy Statement 1993 dated December 1, 1993 for the Company's Annual Meeting of Stockholders held January 21, 1994 57 EXHIBITS TITLE 21. List of Subsidiaries 23. Consent of Coopers & Lybrand, L.L.P. 27. Financial Data Schedule 58 EXHIBIT 21 JURISDICTION OF NAME INCORPORATION Analogic Limited Massachusetts Analogic Foreign Sales Corporation Virgin Islands Analogic Securities Corporation Massachusetts Anadventure II Corporation Massachusetts Anadventure Delaware Corporation Delaware Ana/dventure Corporation Massachusetts B&K Ultrasound Systems A/S Denmark Camtronics Foreign Sales Corporation Virgin Islands Camtronics, Ltd. Wisconsin SKY COMPUTERS, Incorporated Massachusetts SKY Limited England 59 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the registration statement of Analogic Corporation on Form S-3 (File Nos. 2-96488, 33-1089 and 33-1463) and Form S-8 (File Nos. 2-95091, 33-5913, 33-6835, 33-53381 and 33-27372) of our report dated August 30, 1996 on our audits of the consolidated financial statements and financial statement schedule of Analogic Corporation at July 31, 1996 and 1995, and for the years ended July 31, 1996, 1995, and 1994, which report is included in the Annual Report on Form 10-K. COOPERS & LYBRAND L.L.P. October 7, 1996
EX-27 2 FINANCIAL DATA SCHEDULE
5 The schedule contains summary fiancial information extracted from the Company's balance sheets and consolidated statements of income and is qualified in its entirety by reference to such financial statements. 1000 YEAR JUL-31-1996 AUG-01-1995 JUL-31-1996 18040 82509 48241 1426 50232 202012 132806 85050 265162 33497 0 0 0 688 211112 265162 213781 230460 133105 138732 73915 0 832 16160 4241 13065 0 0 0 13065 1.04 1.04
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