Analogic Corporation
Sep 24, 2009

Analogic Corporation Announces Results for the Fourth Quarter and Fiscal Year Ended July 31, 2009

Revenues Improve During the Quarter as Market Conditions Appear to be Stabilizing

PEABODY, Mass., Sept. 24, 2009 (GLOBE NEWSWIRE) -- Analogic Corporation (Nasdaq:ALOG), a leading designer and manufacturer of high-precision medical and security imaging equipment, today announced results for its fourth quarter and fiscal year ended July 31, 2009.

Highlights during the fourth quarter included:



 * Revenues of $98.3 million, up $4.7 million versus Q3 2009
 * Reported EPS: ($0.02) per diluted share; Adjusted non-GAAP
   EPS: $0.11 per diluted share
 * Recorded $3.1 million pre-tax restructuring charge ($2.0 million
   after tax)
 * Positive cash flow from operations of $7.9 million

Revenues for the fourth fiscal quarter ended July 31, 2009, were $98.3 million, compared with third quarter revenues of $93.6 million and the prior fiscal year's fourth quarter revenues of $117.1 million. Income (loss) from operations for the fourth quarter was ($2.6) million compared with income of $1.5 million in the third quarter of fiscal 2009 and income of $2.4 million in the prior year's fourth quarter. Reported results for the fourth quarter of fiscal 2009 included a charge of $3.1 million ($2.0 million after tax) due to restructuring expenses related to a reduction in force and downsizing of facilities. Reported net income (loss) for the fourth quarter of fiscal 2009 was ($0.3) million, or ($0.02) per diluted share, compared with income of $2.3 million, or $0.18 per diluted share, in the third quarter of fiscal 2009 and $3.3 million, or $0.25 per diluted share, for the prior year's fourth quarter.

On an adjusted, non-GAAP basis, income from operations for the fourth quarter of fiscal 2009 was $1.4 million compared with $3.3 million in the third quarter and $10.7 million in the prior year fourth quarter. Adjusted non-GAAP net income for the fourth quarter was $1.4 million, or $0.11 per diluted share, compared with $3.1 million, or $0.24 per diluted share, in the third quarter of fiscal 2009 and $7.2 million, or $0.55 per diluted share, for the prior year's fourth quarter. A reconciliation of GAAP to non-GAAP results is included as an attachment to this press release.

For fiscal 2009, revenues were $396.1 million, compared with revenues of $413.5 million in fiscal 2008. Reported net income for fiscal year 2009 totaled $3.7 million, or $0.29 per diluted share, as compared with net income of $23.5 million, or $1.77 per diluted share, for fiscal 2008.

"Fiscal 2009 was a challenging year due to the global economic conditions, however market conditions appear to have stabilized," commented Jim Green, president and CEO. "In addition to our Digital Radiography and Security businesses performing well through the downturn, our CT business is stabilizing, and we are seeing increased demand in MRI and especially in our end-user specialized ultrasound business."

Segment Revenues

Medical Imaging revenues were $51.2 million for the fourth quarter of fiscal 2009, up $1.2 million from the third quarter and down $16.2 million over the prior year's fourth quarter. Revenues were up slightly during the fourth quarter due to increased shipments of MRI and motion controls products. During the quarter, the Company completed its transition to consigned inventory per a major OEM contract which had the effect of delaying approximately $1.5 million of revenue and increasing finished goods inventory.

Digital Radiography revenues were $8.4 million for the fourth quarter of fiscal 2009, down $1.9 million from the third quarter and down $0.4 million over the prior year. The decrease in revenue was driven by the phasing out of non-mammography detectors as the Company continues to focus the business on the premium segment of Selenium based full field digital mammography detectors.

BK Medical revenues were $23.7 million for the fourth quarter of fiscal 2009, up $4.5 million from the third quarter and down $1.4 million from the prior year. The increase in revenue during the fourth quarter was due primarily to increasing demand for the new FlexFocus ultrasound scanner coupled with a $1.9 million international tender.

Security Technology revenues were $12.8 million for the fourth quarter of fiscal 2009, up $0.6 million from the third quarter and down $0.1 million from a year earlier. During the quarter, the Company shipped the first production eXaminer SX and received a contract from the Transportation Security Administration for the completion of the OnGuard DualUse system for both check-bag and check-point applications in smaller airports.

Use of Adjusted Non-GAAP Financial Measures

This document includes adjusted non-GAAP financial measures that are not in accordance with, nor an alternative to, generally accepted accounting principles and may be different from non-GAAP measures used by other companies. In addition, these adjusted non-GAAP measures are not based on any comprehensive set of accounting rules or principles.

Adjusted non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. They are limited in value because they exclude charges that have a material effect on our reported results and, therefore, should not be relied upon as the sole financial measures to evaluate our financial results. The adjusted non-GAAP financial measures are meant to supplement, and to be viewed in conjunction with, GAAP financial results. An explanation and a reconciliation of our adjusted non-GAAP measures are provided at the end of this press release.

Conference Call

Analogic will conduct an investor conference call on Thursday, September 24, at 5:00 p.m. (ET) to discuss the results for the fourth quarter. To participate in the conference call, dial 1-866-823-6992, or 1-334-323-7225 for international callers, approximately ten minutes before the conference is scheduled to begin. Inform the operator that you wish to join the Analogic conference, passcode 42748. You will then be asked for your name, organization, and telephone number, and be connected to the conference. The earnings release and presentation materials related to the quarterly financial information will be posted on the Company's website at www.analogic.com. The call will also be available via webcast in listen-only mode. To listen to the webcast, visit www.analogic.com approximately five to ten minutes before the conference is scheduled to begin.

A telephone digital replay will be available approximately two hours after the call is completed through midnight (ET) October 23, 2009. To access the digital replay, dial 1-877-919-4059, or 1-334-323-7226 for international callers. The passcode is 75343875. A replay of the conference call webcast will be archived on the Company's website at www.analogic.com approximately three hours after the call is completed and will be available through midnight (ET) Friday, October 23, 2009.

For more information on the conference call, visit www.analogic.com, call 978-326-4058, or email investorrelations@analogic.com

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, risks associated with competition, uncertainties associated with regulatory agency approvals, competitive pricing pressures, downturns in the economy, the risk of potential intellectual property litigation, and other factors discussed in our most recent quarterly report 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

Analogic Corporation is a growth oriented high-technology signal and image processing company, providing products and services to original equipment manufacturers (OEMs) and end users in growing medical diagnostics and security markets worldwide. The Company is recognized worldwide for advancing the state of the art in automatic explosives detection, computed tomography (CT), digital radiography (DR), ultrasound, magnetic resonance imaging (MRI), and advanced signal processing. For more information, visit www.analogic.com



                CONSOLIDATED STATEMENTS OF OPERATIONS
                             (Unaudited)

 (In thousands,
 except per
 share data)               Three months Ended      Twelve months Ended
                      ----------------------------  ------------------
                      July 31,  April 30, July 31,  July 31,  July 31,
                        2009      2009      2008      2009      2008
                      --------  --------  --------  --------  --------
 Net revenue:
   Product            $ 89,515  $ 86,864  $110,797  $365,770  $388,506
   Engineering           6,543     4,846     3,362    21,090    14,089
   Other                 2,231     1,883     2,981     9,289    10,914
                      --------  --------  --------  --------  --------
 Total net revenue      98,289    93,593   117,140   396,149   413,509
                      --------  --------  --------  --------  --------
 Cost of sales:
   Product              59,849    55,908    70,908   242,857   240,657
   Engineering           6,767     5,148     3,686    21,398    14,480
   Other                 1,636     1,576     1,937     6,698     7,274
                      --------  --------  --------  --------  --------
 Total cost of sales    68,252    62,632    76,531   270,953   262,411
                      --------  --------  --------  --------  --------

 Gross margin           30,037    30,961    40,609   125,196   151,098
                      --------  --------  --------  --------  --------
 Operating expenses:
   Research and
    product
    development         10,779    10,572    13,544    45,276    48,947
   Selling and
    marketing            8,923     8,985    10,319    37,320    34,528
   General and
    administrative       9,803     9,899    10,282    40,166    39,296
   Restructuring
    and voluntary
    retirement
    charges              3,131        --     4,016     6,619     4,016
                      --------  --------  --------  --------  --------
 Total operating
  expenses              32,636    29,456    38,161   129,381   126,787
                      --------  --------  --------  --------  --------
 Income (loss)
  from operations       (2,599)    1,505     2,448    (4,185)   24,311
                      --------  --------  --------  --------  --------
 Other income
  (expense):
   Interest
    income, net            267       531     1,108     2,573     7,935
   Gain on sale
    of other
    investments            815        --     2,000       838     2,084
   Other, net           (1,152)     (158)     (291)     (436)      715
                      --------  --------  --------  --------  --------
 Total other
  income (expense)         (70)      373     2,817     2,975    10,734
                      --------  --------  --------  --------  --------
 Income (loss)
  before income
  taxes                 (2,669)    1,878     5,265    (1,210)   35,045
 Provision for
  (benefit from)
  income taxes          (2,384)     (373)    1,993    (4,915)   11,559
                      --------  --------  --------  --------  --------
 Net income (loss)    $   (285) $  2,251  $  3,272  $  3,705  $ 23,486
                      ========  ========  ========  ========  ========
 Net income (loss)
  per share:
   Basic              $  (0.02) $   0.18  $   0.24  $   0.29  $   1.78
   Diluted            $  (0.02) $   0.18  $   0.25  $   0.29  $   1.77
 Dividends declared
  per share           $   0.10  $   0.10  $   0.10  $   0.40  $   0.40
 Weighted-average
  shares
  outstanding:
   Basic                12,665    12,619    13,234    12,835    13,180
   Diluted              12,665    12,691    13,352    12,932    13,290


                CONDENSED CONSOLIDATED BALANCE SHEETS
                             (Unaudited)

 (In thousands, except per share data)                Q4 09     Q4 08
                                                    July 31,  July 31,
                                                      2009      2008
                                                    --------  --------
 Assets:
   Cash, cash equivalents, and marketable
    securities                                      $160,293  $186,442
   Accounts receivable, net                           64,874    66,573
   Inventories                                        79,011    79,197
   Other current assets                               20,113    28,714
                                                    --------  --------
     Total current assets                            324,291   360,926
   Property, plant, and equipment, net                83,688    90,405
   Other assets                                       56,135    59,834
                                                    --------  --------
     Total Assets                                   $464,114  $511,165
                                                    ========  ========

 Liabilities and Stockholders' Equity:
   Accounts payable                                 $ 22,064  $ 28,329
   Accrued liabilities                                30,868    34,552
   Advanced payments and deferred revenue              7,219    10,785
                                                    --------  --------
     Total current liabilities                        60,151    73,666
                                                    --------  --------
   Long-term liabilities                               6,444     8,993
                                                    --------  --------
   Stockholders' equity                              397,519   428,506
                                                    --------  --------
     Total Liabilities and Stockholders' Equity:    $464,114  $511,165
                                                    ========  ========

UNAUDITED SUPPLEMENTAL INFORMATION - RECONCILIATION OF GAAP TO NON-GAAP MEASURES

The Company provides adjusted non-GAAP gross margin, adjusted non-GAAP operating expenses, adjusted non-GAAP income from operations, adjusted non-GAAP income before income taxes, adjusted non-GAAP net income and adjusted non-GAAP diluted earnings per share as supplemental measures to GAAP regarding the Company's operational performance. These financial measures exclude the impact of certain items and, therefore, have not been calculated in accordance with GAAP. The adjustments to these non-GAAP financial measures, and the basis for such adjustments, are outlined below:



   Share-based compensation expense. The Company incurs expense
   related to share-based compensation included in its GAAP
   presentation of cost of sales, research and development, selling
   and marketing, general and administrative expense. Although share-
   based compensation is an expense of the Company and viewed as a
   form of compensation, these expenses vary in amount from period to
   period, and are affected by market forces that are difficult to
   predict and are not within the control of management, such as the
   market price and volatility of the Company's shares, risk-free
   interest rates, and the expected term and forfeiture rates of the
   awards. In accordance with SFAS No. 123(R), share-based
   compensation expense is calculated as of the grant date of each
   share-based award, and generally cannot be changed or influenced by
   management after the grant date. Management believes that exclusion
   of these expenses allows comparisons of operating results that are
   consistent between periods and allows comparisons of the Company's
   operating results to those of other companies that disclose non-
   GAAP financial measures that exclude share-based compensation.

   Acquisition related expenses. The Company incurs amortization of
   intangibles and other expenses related to acquisitions it has made
   in recent years. The intangible assets are valued at the time of
   acquisition, are then amortized over a period of several years
   after the acquisition and generally cannot be changed or influenced
   by management after the acquisition. Management believes that
   exclusion of these expenses allows comparisons of operating results
   that are consistent over time for both our newly acquired and long-
   held businesses.

   Executive transition expenses. James W. Green was appointed as our
   President and CEO on May 21, 2007. Since his arrival Mr. Green made
   a number of changes in the senior leadership team reporting to him.
   As such, the Company incurred charges in fiscal 2008 for severance,
   executive search, relocation and other related expenses. Management
   believes these charges should be excluded from the adjusted non-
   GAAP results because they were items not associated with the
   ongoing operations of the business.

   Restructuring and Voluntary Retirement charges. The Company
   continuously strives to improve its operating efficiency. During
   the three months ended July 31, 2009, the Company reduced its work
   force by 85 employees or approximately 6% worldwide and vacated 50%
   of its office facility in Canton, MA on July 31, 2009 as a result
   of moving certain operations to our Peabody facility. The total
   cost of these activities was $3,131,000, which was recorded as an
   operating expense during the three months ended July 31, 2009.

   During the three months ended January 31, 2009, the Company reduced
   its work force by 145 employees or approximately 9% worldwide. The
   total cost of these activities was $3,811,000 of which $3,488,000
   was recorded as an operating expense during the three months ended
   January 31, 2009. An additional $323,000 was charged against
   restructuring accruals previously recorded as part of the Copley
   acquisition.

   During the three months ended July 31, 2008, the Company offered a
   one-time voluntary retirement program to certain eligible U.S.
   employees. In addition, the Company terminated 32 employees in its
   Peabody, Massachusetts facility. Total cost of these activities was
   $4,016,000 in the three and twelve months ended July 31, 2008.
   Management believes that exclusion of these expenses allows for
   comparisons of operating results that are consistent over time.

   Gain on sale of other investments. During the three months ended
   July 31, 2009, the Company received $838,000 as the final escrow
   payment related to the sale of its interest in Bio-Imaging Research
   ("BIR") was recorded as other income in the twelve months ended
   July 31, 2009. During the three months ended October 31, 2007, the
   Company received $84,000 as an initial escrow payment related to
   the sale of its interest in BIR, which was recorded as other income
   in the twelve months ended July 31, 2008. On December 7, 2007, the
   Company received $555,000 from its insurance company as
   reimbursement for legal fees incurred in relation to an
   indemnification matter related to the Company's sale of its wholly
   owned subsidiary Camtronics Medical Systems, Ltd. in November 2005.
   The $555,000 gain was recorded as other income during the twelve
   months ended July 31, 2008. On January 30, 2008, the Company agreed
   to sell to Chonqing Anke Medical Equipment Co., 20% of its existing
   45% equity interest (for a remaining interest of 25%) in Shenzhen
   Anke High Tech Co. Ltd ("SAHCO") for aggregate compensation of
   $2,000,000. The Company recognized a $2,000,000 gain in other
   (income) expense during the three months ended July 31, 2008 when
   the cash was received. These gains have been presented as a non-
   GAAP item for the related periods as management believes they are
   items not associated with the on-going operations of the business.

   Taxes. For purposes of calculating adjusted non-GAAP net income and
   adjusted non-GAAP diluted earnings per share, management adjusts
   the provision (benefit) for income taxes to tax effect the non-GAAP
   adjustments described above as they have a significant impact on
   the Company's income tax provision (benefit).

   Periodically, the Company recognizes certain non-recurring tax
   adjustments.  In the three months ended January 31, 2009, the
   Company recorded $1,729,000 of discrete tax benefits of which
   $1,232,000 related to an income tax refund for R&D tax credits and
   $497,000 related the settlement of an income tax audit.  In the
   three months ended April 30, 2009, the Company recorded $124,000
   related to interest received on a tax refund.  In the three months
   ended July 31, 2009, the company recorded $244,000 for a tax refund
   and related interest.  As these adjustments do not reflect the
   underlying performance of the business they have been excluded from
   Non-GAAP net income.

Management excludes the above-described expenses, their related tax impact and other non-recurring tax benefits in evaluating short-term and long-term operating trends in the Company's operations, and allocating resources to various initiatives and operational requirements. The Company believes that these non-GAAP financial adjustments are useful to investors because they allow investors to evaluate the effectiveness of the methodology and information used by management in its financial and operational decision-making.

These non-GAAP financial measures have not been prepared in accordance with GAAP, and should not be considered in isolation or as a substitute for financial information provided in accordance with GAAP. Further, these non-GAAP financial measures may not be computed in the same manner as similarly titled measures used by other companies.

The following table reconciles the non-GAAP financial measures to their most directly comparable GAAP financial measures.



          NON-GAAP STATEMENTS OF OPERATIONS RECONCILIATION

 (In thousands,
 except per
 share data)               Three months Ended      Twelve months Ended
                      ----------------------------  ------------------
                      July 31,  April 30, July 31,  July 31,  July 31,
                        2009      2009      2008      2009      2008
                      --------  --------  --------  --------  --------

 GAAP Gross Margin    $ 30,037  $ 30,961  $ 40,609  $125,196  $151,098
   Share-based
    compensation
    expense                 58        69        78       272       213
   Acquisition
    related expenses       282       267     2,614     1,983     3,136
                      --------  --------  --------  --------  --------
 Adjusted Non-GAAP
  Gross Margin        $ 30,377  $ 31,297  $ 43,301  $127,451  $154,447
                      ========  ========  ========  ========  ========
   Percentage of
    Total Net
    Revenue               30.9%     33.4%     37.0%     32.2%     37.4%

 GAAP Operating
  expenses            $ 32,636  $ 29,456  $ 38,161  $129,381  $126,787
   Share-based
    compensation
    expense               (124)   (1,019)     (982)   (3,696)   (3,138)
   Executive
    transition
    costs                   --        --        --        --      (627)
   Restructuring
    and voluntary
    retirement
    charges             (3,131)       --    (4,016)   (6,619)   (4,016)
   Acquisition
    related expenses      (450)     (451)     (542)   (1,799)   (1,472)
                      --------  --------  --------  --------  --------

 Adjusted Non-GAAP
  Operating Expenses  $ 28,931  $ 27,986  $ 32,621  $117,267  $117,534
                      ========  ========  ========  ========  ========
   Percentage of
    Total Net
    Revenue               29.4%     29.9%     27.8%     29.6%     28.4%


 GAAP Income (Loss)
  From Operations     $ (2,599) $  1,505  $  2,448  $ (4,185) $ 24,311
   Share-based
    compensation
    expense                182     1,088     1,060     3,968     3,351
   Executive
    transition costs        --        --        --        --     1,053
   Restructuring
    and voluntary
    retirement
    charges              3,131        --     4,016     6,619     4,016
   Acquisition
    related expenses       732       718     3,156     3,782     4,182
                      --------  --------  --------  --------  --------

 Adjusted Non-GAAP
  Income From
  Operations          $  1,446  $  3,311  $ 10,680  $ 10,184  $ 36,913
                      ========  ========  ========  ========  ========
   Percentage of
    Total Net
    Revenue                1.5%      3.5%      9.1%      2.6%      8.9%


 GAAP Other income
  (expense)           $    (70) $    373  $  2,817  $  2,975  $ 10,734
   Gain on sale
    of other
    investments           (838)       --    (2,000)     (838)   (2,639)
                      --------  --------  --------  --------  --------
 Adjusted Non-GAAP
  Other income
  (expense)           $   (908) $    373  $    817  $  2,137  $  8,095
                      ========  ========  ========  ========  ========
   Percentage of
    Total Net
    Revenue              -0.9%       0.4%      0.7%      0.5%      2.0%


 GAAP Income (Loss)
  Before Income
  Taxes               $ (2,669) $  1,878  $  5,265  $ (1,210) $ 35,045
   Share-based
    compensation
    expense                182     1,088     1,060     3,968     3,351
   Executive
    transition
    costs                   --        --        --        --     1,053
   Restructuring
    and voluntary
    retirement
    charges              3,131        --     4,016     6,619     4,016
   Acquisition
    related expenses       732       718     3,156     3,782     3,483
   Gain on sale
    of other
    investments           (838)       --    (2,000)     (838)   (1,940)
                      --------  --------  --------  --------  --------

 Adjusted Non-GAAP
  Income Before
  Income Taxes        $    538  $  3,684  $ 11,497  $ 12,321  $ 45,008
                      ========  ========  ========  ========  ========
   Percentage of
    Total Net
    Revenue                0.5%      3.9%      9.8%      3.1%     10.9%


 GAAP Net Income
  (Loss)              $   (285) $  2,251  $  3,272  $  3,705  $ 23,486
   Share-based
    compensation
    expense                142       517       711     2,737     2,540
   Executive
    transition
    costs                   --        --        --        --       665
   Restructuring
    and voluntary
    retirement
    charges              1,962        --     2,533     4,334     2,533
   Acquisition
    related expenses       357       488     1,990     2,383     2,637
   Gain on sale
    of other
    investments           (528)       --    (1,261)     (528)   (1,664)
   Tax refunds and
    related interest      (244)     (124)       --    (2,097)       --
                      --------  --------  --------  --------  --------

 Adjusted Non-GAAP
  Net Income          $  1,404  $  3,132  $  7,245  $ 10,534  $ 30,197
                      ========  ========  ========  ========  ========
   Percentage of
    Total Net
     Revenue               1.4%      3.3%      6.2%      2.7%      7.3%

 GAAP Diluted Net
  Income (loss) Per
  Share               $  (0.02) $   0.18  $   0.25  $   0.29  $   1.77
   Effect of
    non-GAAP
    adjustments           0.13      0.06      0.30      0.52      0.49
                      --------  --------  --------  --------  --------
 Adjusted Non-GAAP
  Diluted Net Income
  Per Share           $   0.11  $   0.24  $   0.55  $   0.81  $   2.26
                      ========  ========  ========  ========  ========
CONTACT:  Analogic Corporation 
          Michael Levitz, Vice President, CFO, and Treasurer
            (978) 326-4000
          Mark Namaroff, Director of Strategic Marketing and
           Investor Relations
            (978) 326-4058
            investorrelations@analogic.com

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