1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1 ON
FORM 10-Q/A
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE PERIOD ENDED OCTOBER 31, 2000
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.
[X] Yes [ ] No
The number of shares of Common Stock outstanding at November 30, 2000 was
12,880,768.
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2
Analogic Corporation ("the Company") hereby amends its Form 10-Q for the
period ended October 31, 2000, filed with the Commission on December 14, 2000
for the purpose of restating the carrying value of the Company's investment in
Shenzhen Anke High-Tech Co., Ltd (SAHCO) formerly known as Analogic Scientific,
Inc. The Company recently became aware of certain differences between local
statutory accounting practice used by SAHCO and U.S. Generally Accepted
Accounting Principles (GAAP) primarily with respect to the valuation of accounts
receivable and inventory and revenue recognition which had not been fully
evaluated.
Accordingly, during the quarter ended January 31, 2001, the Company
evaluated the potential differences in accounting basis and concluded that
adjustments were necessary for prior periods resulting in a reduction in the
Company's investment of SAHCO of $2,375,000 at July 31, 2000 (or $1,808,000 net
of tax effect) which reduced the carrying value of the Company's investment at
July 31, 2000 from $6,125,000 to $3,750,000. Although this has the effect of
decreasing the Company's net profit by $42,000 in fiscal year 2000, it has no
impact in the net profit for the quarter ended October 31, 1999. Additionally,
these adjustments have no impact in the net profit for the quarter ended October
31, 2000.
Also, SAHCO has historically provided the Company with current quarterly
information regarding its financial results. To ensure that the Company has
adequate time to review and adjust the financial information provided by SAHCO
and to conform it to U.S. GAAP, the Company has decided to change its method of
recording SAHCO's financial results and will use the previous calendar quarters
financial information of SAHCO to adjust its investment account in the current
quarter, thereby resulting in a consistently applied calendar quarterly delay in
recording its equity-based accounting. Accordingly, the Company recognized its
share of SAHCO's previous calendar quarter profit of $414,000 (or $282,000 net
of tax effect) in the three months ended October 31, 2000 and adjusted the
beginning retained earnings by the $282,000. This change has no impact in fiscal
year 2000.
This amendment amends Part I (Item 1 and 2) of the quarterly report on Form
10-Q for the period ended October 31, 2000.
3
ANALOGIC CORPORATION
INDEX
PAGE
NO
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets of October 31,
2000 and July 31, 2000................................ 2
Condensed Consolidated Statements of Income for the
Three Months Ended October 31, 2000 and 1999.......... 3
Condensed Consolidated Statements of Cash Flows for the
Three Months Ended October 31, 2000 and 1999.......... 4
Notes to Unaudited Condensed Consolidated Financial
Statements............................................ 5-8
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition..................... 9-11
SIGNATURES................................................ 12
1
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ANALOGIC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
OCTOBER 31, JULY 31,
2000 2000 (NOTE 1)
----------- -------------
RESTATED RESTATED
ASSETS
Current assets:
Cash and cash equivalents................................. $ 32,402 $ 29,132
Marketable securities, at market.......................... 83,052 87,242
Accounts and notes receivable, (less allowance for
doubtful accounts of $1,069 in fiscal 2001, and $1,010
in fiscal 2000)......................................... 66,327 63,437
Inventories (Note 2)...................................... 68,797 62,326
Deferred income taxes..................................... 8,914 8,511
Other current assets...................................... 5,423 5,239
-------- --------
Total current assets............................... 264,915 255,887
Property, plant and equipment, net.......................... 62,663 63,524
Investments in and advances to affiliated companies (Note
3)........................................................ 5,006 4,855
Capitalized software, net................................... 5,130 5,368
Other assets................................................ 3,296 3,567
-------- --------
Total Assets....................................... $341,010 $333,201
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Mortgage and other notes payable.......................... $ 364 $ 363
Obligations under capital leases.......................... 585 714
Accounts payable, trade................................... 24,751 20,015
Accrued expenses.......................................... 18,645 20,038
Accrued income taxes...................................... 2,914 1,780
Accrued dividends payable (Note 4)........................ 902 --
-------- --------
Total current liabilities.......................... 48,161 42,910
Long-term debt:
Mortgage and other notes payable.......................... 5,061 5,265
Obligations under capital leases.......................... 332 374
-------- --------
5,393 5,639
Deferred income taxes....................................... 2,452 2,519
Excess of acquired net assets over cost, net................ 76 104
Minority interest in subsidiary............................. 4,249 4,268
Stockholders' equity:
Common stock, $.05 par value.............................. 699 699
Capital in excess of par value............................ 27,683 27,703
Retained earnings......................................... 269,582 266,127
Accumulated other comprehensive income.................... (2,867) (2,118)
Treasury stock, at cost................................... (11,856) (11,869)
Unearned compensation..................................... (2,562) (2,781)
-------- --------
Total stockholders' equity......................... 280,679 277,761
-------- --------
Total Liabilities and Stockholders' Equity......... $341,010 $333,201
======== ========
The accompanying notes are an integral part of these financial statements.
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ANALOGIC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED
OCTOBER 31,
-------------------
RESTATED
2000 1999
-------- -------
Revenues:
Product and service, net.................................. $71,735 $54,365
Engineering and licensing................................. 5,743 5,395
Other operating revenue................................... 4,119 3,953
Interest and dividend income.............................. 1,543 1,725
------- -------
Total revenues.............................................. 83,140 65,438
------- -------
Costs of sales and expenses:
Cost of sales:
Product and service.................................... 46,571 34,246
Engineering and licensing.............................. 4,000 3,874
Other cost of sales.................................... 1,736 1,682
General and administrative................................ 7,328 5,180
Selling and marketing..................................... 7,366 5,913
Research and product development.......................... 9,573 9,611
Interest expense.......................................... 58 87
Loss on foreign exchange.................................. 246 135
Amortization of excess of acquired net assets over cost... (28) (28)
------- -------
Total cost of sales and expenses............................ 76,850 60,700
------- -------
Income from operations and interest and dividend income..... 6,290 4,738
Equity in net gain (loss) of unconsolidated affiliates...... 811 (1,049)
Loss on investment.......................................... (166)
------- -------
Income before income taxes and minority interest............ 6,935 3,689
Provision for income taxes.................................. 2,212 1,144
Minority interest in net income of consolidated
subsidiary................................................ 84 27
------- -------
Net income $ 4,639 $ 2,518
======= =======
Earnings per common share (Note 6)
Basic..................................................... $0.36 $0.20
Diluted................................................... $0.36 $0.20
The accompanying notes are an integral part of these financial statements.
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ANALOGIC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
THREE MONTHS ENDED
OCTOBER 31,
-------------------
RESTATED
2000 1999
-------- -------
OPERATING ACTIVITIES:
Net Income................................................ $ 4,639 $ 2,518
Adjustments to reconcile net income to net cash provided
by operating activities:
Deferred income taxes.................................. (338) (565)
Depreciation and amortization.......................... 2,830 3,389
Minority interest in net income of consolidated
subsidiaries.......................................... 84 27
Allowance for doubtful accounts........................ 59 77
Gain on sale of equipment.............................. (23) (5)
Excess of equity in gain (loss) of unconsolidated
affiliates............................................ (811) 1,049
Loss on investment..................................... 166 --
Compensation from stock grants......................... 183 74
Net changes in operating assets and liabilities (Note
7).................................................... (4,997) (3,784)
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NET CASH PROVIDED BY OPERATING ACTIVITIES:................ 1,792 2,780
------- -------
INVESTING ACTIVITIES:
Investments in and advances to affiliated companies....... (1,500)
Additions to property, plant and equipment................ (2,290) (2,646)
Capitalized software...................................... 497 (504)
Proceeds from sale of property, plant and equipment....... 57 8
Purchases of marketable securities........................ -- (5,805)
Maturities of marketable securities....................... 4,400 5,210
------- -------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES....... 2,664 (5,237)
------- -------
FINANCING ACTIVITIES:
Payments on debt and capital lease obligations............ (374) (352)
Issuance of common stock pursuant to stock options and
employee stock purchase plan........................... 63 409
------- -------
NET CASH USED IN FINANCING ACTIVITIES..................... (311) 57
------- -------
EFFECT OF EXCHANGE RATE CHANGES ON CASH................... (875) 523
------- -------
NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS........ 3,270 (1,877)
------- -------
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.............. 29,132 30,017
------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD.................... $32,402 $28,140
======= =======
The accompanying notes are an integral part of these financial statements.
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ANALOGIC CORPORATION
NOTES TO UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION:
The unaudited condensed consolidated financial statements of Analogic
Corporation (the Company) presented herein have been prepared pursuant to the
rules of the Securities and Exchange Commission for quarterly reports on Form
10-Q and do not include all of the information and note disclosures required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, the accompanying unaudited condensed consolidated
financial statements contain all adjustments (consisting solely of normal
recurring adjustments) necessary to fairly present Analogic Corporation's
financial position as of October 31, 2000 and July 31, 2000, the results of its
operations for the three months ended October 31, 2000 and 1999 and statements
of cash flows for the three months then ended. The results of the operations for
the three months ended October 31, 2000 are not necessarily indicative of the
results to be expected for the fiscal year ending July 31, 2001 or any other
interim period.
These statements should be read in conjunction with the consolidated
financial statements and notes thereto for the year ended July 31, 2000 included
in the Company's Form 10-K as filed with the Securities and Exchange Commission
on October 20, 2000, the Company's Form 10K/A as filed with the Securities and
Exchange Commission on December 12, 2000, and the Company's Form 10K/A, as
amended, as filed with the Securities and Exchange Commission on June 4, 2001.
The financial statements are unaudited and have not been examined by
independent certified public accountants. The consolidated balance sheet as of
July 31, 2000 contains data derived from audited financial statements.
Certain financial statement items have been reclassified to conform to the
current year's financial presentation format.
2. INVENTORIES:
The components of inventory are as follows:
OCTOBER 31, JULY 31,
2000 2000
----------- --------
(IN THOUSANDS)
Raw Materials.......................................... $36,137 $31,728
Work-in-process........................................ 21,694 20,724
Finished goods......................................... 10,966 9,874
------- -------
$68,797 $62,326
======= =======
3. INVESTMENT IN AND ADVANCES TO AFFILIATED COMPANIES:
During October, 2000, Analogic Scientific, Inc. (ASI), a joint venture
corporation located in The People's Republic of China, entered into separate
agreements with four investors which resulted in these investors owning an 10.8%
equity interest in the company. This transaction had the approval of Analogic
Corporation and the other shareholder who prior to this transaction each had a
50% equity ownership interest in ASI. On January 18, 2001, the company name was
changed from "Analogic Scientific, Inc." to "Shenzhen Anke High-Tech Co., Ltd"
(SAHCO).
At October 31, 2000, the Company has a 44.6% ownership of ASI with a
carrying value of $3,750,000 (restated). The Company accounts for this
investment under the equity method of accounting whereby the Company has
adjusted the carrying amount to recognize the Company's share of the earnings or
losses, changes in its capital investment and dividends received by the Company.
The Company receives financial information from ASI on a quarterly basis for use
in accounting for the carrying value of the investment. Therefore, the Company
must make adjustments to the financial information received to have it be in
accordance with US generally accepted accounting principles ("GAAP") due to the
estimates, judgments and
5
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ANALOGIC CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS -- (CONTINUED)
differences in local statutory and U.S. GAAP. The Company became aware of
certain differences between local statutory and U.S. GAAP during the current
quarter. The Company concluded that adjustments were necessary for prior periods
resulting in a reduction in the Company's investment of SAHCO of $2,375,000
(restated) at July 31, 2000 (or $1,808,000 (restated) net of tax effect) which
reduced the carrying value of the Company's investment at July 31, 2000 from
$6,125,000 to $3,750,000 (restated). Although this has the effect of decreasing
the Company's net profit by $42,000 (restated) in fiscal year 2000, it has no
impact in the net profit for the quarter ended October 31, 1999. Additionally,
these adjustments have no impact in the net profit for the quarter ended October
31, 2000.
To ensure that the Company has adequate time to review and adjust the
financial information provided by SAHCO to conform it to U.S. GAAP, the Company
has decided to change its method of recording SAHCO financial results and will
use the previous calendar quarters financial information of SAHCO to adjust its
investment account in the current quarter, thereby resulting in a consistently
applied calendar quarterly delay in recording its equity based accounting. As
SAHCO uses a calendar fiscal year and Analogic uses a July 31(st) fiscal
year-end, Analogic will use SAHCO's first calendar quarter financial information
in Analogic's fourth fiscal quarter results, SAHCO's second calendar quarter
financial information in Analogic's first fiscal quarter results, SAHCO's third
calendar quarter financial information in Analogic's second fiscal quarter
results, and SAHCO's fourth calendar quarter financial information in Analogic's
third fiscal quarter results. Accordingly, the Company recognized its share of
SAHCO previous calendar quarter profit of $414,000 (or $282,000 net of tax
effect) in the three months ended October 31, 2000 and adjusted the beginning
retained earnings by the $282,000. This change has no impact on fiscal year
2000.
This restatement resulted in the following changes to the investment in and
advances to affiliated companies and retained earnings and to the consolidated
statements of income:
THREE MONTHS ENDED
OCTOBER 31,
--------------------------
2000 1999
------------- ---------
(IN THOUSANDS, EXCEPT PER
SHARE AMOUNTS)
Equity in net gain (loss) of unconsolidated
affiliates
As restated..................................... $ 811 $(1,049)
As reported..................................... $ 397 $(1,049)
Provision for income taxes
As restated..................................... $2,212 $ 1,144
As reported..................................... $2,080 $ 1,144
Net income
As restated..................................... $4,639 $ 2,518
As reported..................................... $4,357 $ 2,518
Net income per share
As restated - Basic............................. $ 0.36 $ 0.20
As reported - Basic............................. $ 0.34 $ 0.20
As restated - Diluted........................... $ 0.36 $ 0.20
As reported - Diluted........................... $ 0.34 $ 0.20
OCTOBER 31, JULY 31,
2000 2000
----------- --------
(IN THOUSANDS)
Retained earnings
As restated.................................... $269,582 $266,127
As reported.................................... $271,390 $267,935
Investments in and advances to affiliated companies
As restated.................................... $ 5,006 $ 4,855
As reported.................................... $ 7,381 $ 7,230
6
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ANALOGIC CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS -- (CONTINUED)
4. DIVIDENDS:
The Company declared dividends of $.07 per common share on October 12,
2000, payable on November 10, 2000 to shareholders of record on October 27, 2000
and $.07 per common share on December 5, 2000, payable on January 9, 2001 to
shareholders of record on December 26, 2000.
5. COMPREHENSIVE INCOME:
The following table presents the calculation of comprehensive income and
its components for the three months ended October 31, 2000 and 1999:
THREE MONTHS ENDED
OCTOBER 31,
-------------------
RESTATED
2000 1999
-------- -------
(IN THOUSANDS)
Net Income................................................. $4,639 $2,518
Other Comprehensive Income (Loss) Net of Tax:
Unrealized holding gains and losses, net of taxes of $83
and $289 for the three months ended October 31, 2000
and 1999.............................................. 126 (644)
Foreign currency translation adjustment, net of taxes of
$574 and $9 for the three months ended October 31,
2000 and 1999......................................... (876) 20
------ ------
Total Comprehensive Income................................. $3,889 $1,894
====== ======
6. NET INCOME PER SHARE:
The following table indicates the number of shares utilized in the earnings
per share calculations for the three months ending October 31, 2000 and 1999,
respectively.
THREE MONTHS ENDED
OCTOBER 31,
--------------------------
RESTATED
2000 1999
----------- -----------
Net income........................................ $ 4,639,000 $ 2,518,000
=========== ===========
Basic:
Weighted average number of common shares
outstanding.................................. 12,878,676 12,732,545
=========== ===========
Net income per share............................ $ 0.36 $ 0.20
=========== ===========
Diluted:
Weighted average number of common shares
outstanding.................................. 12,878,676 12,732,545
Dilutive effect of stock options................ 53,472 59,663
----------- -----------
Total........................................... 12,932,148 12,792,208
=========== ===========
Net income per share.............................. $ 0.36 $ 0.20
=========== ===========
7
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ANALOGIC CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS -- (CONTINUED)
7. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Changes in operating assets and liabilities are as follows for the three
months ended:
OCTOBER 31,
------------------
2000 1999
------- -------
(IN THOUSANDS)
Accounts and notes receivable............................ $(2,313) $(2,466)
Accounts receivable from affiliates...................... (636) 201
Inventories.............................................. (6,471) (2,970)
Other current assets..................................... (184) (189)
Other assets............................................. 271 (115)
Accounts payable trade................................... 4,736 2,764
Accrued expenses and other current liabilities........... (1,451) (1,369)
Accrued income taxes..................................... 1,051 360
------- -------
Net changes in operating assets and liabilities.......... $(4,997) $(3,784)
======= =======
8. SEGMENT INFORMATION:
The Company's operations are primarily within a single segment within the
electronics industry (Medical Instrumentation Technology Products). These
operations encompass the design, manufacture and sale of high technology,
high-performance, high precision data acquisition, conversion (analog/digital)
and signal processing instruments and systems to customers that manufacture
products for medical and industrial use. The other segment represents the
Company's hotel operation, interest and dividend income and other Company's
operations, which do not meet the materiality requirements of the statement and
thus are not required to be separately disclosed. The table below presents
information about the Company's reportable segments for the three months ended
October 31, 2000 and 1999:
THREE MONTHS ENDED
OCTOBER 31,
--------------------
2000 1999
-------- --------
(IN THOUSANDS)
Revenues:
Medical Instrumentation Technology Products.......... $ 72,743 $ 57,131
Corporate and Other.................................. 10,397 8,307
-------- --------
Total.................................................. $ 83,140 $ 65,438
-------- --------
Income (Loss) before income taxes and minority interest
(restated):
Medical Instrumentation Technology Products.......... $ 3,910 $ 1,771
Corporate and Other.................................. 2,611 1,918
-------- --------
Total.................................................. $ 6,521 $ 3,689
-------- --------
Identifiable Assets (Restated):
Medical Instrumentation Technology Products.......... $214,656 $190,731
Corporate and Other.................................. 126,354 125,993
-------- --------
Total.................................................. $341,010 $316,724
-------- --------
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ANALOGIC CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
Three Months Fiscal 2001 (10/31/00) vs. Three Months Fiscal 2000 (10/31/99)
Product, service, engineering and licensing revenues for the three months
ended October 31, 2000 were $77,478,000 as compared to $59,760,000 for the same
period last year, an increase of 30%. The increase of $17,718,000 was due to an
increase in sales of Medical Technology Products of $12,140,000, 27% over prior
year, primarily due to digital radiography systems and fully featured mid-range
of Computed Tomography (CT) systems, an increase in sales of $3,951,000, 76%
over prior year, in Industrial Technology Products due to strong demand for the
Company's high frequency, Automatic Test Equipment (ATE) boards, and an increase
of sales in Signal Processing Technology Products of $1,627,000, 18% over prior
year, due to the demand for its multi-processor systems used in some of the most
advanced radar systems. Other operating revenue of $4,119,000 and $3,953,000
represents revenue from the Hotel operation for the three months ending October
31, 2000 and 1999, respectively.
Interest and dividend income decreased $182,000, primarily due to interest
earned from the City of Peabody on real estate tax abatements recorded in the
first quarter of fiscal 2000 of $253,000 versus $14,000 recorded in the first
quarter of fiscal 2001.
The percentage of total cost of sales to total net sales for the three
months of fiscal 2001 and fiscal 2000 was 65% and 64%, respectively. The
increase was primarily due to higher manufacturing costs and product mix. Other
cost of sales which represents costs associated with the Hotel during the first
three months of fiscal 2001 and 2000 were $1,736,000 and $1,682,000,
respectively.
General and administrative expenses for the first three months of fiscal
2001 were $7,328,000, or 9% of total revenue, as compared to $5,180,000, or 8%
of total revenue, for the same period last year. The increase of $2,148,000 was
primarily due to higher personnel-related costs and general expenses to support
the Company's strategic plan.
Selling and marketing expenses were $7,366,000 and $5,913,000 for the three
months of fiscal 2001 and 2000, respectively. The increase of $1,453,000 was
primarily due to higher personnel and related selling activity costs associated
with Camtronic's selling their products directly versus historically selling
through OEMs. Selling and marketing expenses as a percentage of total revenue
were 9% for both the three months of fiscal 2001 and 2000, as a result of
increased revenue.
Research and product development expenses were $9,573,000 for the first
three months of fiscal 2001, or 12% of total revenue, as compared to $9,611,000
for the same period of prior year or 15% of total revenue. The decrease of
$38,000 was primarily due to computer software cost capitalized during the
period.
Computer software costs of $729,000 and $504,000 were capitalized in the
first three months of fiscal 2001 and 2000, respectively. Amortization of
capitalized software amounted to $560,000 and $463,000 in the first three months
of fiscal 2001 and 2000, respectively.
The Company's share of the profit in a new privately held company amounted
to $397,000 during the first quarter of fiscal 2001, representing license
related royalties based on sales of medical imaging equipment. During the first
quarter of fiscal 2000, the Company recorded $1,049,000 share of losses in a
privately held company related to research and development costs for the design
and manufacture of medical imaging equipment.
To ensure that the Company has adequate time to review and adjust the
financial information provided by SAHCO to conform it to U.S. GAAP, the Company
has decided to change its method of recording SAHCO financial results and will
use the previous calendar quarters financial information of SAHCO to adjust its
investment account in the current quarter, thereby resulting in a consistently
applied quarterly delay in recording its equity based accounting. Accordingly,
the Company recognized its share of SAHCO previous
9
12
calendar quarter profit of $414,000 (or $282,000 net of tax effect) in the three
months ended October 31, 2000 and adjusted the beginning retained earnings by
the $282,000. This change has no impact in fiscal year 2000.
The Company recognized a loss of approximately $166,000 during the first
three months of fiscal 2001 on the value of the restricted securities it
received during fiscal 2000, as final distribution in a publicly traded company
from a limited partnership.
The effective tax rate for the first quarter of fiscal 2001 and 2000 was
32% and 31%, respectively.
Net income for the three months ended October 31, 2000 was $4,639,000
(restated) or $.36 (restated) per diluted share as compared with $2,518,000 or
$.20 per share for the same period last year. The increase was primarily related
to sales volume across all the product lines.
FINANCIAL CONDITION
The Company's balance sheet reflects a current ratio of 5.5 to 1 at October
31, 2000 compared to 6.0 to 1 at July 31, 2000. Cash, cash equivalents and
marketable securities, along with accounts and notes receivable, constitute
approximately 69% of current assets at October 31, 2000. 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 0.22 to 1 at October 31, 2000 and 0.20 July 31, 2000.
The Company faces limited exposure to financial market risks, including
adverse movements in foreign currency exchange rates and changes in interest
rates. These exposures may change over time as business practices evolve and
could have a material adverse impact on the Company's financial results. The
Company's primary exposure has been related to local currency revenue and
operating expenses in Europe.
The carrying amounts reflected in the consolidated balance sheets of cash
and cash equivalents, trade receivables, and trade payables approximate fair
value at October 31, 2000 due to the short maturities of these instruments.
The Company maintains a bond investment portfolio of various issuers,
types, and maturities. The Company's cash and investments include cash
equivalents, which the Company considers to be investments purchased with
original maturities of three months or less. Investments having original
maturities in excess of three months are stated at amortized cost, which
approximates fair value, and are classified as available for sale. A rise in
interest rates could have an adverse impact on the fair value of the Company's
investment portfolio. The Company does not currently hedge these interest rate
exposures.
Accounts and notes receivable increased $2,890,000 during the quarter ended
October 31, 2000 primarily due to days sales outstanding (DSO) increasing from
61 days to 64 days.
Inventory increased $6,471,000 during the first quarter ended October 31,
2000 primarily due to an increase in raw materials. The Company made the
decision to procure adequate supplies of key components to ensure that it could
meet customer requirements.
During October, 2000, Analogic Scientific, Inc. (ASI), a joint venture
corporation located in The People's Republic of China, entered into separate
agreements with four investors which resulted in these investors owning an 10.8%
equity interest in the company. This transaction had the approval of Analogic
Corporation and the other shareholder who prior to this transaction each had a
50% equity ownership interest in ASI. On January 18, 2001, the company name was
changed from "Analogic Scientific, Inc." to "Shenzhen Anke High-Tech Co., Ltd"
(SAHCO).
At October 31, 2000, the Company has a 44.6% ownership of ASI with a
carrying value of $3,750,000 (restated). The Company accounts for this
investment under the equity method of accounting whereby the Company has
adjusted the carrying amount to recognize the Company's share of the earnings or
losses, changes in its capital investment and dividends received by the Company.
The Company receives financial information from ASI on a quarterly basis for use
in accounting for the carrying value of the investment. Therefore, the Company
must make adjustments to the financial information received to have it be in
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accordance with US generally accepted accounting principles ("GAAP") due to the
estimates, judgments and differences in local statutory and U.S. GAAP. The
Company became aware of certain differences between local statutory and U.S.
GAAP during the current quarter. The Company concluded that adjustments were
necessary for prior periods resulting in a reduction in the Company's investment
of SAHCO of $2,375,000 (restated) at July 31, 2000 (or $1,808,000 (restated) net
of tax effect) which reduced the carrying value of the Company's investment at
July 31, 2000 from $6,125,000 to $3,750,000 (restated). Although this has the
effect of decreasing the Company's net profit by $42,000 (restated) in fiscal
year 2000, it has no impact in the net profit for the quarter ended October 31,
1999. Additionally, these adjustments have no impact in the net profit for the
quarter ended October 31, 2000.
Accounts payable trade increased $4,736,000 primarily due to increased
inventory purchases.
Net cash provided in investing activities was $2,664,000 for the first
quarter of fiscal 2001, versus net cash used in investing activities of
$5,237,000 for the same period last year. During the three months ended October
31, 2000, cash provided by investing activities was primarily used for the
purchase of property, plant and equipment of $2,290,000, offset by maturities of
marketable securities of $4,400,000.
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ANALOGIC CORPORATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned thereunto duly authorized.
/s/ JOHN J. MILLERICK
--------------------------------------
John J. Millerick
Senior Vice President,
Chief Financial Officer and
Treasurer (Principal Financial
and Accounting Officer)
Date: June 4, 2001
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