-----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, M1ltMcm5KGI0FQXjMT+yVkgDU0dMkhXMvhJIujKI3qyK2tOZNqcObI7irbTOO2Q+ 5W3REzcGzrQ2LT83Bp0RBw== 0000006284-98-000004.txt : 19980311 0000006284-98-000004.hdr.sgml : 19980311 ACCESSION NUMBER: 0000006284-98-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980131 FILED AS OF DATE: 19980310 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-Q SEC ACT: SEC FILE NUMBER: 000-06715 FILM NUMBER: 98561000 BUSINESS ADDRESS: STREET 1: 8 CENTENNIAL DR CITY: PEABODY STATE: MA ZIP: 01960 BUSINESS PHONE: 5089773000 10-Q 1 FORM 10-Q FOR THE PERIOD ENDED JANUARY 31, 1998 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended January 31, 1998 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 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 (I.R.S. Employer incorporation or organization) Identification No.) 8 Centennial Drive, Peabody, Massachusetts 01960 (Address of principal executive offices) (Zip Code) (978) 977-3000 (Registrant's telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report.) 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 The number of shares of Common Stock outstanding at January 31, 1998 was 12,603,337. 2 ANALOGIC CORPORATION AND SUBSIDIARIES INDEX Page No. Part I Financial Information Consolidated Condensed Balance Sheets January 31, 1998 and July 31, 1997 3 - 4 Consolidated Condensed Statements of Income Three and Six Months Ended January 31, 1998 and 1997 5 Consolidated Condensed Statements of Cash Flows Six Months Ended January 31, 1998 and 1997 6 - 7 Notes to Consolidated Condensed Financial Statements 8 - 9 Management's Discussion and Analysis of Financial Condition and Results of Operations 10 - 13 Part II Other Information 14 - 15 Index to Exhibits 14 3 PART I FINANCIAL INFORMATION ANALOGIC CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (000 omitted)
January 31, July 31,* 1998 1997 ASSETS (Unaudited) Current assets: Cash and cash equivalents $ 26,069 $ 24,954 Marketable securities, at market 89,542 89,496 Accounts and notes receivable, net 53,011 52,638 Inventories 55,047 47,800 Prepaid expenses and other current assets 6,788 6,714 Total current assets 230,457 221,602 Property, plant and equipment, net 50,212 48,247 Investments in and advances to affiliated companies 6,247 7,095 Excess of cost over acquired net assets, net of accumulated amortization 171 Other assets, including unamortized software costs (1998, $4,030; 1997, $4,437) 4,882 5,244 TOTAL ASSETS $291,798 $282,359
4 PART I FINANCIAL INFORMATION ANALOGIC CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (CONTINUED) (000 omitted)
January 31, July 31,* 1998 1997 (Unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Mortgage and other notes payable $ 347 $ 344 Obligations under capital leases 527 497 Accounts payable, trade 14,450 13,185 Accrued employee compensation and benefits 10,448 11,654 Accrued expenses 7,416 6,343 Accrued income taxes 2,897 3,449 Accrued dividends payable 756 Total current liabilities 36,841 35,472 Long-term debt: Mortgage and other notes payable 6,083 6,333 Obligations under capital leases 2,010 2,281 Deferred income taxes 3,889 3,854 Minority interest in subsidiaries 4,690 5,538 Excess of acquired net assets over cost, net of accumulated amortization 386 665 Stockholders' equity: Common stock, $.05 par 692 692 Capital in excess of par value 22,866 22,916 Retained earnings 229,273 220,343 Unrealized holding gains and losses 2,074 1,713 Cumulative translation adjustments (1,740) (1,617) Treasury stock, at cost (13,981) (14,121) Unearned compensation (1,285) (1,710) Stockholders' Equity 237,899 228,216 TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $291,798 $282,359 * See note 2 of notes to consolidated condensed financial statements for further information. The accompanying notes are an integral part of these financial statements.
5 ANALOGIC CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED) (000 omitted, except per share data)
Three Months Ended Six Months Ended January 31, January 31, Revenues: 1998 1997 1998 1997 Product and service, net $63,463 $54,262 $117,986 $106,646 Engineering and licensing 4,260 3,843 8,423 6,205 Other operating revenue 2,475 2,241 6,210 5,645 Interest and dividend income 1,450 1,385 2,958 2,708 Total revenues 71,648 61,731 135,577 121,204 Costs and expenses: Cost of sales: Product and service 36,439 30,950 68,340 61,879 Engineering and licensing 3,088 2,586 7,453 4,485 Other operating expenses 1,410 1,369 3,135 2,997 General and administrative 5,151 4,475 10,057 8,757 Selling 6,497 6,461 12,492 12,558 Research and product development 9,267 9,173 17,014 17,606 Interest expense 120 132 228 347 Gain on foreign exchange (53) (187) (121) (338) Amortization of excess of acquired net assets over cost (117) (161) (278) (322) Amortization of excess of cost over acquired net assets (21) 66 132 Total cost of sales and expenses 61,781 54,864 118,320 108,101 Income from operations 9,867 6,867 17,257 13,103 Gain on sale of marketable securities 997 Equity in net loss of unconsolidated affiliates (686) (338) (1,661) (603) Impairment of investment (400) Income before income taxes and minority interest 9,181 6,529 16,193 12,500 Provision for income taxes 3,148 1,921 5,518 3,887 Minority interest in net income of consolidated subsidiary 352 29 360 100 Net income $ 5,681 $ 4,579 $ 10,315 $ 8,513 Shares outstanding - basic 12,598 12,511 12,598 12,505 Shares outstanding - diluted 12,760 12,687 12,770 12,671 Earnings per share - basic $ 0.45 $ 0.37 $ 0.82 $ 0.68 Earnings per share - diluted $ 0.45 $ 0.36 $ 0.81 $ 0.67 Dividends declared per common share $ 0.06 $ 0.05 $ 0.11 $ 0.10 The accompanying notes are an integral part of these financial statements.
6 ANALOGIC CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED) (000 omitted)
Six Months Ended January 31, 1998 1997 CASH FLOWS FROM OPERATION ACTIVITIES: Net income $10,315 $ 8,513 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 4,217 3,037 Amortization of capitalized software 1,196 1,558 Amortization of excess of cost over acquired net assets 132 Amortization of excess of acquired net assets over cost (278) (322) Minority interest in net profit of consolidated subsidiary 360 100 Compensation from stock grants 246 301 Gain on sale of equipment (4) (45) Gain on sale of marketable securities (997) Excess of equity in net losses of unconsolidated affiliates 1,661 603 Impairment of investment 400 Changes in operating assets and liabilities Decrease (increase) in assets: Accounts and notes receivable (373) 4,604 Inventories (7,247) (1,628) Prepaid expenses and other current assets (74) (29) Other assets (18) 154 Increase (decrease) in liabilities: Accounts payable, trade 1,265 (1,131) Accrued expenses and other current liabilities (1,123) (854) Accrued and deferred income taxes (517) (694) Accrued dividends payable 756 TOTAL ADJUSTMENTS (530) 5,786 NET CASH PROVIDED BY OPERATING ACTIVITIES 9,785 14,299
7 ANALOGIC CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (CONTINUED) (UNAUDITED) (000 omitted)
Six Months Ended January 31, 1998 1997 CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property, plant and equipment (6,331) (2,988) Capitalized software (789) (629) Purchases of marketable securities (14,980) (8,005) Maturities of marketable securities 15,295 6,077 Proceeds from sale of property, plant and equipment 153 47 Proceeds from sales of marketable securities 997 Investments in and advances to affiliated companies (1,240) NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES (6,895) (5,498) CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of overdraft facility (3,225) Payments on debt and capital lease obligations (487) (538) Purchase of common stock of majority owned subsidiary Issuance of common stock pursuant to stock options and employee stock purchase plan 220 575 Dividends declared to shareholders (1,385) (625) NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (1,652) (3,813) EFFECT OF EXCHANGE RATE CHANGES ON CASH (123) (1,364) NET INCREASE IN CASH AND CASH EQUIVALENTS 1,115 3,624 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 24,954 18,040 CASH AND CASH EQUIVALENTS, END OF PERIOD $26,069 $21,664 The accompanying notes are an integral part of these financial statements.
8 ANALOGIC CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 1. In the opinion of management, the accompanying unaudited consolidated condensed financial statements contain all adjustments (consisting solely of normal recurring adjustments) necessary to fairly present Analogic Corporation's financial position as of January 31, 1998 and July 31, 1997, the results of its operations for the three and six months ended January 31, 1998 and 1997 and statement of cash flows for the six months then ended. The results of the operations for the three and six months ended January 31, 1998 are not necessarily indicative of the results to be expected for the fiscal year ending July 31, 1998. The accounting policies followed by the Company are set forth in Note 1 to the Company's financial statements in its Annual Report on Form 10-K for the fiscal year ended July 31, 1997. 2. Financial statements, with the exception of the July 31, 1997 balance sheet, are unaudited and have not been examined by independent certified public accountants. The consolidated balance sheet as of July 31, 1997 contains data derived from audited financial statements. 3. The inventories as of January 31, 1998 were not based on a physical or perpetual inventory but were calculated on the basis of an estimated percentage of material used during the period. The components of inventory are estimated as follows:
January 31, July 31, 1998 1997 Raw materials $22,516,000 $19,166,000 Work-in-process 21,032,000 18,381,000 Finished goods 11,499,000 10,253,000 $55,047,000 $47,800,000
4. Total interest expense, amounted to $301,000 of which $73,000 was capitalized during the six months ended January 31, 1998. Interest paid amounted to $232,000 and $409,000 during the six months ended January 31, 1998 and 1997, respectively. 5. Income taxes paid during the six months ended January 31, 1998 and 1997 amounted to $5,277,000 and $4,616,000, respectively. 6. The Company declared a dividend of $.05 per common share on October 9, 1997, payable on November 6, 1997 to shareholders of record on October 23, 1997. On January 23, 1998, the Company declared a $.06 dividend per common share, payable on February 20, 1998 to shareholders of record on February 6, 1998. 9 ANALOGIC CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED) 7. In its fiscal quarter ended January 31, 1998, the Company adopted Statement of Financial Accounting Standards No. 128, "Earnings per Share," which modifies the calculation of earnings per share. Basic earnings per common share was calculated by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share was calculated by dividing net income by the sum of the weighted average number of common shares outstanding plus all additional common shares that would have been outstanding if potentially dilutive common shares had been issued. The following table indicates the number of shares utilized in the earnings per share calculations for the three and six month periods ending January 31, 1998 and 1997, respectively.
Three Months Ended Six Months Ended January 31, January 31, 1998 1997 1998 1997 Net Income $5,681,000 $4,579,000 $10,315,000 $8,513,000 Shares outstanding-basic 12,598,478 12,511,396 12,598,339 12,505,152 Effect of dilutive securities: Stock Options 161,659 175,825 171,887 165,423 Shares outstanding-diluted 12,760,137 12,687,221 12,770,226 12,670,575 Earnings per share-basic $ 0.45 $ 0.37 $ 0.82 $ 0.68 Earnings per share-diluted $ 0.45 $ 0.36 $ 0.81 $ 0.67
8. As a result of the Company adopting FASB No. 128, the Company's reported comparative earnings per share for fiscal year 1997 were restated. The effect of the accounting change is represented as follows.
Three Months Ended Six Months Ended January 31, 1997 January 31, 1997 Primary EPS as reported $ 0.36 $ 0.67 Effect of FASB No. 128 0.01 0.01 Basic EPS as restated $ 0.37 $ 0.68 Fully diluted - EPS $ 0.36 $ 0.67 Effect of FASB No. 128 - - Diluted EPS as restated $ 0.36 $ 0.67
9. Certain financial statement items in the prior periods have been reclassed to conform with the current period presentation. 10 ANALOGIC CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION The Company's balance sheet reflects a current ratio of 6.3 to 1 at January 31, 1998 and July 31, 1997. Cash, cash equivalents and marketable securities, along with accounts and notes receivable, constitute approximately 73% of current assets at January 31, 1998. 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 0.23 to 1 at January 31, 1998 and 0.24 to 1 at July 31, 1997. Capital expenditures totaled approximately $6,331,000 during the six months ended January 31, 1998. RESULTS OF OPERATIONS Six Months Fiscal 1998 (01/31/98) vs. Six Months Fiscal 1997 (01/31/97) Product, service, engineering and licensing revenues for the six months ended January 31, 1998 were $126,409,000 as compared to $112,851,000 for the same period last year, an increase of 12%. The increase of $13,558,000 was due to increased sales of Medical Technology Products of $11,780,000 (primarily due to sales of the new Computed Tomography (CT) Scanner and Ultrasound systems from the Company's Danish subsidiary, B-K), Industrial Technology Products of $1,231,000 (primarily due to increased demand of the Company's high frequency ATE boards), and Signal Processing Technology Products of $547,000. Other operating revenue of $6,210,000 and $5,645,000 represents revenue from the Hotel operation for the six months ending January 31, 1998 and 1997, respectively. The percentage of total cost of sales to total net sales for the six months of fiscal 1998 and fiscal 1997 were 60% and 59%, respectively. The increase was primarily due to the engineering portion of cost of sales reflecting higher than anticipated costs on engineering projects. Operating costs associated with the Hotel during the six months of fiscal 1998 and 1997 were $3,135,000 and $2,997,000, respectively. General and administrative and selling expenses increased by $1,234,000 primarily due to increases in the bad debt reserve and legal expenditures relating to patent filings. Research and product development expenses decreased $592,000 primarily due to lower amortization of capitalized computer software costs. Computer software costs of $789,000 and $629,000 were capitalized in the first six months of fiscal 1998 and 1997, respectively. Amortization of capitalized software amounted to $1,196,000 and $1,558,000 in the first six months of fiscal 1998 and 1997, respectively. 11 ANALOGIC CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Six Months Fiscal 1998 (01/31/98) vs. Six Months Fiscal 1997 (01/31/97) (continued) A gain on foreign exchange of $121,000 was realized during the first six months of fiscal year 1998 versus a gain of $338,000 for the same period last year. Minority interest in the net income of the Company's consolidated subsidiary, Camtronics, for the six months ended January 31, 1998 amounted to $360,000 compared to $100,000 for the six months ended January 31, 1997. The Company's share of losses of a privately held company amounted to $1,514,000 and $603,000 during the first six months of fiscal 1998 and 1997. During the first six months of fiscal 1998, the Company's investment in another privately held company was increased by $428,000, reflecting the Company's share of its equity. During the first six months of fiscal 1998, the Company's investment in Analogic Scientific was decreased by $575,000, reflecting the Company's share of Analogic Scientific's equity. During the first six months of fiscal 1998, the Company sold 140,560 common shares of a publicly traded company, resulting in a gain of $997,000. During the first six months of fiscal 1998, the Company recorded a reserve of $400,000, reflecting a partial impairment of its 19% investment in another privately held company. The effective tax rate for the first six months of fiscal 1998 and fiscal 1997 was 34% and 30%, respectively. The increase in the rate was primarily due to alternative minimum credit carryforwards utilized in fiscal 1997 not available in fiscal 1998; and no tax benefits applicable to equity in losses of unconsolidated subsidiaries were recorded in fiscal 1998. Net income for the six months ended January 31, 1998 was $10,315,000 as compared to net income of $8,513,000 for the six month period ended January 31, 1997. Basic per-share earnings, or net income divided by weighted average common shares outstanding, were $0.82, up from $0.68. Diluted per- share earnings, or net income divided by weighted average common shares and potential new shares from stock options increased 21% to $0.81 from $0.67. Prior periods per share amounts have been restated to reflect the adoption of FASB No. 128 (See Notes 7 & 8 of Notes to Consolidated Condensed Financial Statements). 12 ANALOGIC CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Second Quarter Fiscal 1998 (01/31/98) vs. Second Quarter Fiscal 1997 (01/31/97) Product, service, engineering and licensing revenues for the three months ended January 31, 1998 were $67,723,000 as compared to $58,105,000 for the same period last year, an increase of 17%. The increase of $9,618,000 was due to increased sales of Medical Technology Products of $9,290,000, (primarily due to sales of the Company's new CT Scanner), Industrial Technology Products of $932,000 (primarily due to increased demand of the Company's high frequency ATE boards), offset by decreased sales in Signal Processing Technology Products of $604,000. Other operating revenue of $2,475,000 and $2,241,000 represents revenue from the Hotel operation for the three months ending January 31, 1998 and 1997, respectively. The percentage of total cost of sales to total net sales for the second quarter of fiscal 1998 and fiscal 1997 was 58%. Operating costs associated with the Hotel during the second quarter of fiscal 1998 and 1997 were $1,410,000 and $1,369,000, respectively. General and administrative and selling expenses increased $712,000 primarily due to staffing in one of the Company's subsidiaries, legal expenditures relating to patent filings, increases to the bad debt reserve, and costs associated with our new manufacturing operation. Computer software costs of $403,000 and $263,000 were capitalized in the second quarter of fiscal 1998 and 1997, respectively. Amortization of capitalized software amounted to $591,000 and $782,000 in the second quarter of fiscal 1998 and 1997, respectively. A gain on foreign exchange of $53,000 was realized during the second quarter of fiscal 1998 vs. a gain of $187,000 for the same period last year. Minority interest in the net income of the Company's consolidated subsidiary, Camtronics, for the second quarter ended January 31, 1998 amounted to $352,000 compared to $29,000 for the second quarter ended January 31, 1997. The Company's share of losses of a privately held company amounted to $975,000 during the second quarter of fiscal 1998 and $338,000 during the second quarter of fiscal 1997. During the second quarter of fiscal 1998, the Company's investment in another privately held company was increased by $289,000, reflecting the Company's share of its equity. The effective tax rate for the second quarter of fiscal 1998 was 34% vs. 29% for the same period last year. The increase in the rate was primarily due to alternative minimum credit carryforwards utilized in fiscal 1997 not available in fiscal 1998; and no tax benefits applicable to equity in losses of unconsolidated subsidiaries in fiscal 1998. 13 ANALOGIC CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Second Quarter Fiscal 1998 (01/31/98) vs. Second Quarter Fiscal 1997 (01/31/97) (continued) Net income for the three months ended January 31, 1998 was $5,681,000, compared to net income of $4,579,000 for the three month period ended January 31, 1997. Basic per-share earnings, or net income divided by weighted average common shares outstanding, were $0.45, up from $0.37. Diluted per- share earnings, or net income divided by weighted average common shares and potential new shares from stock options increased 25% to $0.45 from $0.36. Prior periods per share amounts have been restated to reflect the adoption of FASB No. 128 (See Notes 7 & 8 of Notes to Consolidated Condensed Financial Statements). 14 ANALOGIC CORPORATION AND SUBSIDIARIES PART II - OTHER INFORMATION Item 6 - Exhibits and Reports on Form 8-K (a) Exhibits None (b) During the quarter ended January 31, 1998, the Company did not file any reports on Form 8-K. 15 ANALOGIC CORPORATION AND SUBSIDIARIES SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ANALOGIC CORPORATION Registrant Date March 9, 1998 /s/ Bernard M. Gordon Bernard M. Gordon Chairman of the Board Chief Executive Officer Date March 9, 1998 /s/ John A. Tarello John A. Tarello Senior Vice President Chief Accounting Officer EX-27 2 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial 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. 1,000 U.S. DOLLARS 6-MOS JUL-31-1998 AUG-01-1997 JAN-31-1998 1 26069 89542 55172 2161 55047 230457 142607 92395 291798 36841 0 0 0 692 237207 291798 126409 135577 75793 78928 39164 0 228 16193 5518 10315 0 0 0 10315 0.82 0.81
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