Basis of presentation

9 Months Ended

Apr. 30, 2012

Basis of presentation

1. Basis of presentation:

Company

Analogic Corporation (“Analogic” or the “Company”) provides advanced healthcare and security technology solutions to customers around the world. The Company provides advanced imaging systems and technology that enable computed tomography (“CT”), ultrasound, digital mammography, and magnetic resonance imaging (“MRI”) in medical applications, as well as automated threat detection for aviation security. The Company’s CT, MRI, digital mammography, and ultrasound transducer products are sold to original equipment manufacturers (“OEMs”). The Company’s B-K Medical branded ultrasound systems, used in procedure-driven markets such as urology, guided surgery, and anesthesia, are sold to clinical end users through the Company’s direct sales force. The Company’s top ten customers combined for approximately 72% and 62% of the Company’s total net revenue for the three months ended April 30, 2012 and 2011, respectively, and 67% and 64% of the Company’s total net revenue for the nine months ended April 30, 2012 and 2011, respectively. The Company had 4 customers, as set forth in the table below, which individually accounted for 10% or more of the Company’s net product and engineering revenue during the three or nine months ended April 30, 2012 or 2011.

	Three Months Ended April 30,						Nine Months Ended April 30,
	2012			2011			2012			2011
Koninklijke Philips Electronics N.V. (“Philips”)		16	%		12	%		16	%		12	%
L-3 Communications Corporation		11	%		(	*)		(	*)		(	*)
Toshiba Corporation		(	*)		(	*)		10	%		11	%
Siemens AG		11	%		10	%		11	%		(	*)

Note (*): Total net revenue was less than 10% in this period.

Philips accounted for 19% and 15% of net accounts receivable at April 30, 2012 and July 31, 2011, respectively. L-3 Communications accounted for 11% of net accounts receivable at April 30, 2012 and General Electric Corporation accounted for 12% of net accounts receivable at both April 30, 2012 and July 31, 2011.

The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly owned. Investments in companies in which ownership interests range from 10% to 50%, 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.

General

The unaudited condensed consolidated financial statements of the Company presented herein have been prepared pursuant to the rules of the United States Securities and Exchange Commission (the “SEC”) for quarterly reports on Form 10-Q and do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting solely of normal recurring adjustments) necessary for a fair statement of the results for all interim periods presented. The results of operations for the three and nine months ended April 30, 2012 are not necessarily indicative of the results to be expected for the fiscal year ending July 31, 2012 (“fiscal year 2012”), or any other interim period. These statements should be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended July 31, 2011 (“fiscal year 2011”) included in the Company’s Annual Report on Form 10-K as filed with the SEC on October 4, 2011. The accompanying unaudited Condensed Consolidated Balance Sheet as of July 31, 2011 contains data derived from audited financial statements, but does not include all disclosures required by GAAP.

Derivative Instruments and Hedging Activities

The Company recognizes all derivative instruments as either assets or liabilities at fair value in its consolidated balance sheets. Changes in the fair value of derivatives are recorded each period in current earnings or accumulated other comprehensive income (loss), depending on whether a derivative is designated as part of a hedge transaction and, if it is, the type of hedge transaction. The Company classifies the cash flows from these instruments in the same category as the cash flows from the hedged items. The Company does not enter into derivative transactions for trading or speculative purposes.

The Company assesses, both at inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting the changes in cash flows or fair values of the hedged items. The Company also assesses hedge ineffectiveness on a quarterly basis and records the gain or loss related to the ineffective portion to current earnings. If the Company determines that a forecasted transaction is no longer probable of occurring, it discontinues hedge accounting for the affected portion of the hedge instrument, and any related unrealized gain or loss on the contract is recognized in current earnings.

Reclassifications and Revisions to Prior Period Financial Statements

In the third quarter of fiscal year 2012, the Company identified certain amounts totaling $620 recorded within “Effect of exchange rate on cash” in its unaudited Condensed Consolidated Statements of Cash Flows for the first two quarters of fiscal year 2012 that should be classified primarily within cash flow from operating activities. The Company also identified certain amounts totaling $1,685 recorded within “Effect of exchange rate on cash” in its audited Consolidated Statements of Cash Flows of fiscal year 2011 and the related quarterly periods that should be classified primarily within cash flow from operating activities. The Company determined that this change in classification was not material to its audited Consolidated Statement of Cash Flows for fiscal year 2011, its unaudited Condensed Consolidated Statement of Cash Flows for each quarter in fiscal years 2012 and 2011. The Company corrected the unaudited Condensed Consolidated Statement of Cash Flows with the appropriate classification for the nine months ended April 30, 2012 and 2011 within this Form 10-Q. In future quarterly and annual filings, the Company will revise the amounts related to prior periods to correct for the identified errors, which will result in the following:

(i) increases in “Effect Of Exchange Rate Changes On Cash” and “Net Cash Used By Investing Activities” of $1,685 and $19, respectively, with a corresponding decrease in the “Net Cash Provided by Operating Activities” of $1,639 and a increase in “Net Cash Used For Financing Activities” of $26 in fiscal year 2011;

(ii) increase in “Effect Of Exchange Rate Changes On Cash” of $910 with a corresponding decrease in the “Net Cash Provided by Operating Activities” of $910 in the three months ended October 31, 2011;

(iii) increase in “Effect Of Exchange Rate Changes On Cash” of $620 with corresponding decreases in the “Net Cash Provided by Operating Activities” and “Net Cash Used For Financing Activities” of $654 and $34, respectively, in the six months ended January 31, 2012.