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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [Fee Required]
For the fiscal year ended: July 31, 1994 or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required]
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 (IRS Employer Identification No.)
incorporation or organization)
8 Centennial Drive, Peabody, Massachusetts ______01960_____
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (508) 977-3000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.05 par value
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes___X___ No_______
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
The aggregate market value of the Registrant's Common Stock held by
non-affiliates of the Registrant at August 30, 1994 was approximately
$118,801,840.
Number of shares of Common Stock outstanding at August 30, 1994:
12,348,807
DOCUMENTS INCORPORATED BY REFERENCE: NONE
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PART I
Item 1. Business
(a) Developments During Fiscal 1994
Total revenues of Analogic Corporation (hereinafter, together with
its subsidiaries, referred to as "Analogic" or the "Company") for the fiscal
year July 31, 1994, were $193,745,000 as compared to $177,876,000 for fiscal
year 1993, an increase of 9%. Net income was $14,657,000, or $1.18 per
share as compared to $12,445,000, or $1.01 per share for fiscal year 1993.
During fiscal 1993, Analogic invested $2,239,000 for a 41.5%
interest in a privately-held company located in Canada. This company is in
the business of designing, manufacturing and distributing medical electronic
equipment. During the first quarter of fiscal 1994, Analogic invested an
additional $760,000, increasing its equity interest to 44%. In connection
with this investment, a charge of $595,000 and $1,700,000 resulting from the
Company's share of losses has been recorded in fiscal 1994 and 1993,
respectively.
During January 1994, Analogic agreed to transfer its 44% interest in
this privately-held company to Park Meditech, Inc., located in Toronto,
Canada for 6,000,000 shares of Park Meditech, Inc. common stock plus
1,000,000 common stock warrants. Each warrant is exercisable at a price
of $5.00 (Canadian) into one share of Park common stock, and may be
exercised through April 1996. Park Meditech, Inc. shares are currently
traded on the Montreal Exchange (PKM) as well as the NASDAQ Small Cap
Exchange (PMDTF).
During April 1994, the Company purchased 300,000 units of Park
Meditech, Inc. for $824,000. Each unit consists of one common share of
Park Meditech, Inc. stock and one-half of a share warrant. Each share warrant
is convertible to one common share of Park Meditech, Inc. stock for a price of
$4.00 (Canadian) on or before December 15, 1995.
During fiscal 1993, Analogic invested $500,000 for a 51% interest in
a newly formed sales and marketing organization which was formed to
promote and sell an affiliated company's products in the United States and
certain other countries. An additional $125,000 was invested in this
company in September 1993. The 51% interest did not change. The
Company ceased operations of this sales and marketing organization during
fiscal 1994. No significant financial impact is anticipated on the Company's
future financial results.
As of January 1, 1993, the Company acquired an interest of
approximately 57% in a newly formed company, B&K Medical A/S ("B&K"),
for $3,607,000 in cash and a subordinated interest free short-term
loan of $3,500,000, which was converted to equity as of July 31, 1993.
The Company's ownership was adjusted upward to 59% during the year ended
July 31, 1994, in accordance with the shareholders' agreement. B&K, a
Danish Corporation, is primarily engaged in the design and manufacture of
ultrasound imaging devices used in urology and various sonographic
techniques. The acquisition was accounted for as a purchase and B&K's
results from operations, from the date of acquisition, have been included in
the Company's consolidated financial statements. The Company's equity in
net assets of B&K exceeded the purchase price by approximately $2,662,000.
This excess of acquired net assets over cost is being amortized over a five-
year period beginning in January 1993. Accumulated amortization amounted
to $843,000 and $266,000 as of July 31, 1994 and 1993, respectively.
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During fiscal 1994, the Company purchased 97,800 shares of its
common stock for the treasury at a cost of $1,543,000. On August 30,
1994, the Company has left to repurchase 378,221 shares against the
1,000,000 shares authorized in October 1991.
(b) Financial Information About Industry Segment
The Company's operations are within a single segment within the
electronics industry: the design, manufacture and sale of high-technology,
high-precision conversion (analog/digital) and signal processing instruments
and systems.
(c) Narrative Description of Business
Analogic designs, manufactures and sells standard and customized
high-precision data conversion and signal processing equipment. Analogic's
principal customers are original equipment manufacturers who incorporate
Analogic's state-of-the-art products into systems used in medical, industrial
and scientific applications.
Analogic is a leader in precision analog-to-digital (A/D) and digital
- - -to-analog (D/A) conversion technology, which involves the conversion of
continuously varying (i.e., "analog") electrical signals, such as those
representing temperature, pressure, voltage, weight, and velocity, into and
from the numeric (or "digital") form required by computers, medical imaging
equipment and other data processing equipment.
In addition to their A/D and D/A conversion capabilities, most of
Analogic's products perform calculations on the data being analyzed. Thus,
Analogic's products are an integral part of the communications link between
various analog sensors, detectors or transducers and the people or systems
which interpret or utilize this information.
Analogic's products may be divided for discussion purposes into three
groupings as described below. These products are classified by product
technology and not by application.
Signal Processing Technology Products, consisting of A/D and D/A
converters and supporting modules, high-speed digital signal processors such
as Array Processors, and image processing equipment, accounted for
approximately 18% of fiscal 1994 product, service, engineering, and
licensing revenue.
The technology developed by Analogic and incorporated within these
products is fundamental to all of the Company's other products.
A/D converters convert continuously varying "analog" signals into the
numerical "digital" form required by microprocessors and other data process-
ing equipment. D/A converters transform computer output in digital form
into the analog form required by process control equipment. Analogic
manufactures a wide variety of interconnecting and supporting modules
relating to its A/D and D/A converters. These include signal conditioning
devices, which amplify, isolate and filter physical analog signals;
multiplexing devices, which permit simultaneous processing of a number of
analog signals; and sample and hold devices, which sample rapidly varying
phenomena.
Analogic specializes in the manufacture of very precise, rather than
lower-cost, medium or low-precision, data conversion products. Typical
applications of these devices include the conversion of industrial and
biomedical signals into computer language.
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The Company also manufactures a line of PC/AT-class high
performance data acquisition cards. These plug-in cards provide personal
computer users with unprecedented data throughput and flexibility. The new
series of cards has a library of high level languages supported by third-party
software houses and proprietary set-up and diagnostic software.
Further, the Company manufactures a line of PC/AT-class video
acquisition cards. Used extensively for on-line, real-time applications, these
cards enable the user to acquire and process video information as well as
compare this information to known standards. Supported by several third-
party software houses, the product line also includes a user-friendly, menu-
driven software development package as well as high level languages.
Analogic manufactures array processors (special purpose computers)
which generally receive information from a host computer or data source,
rapidly perform the desired calculations, and return the processed data or
results to the host computer. The cost per calculation of array processors,
which can compute and/or manipulate data at the rate of ten or more million
operations per second, is less than that of general purpose computers.
Analogic believes its array processors have been cost effective when
compared with competitive array processors.
The Company is marketing its array processors for applications such
as geophysical exploration, speech processing, X-ray imaging, manufacturing
testing, and other technical and scientific areas. In addition, the Company
sells array processors used for image construction in Magnetic Resonance
Imaging (MRI) medical diagnostic systems. The Company also manufactures
Digital Signal Processing (D.S.P.) floating point products which are used in
the above mentioned markets. The SKY Computers, Inc. acquisition added
a line of desktop processors for workstations that provide super computing
performance for computation-intensive applications.
The Company also manufactures 8-bit grey scale and color video
frame grabbers for real-time digital image acquisition and display. These
products have a wide range of military and commercial applications.
Medical Technology Products, consisting primarily of medical
imaging equipment accounted for approximately 70% of product, service,
engineering, and licensing revenue in fiscal 1994.
Analogic's medical imaging data acquisition systems and related
computing equipment are incorporated by U.S., European and Asian
manufacturers into advanced X-ray equipment known as computer assisted
tomography (CAT) scanners. These scanners generate images of the internal
anatomy which are used primarily in diagnosing medical conditions.
Analogic's data acquisition and signal processing systems have advanced
CAT scanner technology by substantially increasing resolution of the image,
by reducing the time necessary to acquire the image, and by reducing the
computing time required to produce the image. Analogic supplies to its
medical imaging customers A/D conversion equipment and complete data
acquisition systems.
In addition, the Company manufactures phased array ultrasound
systems, key subsystems, and a family of transducers on an OEM basis for
ultrasound equipment manufacturers. The Company also designs and
manufactures radiology and urology ultrasound equipment. The Company
manufactures a family of hard copy laser printers for single and multi-user
configurations that address the diagnositic image market. The Company
manufactures fetal monitoring equipment for conversion and display of
biomedical signals. These monitors are designed for use in both antepartum
and intrapartum applications and have the capability to monitor and display
fetal heart rates. The Company also designs and manufactures for OEM
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customers advanced RF amplifiers, gradient coil amplifiers, and
spectrometers for use in MRI equipment. These MRI scanners are used
primarily to create diagnostic medical images.
The products manufactured by Camtronics, our 68% owned
subsidiary, are included herein as medical technology products. It designs
and manufactures state-of-the-art imaging processing products for diagnostic
and interventional applications in cardiac catheterization laboratories and
for other radiology procedures. They also manufacture optical multiformat
cameras used primarily in medical ultrasound and nuclear medicine
applications.
Industrial Technology Products, consisting of digital panel
instruments, industrial data acquisition and conversion systems, and test
and measurement devices and automation systems, accounted for approximately
12% of fiscal 1994 product, service, engineering, and licensing revenue.
Digital panel instruments measure analog inputs and visually display
the result in numerical (digital) form. They are sold to original equipment
manufacturers to be incorporated in products such as precision thermometers,
blood analyzers, and automatic test equipment. Certain of Analogic's digital
panel instruments incorporate specialized signal conditioning and computing
capabilities, and can transmit the measured value in digital form to remote
displays or to computers. The Company's Monitroller line of products
extends this capability still further by functioning as single loop process
controllers.
Industrial digitizing systems condition analog signals, translate
them to digital form with a high degree of precision, and perform subsequent
computations and calculations. These instruments are available as complete
standard instruments or are customized to particular applications for
incorporation into customers' products. Typical applications for these
systems are in static and dynamic weighing, measurement of pressure, force
or temperature, and engine power measurement as well as factory-wide
Distributed Control Systems.
Analogic's products also include a large number of standard and
customized A/D and D/A systems which can accept up to several thousand
channels of signals, perform precise signal conditioning, translate the data
into digital format and process the information via computer. Certain of the
customized subsystems include computing or computer-interfacing sub-units.
The Company manufactures complete data acquisition and conversion
systems used in a wide variety of industrial applications from process control
to emergency recording systems used in nuclear power plants. Also, a
family of high speed, 16-bit, multichannel data acquisition boards has been
designed to meet the stringent demands of fast and accurate measurements in
precision instrumentation environments.
Incorporating much of the same technology as the Company's medical
equipment, our sophisticated test instruments include general purpose digital
multimeters, which measure the basic parameters as voltage, current and
resistance, as well as temperature and frequency. The Company's universal
waveform analyzer line combines the features of a digital storage
oscilloscope, spectrum analyzer, array processor, and computer. The
Company is also a supplier of power supply test systems, static and dynamic
loads, and AC sources used for testing power supplies and other power
devices.
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The Company manufactures telecommunications products for use in
network monitoring and fault reporting. In addition, original equipment
manufacturers (OEM) purchase the Company's standard A/D, D/A and
digital signal processing products for specific production testing of
telecommunications equipment.
Marketing and Distribution
The Company sells its products domestically and abroad directly
through the efforts of its officers and employees and through a network of
independent sales representatives and distributors located in principal cities
around the world. In addition, Analogic subsidiaries act as its distributors
in England and Denmark. Domestically, Analogic has several regional sales
offices staffed by salespeople who sell the Company's products in the
surrounding areas and supervise independent sales representatives and
distributors in their regions. Some of Analogic's distributors also represent
manufacturers of competing products.
Sources of Components/Raw Materials
In general, Analogic's products are composed of company-designed
proprietary integrated circuits, printed circuit boards, and precision
resistor networks, all manufactured by others in accordance with Analogic's
specifications, as well as standard electronic integrated circuits,
transistors, displays and other components. Most items procured are believed
to be available from more than one source. However, it may be necessary, if
a given component ceases to be available, for Analogic to incur additional
expense in order to modify its product design to adapt to a substitute
component or to purchase new tooling to enable a new supplier to
manufacture the component. Also, from time to time the availability of
certain electronic components has been disrupted. Accordingly, Analogic
carries a substantial inventory of raw material components in an effort to
assure its ability to make timely delivery to its customers.
Patents and Licenses
The Company owns, or is licensee of, a number of patents of varying
durations. In the opinion of management, Analogic's present position and its
future prospects are a function of the level of excellence and creativity of
its engineers; patent protection is useful but of secondary importance.
Management is of the opinion that the loss of patent protection would not
have a material effect on the Company's competitive position.
Seasonal Aspect of Business
There is no material seasonal element to the Company's business,
although plant closings in the summer, particularly in Europe, tend to
decrease the activity of certain buying sources during the first quarter of
the Company's fiscal year.
Working Capital Matters
The Company does not carry a substantial inventory of finished goods
but does carry a substantial inventory of raw material components and work-
in-process to enable it to meet its customers' delivery requirements. (See
Note 3 of notes to consolidated financial statements.)
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Material Customers
The Company's three largest customers for the fiscal year ended July
31, 1994 were Siemens, a major German manufacturer of electronic and
electrical equipment; 3M Corporation; and General Electric Corporation,
which accounted for approximately 14%, 13%, and 8%, respectively, of
product, service, engineering, and licensing revenue. Loss of any one of
these customers would have a material adverse effect upon the Company's
business. With the exception of Siemens' acquisition of Medical Electronics
Laboratories, Inc., consummated in fiscal year 1989, neither Siemens, 3M
Corporation, nor General Electric Corporation has any other material
relationships with the Company except as significant and valued customers.
No other individual customer accounted for as much as 8% of the
Company's product, service, engineering, and licensing revenue during fiscal
1994. The Company's ten largest customers, including Siemens, 3M
Corporation, and General Electric Corporation, accounted for approximately
56% of product, service, engineering, and licensing revenue during fiscal
1994.
Backlog
The backlog of orders believed to be firm at July 31, 1994, was
approximately $46.5 million compared with approximately $37.2 million at
July 31, 1993. This increase is principally related to an increase in the
sales of medical technology products. Many of the orders in the Company's
backlog permit cancellation by the customer under certain circumstances.
To date, Analogic has not experienced material cancellation of orders. The
Company reasonably expects to ship most of its July 31, 1994, backlog during
fiscal 1995.
Government Contracts
The amount of the Company's business that may be subject to
renegotiation of profits or termination of contracts or subcontracts at the
election of the Government is insignificant.
Competition
Analogic is subject to competition based upon product design,
performance, pricing, quality and service. Analogic believes that its
innovative engineering and product reliability have been important factors
in its growth. While the Company tries to maintain competitive pricing on
those products which are directly comparable to products manufactured by
others, in many instances Analogic's products will conform to more exacting
specifications and carry a higher price than analogous products manufactured
by others.
Analogic's medical X-ray imaging systems are sufficiently specialized
so that Analogic is not aware of products marketed by others which may be
deemed directly competitive. The Company considers its selection by its
customers for design and manufacture of these products and its other medical
products to be much less a function of other competitors in the field than it
is of the "make-or-buy" decision of the individual customers. Many
customers and potential customers of the Company have the capacity to
design and manufacture these products for themselves. In the Company's
area of expertise, the continued signing of new contracts indicates continued
strength in the Company's relationship with its major customers, although
some of these customers continue to commit to shorter term contracts.
Analogic's competitors include divisions of some larger, more
diversified organizations, as well as several specialized companies. Some of
them have greater resources and larger staffs than Analogic. The Company
believes that, measured by total sales dollars, it is a leading manufacturer
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of CAT scanner and MRI electronic sub-systems, industrial digitizing systems
for the weighing industry, waveform analyzers and high-precision (14 bits or
greater) A/D and D/A converters. Other companies sell substantially more
converters than Analogic, but only a small portion of their products can be
used for the high-precision applications for which Analogic's products are
sold.
Research and Product Development
Research and product development is an important factor in
Analogic's business. The Company maintains a constant research and
development program directed toward the creation of new products as well
as toward the improvement and refinement of its present products and the
expansion of their uses and applications.
Company funds expended for research and product development
amounted to approximately $26,100,000 in fiscal 1994, $25,634,000 in fiscal
1993, and $21,986,000 in fiscal 1992. Analogic intends to continue its
emphasis on new product development. As of July 31, 1994, Analogic had
approximately 345 employees, including electronic development engineers,
software engineers, physicists, mathematicians, and technicians engaged in
research and product development activities. These individuals, in
conjunction with the Company's salespeople, also devote a portion of their
time assisting customers in utilizing the Company's products, developing new
uses for these products, and anticipating customer requirements for new
products.
During fiscal 1994, the Company capitalized $3,305,000 of computer
software testing and coding costs incurred after technological feasibility was
established. These costs will be amortized by the straight line method over
the estimated economic life of the related products, not to exceed three years.
Amortization of capitalized software amounted to $1,602,000 in fiscal 1994.
Environmental Protection
The Company does not anticipate any material effect upon its capital
expenditures, earnings or competitive position resulting from compliance by
it and its subsidiaries with presently enacted or adopted Federal, State and
local provisions regulating the discharge of materials into the environment,
or otherwise relating to the protection of the environment. (See Item 3 of
this Report, Legal Proceedings, Page 10.)
Employees
As of July 31, 1994, the Company had approximately 1,428
employees.
Financial Information About Foreign and Domestic Operations
and Export Revenue
Product, service, engineering, and licensing export revenue from
companies, primarily in Europe and Asia, amounted to approximately
$60,800,000 (34%) in fiscal 1994 as compared to approximately $66,900,000
(41%) in fiscal 1993, and approximately $65,900,000 (48%) in fiscal 1992.
Management believes that the Company's export revenue is at least as
profitable as its domestic revenue. Most of the Company's foreign revenue
is export revenue denominated in U.S. dollars. Management does not believe
the Company's foreign export revenue is subject to significantly greater risks
than its domestic revenue. See Note 15 of notes to consolidated financial
statements for further information regarding foreign and domestic operations.
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Item 2. Properties
Analogic's principal executive offices and a major manufacturing
facility are located in a building, owned by the Company, which it
constructed on its site in Peabody, Massachusetts (a suburb of Boston). This
facility consists of approximately 404,000 square feet of manufacturing,
engineering, and office space. The Company owns approximately 65 acres
of land at this location, which will accommodate future consolidation and
expansion as required. The Company uses approximately 7 1/2 acres of this
land for the Hotel (See note 2 of notes to consolidated financial statements
regarding the Hotel).
The Company's 68% owned subsidiary, Camtronics, owns a 40,000
square foot manufacturing and office building located in Hartland,
Wisconsin. Camtronics owns approximately eleven acres of land at this
location which should accommodate any future expansion requirements.
The Company leases approximately 9,000 square feet of office space
in a two-story building in Nordenstadt, Germany (a suburb of Wiesbaden).
The term of the lease is ten years commencing in April 1992. The lease may
be cancelled after five years.
The Company leases a modern one-story brick building containing a
total of approximately 41,000 square feet of manufacturing, engineering and
office space located in Wakefield, Massachusetts. This building is leased for
a term expiring on July 31, 2003.
The Company leases two modern adjacent brick and concrete block
buildings in Danvers, Massachusetts. These two buildings total
approximately 170,000 square feet of manufacturing, engineering and office
space and are leased for a term expiring on July 31, 2001. Both of these
buildings have been sublet on a self renewing lease to Siemens Medical
Electronics, Inc. for a term of three years initially ending on December 1,
1995, on a triple net basis.
The Company leases approximately 30,200 square feet of
manufacturing, engineering, and office space in Chelmsford, Massachusetts
which is occupied by SKY Computers, Inc. The space is leased for a seven-
year term expiring July 31, 1996.
The Company's 59% owned subsidiary, B&K Medical A/S, leases a
modern two-story building containing a total of approximately 41,000 square
feet of manufacturing, engineering, and office space. The building is located
in Gentofte, Denmark (a suburb of Copenhagen). The building is leased for
a term of ten years commencing in January 1993. The lease may be
cancelled by B&K after five years.
On August 25, 1993 the Company purchased a modern two-story
building containing approximately 49,000 square feet of manufacturing and
office space in Peabody, Massachusetts, adjacent to the Company's principal
executive offices. This building is presently leased to an unrelated
manufacturer for a term of five years ending on November 30, 1997.
See Item 13 of this Report and Note 6 of notes to consolidated
financial statements for further information concerning certain of the afore-
said leases.
Analogic and its subsidiaries lease various other facilities used for
sales and service purposes. The Company does not consider any of these
leases to be material.
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Analogic owns substantially all of the machinery and equipment used
in its business. Management considers that the Company's plant and
equipment are in good condition and are adequate for its current needs.
Item 3. Legal Proceedings
On or about February 26, 1990, the Company was impleaded as a
third-party defendant in United States of America vs. Charles George
Trucking Company, Inc., et al, an action filed in the United States District
Court for Massachusetts. The matter has been previously reported; see Item
3 of the Company's report on Form 10-K for the fiscal year ended July 31,
1993. On September 13, 1994, the United States Court of Appeals for the
First Circuit upheld the reasonableness of the consent agreement resolving the
Company's involvement in the litigation. In a separate related action pending
in the Massachusetts Superior Court brought by the Company against its
insurers for their failure to defend the Company and to reimburse it for its
settlement contribution in the Charles George litigation, partial summary
judgment has been granted in the Company's favor, finding that its insurers
had a duty to defend the Company.
Bernard L. Freidman, a former officer and vice chairman of the
Company's Board of Directors instituted suit against the Company on or
about January 10, 1994. Mr. Friedman is the general partner of a limited
partnership which rents property to the Company in Wakefield,
Massachusetts, and at the time of the negotiation and execution of the lease,
was an officer and/or director of the Company. Mr. Friedman, as general
partner, claims that the Company has failed to pay rent according to the
terms of the lease. The Company denies Mr. Friedman's assertions and has,
in addition, brought a counterclaim against him, in his capacity as general
partner for all rents paid in excess of the agreed upon rent.
The Company also filed a third-party complaint against Mr.
Friedman, individually, in connection with the lease. While in the opinion
of management, the amounts at issue in this litigation will not have a material
effect on the Company's business, management believes that in view of his
former positions with the Company, Mr. Friedman's actions nevertheless
warrant disclosure.
Bernard M. Gordon, President and Chairman of the Board of
Directors of the Company, is a limited partner in the partnership. He has
advised the Board that he objects to the rent increase sought by Mr.
Friedman and has further advised the Board that in the event the partnership
prevails in its claim for a rent increase, Gordon will return to the Company
all amounts he receives from the partnership which represent his share of
rents paid by Analogic in excess of the fair rental value of the property.
The Company does not have any other material pending legal
proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
NONE
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PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters
The Company's Common Stock is traded in the NASDAQ National
Market System. The following table sets forth the range of high and low
closing prices for the Common Stock, as reported by NASDAQ during the
quarterly periods indicated:
Fiscal Year High Low
1994 First Quarter $15.38 $13.50
Second Quarter 16.25 13.50
Third Quarter 18.12 14.62
Fourth Quarter 17.25 14.75
1993 First Quarter $11.75 $10.38
Second Quarter 15.50 10.38
Third Quarter 15.88 13.62
Fourth Quarter 16.62 13.12
The Company's Common Stock has traded in the NASDAQ National
Market System, and therefore, the high and low prices reflect actual
transactions.
As of August 30, 1994, there were approximately 1,025 holders of
record of the Common Stock.
No cash dividends have been declared on the Common Stock. The
policy of the Company is to retain earnings to provide funds for the operation
and expansion of its business, and while there are no covenants which restrict
dividend payment, the Company has no present intention of paying cash
dividends.
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Item 6. Selected Financial Data
(Thousands of dollars, except per share data)
Year Ended July 31
1994 1993 1992 1991 1990
Total Revenues $193,745 $177,876 $149,244 $142,563 $143,556
Income from
operations 18,205 18,256 8,054 17,391 17,920
Net Income 14,657 12,445 9,910 12,239 12,431
Earnings per
common and common
equivalent share $1.18 $1.01 $.78 $.91 $.85
Number of shares
used in computation
of per share data 12,434 12,301 12,715 13,451 14,639
Working Capital $150,571 $139,587 $119,029 $128,727 $124,152
Total Assets 239,620 223,423 196,966 190,482 185,355
Long-term debt
(including
capitalized
leases) 10,993 13,205 16,482 13,022 11,177
Stockholders'
Equity 184,391 168,907 155,859 157,316 153,501
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Item 7. Management's Discussion and Analysis of Financial
Conditions and Results of Operations
Results of Operations
Fiscal 1994 Compared to Fiscal 1993
Product, service, engineering, and licensing revenues for fiscal 1994 were
$179,951,000 as compared to $165,001,000 for fiscal 1993. The increase of
$14,950,000 was principally due to an increase in sales of Medical Technology
Products of $23,578,000 offset by decreased sales of Signal Processing
Technology Products of $7,448,000 and Industrial Technology Products of
$1,180,000. The increase in Medical Technology Products sales are primarily
due to the inclusion of B&K. Other operating revenue of $9,166,000 and
$8,556,000 represents revenue from the Hotel operation for fiscal 1994 and
1993, respectively.
The percentage of total cost of sales to total net sales for fiscal 1994 and
1993 was 55%. Operating costs associated with the Hotel for fiscal years
1994 and 1993 were $5,258,000 and $5,095,000, respectively.
General and administrative and selling expenses increased $7,282,000 primarily
due to the inclusion of B&K. Research and product development expenses
increased $466,000 due to the addition of staff supporting new medical
technology product development programs.
Computer software costs of $3,305,000 and $2,127,000 were capitalized in
fiscal 1994 and 1993, respectively. Amortization of capitalized software
amounted to $1,602,000 and $1,218,000 in fiscal 1994 and 1993, respectively.
The amortization of the excess of cost over fair value of net assets acquired
from Camtronics was $208,000 and $184,000 in fiscal 1994 and 1993,
respectively. The amortization of the excess of cost over fair value of net
assets acquired from SKY was $179,000 and $177,000 in fiscal 1994 and 1993,
respectively.
The amortization of excess of fair value of net assets over cost acquired from
B&K was $577,000 and $266,000 in fiscal 1994 and 1993, respectively.
During fiscal 1994 and 1993, the Company's investment in Analogic Scientific
was increased by $2,000,000, reflecting the Company's share of Analogic
Scientific's income. In fiscal 1994 and 1993, the Company's investment was
reduced by a cash dividend received of $300,000 and $500,000, respectively.
Equity in net losses of an unconsolidated affiliate located in Canada,
amounted to $595,000 and $1,700,000 during fiscal 1994 and 1993, respectively.
(See Note 4 of notes to consolidated financial statements.)
Minority interest in the net income of the Company's consolidated subsidiary,
Camtronics, in fiscal 1994 and 1993 amounted to $1,157,000 and $1,166,000,
respectively.
Minority interest in the net losses of a domestic subsidiary in fiscal 1994
and 1993 amounted to 177,000 and $435,000, respectively. The Company ceased
operations of this sales and marketing organization during the third quarter
of fiscal 1994. No significant financial impact is anticipated on the
Company's future financial results.
Minority interest in the net income of the Company's consolidated foreign
subsidiary, B&K, in fiscal 1994 was $935,000. During Fiscal 1993, minority
interest in the net loss of B&K was $169,000.
14
The effective tax rate for fiscal 1994 was 16% vs. 30% for fiscal 1993. The
decrease is primarily due to a tax loss benefit related to the dissolution of
a foreign subsidiary for which there was no impact on income before income
taxes.
Net income for fiscal 1994 was $14,657,000, or $1.18 per share as compared
with $12,445,000, or $1.01 per share for fiscal 1993.
Fiscal 1993 Compared to Fiscal 1992
Product, service, engineering, and licensing revenues for fiscal 1993 were
$165,001,000 as compared to $136,990,000 for fiscal 1992. The increase of
$28,011,000 was principally due to an increase in sales of Medical Technology
Products of $23,370,000 and Signal Processing Technology Products of
$7,601,000 offset by decreased sales of Industrial Technology Products of
$2,960,000. The increase in Medical Technology Products sales are primarily
due to the inclusion of B&K and the increase in Signal Processing Technology
sales are primarily due to SKY. Other operating revenue of $8,556,000 and
$8,088,000 represents revenue from the Hotel operation for fiscal 1993 and
1992, respectively.
The percentage of total cost of sales to total net sales for fiscal 1993 and
1992 was 55% and 61%, respectively. The decrease was due primarily to the
inclusion of B&K and SKY generating proportionately higher margins than the
Company's traditional revenue sectors. Operating costs associated with the
Hotel for fiscal years 1993 and 1992 were $5,095,000 and $5,165,000,
respectively.
General and administrative and selling expenses increased $9,026,000 primarily
due to the inclusion of SKY, B&K and a majority-owned subsidiary. Research
and product development expenses increased $3,648,000 due to the addition of
staff supporting new product development programs and the inclusion of B&K
within the Medical Technology Products sector along with the addition of SKY
within the Signal Processing Technology sector.
Interest expense decreased $411,000 primarily due to the reduction of debt
incurred in connection with the purchase of the Hotel.
Computer software costs of $2,127,000 and $1,715,000 were capitalized in
fiscal 1993 and 1992, respectively. Amortization of capitalized software
amounted to $1,218,000 and $1,022,000 in fiscal 1993 and 1992, respectively.
The amortization of the excess of cost over fair value of net assets acquired
from Camtronics was $184,000 and $159,000 in fiscal 1993 and 1992,
respectively. The amortization of the excess of cost over fair value of net
assets acquired from SKY was $177,000 and $62,000 in fiscal 1993 and 1992,
respectively.
The amortization of excess of fair value of net assets over cost acquired
from B&K was $266,000 during fiscal 1993.
During fiscal 1992, a wholly-owned foreign subsidiary sold real estate in
Nordenstadt, Germany, for a gain of $1,864,000.
During fiscal 1993 and 1992, the Company's investment in Analogic Scientific
was increased by $2,000,000 and $3,423,000, respectively, reflecting the
Company's share of Analogic Scientific's income. In fiscal 1993 and 1992,
the Company's investment was reduced by a cash dividend received of $500,000
and $1,423,000, respectively.
15
Fiscal 1993 includes a $1,700,000 charge resulting from the Company's share of
equity in losses of a privately-held company located in Canada.
Minority interest in the net income of the Company's consolidated subsidiary,
Camtronics, in fiscal 1993 and 1992 amounted to $1,166,000 and $959,000,
respectively.
Minority interest in the net losses of a domestic subsidiary and B&K during
fiscal 1993 were $435,000 and $169,000, respectively.
The effective tax rate for fiscal 1993 was 30% vs. 19% for fiscal 1992. The
increase is primarily due to lower nontaxable interest and dividend income as
a percentage of taxable income in fiscal 1993 vs. fiscal 1992. The increase
was also due to taxable income from a foreign investment in fiscal 1993 vs.
nontaxable income in fiscal 1992 from the foreign investment. In addition,
fiscal 1992 included nontaxable net profits of a foreign subsidiary.
Net income for fiscal 1993 was $12,445,000, or $1.01 per share as compared
with $9,910,000, or $.78 per share for fiscal 1992.
During fiscal 1992, the Company adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes." The adoption of Statement
109 did not have a material impact on the Company's consolidated financial
statements.
Financial Position
The Company's balance sheet at July 31, 1994, reflects a current ratio of 6.8
to 1, compared to 6.4 to 1 at July 31, 1993. Cash, cash equivalents and
marketable securities, along with accounts and notes receivable, constitute
approximately 74% of current assets at July 31, 1994. 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 d
ebt to equity ratio was .30 to 1 at July 31, 1994 and .32 to 1 at July 31,
1993.
Capital expenditures for fiscal 1994 totaled approximately $7,326,000.
As part of a stock repurchase program authorized by the Board of Directors,
the Company made the following purchases of common stock for its treasury:
97,800 shares during fiscal 1994 at an aggregate cost of $1,543,000; 121,200
shares during fiscal 1993 at an aggregate cost of $1,363,000 and 1,103,300
shares during fiscal 1992 at an aggregate cost of $12,279,000.
Impact of Inflation
Overall, inflation has not had a material impact on the Company's operations
during the past three fiscal years.
Effect of Recently Issued Accounting Standards
In May, 1993, Statement of Financial Accounting Standards No. 115, "Accounting
for Certain Investments in Debt and Equity Securities" ("SFAS. No. 115"), was
issued. The Company will adopt SFAS No. 115 in the first quarter of fiscal
1995.
16
The Company's marketable securities are expected to be categorized as
available - for - sale securities, as defined by SFAS No. 115, and will be
reflected on the balance sheet at fair value. Unrealized holding gains and
losses will be reflected as a net amount in a separate component of stock-
holders' equity until realized. The impact on the Company's financial
position and results of operations is not expected to be material.
Item 8. Financial Statements and Supplementary Data
The Financial statement and supplementary data are listed under PART IV,
Item 14 in this Report.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None
17
PART III
Item 10. Directors and Executive Officers of the Registrant
(a) Directors
Other Offices Held
Director Expiration As of
Name Age Since of Term* __August 30, 1994__
Bernard M. Gordon 67 1969 1995 Chairman of the
Board and President
John A. Tarello 63 1979 1995 Senior Vice
President and
Treasurer
M. Ross Brown 60 1984 1996 Vice President
Edward F. Voboril 51 1990 1996 ---
Gerald L. Wilson 55 1980 1995 ---
Bruce R. Rusch 51 1993 1997 Vice President
Bruce W. Steinhauer 59 1993 1997 ---
*The Board of Directors is divided into three classes, each having a three
year term of office. The term of one class expires each year. Directors hold
office until the Annual Meeting of Stockholders held during the year noted
and until their respective successors have been duly elected and qualified.
18
(b) Executive Officers
Date Since
Office
Name Age Offices Held Has Been Held
Bernard M. Gordon 67 Chairman of the Board 1969 & 1980,
and President respectively
John A. Tarello 63 Senior Vice President 1980 & 1985,
and Treasurer respectively
M. Ross Brown 60 Vice President 1984
Julian Soshnick 62 Vice President, 1982
General Counsel,
and Clerk
Bruce R. Rusch 51 Vice President 1993
Each such officer is elected for a term continuing until the first
meeting of the Board of Directors following the annual meeting of
stockholders, and in the case of the President, Treasurer and Clerk, until
their successors are chosen and qualified; provided that the Board may
remove any officer with or without cause.
(c) Identification of certain significant employees:
None
(d) Family relationships:
None
(e) Business Experience:
Bernard M. Gordon has been the Chairman of the Board of Directors
of the Company since 1969 and President since 1980.
19
John A. Tarello was the Company's Controller from May 1970
through July 1982, a Vice President of the Company from 1971 to 1980, and
has been Senior Vice President since 1980, and Treasurer since 1985. He
is also a director of Spire Corporation.
M. Ross Brown joined the Company in August 1984 and is
responsible for managing its manufacturing operations. He was elected a
Vice President in October 1984. Before joining the Company, Mr. Brown
was with CBS Musical Instrument Division for more than fifteen years where
he most recently served as Division Vice President.
Julian Soshnick joined Analogic in October 1981 as General Counsel
after twenty-five years of distinguished law practice, including serving as
an Assistant Attorney General of Massachusetts. Mr. Soshnick has served as
a Vice President since July 1982 and Clerk since 1988.
Dr. Gerald L. Wilson is the former Dean of the School of
Engineering at Massachusetts Institute of Technology and the Vannevar Bush
Professor of Engineering at the Massachusetts Institute of Technology. Dr.
Wilson has served on MIT's faculty since 1965 and currently serves as a
Professor of Electrical and Mechanical Engineering. He is a director of
Commonwealth Energy Systems. He also served as Vice President of
Technology and Manufacturing for Carrier Corporation during 1991 and
1992.
Edward F. Voboril is President and CEO of Wilson Greatbatch Ltd.
of Clarence, New York. For three years ending in 1989, he was a Vice
President of PPG Industries. Prior to that, he was a Vice President of
Honeywell, Inc., and General Manager of its medical electronics business.
Bruce R. Rusch was appointed a Vice President of the Company in
January 1993. Mr. Rusch has been President of SKY Computers, Inc. since
1987. SKY Computers, Inc. was acquired by Analogic effective April 1,
1992.
Dr. Bruce W. Steinhauer has been Chief Executive Officer of the
Lahey Clinic in Burlington, Massachusetts since early 1992. Prior to that
he was Senior Vice President for Medical Affairs and Chairman of the
Board of Governors for the Medical Group Practice of the Henry Ford
Hospital from 1988 to 1992.
(f) Involvement in certain legal proceedings:
None
(g) Promoters and Control Persons
Inapplicable
Compliance with Section 16(a) of the Exchange Act
The Company is unaware of any failure to file on a timely basis any
reports required by Section 16(a) of the Exchange Act by any "reporting
person," pursuant to Item 405 of Regulation S-K.
20
Item 11. Executive Compensation
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain compensation information for
the Chief Executive Officer and each of the next four most highly compensated
executive officers of the Company during the last fiscal year ("Named
Officers") for services rendered in all capacities for the last three fiscal
years.
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
Restricted All Other
Name and Total Annual Stock Awards Stock Options Compensation
Principal Position Year Salary Bonuses Compensation ($) (B) (A) # (E) ($) (F)______
Bernard M. Gordon 1994 $300,000 $50,000 $350,000 ---- ---- $4,698
Chairman and President 1993 285,000 35,000 320,000 ---- ---- 3,997
1992 285,000 40,000 325,000 ---- ---- 3,797
John A. Tarello 1994 $195,000 $35,000 $230,000 ---- ---- $3,842
Senior Vice President 1993 185,000 30,000 215,000 $595,000 (C) 10,000 3,355
and Treasurer 1992 185,000 35,000 220,000 ---- ---- 3,076
M. Ross Brown 1994 $175,000 $30,000 $205,000 ---- ---- $3,316
Vice President 1993 165,000 25,000 190,000 $446,250 10,000 2,887
1992 165,000 30,000 195,000 ---- ---- 2,624
Julian Soshnick 1994 $175,000 $30,000 $205,000 ---- ---- $3,345
Vice President and 1993 165,000 25,000 190,000 $520,625 (D) 5,000 2,912
General Counsel 1992 165,000 20,000 185,000 ---- ---- 2,648
Bruce R. Rusch 1994 $159,958 $47,000 $206,958 ---- ---- ----
Vice President 1993 139,000 20,000 159,000 $635,625 ---- ----
1992 ----- ----- ----- ---- ---- ----
21
Notes To Summmary Compensation Table
___________________________________
(A) Represents stock grants under the Company's Key Employee Stock
Bonus Plan dated March 14, 1983, as amended and restated on January
27, 1988, pursuant to which Common Stock of the Company may be granted
to key employees to encourage them to exert their best efforts on behalf
of the Company. Each Recipient of the Common Stock pursuant to the Bonus
Plan is required to execute a noncompetition agreement in a form
satisfactory to the Company. The Bonus Plan is administered by a
committee appointed by the Board of Directors consisting of the Chairman
of the Board and three other Directors who are not eligible to
participate in the Bonus Plan. Generally, the Common Stock granted
pursuant to the Bonus Plan is not transferable for a period of three
years from the date of the grant and is subject to a risk of forfeiture
in the event that the recipient leaves the employ of the Company during
this period for any reason. Generally, during the subsequent four-year
period, the transfer restrictions will lapse with respect to 25% of
the Common Stock for each year the recipient remains in the
employ of the Company. Failure to remain in the Company's
employ during all of the subsequent four-year period will result
in a forfeiture of shares as to which restrictions on disposition
still exist. The Common Stock granted pursuant to the Bonus
Plan is held in escrow by the Company until such restrictions on
disposition lapse. However, while in escrow, the recipient has
the right to vote such shares of Common Stock and to receive
any cash dividends thereon. The Board of Directors, acting
upon the recommendation of the Stock Bonus Plan Committee,
may at the time of grant designate a different schedule upon
which the transfer restrictions lapse.
(B) As of July 31, 1994, the following table reflects the aggregate stock
bonus awards for which transfer restrictions have not yet lapsed:
Shares Market Value
John A. Tarello 20,000 $297,500
M. Ross Brown 30,000 446,250
Julian Soshnick 35,000 520,625
Bruce R. Rusch 45,000 635,625
(C) Represents a stock grant of 40,000 shares on March 12, 1993. Transfer
restrictions, with respect to 25% of the shares granted, lapsed on May
20, 1993 and 25% lapsed on May 20, 1994. Transfer restrictions with
respect to an additional 25% of the shares will lapse on May 20, 1995
and May 20, 1996, respectively.
(D) Represents a stock grant of 35,000 shares on March 12, 1993. Transfer
restrictions, with respect to 25% of the shares granted, will lapse on
August 17, 1994; August 17, 1995; August 17, 1996; and August 17,
1997, respectively.
(E) Represents options granted pursuant to the Key Employee Stock Option
Plan dated March 14, 1983, as amended and restated January 28, 1987.
Details of stock options are more fully explained in the following two
tables.
(F) Represents amounts allocated to the Named Officers pursuant to the
Company's profit sharing plan under which it may, but is not required
to, make contributions to a trust for the purpose of providing
retirement benefits to employees.
22
STOCK OPTION GRANTS IN LAST FISCAL YEAR
There were no stock options awarded to named officers under the
Company's Key Employee Stock Option Plans during the last fiscal year.
STOCK OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table indicates (i) stock options exercised by the
Named Officers during the last fiscal year; (ii) the number of shares
subject to exercisable (vested) and unexercisable (unvested) stock options
as of July 31, 1994; and (iii) the fiscal year-end value of "in-the-money"
unexercised options.
Number of Value of Unexercised
Number of Unexercised Options In-The-Money Options
Shares Acquired Value at Fiscal Year End At Fiscal Year End (A)(B)
Name On Exercise Realized (A) Exercisable Unexercisable Exercisable Unexercisable
Bernard M. Gordon ---- ---- ---- ---- ---- ----
John A. Tarello ---- ---- 10,000 5,000 $42,500 $5,625
M. Ross Brown ---- ---- ---- 10,000 ---- $11,250
Julian Soshnick ---- ---- ---- 5,000 ---- $ 5,625
Bruce R. Rusch ---- ---- ---- ---- ---- ----
___________________________________
(A) The value realized or the unrealized value of in-the-money options at
year-end represents the aggregate difference between the market value
on the date of exercise, or July 31, 1994, in the case of the unrealized
values and the applicable exercise prices.
(B) "In-the-money" options are options whose exercise price was less than the
market price of Common Shares at July 31, 1994.
23
Compensation of Directors
Each director who is not an employee of the Company is entitled to
an annual fee of $8,000 plus a fee of $500 per meeting for each of the first
four meetings of the Board or any Board Committee attended by him, together
with reimbursement of travel expenses under certain circumstances.
In February 1988, the Board of Directors adopted and stockholders
approved at the January 1989 Annual Meeting of Stockholders, the 1988
Non-Qualified Stock Option Plan for Non-Employee Directors (the "1988 Plan").
Pursuant to the 1988 Plan, options to purchase 50,000 shares of common stock
may be granted only to directors of the Company or any subsidiary who are not
otherwise employees of the Company or any subsidiary. The exercise price of
options granted under the 1988 Plan is the fair market value of the Common
Stock on the date of grant. The 1988 Plan provides that each Non-Employee
director as of the date on which the Board of Directors adopted the 1988 Plan
shall be granted an option to acquire 5,000 shares. Each Non-Employee
director who is subsequently elected to the Board of Directors shall be
granted an option to acquire 5,000 shares after one year of service.
Options granted under the 1988 Plan are exercisable for a nine-year
period commencing one year after the date of grant. During that exercise
period, subject to the occurrence of certain events, options may be exercised
only to the extent of (a) 33 1/3% of the number of shares covered by the
option one or more years after the date of grant, (b) 66 2/3% of the number
of shares subject to the option two or more years after the date of grant,
and (c) 100% of the number of shares subject to the option three or more
years after the date of grant.
The 1988 Plan is administered by members of the Company's Board of
Directors.
Pursuant to the 1988 Plan, the Company granted options to purchase
5,000 shares to Mr. Wilson on February 1, 1988, at an option price of $7.125
per share; to Mr. Voboril on June 21, 1991, at an option price of $10.875;
and to Mr. Steinhauer on October 8, 1993, at an option price of $14.75 per
share. As of August 30, 1994, Mr. Wilson had exercised 4,000 shares and
1,000 shares remained exercisable; Mr. Voboril was entitled to exercise 5,000
shares; and Mr. Steinhauer's options were not yet exercisable.
24
Item 12. Security Ownership of Certain Beneficial Owners and
Management
(a) The following table sets forth information as to all persons
(including any "group", as defined) known by the Company to have owned
beneficially 5% or more of its Common Stock, $.05 par value, as of August 30,
1994:
Amount and Nature of Percent
Name and Address Beneficial Ownership of Class
Bernard M. Gordon Charitable 4,720,192 shares (1)(2) 38.2%(1)(2)
Remainder Unitrust
Bernard M. Gordon
Julian Soshnick
Gerald P. Bonder, Trustees
8 Centennial Drive
Peabody, MA 01960
FMR Corporation 1,489,300 shares (3) 12.1%(3)
82 Devonshire Street
Boston, MA 02109
Private Capital Management Inc. 619,800 shares (3) 5.0%(3)
3003 Ninth Street
Naples, FL 33940
__________________________________
(1) Exclusive of 6,000 shares owned by Mr. Gordon's wife, as to which
he disclaims any beneficial interest.
(2) Mr. Gordon serves as Trustee of the Bernard Gordon Charitable
Remainder Unitrust (the "Trust") along with Julian Soshnick and
Gerald P. Bonder. The three Trustees, acting by a majority, have
full power to vote or dispose of the shares held by the Trust. Upon the
death of Mr. Gordon, all of the assets of the Trust, in general, will be
distributed to The Gordon Foundation, a Section 501(c)(3) trust formed
by Mr. Gordon with its principal office located at 8 Centennial Drive,
Peabody, Massachusetts.
(3) The Company has been advised informally by FMR Corporation and
Private Capital Management Inc.that in their capacity as investment
advisors they may be deemed a beneficial owner on August 30, 1994, of
1,489,300 shares, or 12.1% of the Company's Common Stock and 619,800
shares, or 5.0% of the Company's Common Stock, respectively.
25
(b) The following table sets forth information as to
ownership of the Company's Common Stock, $.05 par value, by
its directors and by all directors and executive officers as a group,
as of August 30, 1994:
Amount and Nature of Percent
Identity of Person Beneficial Ownership(1) of Class
Bernard M. Gordo 4,720,192 shares (2)(3) 38.2%
John A. Tarello 37,500 shares (4)(5) *
M. Ross Brown 42,500 shares (4) *
Bruce R. Rusch 45,000 shares (4) *
Gerald L. Wilson 2,000 shares (5) *
Edward F. Voboril 5,000 shares (5) *
All Directors and Executive
Officers as a group
(8 persons) 4,923,692 shares(4)(5) 39.9%
*Represents less than 1% ownership
______________________________
(1) The amounts shown are based upon information furnished by the individual
directors and officers. Unless otherwise noted, the beneficial owners
have sole voting and investment power with respect to the shares listed.
(2) Exclusive of 6,000 shares owned by Mrs. Gordon, in which Mr. Gordon
disclaims all beneficial interest.
(3) Mr. Gordon serves as Trustee of the Bernard Gordon Charitable
Remainder Unitrust (the "Trust") along with Julian Soshnick and
Gerald P. Bonder. The three Trustees, acting by a majority, have full
power to vote or dispose of the shares held by the Trust. Upon the
death of Mr. Gordon, all of the assets of the Trust, in general, will be
distributed to the Gordon Foundation, a Section 501(c)(3) trust formed
by Mr. Gordon with its principal office located at 8 Centennial Drive,
Peabody, Massachusetts.
(4) These amounts include certain shares issued under the Company's Key
Employee Stock Bonus Plan which are subject to forfeiture under
certain circumstances.
(5) These amounts include certain shares deemed beneficially owned under
Exchange Act Rule 13d-3(d)(1).
26
Item 13. Certain Relationships and Related Transactions
Mr. Bernard M. Gordon and Mr. Bernard L. Friedman, the Company's
former Vice Chairman of the Board (Mr. Friedman resigned on July 31, 1993),
each own 50% interest in a limited partnership (Audubon Realty), which owns
the Danvers, Massachusetts facilities leased by the Company for a term to
July 31, 2001. These facilities include a 50,000 square foot building
completed in 1978; a 40,000 square foot addition to that building, completed
in 1982; and an 80,000 square foot building which the Company moved into
during 1980. By an Amendment of Lease dated August 2, 1982, effective
September 1, 1982, the annual rent on the entire Danvers premises was
increased by $176,000 to reflect the addition of the 40,000 square feet to
the 50,000 square foot facility. All other terms and conditions of the
underlying lease remain unchanged. The fixed annual rent on the entire
170,000 square feet was increased from $1,008,000 to $1,042,000 as of
March 1, 1992, and shall be adjusted as of March 1 every third year to
reflect increases in the cost of living. Both of the facilities are sublet
on a self renewing lease to Siemens Medical Electronics, Inc. for a term of
three years initially ending on December 1, 1995, subject to an eighteen-month
notice of cancellation, on a triple-net basis.
Mr. Gordon and Mr. Friedman each own a 50% interest in a limited
partnership which owns the facility located at 360 Audubon Road, Wakefield,
Massachusetts, which is leased by the Company for a term of approximately
22 years, commencing May 1, 1981. This facility has been utilized by the
Company for manufacturing and office space since May 1, 1981. The terms
of this lease provide for rental adjustments every three years to reflect
increases in the cost of living. There is presently a disagreement between
the Company and Mr. Friedman, in his capacity as General Partner of
Audubon Realty Trust, with respect to the amount of rent payable under the
terms of this lease. This disagreement has led to legal proceedings as more
fully described in Item 3 of this report, "Legal Proceedings" on Page 10.
The potential amounts at issue, in the opinion of management, will not have
a material effect on the Company's business.
All of the foregoing rents are on a net lease basis, and accordingly
the Company pays, in addition to the above rental payments, all taxes,
maintenance, insurance, and other costs relating to the leased premises.
See Item 2 of this Report for information as to the character of the
leased premises, and Note 6 of notes to consolidated financial statements for
further information as to the leases.
Bernard M. Gordon, Chairman of Analogic, personally owns 72% of
the outstanding stock of UltraAnalog, Inc., which he acquired on October 2,
1989. UltraAnalog is a manufacturer of analog-to-digital and digital-to-
analog converters, located in Fremont, California. Analogic has the
irrevocable right to acquire Mr. Gordon's interest at his cost.
(b) Certain Business Relationships:
None
(c) Indebtedness of Management:
None
(d) Transactions with Promoters:
None
27
PART IV
Item 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
PAGE
NUMBER
(a) 1. Financial Statements
Report of independent accountants 29
Consolidated balance sheets at July 31, 1994
and 1993 30-31
Consolidated statements of income for the years
ended July 31, 1994, 1993 and 1992 32
Consolidated statements of stockholders' equity
for the years ended July 31, 1994, 1993 and 1992 33-35
Consolidated statements of cash flows for the
years ended July 31 1994, 1993 and 1992 36-37
Notes to consolidated financial statements 38-51
2. Financial Statement Schedules
I - Marketable Securities 52
V - Property, plant and equipment 53
VI - Accumulated depreciation and amortization
of property, plant and equipment 54-55
VIII - Valuation and qualifying accounts 56
X - Supplementary income statement information 57
Schedules other than those listed above have been omitted
because they are not required, not applicable, or the required
information is furnished in the consolidated statements or notes
thereto.
3. Exhibits - See Index to Exhibits 58-62
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the registrant during
the quarter ended July 31, 1994.
28
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ANALOGIC CORPORATION
By ________/s/ Bernard M. Gordon_________
Bernard M. Gordon
Chairman of the Board, President
Chief Executive Officer
Date: October 12, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Date: October 12, 1994 ______/s/ Bernard M. Gordon____________
Chairman of the Board, President,
Chief Executive Officer and Director
Date: October 12, 1994 _______/s/ John A. Tarello________________
Senior Vice President, Treasurer
and Director
Date: October 12, 1994 _______/s/ M. Ross Brown________________
Vice President and Director
Date: October 12, 1994 ______/s/ Bruce R. Rusch_________________
Vice President and Director
Date: October 12, 1994 ______/s/ Gerald L. Wilson________________
Director
29
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors
Analogic Corporation
Peabody, Massachusetts
We have audited the accompanying consolidated balance sheets of Analogic
Corporation and subsidiaries as of July 31, 1994 and 1993 and the related
consolidated statements of income, stockholders' equity, and cash flows and
the financial statement schedules listed in Item 14(a) of this Form 10-K for
each of the three years in the period ended July 31, 1994. These financial
statements and financial statement schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statement are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Analogic
Corporation and subsidiaries as of July 31, 1994 and 1993, and the results of
its operations and its cash flows for each of the three years in the period
ended July 31, 1994 in conformity with generally accepted accounting
principles. In addition, in our opinion, the financial statement schedules
referred to above, when considered in relation to the basic financial
statements taken as a whole, present fairly, in all material respects, the
information required to be included therein.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
September 8, 1994
30
Analogic Corporation and Subsidiaries
Consolidated Balance Sheets (000 omitted)
July 31,
1994 1993
Assets
Current assets:
Cash and cash equivalent $ 23,571 $ 20,482
Marketable securities, at cost which
approximates market 70,825 67,340
Accounts and notes receivable, net of allowance
for doubtful accounts (1994, $1,339; 1993, $1,518) 34,678 32,275
Accounts receivable, affiliate 961 841
Inventories 41,169 39,940
Prepaid expenses and other current assets 5,536 4,330
Total current assets 176,740 165,208
Property, plant and equipment, at cost:
Land and land improvements 4,252 3,739
Buildings 36,529 35,095
Property under capital leases 6,841 6,841
Leasehold and capital lease improvements 2,158 1,914
Manufacturing equipment 55,904 53,909
Furniture and fixtures 17,438 16,340
Motor vehicles 897 651
124,019 118,489
Less accumulated depreciation and amortization 76,088 71,202
47,931 47,287
Investments in and advances to affiliated
companies 7,977 5,289
Excess of cost over acquired net assets, net
of accumulated amortization 1,347 1,640
Other assets, including unamortized software
costs (1994, $5,244 ; 1993, $3,541) 5,625 3,999
$239,620 $223,423
The accompanying notes are an integral part of these financial statements.
31
Analogic Corporation and Subsidiaries
Consolidated Balance Sheets (000 omitted)
July 31,
1994 1993
Liabilities and stockholders' equity
Current liabilities:
Mortgage and other notes payable $ 1,975 $ 365
Obligations under capital leases 357 386
Accounts payable, trade 7,568 8,496
Accrued employee compensation and benefits 8,639 7,941
Accrued expenses 6,298 6,339
Accrued income taxes 1,332 2,094
Total current liabilities 26,169 25,621
Long-term debt:
Mortgage and other notes payable 7,381 9,227
Obligations under capital leases 3,612 3,978
10,993 13,205
Deferred income taxes 4,128 3,066
Minority interest in subsidiaries 12,120 10,611
Excess of acquired net assets over cost, net 1,819 2,013
Commitments
Stockholders' equity:
Common stock, $.05 par; authorized
30,000,000 shares; issued 1994, 13,602,325
shares; issued 1993, 13,517,599 shares 680 676
Capital in excess of par value 19,911 18,807
Retained earnings 180,222 165,565
Cumulative translation adjustments 558 (614)
201,371 184,434
Less:
Treasury stock, at cost (1994, 1,253,268
shares; 1993, 1,157,761 shares) 14,233 12,822
Unearned compensation 2,747 2,705
Total stockholders' equity 184,391 168,907
$239,620 $223,423
The accompanying notes are an integral part of these financial statements.
32
Analogic Corporation and Subsidiaries
Consolidated Statements of Income (000 omitted, except share data)
Years Ended July 31,
1994 1993 1992
Revenues:
Product and service, net $177,175 $160,764 $133,973
Engineering and licensing 2,776 4,237 3,017
Other operating revenue 9,166 8,556 8,088
Interest and dividend income 4,628 4,319 4,166
Total revenues 193,745 177,876 149,244
Cost of sales and expenses:
Cost of sales:
Product and service 95,506 87,439 81,486
Engineering and licensing 2,929 2,850 2,440
Other operating expenses 5,258 5,095 5,165
General and administrative 15,492 14,918 15,625
Selling 29,278 22,570 12,837
Research and product development 26,100 25,634 21,986
Interest expense 1,167 1,019 1,430
Amortization of excess of cost over
acquired net assets 387 361 221
Amortization of excess of acquired net
assets over cost (577) (266)
Total cost of sales and expenses 175,540 159,620 141,190
Income from operations 18,205 18,256 8,054
Gain on sale of real estate 1,864
Equity in net income (losses) of
unconsolidated affiliates 1,405 300 3,414
Income before income taxes 19,610 18,566 13,332
Provision for income taxes 3,038 5,549 2,463
Minority interest in net income of
consolidated subsidiaries 1,915 562 959
Net income $ 14,657 $ 12,445 $ 9,910
Earnings per common and common
equivalent share $1.18 $1.01 $.78
The accompanying notes are an integral part of these financial statements.
33
Analogic Corporation and Subsidiaries
Consolidated Statements of Stockholders' Equity - Years Ended
July 31, 1994, 1993 and 1992 (000 omitted, except share data)
Common stock Capital in
excess of Retained
Shares Amount par value earnings
Balance, July 31, 1991 14,088,207 $704 $22,994 $143,210
Retirement of treasury shares (1,020,352) (51) (9,141)
Shares issued pursuant to
stock grants, net of cancellation 18,500 1 201
Shares issued pursuant to
stock options 60,403 3 386
Purchases of treasury stock
Amortization of unearned
compensation
Amounts related to employee
stock purchase plan (14)
Income tax reduction relating
to stock options 90
Net income for the year 9,910
Balance, July 31, 1992 13,146,758 657 14,516 153,120
Shares issued pursuant to stock
grants, net of cancellations 188,750 10 2,669
Shares issued pursuant to stock
options 182,091 9 1,182
Purchases of treasury stock
Amortization of unearned
compensation
Amounts related to employee
stock purchase plan (5)
Income tax reduction relating
to stock options 445
Translation adjustments for
the year
Net income for the year 12,445
Balance, July 31, 1993 13,517,599 676 18,807 165,565
Shares issued pursuant to stock
grants, net of cancellations 48,750 2 696
Shares issued pursuant to
stock options 35,976 2 290
Purchases of treasury stock
Amortization of unearned
compensation
Amounts related to employee
stock purchase plan 19
Income tax reduction relating
to stock options 99
Translation adjustments for
the year
43
Net income for the year 14,657
Balance, July 31, 1994 13,602,325 $680 $19,911 $180,222
The accompanying notes are an integral part of these financial statements.
34
Analogic Corporation and Subsidiaries
Consolidated Statements of Stockholders' Equity - Years Ended
July 31, 1994, 1993 and 1992 (000 omitted, except share data)
Cumulative Treasury stock
translation
adjustments Shares Amount
Balance, July 31, 1991 (1,020,352) ($9,192)
Retirement of treasury shares 1,020,352 9,192
Shares issued pursuant to
stock grants, net of cancellation
Shares issued pursuant to
stock options 15,981 165
Purchases of treasury stock (1,103,300) (12,279)
Amortization of unearned
compensation
Amounts related to employee
stock purchase plan 8,568 94
Income tax reduction relating
to stock options
Net income for the year
Balance, July 31, 1992 (1,078,751) (12,020)
Shares issued pursuant to stock
grants, net of cancellations (9,375)
Shares issued pursuant to stock
options 43,721 475
Purchases of treasury stock (121,200) (1,363)
Amortization of unearned
compensation
Amounts related to employee
stock purchase plan 7,844 86
Income tax reduction relating
to stock options
Translation adjustments for
the year (614)
Net income for the year
Balance, July 31, 1993 (614) (1,157,761) (12,822)
Shares issued pursuant to stock
grants, net of cancellations (10,000)
Shares issued pursuant to
stock options 5,000 54
Purchases of treasury stock (97,800) (1,543)
Amortization of unearned
compensation
Amounts related to employee
stock purchase plan 7,293 78
Income tax reduction relating
to stock options
Translation adjustments for 1,172
the year
45
Net income for the year
Balance, July 31, 1994 $ 558 (1,253,268) ($14,233)
The accompanying notes are an integral part of these financial statements.
35
Analogic Corporation and Subsidiaries
Consolidated Statements of Stockholders' Equity - Years Ended
July 31, 1994, 1993 and 1992 (000 omitted, except share data)
Total
Unearned stockholders'
compensation equity
Balance, July 31, 1991 ($400) $157,316
Retirement of treasury shares
Shares issued pursuant to
stock grants, net of cancellations (202)
Shares issued pursuant to
stock options 554
Purchases of treasury stock (12,279)
Amortization of unearned
compensation 188 188
Amounts related to employee
stock purchase plan 80
Income tax reduction relating
to stock options 90
Net income for the year 9,910
Balance, July 31, 1992 (414) 155,859
Shares issued pursuant to stock
grants, net of cancellations (2,679)
Shares issued pursuant to stock
options 1,666
Purchases of treasury stock (1,363)
Amortization of unearned
compensation 388 388
Amounts related to employee
stock purchase plan 81
Income tax reduction relating
to stock options 445
Translation adjustments for
the year (614)
Net income for the year 12,445
Balance, July 31, 1993 (2,705) 168,907
Shares issued pursuant to stock
grants, net of cancellations (698)
Shares issued pursuant to
stock options 346
Purchases of treasury stock (1,543)
Amortization of unearned
compensation 656 656
Amounts related to employee
stock purchase plan 97
Income tax reduction relating
to stock options 99
Translation adjustments for
the year 1,172
Net income for the year 14,657
Balance, July 31, 1994 ($2,747) $184,391
The accompanying notes are an integral part of these financial statements.
36
Analogic Corporation and Subsidiaries
Consolidated Statements of Cash Flows (000 omitted)
Years Ended July 31,
1994 1993 1992
Cash flows from operating activities:
Net income $14,657 $12,445 $ 9,910
Adjustments to reconcile net income
to net cash provided by operating
activities:
Deferred income taxes 920 (53) 811
Depreciation 6,598 7,725 8,531
Amortization of capitalized software 1,602 1,218 1,022
Amortization of excess of cost over
net acquired assets 387 361 221
Amortization of excess of acquired
net assets over cost (577) (266)
Amortization of other assets (deferred
charges) 3 48 688
Minority interest in net income of
consolidated subsidiaries 1,915 562 959
Provision for losses on accounts
receivable (179) 120 301
Gain on sale of building (1,864)
Loss (gain) on sale of equipment (30) 140 (2)
Excess of equity in losses (income) of
unconsolidated affiliates over
dividend received (1,105) 200 (1991)
Compensation from stock grants 656 388 188
Changes in operating assets & liabilities
Decrease (increase) in assets:
Accounts and notes receivable (3,543) 6,733 1,048
Inventories (1,229) 1,876 1,532
Prepaid expenses and other current
assets 75 886 43
Other assets 74 (138) (278)
Increase (decrease) in liabilities:
Accounts payable, trade (928) (232) (1,594)
Accrued expenses and other current
liabilities 801 (5,723) 780
Accrued income taxes (762) 1,205 (974)
Total adjustments 4,678 15,050 9,421
Net cash provided by operating activities 19,335 27,495 19,331
Cash flows from investing activities:
Investments in and advances to affiliated
companies (1,583) (2,239)
Additions to property, plant and equipment (7,326) (4,425) (4,547)
Capitalized software (3,305) (2,127) (1,715)
Proceeds on sale of building 3,638
Proceeds from sale of property, plant and
equipment 114 64 47
Proceeds on maturities (purchases) of
marketable securities, net (3,485) (6,725) (1,555)
Acquisition of businesses, net of cash
acquired 3,239 (18,413)
Net cash used by investing activities (15,585) (12,213) (22,545)
Cash flows from financing activities:
Increase in debt 6,000
37
Analogic Corporation and Subsidiaries
Consolidated Statements of Cash Flows (000 omitted)
Years Ended July 31,
1994 1993 1992
Payments on debt and capital lease
obligations ( 631) (6,946) (2,200)
Purchase of common stock for treasury (1,543) (1,363) (12,279)
Purchase of common stock of majority
owned subsidiary (201) (513) (332)
Issuance of common stock pursuant to stock
options and employee stock purchase plan 542 2,191 724
Net cash used by financing activities (1,833) (6,631) (8,087)
Effect of exchange rate changes on cash 1,172
Net increase (decrease) in cash and cash
equivalents 3,089 8,651 (11,301)
Cash and cash equivalents, beginning of year 20,482 11,831 23,132
Cash and cash equivalents, end of year $23,571 $20,482 $11,831
The accompanying notes are an integral part of these financial statements.
38
ANALOGIC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of business operations and significant accounting policies:
Business operations:
The Company's operations consist of the design, manufacture and sale of
high-technology, high-precision analog/digital signal processing
instruments and systems.
Product, service, engineering and licensing export revenue, primarily
from customers in Europe and Asia, amounted to approximately $60,800,000
or 34%, 66,900,000 or 41%, and $65,900,000 or 48% of total product,
service, engineering and licensing revenue for the years ended July 31,
1994, 1993 and 1992, respectively.
Significant accounting policies are as follows:
(a) Principles of consolidation:
The consolidated financial statements include the accounts of the
Company, all wholly-owned and majority-owned subsidiaries.
Investments in companies in which ownership interests range from 20
to 50 percent 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.
All significant intercompany accounts and transactions have been
eliminated.
(b) Inventories:
Inventories are stated at the lower of cost or market.
Cost is determined on a first-in, first-out basis.
(c) Property, plant and equipment:
For financial reporting purposes, depreciation and amortization are
provided utilizing the straight-line method over the estimated
useful lives of the assets or lease terms, whichever is shorter,
and are computed principally utilizing accelerated methods for
income tax purposes. Property under capital leases is amortized
over the lease terms.
(d) Revenue recognition:
Revenues are recognized when a product is shipped or a service is
performed.
(e) software costs:
The Company capitalizes certain computer software costs which are
amortized utilizing the straight-line method over the economic
lives of the related products not to exceed three years.
Accumulated amortization approximated $5,321,000 and $3,719,000 at
July 31, 1994 and 1993, respectively.
39
ANALOGIC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of business operations and significant accounting policies:
(continued)
Business operations: (continued)
(f) Warranty costs:
The Company provides for estimated warranty costs as products are
shipped.
(g) Income taxes:
The Company does not provide U.S. Federal income taxes on
undistributed earnings of consolidated foreign subsidiaries as such
earnings are intended to be permanently reinvested in those
operations.
(h) Earnings per share:
Earnings per common and common equivalent share is based upon the
weighted average of common and common equivalent shares outstanding
during the year. Primary and fully diluted earnings per share are
the same. The number of common and common equivalent shares
utilized in the per share computations were 12,433,821, 12,301,007
and 12,715,043 in fiscal 1994, 1993 and 1992, respectively.
(i) Cash and cash equivalents:
The Company considers all short-term deposits with a maturity of
three months or less to be cash equivalents. Cash equivalents
amounted to approximately $21,135,000 and $15,978,000 at July 31,
1994 and 1993, respectively.
(j) Concentration of credit risk:
The Company grants credit to domestic and foreign original
equipment manufacturers, distributors and end users. 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.
(k) Newly issued accounting standards:
In May, 1993, Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities"
("SFAS. No. 115"), was issued. The Company will adopt SFAS No. 115
in the first quarter of fiscal 1995.
The Company's marketable securities are expected to be categorized
as available - for - sale securities, as defined by SFAS No. 115,
and will be reflected on the balance sheet at fair value.
Unrealized holding gains and losses will be reflected as a net
amount in a separate component of stockholders' equity until
realized. The impact on the Company's financial position and
results of operations is not expected to be material.
(l) Basis of presentation:
Certain financial statement items have been reclassified to conform
to the current year's format.
40
ANALOGIC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Business combinations:
The Company's subsidiary, Camtronics, has entered into an agreement with
the three founding stockholders ("Founders") who are also active
employees of Camtronics. The agreement requires Camtronics to purchase
up to 5% of the shares of common stock originally issued to the Founders
at their option during each fiscal year from 1992 through 1995 pursuant
to a predetermined formula. Commencing in 1996, the percentage of
originally issued shares which a Founder may require Camtronics to
purchase shall be negotiated and agreed upon by the Company. Absent an
agreement for a higher amount, the percentage shall be no less than 5%
per year. Furthermore, if a Founder does not exercise his right to
cause Camtronics to purchase his outstanding shares, such rights shall
not lapse, but shall be cumulative and may be exercised thereafter. The
Company's ownership of Camtronics increased from approximately 65% in
fiscal 1992 to approximately 68% in fiscal 1994 as a result of the
Founders exercising their conversion rights to sell 5% of their shares
for the amount of $202,000, $513,000, and $332,000 during fiscal 1994,
1993, and 1992, respectively. The carrying value of the Company's total
investment, as adjusted, in Camtronics exceeded its portion of
underlying equity in net assets by approximately $1,940,000. This
excess is being amortized over a 10 year period. Accumulated
amortization amounted to $678,000 and $470,000 as of July 31, 1994 and
1993, respectively.
On August 8, 1991, a wholly-owned subsidiary of the Company purchased
for the sum of $16,000,000 from a wholly-owned subsidiary of the Federal
Deposit Insurance Corporation, the entire interest in a Marriott Hotel
complex. The purchase price consisted of $10,000,000 in cash and a
$6,000,000 promissory note. Under the terms of the note, annual
principal payments of $2,000,000 commencing August 8, 1992 were due
until August 8, 1994. Interest was at prime with an interest free
period from August 8, 1991 through August 7, 1992. The discounted
present value of the $6,000,000 promissory note was approximately
$5,500,000. On August 7, 1992, the Company paid the note in full. This
transaction was accounted for as a purchase and the results of the
hotel's operations from August 8, 1991 are included in the consolidated
financial statements.
On April 1, 1992, the Company acquired all of the common stock of SKY
Computers, Inc. (SKY) for $3,161,000 in cash. SKY is a leading supplier
of board-level and desktop supercomputer application accelerators. The
acquisition was accounted for as a purchase and SKY's results from
operations from April 1, 1992 have been included in the Company's
consolidated financial statements.
The carrying value of the Company's investment in SKY exceeded its
equity in net assets by approximately $895,000. This excess is being
amortized over a 5 year period. Accumulated amortization was $418,000
and $239,000 as of July 31, 1994 and 1993, respectively.
On the assumption that SKY and the entire interest in the Marriott Hotel
complex were acquired as of August 1, 1990, unaudited pro forma
consolidated revenues would have been approximately $156,000,000; net
income would have been approximately $10,000,000 and earnings per share
would have been $.80 for the year ended July 31, 1992. In management's
opinion, the pro forma financial information is not indicative of
results of operations or future results of operations of the combined
companies under the ownership and operation of Analogic Corporation.
41
ANALOGIC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Business combinations: (continued)
During fiscal 1993, the Company invested $500,000 for a 51% interest in
a newly formed sales and marketing organization which was formed to
promote and sell an affiliated company's products in the United States
and certain other countries. In September, 1993, the Company invested
an additional $125,000 resulting in no change in the Company's equity
interest. The Company ceased operations of this sales and marketing
organization during the third quarter of fiscal 1994. No significant
financial impact is anticipated on the Company's future financial
results.
As of January 1, 1993, the Company acquired an interest of approximately
57% in a newly-formed company, B&K Medical A/S (B&K), for $3,607,000 in
cash and a subordinated interest free short-term loan of $3,500,000
which was converted into equity on July 31, 1993. The Company's
ownership interest was adjusted upward to 59% in fiscal 1994 in
accordance with the shareholders' agreement. B&K, a Danish Corporation,
is primarily engaged in the design and manufacture of ultrasound imaging
devices used in urology and various sonographic techniques. The
acquisition was accounted for as a purchase and B&K's results from
operations have been included in the Company's consolidated financial
statements beginning January 1, 1993. The Company's equity in net
assets of B&K exceeded the purchase price by approximately $2,662,000.
This excess of acquired net assets over cost is being amortized over a
5 year period beginning in January, 1993. Accumulated amortization
amounted to $843,000 and $266,000 as of July 31, 1994 and 1993,
respectively.
Unaudited pro forma financial information is based on the assumption
that B&K was acquired as of August 1, 1992. On a pro forma basis, for
the twelve months ended July 31, 1993, consolidated revenues would have
been approximately $192,869,000; net income would have been
approximately $12,649,000 and earnings per share would have been
approximately $1.03. Pro forma financial information for fiscal 1992
does not exist due to the fact that B&K was a newly-formed company as of
August 1, 1992. In management's opinion, the pro forma financial
information is not indicative of results of operations or future results
of operations of the combined companies under the ownership and
operation of Analogic Corporation.
3. Inventories:
The components of inventory are as follows:
July 31
1994 1993
Raw materials $16,711,000 $15,555,000
Work-in-process 14,982,000 15,643,000
Finished goods 9,476,000 8,742,000
$41,169,000 $39,940,000
42
ANALOGIC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
4. Investments in and advances to affiliated companies:
The Company owns 50% of Analogic Scientific, Inc., a joint venture
corporation with Kejian Corporation of The People's Republic of China.
The Company's original investment of $1,500,000 has been accounted for
using the equity method of accounting. The Company's share of Analogic
Scientific's income amounted to $2,000,000, $2,000,000 and $3,423,000 in
fiscal years 1994, 1993 and 1992, respectively. Dividends received from
Analogic Scientific, Inc. amounted to $300,000, $500,000 and $1,423,000
in fiscal 1994, 1993 and 1992, respectively. The carrying value of this
investment was $5,700,000 and $4,000,000 at July 31, 1994 and 1993,
respectively. Transactions with Analogic Scientific, Inc. for fiscal
years 1994, 1993 and 1992 consisted of revenues of approximately
$2,990,000, $2,542,000 and $5,188,000, respectively. At July 31, 1994
and 1993, accounts receivable from this affiliate were $1,660,000 and
$841,000, respectively.
On August 14, 1992, Analogic invested $1,052,000 for a 34% interest in
a privately-held company located in Canada. This company is in the
business of designing, manufacturing and distributing medical electronic
equipment. Subsequent to August 14, 1992, the Company invested an
additional $1,187,000 increasing its equity interest to 41.5% as of July
31, 1993. During the first quarter of fiscal 1994, the Company invested
an additional $760,000 increasing its equity interest to 44%. In
connection with this investment, a charge of $595,000 and $1,700,000
resulting from the Company's share of losses has been recorded in fiscal
1994 and 1993 respectively.
During January, 1994, the Company agreed to transfer its 44% interest in
this privately-held company to Park Meditech, Inc. ("Park"), located in
Toronto, Canada in exchange for 6,000,000 shares of Park common stock
plus 1,000,000 common stock warrants. Each warrant is exercisable at the
price of $5.00 (Canadian) into one share of Park common stock, and may
be exercised through April 1996. Park shares are currently traded on
the Montreal Exchange (PKM) as well as the NASDAQ Small Cap Exchange
(PMDTF). At July 31, 1994, the closing NASDAQ bid price of Park common
stock was $1.188 per share.
During April, 1994, the Company purchased 300,000 units of Park for
$824,000. Each unit consists of one common share of Park stock and one-
half of a Share Warrant. Each Share Warrant is convertible to one
common share of Park for a price of $4.00 (Canadian) on or before
December 15, 1995.
The Company owns approximately 26% of the outstanding shares of Park,
and currently does not exercise any influence over the financial and
operational policies of that company. Therefore, this investment is
accounted for on the cost method.
43
ANALOGIC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
4. Investments in and advances to affiliated companies: (continued)
During fiscal 1991, the Company invested $750,000 for a 25% interest in
a limited partnership which owns a 70% interest in a company which
designs, manufactures and distributes electronic instruments equipment.
The investment in the limited partnership is accounted for using the
cost method, as the Company is a limited partner, and accordingly, has
no influence over the partnership.
5. Mortgage and other notes payable:
Mortgage and other notes payable consists of the following:
July 31
1994 1993
3% mortgage note payable, due 2017, payable
quarterly, collateralized by land, office
and manufacturing facilities $ 5,877,000 $ 6,050,000
Business Development Revenue Bonds,
interest of approximately 7% payable
quarterly, annual principal payments
of $150,000 through September 1, 2005,
collateralized by land, office and
manufacturing facilities 1,800,000 1,950,000
11% unsecured term loan, principal and
interest payments due December 31, 1994 1,605,000 1,476,000
Term loan, at prime rate, (7.25% at July 31,
1994), due April, 1996, payable in monthly
installments, collateralized by computer
equipment and software 74,000 116,000
9,356,000 9,592,000
Less current portion 1,975,000 365,000
$ 7,381,000 $ 9,227,000
Principal maturities in each of the next five fiscal years on the above
notes are as follows: 1995, $1,975,000; 1996, $365,000; 1997, $339,000;
1998, $344,000; 1999, $350,000.
44
ANALOGIC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
6. Lease commitments and related party transactions:
The Company leases three operating facilities from a partnership in
which the Chairman and the former Vice Chairman are partners under
leases that have been accounted for as capital leases. Certain leases
contain contingent rentals based upon cost of living adjustments.
Contingent rentals were not significant in 1994, 1993 and 1992.
One of the Company's wholly-owned subsidiaries leases certain machinery
and equipment under capital lease agreements which expire in 1995.
Property under capital leases is included in property, plant and
equipment, as follows:
July 31
1994 1993
Land and buildings $ 6,251,000 $ 6,251,000
Machinery and equipment 590,000 590,000
6,841,000 6,841,000
Less accumulated amortization 4,692,000 4,349,000
Net capital lease assets $ 2,149,000 $ 2,492,000
Certain of the Company's subsidiaries lease manufacturing and office
space under non-cancelable operating leases. These leases expire
through 1998 and contain renewal options. The Company leases certain
other real property and equipment under operating leases which, in the
aggregate, are not significant.
Rent expense approximated $814,000, $329,000 and $282,000 (net of
sublease income of $1,199,000, $1,103,000 and $1,056,000) in fiscal
1994, 1993 and 1992, respectively.
The following is a schedule by year of future minimum lease payments at
July 31, 1994:
Capital Operating
Fiscal Year Leases Leases
1995 $ 820,000 $1,005,000
1996 812,000 826,000
1997 812,000 566,000
1998 812,000 468,000
1999 812,000 172,000
Later years (through 2003) 2,202,000
6,270,000 $3,037,000
Less amount representing
interest, at 9.5% - 17.6% 2,301,000
Present value of minimum lease
payments (includes current
portion of $357,000) $3,969,000
45
ANALOGIC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
6. Lease commitments and related party transactions: (continued)
Future minimum lease payments under capital leases have not been reduced
for sublease rental income of approximately $1,199,000.
Included in accounts and notes receivable are $200,000 of convertible
debentures from UltraAnalog, Inc., a manufacturer of analog-to-digital
and digital-to-analog converters. Bernard M. Gordon, the Company's
President and Chairman, owns 72% of the outstanding common stock of
UltraAnalog, Inc. which the Company, solely at its option, has the right
to acquire at his cost.
7. Stock option and stock bonus plans:
At July 31, 1994, the Company had four key employee stock option plans;
two of which have lapsed as to the granting of options. In addition,
the Company has one key employee stock bonus plan, one non-employee
director stock option plan and one employee stock purchase plan.
Options granted under five stock option plans become exercisable in
installments commencing no earlier than one year from the date of grant
and no later than five years from the date of grant. Options issued
under the plans are nonqualified options or incentive stock options and
are issued at prices of not less than 100% of the fair market value at
the date of grant. Tax benefits from early disposition of the stock by
optionees under incentive stock options, and from exercise of
nonqualified options are credited to capital in excess of par value.
Under the Company's key employee stock bonus plan, common stock may be
granted to key employees under terms and conditions as determined by the
Board of Directors. Participants under the stock bonus plan may not
dispose or otherwise transfer stock granted for three years from date of
grant. Upon issuance of stock under the plan, unearned compensation
equivalent to the market value at the date of grant is charged to
stockholders' equity and subsequently amortized over the periods during
which the restrictions lapse (up to six years). Amortization of
$655,000, $388,000 and $188,000 was recorded in fiscal 1994, 1993 and
1992, respectively.
Under the employee stock purchase plan, participants are granted options
to purchase the Company's common stock twice a year at the lower of 85%
of market value at the beginning or end of each period. Calculation of
the number of options granted, and subsequent purchase of these shares,
is based upon voluntary payroll deductions during each six month period.
The number of options granted to each employee under this plan, when
combined with options issued under other plans, is limited to a maximum
outstanding fair market value of $25,000 during each calendar year. The
number of shares issued pursuant to this plan totaled 7,293 in 1994,
7,844 in 1993 and 8,568 in 1992.
At July 31, 1994, 1,315,796 shares were reserved for grant under the
above stock option, bonus and purchase plans.
46
ANALOGIC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
7. Stock option and stock bonus plans: (continued)
The following table sets forth the stock option transactions
for the years ended July 31, 1994, 1993 and 1992:
1994 1993 1992
Option Number Option Number Option Number
price per of price per of price per of
share shares share shares share shares
Options out-
standing,
beginning
of year $7.125-$16.125 325,955 $7.125-$14.00 519,130 $7.125-$14.00 601,255
Options
granted 14.750-18.00 109,125 10.875-16.125 82,950 10.375-11.75 68,200
Options
exercised 7.125-14.00 (40,976) 7.125-14.00 (225,812) 7.125-9.125 (76,384)
Options
cancelled (34,375) ( 50,313) (73,941)
Options out-
standing, end
of year 7.125-18.00 359,729 7.125-16.125 325,955 7.125-14.00 519,130
Options
exercisable,
end of
year 7.125-11.75 113,791 7.125-14.875 113,458 7.125-14.00 280,714
8. Profit sharing retirement plan:
The Company has a qualified Profit Sharing Retirement Plan for the
benefit of eligible employees. The plan provides that the Company shall
make contributions from current or accumulated earnings as determined by
the Board of Directors. The contribution each year shall in no event
exceed the maximum allowable under applicable provisions of the Internal
Revenue Code. Profit sharing expense amounted to $660,000 in 1994, and
$600,000 in 1993 and 1992, respectively.
The Company has 401(K) plans under which employees can contribute up to
15% of their annual base income, not to exceed the maximum amount
allowable under the Internal Revenue Code in any one calendar year.
47
ANALOGIC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
9. Interest:
Total interest incurred amounted to $1,261,000, $1,089,000 and
$1,560,000 in 1994, 1993 and 1992, respectively, of which $94,000 in 1994,
$70,000 in 1993 and $130,000 in 1992 was capitalized.
10. Income taxes:
The components of the provision for income taxes are as follows:
July 31
1994 1993 1992
Current income taxes:
Federal $ 1,746,500 $ 4,491,000 $ 2,656,000
State and foreign 371,000 1,111,000 460,000
2,117,500 5,602,000 3,116,000
Deferred income taxes (benefit):
Federal 915,000 ( 39,000) ( 593,000)
State and foreign 5,000 ( 14,000) ( 60,000)
920,000 ( 53,000) ( 653,000)
$ 3,037,500 $ 5,549,000 $ 2,463,000
The tax effects of the principal temporary differences resulting in
deferred tax expense (benefit) are as follows:
July 31
1994 1993 1992
Unrealized equity
gain/loss $ 424,000 ($ 78,000) ($ 300,000)
Capitalized software 325,000 99,000 297,000
Depreciation 370,000 ( 6,000) ( 510,000)
Bad debts 6,000 ( 12,000) ( 24,000)
Inventory valuation ( 11,000 ) ( 56,000) 31,000
Other items, net ( 194,000 ) ( 147,000)
$ 920,000 ($ 53,000) ($ 653,000)
Income (loss) before income taxes from domestic and foreign operations
is as follows:
Years ended July 31
1994 1993 1992
Domestic $17,356,000 $19,686,000 $11,996,000
Foreign 2,254,000 ( 1,130,000) 1,336,000
$19,610,000 $18,556,000 $13,332,000
48
ANALOGIC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
10. Income taxes: (continued)
The components of the deferred tax assets and liabilities are as
follows:
Deferred Tax Deferred Tax
July 31, 1994 Assets Liabilities
Depreciation $ 2,308,000
Bad debt allowance $ 162,000
Capitalized interest and other costs 289,000 440,000
Inventory 403,000
Warranty 518,000
Benefit plans 684,000
Lease transactions 737,000
Unrealized equity gain/loss 890,000 1,628,000
Capitalized software 1,701,000
Business credit carryforwards 483,000
Alternative minimum tax credit
carryforwards 1,086,000
Miscellaneous 210,000
5,462,000 6,077,000
Valuation allowance (1,384,000)
$ 4,078,000 $ 6,077,000
July 31, 1993
Depreciation $ 1,938,000
Bad debt allowance $ 170,000
Capitalized interest and other costs 316,000 462,000
Inventory 404,000
Warranty 599,000
Benefit plans 702,000
Lease transactions 748,000
Unrealized equity gain/loss 667,000 981,000
Capitalized software 1,390,000
Net operating loss and general
business credit carryforwards 1,350,000
Miscellaneous 145,000
5,101,000 4,771,000
Valuation allowance (1,350,000)
$ 3,751,000 $ 4,771,000
Included in prepaid expenses and other current assets is $2,129,000 and
$2,047,000 of current deferred tax assets at July 31, 1994 and 1993,
respectively.
49
ANALOGIC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
10. Income taxes: (continued)
A reconciliation of income taxes at the United States statutory rate to
the effective tax rate follows:
Years ended July 31
1994 1993 1992
U.S. Federal statutory tax rate 35% 35% 34%
Tax loss on dissolution of foreign
subsidiary ( 9 )
Foreign sales corporation tax benefit ( 2 ) ( 2 ) ( 2 )
State income taxes, net of
federal tax benefit 1 1 2
Tax exempt interest ( 6 ) ( 6 ) ( 9 )
Net losses (profits) of
subsidiaries and affiliates
not taxed ( 1 ) 3 ( 6 )
Alternative minimum tax 3 2
Other items, net ( 5 ) ( 1 ) ( 2 )
Effective tax rate 16% 30% 19%
The Internal Revenue Service has examined the Company's federal
consolidated income tax returns through fiscal 1988.
Two of the Company's subsidiaries have elected to be taxed as Foreign
Sales Corporations (FSC).
The Company has federal and state research and experimental tax credits
carryforwards of approximately $483,000 expiring in various years
through 2009.
50
ANALOGIC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
11. Quarterly results of operations (unaudited):
The following is a summary of unaudited quarterly results of operations
for the years ended July 31, 1994 and 1993.
Total Net Earnings
revenues income per share
1994
quarters
First $ 46,105,000 $ 3,201,000 $ .26
Second 49,587,000 3,762,000 .30
Third 47,125,000 3,572,000 .29
Fourth 50,928,000 4,122,000 .33
Total $193,745,000 $14,657,000 $1.18
1993
quarters
First $ 41,020,000 $ 2,770,000 $ .23
Second 42,979,000 2,930,000 .24
Third 46,837,000 3,231,000 .26
Fourth 47,040,000 3,514,000 .28
Total $177,876,000 $12,445,000 $1.01
12. Transactions with major customers:
One export customer accounted for approximately $25,700,000 or 14%,
$22,000,000 or 13% and $28,000,000 or 20% of total product, service,
engineering and licensing revenue in 1994, 1993 and 1992, respectively.
Of the total product, service, engineering and licensing revenue, one
domestic customer accounted for approximately $23,700,000 or 13%,
$23,000,000 or 14% and $18,800,000 or 14% in 1994, 1993 and 1992,
respectively.
51
ANALOGIC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
13. Supplemental disclosure of cash flow information:
During fiscal years 1994, 1993 and 1992, interest paid, net of amounts
capitalized, amounted to $945,000, $1,022,000 and $1,458,000,
respectively.
Income taxes paid during fiscal years 1994, 1993 and 1992 amounted to
$3,763,000, $4,262,000 and $3,128,000, respectively.
14. Fair value of financial instruments:
The carrying amounts of cash, cash equivalents, receivables, mortgages
and other notes payable approximate fair value. The Company believes
similar terms for mortgage and other notes payable would be attainable.
The fair value of marketable securities are estimated based on quoted
market prices for these securities. At July 31, 1994, estimated fair
values of the Company's financial instruments are as follows:
Carrying Fair
Amount Value
Cash and cash equivalents $23,571,000 $23,571,000
Marketable securities 70,825,000 70,821,000
Mortgage and other notes payable 9,356,000 9,356,000
It was not practicable to estimate the fair value of an investment
representing 25% of the outstanding stock of an untraded company; this
investment is carried at its original cost.
15. Foreign Operations
Financial information relating to the Company's foreign and domestic
operations for fiscal 1994 are as follows:
Foreign Domestic Total
Revenue $ 42,231,000 $151,514,000 $193,745,000
Income from Operations 2,254,000 15,951,000 18,205,000
Identifiable assets 32,917,000 206,703,000 239,620,000
52
ANALOGIC CORPORATION AND SUBSIDIARIES
SCHEDULE I - MARKETABLE SECURITIES
JULY 31, 1994
Column A Column B Column C Column D Column E
Amount at
which each
portfolio of
equity security
Market value issues are
of issues at carried in
Principal Cost of balance sheet the balance
Name of issuer amount issues date sheet
Tax exempt municipal bonds $70,825,000 $70,961,000 $70,821,000 $70,825,000
No individual investment exceeded two percent of total assets.
53
ANALOGIC CORPORATION AND SUBSIDIARIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
(000 omitted)
Column A Column B Column C Column D Column E Column F
Balance at Other(1) Balance at
beginning Increases close of
Description of period Additions Retirements (Decreases) period
Year ended July 31, 1994:
Land and land improvements $3,739 $513 $4,252
Building 35,095 1,434 36,529
Property under capital leases 6,841 6,841
Leasehold and capital lease
improvements 1,914 244 2,158
Manufacturing equipment 53,909 3,387 (1,392) 55,904
Furniture and fixtures 16,340 1,336 (238) 17,438
Motor vehicles 651 412 (166) 897
$118,489 $7,326 ($1,796) $124,019
Year ended July 31, 1993:
Land and land improvements $3,639 $100 $3,739
Building 34,690 405 35,095
Property under capital leases 6,841 6,841
Leasehold and capital lease
improvements 2,232 40 ($358) 1,914
Manufacturing equipment 51,912 2,992 (995) 53,909
Furniture and fixtures 16,383 759 (802) 16,340
Motor vehicles 660 129 (138) 651
$116,357 $4,425 ($2,293) $118,489
Year ended July 31, 1992:
Land and land improvements $4,077 ($438) $3,639
Building 22,654 $450 (1,610) $13,196 34,690
Property under capital leases 6,251 590 6,841
Leasehold and capital lease
improvements 2,076 123 33 2,232
Manufacturing equipment 46,134 2,995 (474) 3,257 51,912
Furniture and fixtures 13,462 875 (170) 2,216 16,383
Motor vehicles 707 104 (151) 660
$95,361 $4,547 ($2,843) $19,292 $116,357
54
ANALOGIC CORPORATION AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
(000 omitted)
Column A Column B Column C Column D Column E Column F
Balance Charged to Other(1) Balance at
beginning profit and Increases close of
Description of period loss of income Retirements (Decreases) period
Year ended July 31, 1994:
Building 5,424 $1,055 $6,479
Property under capital leases 4,349 343 4,692
Leasehold and capital lease
improvements 1,747 72 1,819
Manufacturing equipment 46,297 3,756 (1,366) 48,687
Furniture and fixtures 12,982 1,227 (202) 14,007
Motor vehicles 403 145 (144) 404
$71,202 $6,598 ($1,712) $76,088
Year ended July 31, 1993:
Building $4,416 $1,008
Property under capital leases 3,988 361
Leasehold and capital lease
improvements 2,037 68 ($358) 1,747
Manufacturing equipment 42,731 4,433 (867) 46,297
Furniture and fixtures 11,926 1,762 (706) 12,982
Motor vehicles 468 93 (158) 403
$65,566 $7,725 ($2,089) $71,202
Year ended July 31, 1992:
Building $3,664 $1,026 ($274) $4,416
Property under capital leases 3,260 314 $414 3,988
Leasehold and capital lease
improvements 1,736 278 23 2,037
Manufacturing equipment 35,543 4,769 (471) 2,890 42,731
Furniture and fixtures 9,825 2,044 (155) 212 11,926
Motor vehicles 492 100 (124) 468
$54,520 $8,531 ($1,024) $3,539 $65,566
55
(1) Accumulated depreciation acquired upon a business purchase.
(2) The annual provision for depreciation and amortization have been computed
in accordance with the following ranges of estimated useful lives:
Building 35 years
Property under capital leases 14 to 23 years
Manufacturing equipment 4 to 7 years
Furniture and fixtures 4 to 8 years
Leasehold and capital lease improvements 3 to 10 years
Motor vehicles 3 years
56
ANALOGIC CORPORATION
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
Column A Column B Column C Column D Column E Column F
Additions (1)
charged to Additions
Balance at profit and charged Deductions Balance
beginning loss or to other from at end
of period income accounts reserves Recoveries of period
Year ended July 31, 1994:
Allowance for doubtful
accounts $1,518,000 $65,000 ($244,000) $1,339,000
Deferred Tax Valuation
Allowance 1,350,000 34,000 1,384,000
Year ended July 31, 1993:
Allowance for doubtful
accounts $620,000 $181,000 $778,000 ($61,000) $1,518,000
Deferred Tax Valuation
Allowance 1,986,000 (636,000) 1,350,000
Year ended July 31, 1992:
Allowance for doubtful
accounts $466,000 $169,000 ($15,000) $620,000
Deferred Tax Valuation
Allowance 1,986,000 1,986,000
(1) Reserve addition from the purchase of a company
57
ANALOGIC CORPORATION
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
Column A Column B
Charged to costs and expenses
Item 1994 1993 1992
1. Maintenance and repairs $2,410,000 $2,812,000 $2,424,000
2. Depreciation and amortization
of property, plant and
equipment and capital leases $6,598,000 $7,725,000 $8,531,000
3. Advertising costs $1,372,000 $2,397,000 $1,083,000
58
INDEX TO EXHIBITS
TITLE INCORPORATED BY REFERENCE TO
3.1 Restated Articles of Exhibit 3.1 to the Company's
Organization, as Amended Annual Report on Form 10-K for
March 15, 1988 the fiscal year ended July 31,
1988
3.2 By-laws, as amended January Exhibit 3.2 to the Company's
27, 1988 Annual Report on Form 10-K for
the fiscal year ended July 31,
1988
10.1 Lease dated March 5, 1976 Exhibit 6(e) to the Company's
from Bernard M. Gordon to Registration Statement on Form
Analogic S-14 (File No. 2-61959)
10.2 Amendment of Lease dated Exhibit to the Company's Report
May 1, 1977 between Bernard on Form 8-K dated May 1, 1977
M. Gordon and Analogic
10.3 Lease dated January 16, 1976 Exhibit to the Company's Annual
from Bernard M. Gordon on Data Report on Form 10-K for the fiscal
Precision Corporation and year ended July 31, 1977
related Assignment of Lease
dated October 31, 1979 from
Data Precision Corporation
to Analogic
10.4(a) Lease dated October 31, 1977 Exhibit 6(d) to the Company's
from Audubon Realty, Ltd. Registration Statement on Form
to Data Precision Corporation S-14 (File No. 2-61959)
and related letter agreement
dated January 18, 1978
(b) Amendment of Lease dated Exhibit I to the Company's Annual
June 19, 1979 between Audubon Report on Form 10-K for the fiscal
Realty, Ltd. and Analogic year ended July 31, 1982
(c) Third Amendment of Lease Exhibit to the Company's Annual
dated August 2, 1982 Report on Form 10-K for the fiscal
year ended July 31, 1982
(d) Fourth Amendment of Lease Exhibit 19.1 to Quarterly Report on
dated December 31, 1982 Form 10-Q for the three months
ended January 31, 1983
59
10.5(a) Lease dated March 16, 1981 Exhibit II to the Company's
from Audubon Realty Ltd. to Quarterly Report on Form 10-Q
Analogic for the three months ended
April 30, 1981
(b) Amendment of Lease dated Exhibit to the Company's Annual
October 31, 1984 Report on form 10-K for the fiscal
year ended July 31, 1985
10.6 Land Disposition Agreement Exhibit to the Company's Annual
by and between City of Report on Form 10-K for the fiscal
Peabody Community Development year ended July 31, 1981
Authority and Analogic
Corporation
10.7 Loan Agreement among the City Exhibit to the Company's Annual
of Peabody, its Community Report on Form 10-K for the fiscal
Development Authority, and year ended July 31, 1981
Analogic Corporation
10.8 Amendments to Urban Development Exhibit 10.13 to the Company's
Action Grant Agreement dated Annual Report on Form 10-K for the
August 28, 1986 and September fiscal year ended July 31, 1986
30, 1986
10.9 Promissory Note of Analogic Exhibit to the Company's Annual
payable to Peabody Community Report on Form 10-K for the fiscal
Development Authority year ended July 31, 1981
10.10(a)Stockholder Agreement as of Exhibits to the Company's Report on
July 9, 1986 by and among Form 8-K dated July 31, 1986
Siemens AG, SCC, and Analogic
including the following
exhibits thereto
(b) Development Agreement dated as
of July 28, 1986 between "
Siemens AG and Medical
Electronics Laboratories, Inc.
(c) Manufacturing Agreement dated
as of July 28, 1986 between "
Analogic and Medical
Electronics Laboratories, Inc.
(d) License Agreement dated as of
July 28, 1986 between Analogic "
and Medical Electronics
Laboratories, Inc.
60
(e) License Agreement I dated as Exhibits to the Company's Report
of July 28, 1986 between on Form 8-K dated July 31, 1986
Siemens AG and Medical
Electronics Laboratories, Inc.
(f) License Agreement II dated as
of July 28, 1986 between "
Siemens AG and Medical
Electronics Laboratories, Inc.
(g) Sublease dated as of July 28,
1986 between Analogic as
sublessor and Medical "
Electronics Laboratories, Inc.
as sublessee
10.11 Stock Purchase Agreement as Exhibit 10.11 to the Company's
of March 11, 1988 by and Annual Report on Form 10-K for
among Siemens AG, SCC, SMS, fiscal year ended July 31, 1988
MEL, and Analogic
10.12(a)Anamass Partnership Agree- Exhibit 10.12(a) to the Company's
ment dated as of July 5, Annual Report on Form 10-K for
1988 between Ana/dventure fiscal year ended July 31, 1988
Corporation and Massapea,
Inc.
(b) Ground Lease Agreement dated Exhibit 10.12(b) to the Company's
July 5, 1988 between Analogic Annual Report on Form 10-K for
and Anamass Partnership fiscal year ended July 31, 1988
(c) Equity Infusion Agreement Exhibit 10.12(c) to the Quarterly
Report on Form 10-Q for the three
months ended January 31, 1991
(d) Resolution Agreement dated Exhibit 10.12(d) to the Company's
July 31, 1991 and ratified Annual Report on Form 10-K for the
on August 8, 1991 fiscal year ended July 31, 1991
10.13 Key Employee Stock Option Exhibit 10.7 to the Company's
Plan dated April 21, 1978 Annual Report on Form 10-K for the
as amended and restated fiscal year ended July 31, 1987
December 4, 1981 and further
amended on October 9, 1984
and January 28, 1987
10.14 Key Employee Stock Option Exhibit 10.8 to the Company's
Plan dated August 8, 1980 Annual Report on Form 10-K for the
as amended and restated fiscal year ended July 31, 1987
December 4, 1981 and further
amended on October 9, 1984
and January 28, 1987
61
10.15(a)Analogic Corporation Profit Exhibit 6(c) to the Company's
Sharing Plan dated July 26, Registration Statement on Form
1977 S-14 (File No. 2-61959)
(b) Amendments 2,3,4 and 5 to Exhibit 10.10(b) to the Company's
said Profit Sharing Plan Annual Report on Form 10-K for the
fiscal year ended July 31, 1980
(c) Restated Analogic Corporation Exhibit 10.9(c) to the Company's
Profit Sharing Plan dated Annual Report on Form 10-K for the
July 31, 1985 and Amendment fiscal year ended July 31, 1985
No. 1 thereto dated August 20,
1985
10.16 Key Employee Stock Bonus Plan Exhibit A to definitive proxy
dated March 14, 1983 as statement for the Company's
amended on January 27, 1988 Special Meeting in lieu of
Annual Meeting of Stockholders
held January 25, 1984
10.17 Key Employee Incentive Stock Exhibit 10.15 to the Company's
Option Plan dated March 14, Annual Report on Form 10-K for
1983, as amended and the fiscal year ended July 31,
restated on January 28, 1987 1987
10.18 1985 Non-Qualified Stock Exhibit 10.19 to the Company's
Option Plan dated May 13, Annual Report on Form 10-K for the
1985 fiscal year ended July 31, 1985
10.19 Employee Qualified Stock Exhibit G to Company's definitive
Purchase Plan dated proxy statement dated December 9,
January 22, 1986 1985 for the Company's Special
Meeting in lieu of Annual Meeting
of Stockholders held January 22,
1986
10.20 Proposed 1988 Non-Qualified Exhibit 10.20 to the Company's
Stock Option Plan for Non- Annual Report on Form 10-K for the
Employee Directors fiscal year ended July 31, 1988
10.21 Form of Indemnification Exhibit 10.19 to the Company's
Contract Annual Report on Form 10-K for
the fiscal year ended July 31, 1987
10.22 Agreement and Plan Merger Exhibit 10.22 to the Company's
Between SKY COMPUTERS, Inc. Annual Report on Form 10-K for the
and Analogic Corporation fiscal year ended July 31, 1992
62
10.23(a)Agreement between B&K Medical Exhibits to the Company's Report
Holding A/S and Analogic on Form 8-K dated December 18, 1992
Corporation dated October 20,
1992
(b) Addendum dated December 11,
1992 to Agreement between B&K "
Medical Holding A/S and
Analogic Corporation dated
October 20, 1992
(c) Shareholders Agreement between
B&K Medical Holding A/S and "
Analogic Corporation dated
December 11, 1992
10.24 Key Employee Incentive Stock Exhibit A to the Company's
Option Plan dated June 11, definitive Proxy Statement
1993 dated December 1, 1993 for
the Company's Annual Meeting
of Stockholders held January 21,
1994
63
21. List of Subsidiaries *
23. Consent of Coopers & Lybrand, L.L.P. *
27. Financial Data Schedule *
___________________________________
* Filed as an Exhibit to this Annual Report on Form 10K for the year
ended July 31, 1994.
64
EXHIBITS
TITLE
21. List of Subsidiaries
23. Consent of Coopers & Lybrand, L.L.P.
27. Financial Data Schedule
65
EXHIBIT 21
JURISDICTION OF
NAME
INCORPORATION
Analogic Limited Massachusetts
Analogic Foreign Sales Corporation Virgin Islands
Analogic Securities Corporation Massachusetts
Anadventure II Corporation Massachusetts
Anadventure Delaware Corporation Delaware
Ana/dventure Corporation Massachusetts
B&K Medical A/S Denmark
Camtronics Foreign Sales Corporation Virgin Islands
Camtronics, Ltd. Wisconsin
SKY COMPUTERS, Incorporated Massachusetts
SKY Limited England
66
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Form S-3 Registration
Statements and related Prospectuses pertaining to shares of Common Stock
issued to certain individuals pursuant to the 1983 Key Employee Stock Bonus
Plan (Registration No. 2-96488) and the resale of certain shares of Common
Stock (Registration No. 33-1089 and 33-1463) and in the Form S-8 Registration
Statements and related Prospectuses pertaining to the 1978 Key Employee Stock
Opton Plan and the 1980 Key Employee Stock Option Plan (Registration No.
2-70459), the 1983 Key Employee Stock Bonus Plan, the 1983 Key Employee
Incentive Stock Option Plan (Registration No. 2-95091) and the 1993 Key
Employee Incentive Stock Option Plan (Registration No. 33-53381), the Employee
Stock Purchase Plan (Registration No. 33-5913), the 1985 Non-Qualified Stock
Option Plan (Registration No. 33-6835), and the 1988 Non-Qualified Stock
Option Plan for Non-Employee Directors (Registration No. 33-27372) of our
report dated September 8, 1994, with respect to the Consolidated Financial
Statements of Analogic Corporation and subsidiaries included in this Annual
Report on Form 10-K for the periods ended July 31, 1994, 1993 and 1992.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
October 12, 1994