8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): June 4, 2018

 

 

Analogic Corporation

(Exact name of registrant as specified in its charter)

 

 

 

Massachusetts   0-6715   04-2454372

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

 

8 Centennial Drive, Peabody,

Massachusetts

  01960
(Address of principal executive offices)   Zip Code)

Registrant’s telephone number, including area code: 978-326-4000

Not Applicable

Former name or former address, if changed since last report

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 


Item 2.02 Results of Operations and Financial Condition

On June 4, 2018, Analogic Corporation (the “Registrant”) announced its financial results for the fiscal quarter ended April 30, 2018. The full text of the press release issued in connection with the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K.

The information in this Item 2.02 and the Exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as expressly set forth by specific reference in such a filing.

 

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

 

Exhibit
No.
  

Description

99.1    Press Release dated June 4, 2018


Exhibit Index

 

Exhibit
No.
  

Description

99.1    Press Release dated June 4, 2018


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 hereunto duly authorized.

 

  Analogic Corporation
June 4, 2018   By:  

/s/ Michael Bourque

  Name:   Michael Bourque
  Title:  

Senior Vice President, Chief Financial

Officer, and Treasurer

EX-99.1

Exhibit 99.1

 

LOGO

 

LOGO

FOR IMMEDIATE WORLDWIDE RELEASE

For Further Information:

Investor and Financial Media Contact:

Mark Namaroff

Senior Director of Investor Relations and Corporate Communications

(978) 326-4058

investorrelations@analogic.com

Analogic Announces Results for the Third Quarter Ended April 30, 2018

Special Shareholder Meeting To Approve Altaris Transaction Scheduled for June 21, 2018

PEABODY, Mass. (June 4, 2018) - Analogic Corporation (Nasdaq:ALOG), enabling the world’s medical imaging and aviation security technology, today announced results for its third quarter ended April 30, 2018.    

Highlights during the third quarter included:

 

    Revenue of $120 million with gross margin of 44%

 

    GAAP operating margin of 6%; Non-GAAP operating margin of 13%

 

    GAAP diluted EPS of $0.56; Non-GAAP diluted EPS of $1.08

 

    Operating cash flow of $22 million

 

    Signed merger agreement to be acquired by affiliate of Altaris Capital Partners

Revenue for the third quarter of fiscal 2018 was $120.0 million, a decrease of 2% compared with revenue of $122.2 million in the third quarter of fiscal 2017. GAAP net income for the third quarter of fiscal 2018 was $7.1 million, or $0.56 per diluted share, compared with a net loss of $(59.7) million, or $(4.78) per diluted share, in the third quarter of fiscal 2017. Included in GAAP net income and diluted EPS for the third quarter of fiscal 2017 were impairment and restructuring related charges totaling $75.2 million, or $5.40 per diluted share, primarily due to the Ultrasound business restructuring initiative and the 2017 restructuring plan.

Non-GAAP net income for the third quarter of fiscal 2018 was $13.6 million, or $1.08 per diluted share, compared with $10.0 million, or $0.79 per diluted share, in the prior year’s third quarter. A reconciliation of GAAP to non-GAAP results is included as an attachment to this press release.

 

Analogic Corporation         8 Centennial Drive, Peabody, MA 01960         978-326-4000         www.analogic.com


For the first nine months of fiscal 2018, revenue totaled $356.0 million, down 5% from the same period in the prior fiscal year. Fiscal year-to-date GAAP net income was $19.3 million, or $1.53 per diluted share, compared with a net loss of $(49.6) million, or $(3.98) per diluted share, from the same period in 2017. Included in GAAP net income and diluted EPS for the first nine months of 2018 is a provisional $5.8 million income tax expense, or $0.46 per diluted share, for the one-time transition tax associated with the Tax Cuts and Jobs Act of 2017 that was signed into law in late 2017 in addition to the $2.4 million of non-cash inventory impairment charges described above. Included in GAAP net income and EPS for the first nine months of fiscal 2017 were impairment and restructuring related charges of $75.7 million, or $5.43 per diluted share, primarily due to our Ultrasound business restructuring initiative, the 2017 restructuring plan, and the Oncura contingent consideration adjustment.

Year-to-date non-GAAP net income was $38.9 million, or $3.08 per diluted share, compared with $27.9 million, or $2.20 per diluted share, in the same period last year. A reconciliation of GAAP to non-GAAP results is included as an attachment to this press release.

Fred Parks, president and CEO, commented, “Our preparations to complete the previously announced transaction with Altaris Capital Partners are on track. We look forward to providing what we believe is the most attractive combination of value and certainty to shareholders upon the close of the transaction, and continuing to deliver innovative technology to our customers.”

Segment Revenues for the Third Quarter of Fiscal 2018

Medical Imaging segment revenue was $61.4 million for the third quarter of fiscal 2018, down 12% from revenue of $69.5 million in the same period of fiscal 2017, primarily due to lower sales in CT. Lower sales in MR and mammography were offset by favorability in Motion Controls.

Ultrasound segment revenue was $42.2 million for the third quarter of fiscal 2018, up 21% from revenue of $34.8 million in the same period of fiscal 2017, due to continued strong sales growth in North America and Europe. Revenue growth was partially offset by the comparative lower revenue from discontinued system sales.

Security and Detection segment revenue was $16.4 million for the third quarter of fiscal 2018, down 8% from revenue of $17.9 million in the same period of fiscal 2017, mainly driven by lower shipments of airport checked baggage systems.

Conference Call Details

The Company does not plan to host a conference call to review the results of the quarter.

Use of Non-GAAP Financial Measures

We supplement our GAAP financial reporting with certain non-GAAP financial measures, including non-GAAP operating income, non-GAAP operating margin, non-GAAP other income and expense, non-GAAP net income, non-GAAP effective tax rate and non-GAAP diluted earnings per share. These measures are not presented in accordance with, nor are they a substitute for, U.S. generally accepted accounting principles, or GAAP. In addition, these measures may be different from non-GAAP measures used by other companies, limiting their usefulness for comparison purposes. The non-GAAP financial measures should not be considered in isolation from measures of financial performance prepared in accordance with GAAP. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. We have included at the end of this document a reconciliation of each historical non-GAAP financial measure used in this document to the most directly comparable GAAP financial measure.

 

Analogic Corporation         8 Centennial Drive, Peabody, MA 01960         978-326-4000         www.analogic.com


We utilize a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of our business, in making operating decisions, in forecasting and planning for future periods, and in determining payments under our compensation programs. We also believe that non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our operating results and in comparing financial results across accounting periods and to those of other companies.

Forward-Looking Statements

Any statements about future expectations, plans, and prospects for the Company, including statements containing the words “believes,” “anticipates,” “plans,” “expects,” and similar expressions, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including risks relating to product development and commercialization, limited demand for the Company’s products, limited number of customers, risks associated with competition, uncertainties associated with regulatory agency approvals, competitive pricing pressures, downturns in the economy, the risk of potential intellectual property litigation, acquisition related risks, and other factors discussed in our most recent quarterly and annual reports filed with the Securities and Exchange Commission. In addition, the forward-looking statements included in this presentation represent the Company’s views as of the date of this document. While the Company anticipates that subsequent events and developments will cause the Company’s views to change, the Company specifically disclaims any obligation to update these forward-looking statements. These forward-looking statements should not be relied upon as representing the Company’s views as of any later date.

About Analogic – Celebrating 50 Years of Imaging Innovation

Analogic (Nasdaq:ALOG) provides leading-edge healthcare and security technology solutions to advance the practice of medicine and save lives. We are recognized around the world for advanced imaging and real-time guidance technologies used for disease diagnosis and treatment as well as for automated threat detection. Our market-leading ultrasound systems, led by our flagship BK Ultrasound brand, used in procedure-driven markets such as urology, surgery, and point-of-care, are sold to clinical practitioners around the world. Our advanced imaging technologies are also used in computed tomography (CT), magnetic resonance imaging (MRI), and digital mammography systems, as well as automated threat detection systems for aviation security. Analogic is headquartered just north of Boston, Massachusetts. For more information, visit www.analogic.com.

Analogic and the globe logo are registered trademarks of Analogic Corporation.

 

Analogic Corporation         8 Centennial Drive, Peabody, MA 01960         978-326-4000         www.analogic.com


CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

     Three Months Ended     Nine Months Ended  
(In thousands, except per share data)    April 30, 2018     April 30, 2017     April 30, 2018      April 30, 2017  

Net revenue:

         

Product

     117,156     $ 120,791     $ 349,599      $ 371,373  

Engineering

     2,815       1,371     $ 6,419        3,448  
  

 

 

   

 

 

   

 

 

    

 

 

 

Total net revenue

     119,971       122,162       356,018        374,821  
  

 

 

   

 

 

   

 

 

    

 

 

 

Cost of sales:

         

Product

     64,576       68,667       192,904        210,149  

Engineering

     2,466       1,334       5,554        3,180  
  

 

 

   

 

 

   

 

 

    

 

 

 

Total cost of sales

     67,042       70,001       198,458        213,329  
  

 

 

   

 

 

   

 

 

    

 

 

 

Gross profit

     52,929       52,161       157,560        161,492  
  

 

 

   

 

 

   

 

 

    

 

 

 

Operating expenses:

         

Research and product development

     15,285       14,900       45,927        46,962  

Selling and marketing

     13,530       16,356       39,131        51,894  

General and administrative

     16,824       10,377       40,864        27,978  

Restructuring

     (21     2,080       710        2,379  

Asset impairment charges

     —         73,051       —          83,474  
  

 

 

   

 

 

   

 

 

    

 

 

 

Total operating expenses

     45,618       116,764       126,632        212,687  
  

 

 

   

 

 

   

 

 

    

 

 

 

Income from operations

     7,311       (64,603     30,928        (51,195

Total other income (expense), net

     328       57       1,504        (357
  

 

 

   

 

 

   

 

 

    

 

 

 

Income before income taxes

     7,639       (64,546     32,432        (51,552

Provision for income taxes

     529       (4,882     13,115        (1,934
  

 

 

   

 

 

   

 

 

    

 

 

 

Net income (loss)

   $ 7,110     $ (59,664   $ 19,317      $ (49,618
  

 

 

   

 

 

   

 

 

    

 

 

 

Net income per share

         

Basic

   $ 0.57     $ (4.78   $ 1.55      $ (3.98

Diluted

   $ 0.56     $ (4.78   $ 1.53      $ (3.98

Dividends declared and paid per share

   $ 0.10     $ 0.10     $ 0.30      $ 0.30  

Weighted-average shares outstanding:

         

Basic

     12,503       12,486       12,489        12,457  

Diluted

     12,633       12,486       12,617        12,457  

 

Analogic Corporation         8 Centennial Drive, Peabody, MA 01960         978-326-4000         www.analogic.com


CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

 

     April 30, 2018      July 31, 2017  

Assets:

     

Cash and cash equivalents

   $ 123,939    $ 129,298  

Short-term marketable securities

     62,587        18,797  

Accounts receivable, net

     84,865        77,587  

Inventory

     132,240        130,575  

Other current assets

     11,400        14,448  
  

 

 

    

 

 

 

Total current assets

     415,031        370,705  

Long-term marketable securities

     35,765        26,171  

Property, plant, and equipment, net

     97,076        102,676  

Intangible assets and goodwill, net

     24,354        28,269  

Other non-current assets

     7,843        10,262  
  

 

 

    

 

 

 

Total Assets

   $ 580,069      $ 538,083  
  

 

 

    

 

 

 

Liabilities and Stockholders’ Equity:

     

Accounts payable

   $ 37,738      $ 27,179  

Accrued liabilities

     33,168        31,619  

Other current liabilities

     9,674        8,312  
  

 

 

    

 

 

 

Total current liabilities

     80,580        67,110  

Long-term liabilities

     16,301        10,479  

Stockholders’ equity

     483,188        460,494  
  

 

 

    

 

 

 

Total Liabilities and Stockholders’ Equity

   $ 580,069      $ 538,083  
  

 

 

    

 

 

 

 

Analogic Corporation         8 Centennial Drive, Peabody, MA 01960         978-326-4000         www.analogic.com


NON-GAAP STATEMENTS OF OPERATIONS RECONCILIATION    

 

(In thousands, except per share data)    Three Months Ended     Nine Months Ended  
     April 30, 2018     April 30, 2017     April 30, 2018     April 30, 2017  

GAAP Income (Loss) From Operations

   $ 7,311     $ (64,603   $ 30,928     $ (51,195

Share-based compensation expense (Note 1)

     2,247       2,195       6,128       6,355  

Acquisition-related revenues and expenses (Note 2)

     1,413       (23     4,336       (3,876

Non-routine other legal costs (Note 3)

     4,071       8       4,725       24  

Restructuring (Note 4)

     (21     2,080       710       2,379  

Asset impairment charges (Note 5)

     —         73,051       —         83,474  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Income From Operations

   $ 15,020     $ 12,708     $ 46,827     $ 37,161  
  

 

 

   

 

 

   

 

 

   

 

 

 

Percentage of Total Net Revenue

     12.5     10.4     13.2     9.9

GAAP Other Income (Expense), net

   $ 328     $ 57     $ 1,504     $ (357

Acquisition-related revenues and expenses (Note 2)

     3       —         3       —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Other Income (Expense), net

   $ 331     $ 57     $ 1,507     $ (357
  

 

 

   

 

 

   

 

 

   

 

 

 

Percentage of Total Net Revenue

     0.3     0.0     0.4     -0.1

GAAP Tax Provision (Note 6)

   $ 529     $ (4,882   $ 13,115     $ (1,934

GAAP Tax Rate

     6.9     7.6     40.4     3.8

Non-GAAP Tax Provision (Note 6)

     1,758       2,803     $ 9,461     $ 8,877  

Non-GAAP Tax Rate

     11.5     22.0     19.6     24.1

GAAP Net Income (Loss)

   $ 7,110     $ (59,664   $ 19,317     $ (49,618

Share-based compensation expense (Note 1)

     1,683       1,453       5,061       4,310  

Acquisition-related revenues and expenses (Note 2)

     1,159       338       3,537       (1,410

Non-routine other legal costs (Note 3)

     4,184       433       4,650       443  

Restructuring (Note 4)

     (15     1,367       502       1,557  

Asset impairment charges (Note 5)

     —         —         13       —    

Valuation Allowance Tax Effect (Note 6)

     156       —         (5     —    

Transition Tax Impact (Note 6)

     (684     66,035       5,798       72,645  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Net Income

   $ 13,593     $ 9,962     $ 38,873     $ 27,927  
  

 

 

   

 

 

   

 

 

   

 

 

 

Percentage of Total Net Revenue

     11.3     8     10.9     7.5

GAAP Diluted EPS

   $ 0.56     $ (4.78   $ 1.53     $ (3.98

Effect of non-GAAP adjustments

   $ 0.52     $ 5.57       1.55       6.19  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Diluted EPS

   $ 1.08     $ 0.79     $ 3.08     $ 2.20  
  

 

 

   

 

 

   

 

 

   

 

 

 

Note 1: Exclusion of variable share-based compensation expense allows consistency of operating results between periods and other companies.     

Note 2: During fiscal years 2017 and 2018, we incurred acquisition costs related to the Ultrasonix Medical Corporation, PocketSonics, Inc., and Oncura Partners Diagnostics, LLC acquisitions, which we closed on March 2, 2013, September 20, 2013, and January 8, 2016, respectively. Costs included the amortization of intangibles of $1.4 million and $4.3 million for the three and nine months ended April 30, 2018, respectively. Costs also included in the adjustment for a decrease in the contingent consideration accrual of $2.1 million and $10.2 million for the three and nine months ended April 30, 2017, respectively.    

Note 3: During the three and six months ended January 31, 2018, we incurred $4.1 million and $4.7 million, respectively, of pre-tax strategic alternative related costs. Additionally, during the three and nine months ended April 30, 2018, we incurred $0 of pre-tax inquiry-related costs, associated with the BK matter, as initially disclosed in our annual report on Form 10-K for the fiscal year ended July 31, 2011. This matter relates to transactions we identified involving our Danish subsidiary, BK Medical, and certain of its foreign distributors, regarding compliance with the law.     

Note 4: During the three and nine months ended April 30, 2018, we incurred pre-tax charges of ($21) thousand and $710 thousand, respectively, primarily due to facility exit costs associated with exiting the Vancouver facility.     

Note 5: As a result of continuing losses in the Oncura business and the related business outlook, the Company evaluated the net realizability of all of the related assets at December 31, 2016. As a result, the company recorded a pre-tax asset impairment charge of $73.1 million, primarily associated with the write-down of the Oncura goodwill to its estimated fair values.

Note 6: The quarter to date Q3 FY 2018 non-GAAP tax rate differs from the GAAP tax rate primarily due to the transition tax impact from the 2017 Tax Reform Bill, acquisition related adjustments and stock compensation expenses. The quarter to date Q3 FY 2018 non-GAAP tax rates differ from the GAAP tax rates primarily due to the transition tax impact from the 2017 Tax Reform Bill, acquisition related amortization expenses and stock compensation expenses.

 

Analogic Corporation         8 Centennial Drive, Peabody, MA 01960         978-326-4000         www.analogic.com