Item 1. Business
(a) Developments During Fiscal 1999
Total revenues of Analogic Corporation (hereinafter, together with its subsidiaries, referred to as "Analogic" or the "Company") for the fiscal year ended July 31, 1999, were $279,694,000 as compared to $294,472,000 for fiscal year 1998, a decrease of 5%. Net income was $19,513,000, or $1.53 per diluted share as compared to $23,888,000, or $1.87 per diluted share, a decrease of 18%.
The Company acquired the assets of Noranda Advanced Materials' medical detectors and pure metal businesses on June 28, 1999. The company was renamed ANRAD and is located in St. Laurent, Quebec. ANRAD's objective is to develop and manufacture selenium-based flat panel x-ray detectors for the medical and industrial markets.
The Company received a contract from L-3 Communications for one hundred Explosive Assessment Computed Tomography (EXACTTM ) Systems. The innovative EXACT is the heart of the EXaminer 3DXTM 6000 Explosive Detection System (EDS) developed jointly by L-3 and Analogic and distributed exclusively by L-3 for screening checked luggage at airports.
The Year 2000 issue is the result of computer programs written using two digits rather than four digits to define the applicable year. The company decided to replace its internal computer systems to mitigate this problem and upgrade its technology. The Company also reviewed the Y2K status of its major vendors and products.
After over a year of testing, training, software conversion and hardware installation, the Company began implementation of its new Enterprise Resource Planning (ERP) system in the first quarter of fiscal 2000. Due to the size and complexity of the system, the Company anticipated and has experienced problems during August and September of 1999. The Company has resolved many of these problems and expects the system to be functioning as planned in advance of January 1, 2000.
The Company surveyed its major vendors for Y2K compliance and ensured all products currently manufactured by the Company are Y2K compliant.
Mr. Bruce Rusch, President and Chief Operating Officer, resigned effective July 31, 1999. Mr. Thomas J. Miller Jr. will assume the responsibil- ities of President and Chief Operating Officer in mid-October of 1999.
(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-performance, high-precision, data acquisition, conversion (analog/digital) and signal processing instruments and systems.
(c) Narrative Description of Business
Analogic conceives, designs, manufactures, and sells standard and customized high-precision data acquisition, signal and imaging processing based medical imaging and industrial systems and subsystems. 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 has been a leader in the application of 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, velocity, ultrasound and x-ray intensity into and from the numeric (or "digital") form required by computers, medical imaging equipment and other data processing equipment and in subsystems and systems based on such technology.
In addition to their precision measurement capabilities, most of Analogic's products perform very high speed complex calculations on the data being analyzed. Thus, Analogic's products are an integral part of the commu- nications 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.
Medical Technology Products, consisting primarily of electronic subsystems for medical imaging equipment, accounted for approximately 78% of product, service, engineering and licensing revenue in fiscal 1999.
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 substan- tially 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 and D/A conversion equipment and complete data acquisition systems. The Company also manufactures a complete mobile and other CAT Scanners incorporating proprietary technology.
In addition, the Company manufactures key subsystems and phased array transducers on an OEM basis for ultrasound equipment manufacturers. The Company also designs and manufactures radiology, surgical and urology ultrasound equipment for the end-user market. These scanners generate real- time images of the internal anatomy, which are used for diagnosing medical conditions and for interventional procedures.
The Company manufactures electronics for a family of hard copy laser printers in single and multi-user configurations that address the diagnostic image market. These printers are used in hospitals world wide to print diagnostic quality images on film from the electronic data collected by medical imaging equipment such as CAT scanners and MRI scanners. The Company also designs and manufactures for OEM 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 Company manufactures fetal monitoring products for conversion and display of biomedical signals. These monitors are designed for use in both antepartum and intrapartum applications have the capability to measure, compute, display and print fetal and maternal heart rates, maternal contrac- tion frequency and relative intensity and other maternal vital sign parameters to determine both maternal and fetal well being.
The Company also manufactures a lightweight, portable, multi- functional, custom patient monitor instrument which acquire, calculate and display combinations of the five most common vital sign parameters-ECG, Respiration, Temperature, NIBP and SpO2. These monitors are designed to be used in a variety of hospital settings such as emergency room, step-down general care and surgical centers where ease-of-use, portability, flexibility and costs are important considerations.
The Company also manufactures a broad line of medical connectivity products that allows medical equipment such as CAT Scanners and MRI and ultrasound equipment to attach to local DICOM, PACS and wide area networks. The line includes Computed Radiography (CR) image processing and viewing work stations.
The products manufactured by Camtronics, a 77% owned subsidiary, are included herein as medical technology products. They design and manufacture state-of-the-art image processing products for diagnostic and interventional applications in cardiac catheterization laboratories and for other radiology procedures. They also manufacture the ArchiumTM Cardiac Digital Archive System that stores and displays in real time images from cardiac labs at multiple locations.
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 16% of fiscal 1999 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 processing 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 it's 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 high-precision and high performance, rather than lower-cost, low-precision and minimal performance, data conversion products. Typical applications of these devices include the conversion of industrial and biomedical signals into computer language.
The Company also manufactures a line of PC/AT-class high performance data acquisition cards. These plug-in cards provide personal computer users with data throughput and flexibility. The series of cards has a library of high level software applications supported by third-party software houses and proprietary set-up and diagnostic software.
The Company also manufactures a line of high performance data acquisition products for the PC 104 market. Designed for embedded processor applications normally used in OEM products, these cards provide precision measurement capability between real world signals and the measuring instrument while meeting all of the requirements of the PC 104 form factor and bus structure.
The Company recently introduced a line of Compact PCI (CPCI) boards. These products are fully compatible with the CPCI form factor and bus structure and take advantage of software written for the PCI bus. The boards, which are designed for OEM embedded application requiring precision measurements and high sampling rates, perform acquisition, conditioning, multiplexing, as well as signal processing functions, and are supported by Microsoft Windows NT software.
Analogic manufactures application accelerator and 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 hundreds of millions of operations per second, is less than that of general purpose computers. Analogic believes its accelerators and array processors have generally been cost effective when compared with competitive products.
The Company is marketing its array processors for applications such as speech processing, speech compression, Voice Over Internet Protocol (VOIP), X-ray imaging, manufacturing testing, radar and sonar, geophysical exploration, 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 (DSP) floating point products which are used in the above mentioned markets.
Analogic manufactures the EXACT system, an advanced computed tomography imaging system capable of providing data for full 3-D images of every object in a package, parcel or bag. Working with its aviation partner, the Company supplies the EXACT system to the aviation market, while pursuing other applications such as drug interdiction and the protection of high risk security buildings.
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 6% of fiscal 1999 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 incorpor- ation 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.
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. The Company also manufactures a line of high performance digital signal processor (DSP) boards used in the telephony industry.
	Hotel Operation
The Company owns a hotel which is located adjacent to the Company's principal executive offices and manufacturing facility in Peabody, Massachusetts. The hotel is strategically situated in an industrial park, is in close proximity to the historic and tourist attracted area of Boston's North Shore and is approximately 18 miles from Boston. The hotel has 256 rooms, a ballroom and several other function rooms and appropriate recreational facilities. The hotel is managed for the Company under a contract with Marriott Corporation.
	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 distrutors 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, manufactured by Analogic and 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 4 of Notes to Consolidated Financial Statements.)
	Material Customers
The Company's three largest customers, each of which is a significant and valued customer, were Philips, Toshiba and General Electric, which accounted for approximately 18%, 9%, and 8%, respectively, of product, service, engineering and licensing revenue for the fiscal year ended July 31, 1999. Loss of any one of these customers would have a material adverse effect upon the Company's business. The Company does business with Philips through several of the Company's Product Groups and Subsidiaries principally through normal OEM contracts, with the Company and Philips jointly funding research and development of some products to be manufactured by Analogic for Philips. No other individual customer accounted for as much as 7% of the Company's product, service, engineering and licensing revenue during fiscal 1999. The Company's ten largest customers, including Philips, Toshiba and General Electric accounted for approximately 60% of product, service, engineering and licensing revenue during fiscal 1999.
	Backlog
The backlog of orders believed to be firm at July 31, 1999 was approximately $86.6 million compared with approximately $63.8 million at July 31, 1998. This increase is principally related to Medical Technology Products and Signal Processing 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, 1999 during fiscal 2000.
	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 OEM 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 OEM customers and potential OEM 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 of CAT scanner and MRI electronic sub-systems and industrial digitizing systems for the weighing industry.
Research and Product Development
Research and product development is a significant factor in Analogic's business. The Company maintains a constant and comprehensive 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 $39,598,000 in fiscal 1999, $36,177,000 in fiscal 1998, and $33,948,000 in fiscal 1997. Analogic intends to continue its emphasis on new product development. As of July 31, 1999, Analogic had approximately 500 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 1999, the Company capitalized $2,462,000 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 $1,977,000 in fiscal 1999.
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.
Employees
As of July 31, 1999, the Company had approximately 1,720 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 $95,504,000 (37%) in fiscal 1999 as compared to approximately $92,292,000 (33%) in fiscal 1998, and approximately $81,395,000 (34%) in fiscal 1997. 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 export revenue is
subject to significantly greater risks than its domestic revenue. See Note 18 of Notes to Consolidated Financial Statements for further information regarding foreign and domestic operations.
Item 2.
Item 2. Properties
Analogic's principal executive offices and 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 7.5 acres of this land for Marriott Hotel which is owned by a wholly-owned subsidiary of the Company and managed by the Marriott Corporation.
The Company's 77% 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 a modern one-story brick building containing 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. A total of 155,000 square feet of these buildings have been sublet on a triple net basis, self renewing lease to Siemens Medical Electronics, Inc. for a term, which as presently extended will end on December 1, 2000.
The Company leases approximately 30,200 square feet of manufacturing, engineering, and office space in Chelmsford, Massachusetts which is occupied by its wholly owned subsidiary, SKY Computers, Inc. The space is leased for a three-year term expiring May 31, 2002.
The Company's 100% owned subsidiary, B-K, leases a modern two-story building containing a total of approximately 54,000 square feet of manufactur- ing, 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 June 1993. The lease may be cancelled by B-K with six months notice.
The Company owns 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 party for a term of five years expiring September 30, 2002.
In conjunction with the asset purchase of the Noranda Advanced Materials' medical detectors and pure metals business, ANRAD assumed a lease for approximately 42,000 square feet of manufacturing, engineering and office space in St. Laurent, Quebec. The total building contains approx- imately 50,000 square feet and ANRAD's lease expires on February 28, 2015.
See Item 13 of this Report and Note 7 of Notes to Consolidated Financial Statements for further information concerning certain of the aforesaid 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.
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.
Item 3. Legal Proceedings
There are no material legal proceedings pending against the Company or its subsidiaries or of which any of their property is the subject.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
None
PART II
Item 5.
Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters
The Company's Common Stock trades on the NASDAQ Stock Market under the symbol: ALOG. The following table sets forth the range of high and low prices for the Common Stock, as reported by NASDAQ during the quarterly periods indicated:
As of August 31, 1999, there were approximately 916 holders of record of the Common Stock.
Dividends of $.07 per share were declared for each of the quarters of fiscal 1999, and $.06 per share for each of the quarters of fiscal 1998. The policy of the company is to retain sufficient earnings to provide funds for the operation and expansion of it business.
Item 6.
Item 6. Selected Financial Data ( In thousands, except per share data)
Item 7.
Item 7. Management's Discussion and Analysis of Financial Conditions and Results of Operations
Results of Operations
Fiscal 1999 Compared to Fiscal 1998
Product, service, engineering, and licensing revenues for fiscal 1999 were $260,945,000 as compared to $276,562,000 for fiscal 1998, a decrease of 6%. The decrease of $15,617,000 was principally due to the completion of a foreign government contract with our Danish subsidiary as well as softness in the Asian and South American markets, which adversely impacted our OEM customers. Reduced demand for products for the Computer Telephony and Semiconductor industries contributed approximately $6,000,000 to the revenue shortfall. Partially offsetting these revenue declines were initial fourth quarter shipments of the EXACT system used for airport security. Other operating revenue of $12,015,000 and $12,036,000 represents revenue from the Hotel operation for fiscal 1999 and 1998, respectively.
Interest and dividend income increased $860,000 primarily due to interest earned from the City of Peabody on a real estate tax abatement.
The percentage of total cost of sales to total net sales for fiscal 1999 and 1998 was 60%. Operating costs associated with the Hotel for fiscal years 1999 and 1998 were $6,098,000 and $6,091,000, respectively.
General and administrative and selling expenses increased $825,000 or 2%, primarily due to higher operating costs in the Company's Danish subsidiary, partially offset by lower staffing requirements within the Company's domestic operations. Research and product development expenses increased $3,421,000 primarily due to the expanding effort applicable to developing a new class of complex medical imaging systems.
Computer software costs of $2,462,000 and $1,658,000 were capitalized in fiscal 1999 and 1998, respectively. Amortization of capitalized software amounted to $1,977,000 and $2,406,000 in fiscal 1999 and 1998, respectively.
A loss of foreign exchange for fiscal 1999 amounted to $59,000, compared to $4,000 loss for fiscal 1998, primarily from the Company's subsidiary in Denmark.
The amortization of excess of fair value of net assets over cost acquired from B-K was $113,000 and $335,000 in fiscal 1999 and 1998, respectively.
The Company's share of losses of a privately held company amounted to $4,780, 000 and $3,488,000 in fiscal 1999 and fiscal 1998, respectively. (See Note 5 of Notes to Consolidated Financial Statements.)
Fiscal 1999 Compared to Fiscal 1998 (continued)
During fiscal 1998, the Company's investment in Analogic Scientific was decreased by $575,000 reflecting the Company's share of Analogic Scientific's equity, for fiscal 1999 no adjustment was necessary. (See Note 5 of Notes to the Consolidated Financial Statements.)
During fiscal 1998, the Company recorded a write down of $400,000, reflecting a partial impairment of its 19% investment in another privately held company. There were no adjustments in fiscal 1999.
During fiscal 1998, the Company sold 140,560 common shares of a publicly traded company, resulting in a gain of $997,000. (See Note 5 of Notes of Consolidated Statements.)
Minority interest in the net income of the Company's consolidated subsidiary, Camtronics, in fiscal 1999 amounted to $758,000 compared to $1,098,000 for fiscal 1998. During the fourth quarter of fiscal 1998, the Company purchased from one of the founders of Camtronics his entire equity interest in Camtronics for $1,600,000. After this transaction, the Company's share in Camtronics increased to approximately 77%. (See Note 2 of Notes to Consolidated Financial Statements.)
The effective tax rate for fiscal 1999 was 20% vs. 32% for fiscal 1998. This decrease was due to the increased benefits of tax exempt interest, increased general business credits, the impact of the resolution of prior year tax audit and increased FSC (Foreign Sales Corporation) benefit.
Net income for fiscal 1999 was $19,513,000, as compared to net income of $23,888,000 for the same period last year. Basic per-share earnings were $1.54 down from $1.89. Diluted per-share earnings were $1.53 down from $1.87.
Fiscal 1998 Compared to Fiscal 1997
Product, service, engineering, and licensing revenues for fiscal 1998 were $276,562,000 as compared to $239,550,000 for fiscal 1997, an increase of 15%. The increase of $37,012,000 was principally due to increased sales of Medical Technology Products of $30,060,000 (primarily due to the continued and strengthening demand for Digital Laser Imaging Systems, Magnetic Resonance Imaging products, and new products such as the Digital Ultrasound Subsystems and Ultrasound Systems from the Danish subsidiary, B-K), Signal Processing Technology Products of $4,532,000 (primarily due to the Company entering a new and growing market for DSP resource boards for Computer Telephony Integration applications, such as automated directory assistance and for voice over the internet), and Industrial Technology Products of $2,420,000 (primarily due to increased demand of the Company's high frequency ATE boards). Other operating revenue of $12,036,000 and $11,591,000 represents revenue from the Hotel operation for fiscal 1998 and 1997, respectively.
The percentage of total cost of sales to total net sales for fiscal 1998 and 1997 was 60% and 59%, respectively. Operating costs associated with the Hotel for fiscal years 1998 and 1997 were $6,091,000 and $5,959,000, respectively.
General and administrative and selling expenses increased $2,619,000, primarily due to increases in the bad debt reserve and legal expenditures related to patent filings. Research and product development expenses increased $2,229,000 primarily due to the Company's expanding engineering efforts applicable to developing complex imaging systems, such as the new Digital Ultrasound Subsystems and the Ultrasound Systems for the Company's Danish subsidiary, B-K.
Computer Software costs of $1,658.000 and $1,480,000 were capitalized in fiscal 1998 and 1997, respectively. Amortization of capitalized software amounted to $2,406,000 and $3,115,000 in fiscal 1998 and 1997, respectively.
A gain of foreign exchange of $1,045,000 was realized during 1997 versus a loss of $4,000 for fiscal 1998.
The Company's share of losses of a privately held company amount of $3,488,000 and $1,949,000 during fiscal 1998 and 1997, respectively. (See note 5 of Notes to Consolidated Financial Statements.)
The amortization of excess of fair value of net assets over cost acquired from B-K was $335,000 and $645,000 in fiscal 1998 and 1997, respectively.
During fiscal 1998, the Company's investment in another privately held company was increased by $447,000, reflecting the Company's share of its equity.
During fiscal 1998, the Company's investment in Analogic Scientific was decreased by $575,000 reflecting the Company's share of Analogic Scientific's equity. (See Note 5 of Notes to Consolidated Financial Statements.)
During fiscal 1998, the Company recorded a write down of $400,000, reflecting a partial impairment of its 19% investment in another privately held company.
During fiscal 1998, the Company sold 140,560 common shares of a publicly traded company, resulting in a gain of $997,000. (See Note 5 of Notes to Consolidated Statements.)
Minority interest in the net income of the company's consolidated subsidary, Camtronics, for fiscal 1998 amounted to $1,098,000 compared to $1,270,000 for fiscal 1997. During the fourth quarter of fiscal 1998, the Company purchased from one of the founders of Camtronics his entire equity interest in Camtronics for $1,600,000. After this transaction, the Company's share in Camtronics increased to approximately 77% (See Note 2 of Notes to Consolidated Financial Statements.)
The effective tax rate for fiscal 1998 was 32% vs. 24% for fiscal 1997. This increase was primarily due to alternative minimum tax credit carry forwards utilized in fiscal 1997 not available in fiscal 1998 ( See note 11 of Notes to Consolidated Financial Statements).
Net Income for fiscal 1998 was $23,888,000, as compared to net income of $20,090,000 for the same period last year. Basic per-share earnings, or net income divided by weighted average common shares outstanding, were $1.89, up from $1.60. Diluted per-share earnings, or net income divided by weighted average common shares and potential new shares from stock options, also increased to $1.87, up from $1.58. Prior periods per share amounts have been restated to reflect the adoption of FASB No. 128 (See Notes 1(h), 1(1) & 12 of Notes to Consolidated Financial Statements).
Financial Position
The Company's balance sheet at July 31, 1999, reflects a current ratio of 7.0 to 1, compared to 6.5 to 1 at July 31, 1998. Cash, cash equivalents and marketable securities, along with accounts and notes receivable, constitute approximately 75% of current assets a July 31, 1999. Liquidity is sustained principally through funds provided from operations, with short-term time deposits and marketable securities available to provide additional sources of cash. The Company places its cash investments in high credit quality financial instruments and, by policy, limits the amount of credit exposure to any one financial institution. Management does not anticipate any difficulties in financing operations at anticipated levels. The Company's debt to equity ratio was .18 to 1 at July 31, 1999 compared to .21 to 1 at July 31, 1998.
The Company faces limited exposure to financial market risks, including adverse movements in foreign currency exchange rates and changes in interest rates. These exposures may change over time as business practices evolve and could have a material adverse impact on the Company's financial results. The Company's primary exposure has been related to local currency revenue and operating expenses in Europe.
The carrying amounts reflected in the consolidated balance sheets of cash an cash equivalents, trade receivables, and trade payables approximate fair value at July 31, 1999 due to the short maturities of these instruments.
The Company maintains a bond investment portfolio of various issuers, types, and maturities. The Company's cash and investments include cash equivalents, which the Company considers to be investments purchased with original maturities of three months or less. Investments having original maturities in excess of three months are stated at amortized cost, which approximates fair value, and are classified as available for sale. A rise in interest rates could have an adverse impact on the fair value of the Company's investment portfolio. The Company does not currently hedge these interest rate exposures.
In fiscal 1999 funds provided from operations were $37,018,000. The major components of the $37,018,000 were net income of $19,513,000, depreciation & amortization of $13,638,000, inventory decrease of $2,493,000 and an increase in account payable of $2,909,000.
The following investing activities resulted in a cash decrease of $28,066,000. During 1999, the Company invested an additional $3,950,000 in a privately held company which designs and manufactures medical imaging equipment. Capital expenditures for fiscal 1999 of $20,665,000 include approximately $7,100,000 of assets acquired for ANRAD. Capitalized computer software cost were approximately $2,462,000. The Company also made an additional investment of $1,085,000 in marketable securities net of maturities.
The following financing activities resulted in a net cash reduction of $6,329,000. Dividends paid to shareholders during the fiscal year were $3,425,000. Cash flows from financing activities were decreased by the payment of an unsecured bank line of credit of $2,600,000 which was offset by the proceeds from stock options exercised of $1,156,000.
Total investments in and advances to affiliated companies decreased $800,000. This decrease was primarily due to the Company's share of equity losses from a privately held company of $4,780,000 partially offset by an additional investment of $3,950,000 in the privately held company.
Notes Payable decreased by $2,951,000 to $5,982,000 at end of fiscal 1999 primarily due to repayment of borrowing against a line of credit by Camtronics.
Minority Interest in Consolidated Subsidiaries increased $758,000. This represents the minority interest in Camtronics.
The Company's three largest customers, each of which is a significant and valued customer, were Philips, Toshiba and General Electric which accounted for approximately 18%, 9%, and 8%, respectively, of product, service, engineering, and licensing revenue for the fiscal year ended July 31, 1999. Loss of any one of these customers would have a material adverse effect upon the Company's business.
As part of a stock repurchase program authorized by the Board of Directors, the Company purchased 16,000 shares of common stock for its treasury during fiscal 1999 at an aggregate cost of $549,000. No shares were repurchased during fiscal 1998.
Impact of Inflation
Overall, inflation has not had a material impact on the Company's operations during the past three fiscal years.
Accounting Standards
In June 1997, the FASB issued Statement No. 130 (SFAS 130), Reporting Comprehensive Income, which requires disclosure of certain information displaying comprehensive income and its components. The Company has adopted SFAS No. 130 in fiscal year 1999.
In June 1997, the FASB issued Statement No. 131 (SFAS 131), Disclosures about Segments of an Enterprise and Related Information. SFAS 131 requires disclosure of certain information regarding operating segments, products and services, geographic areas of operation and major customers. The Company has adopted SFAS No. 131 in fiscal year 1999. (See Note 17 of Notes to Consolidated Financial Statements.)
In June 1998, the FASB issued Statement No. 133 (SFAS 133), "Accounting for Derivative Instruments and Hedging Activities", which establishes a new model of accounting for derivative and hedging activities and supersedes and amends a number of existing standards. The provisions of SFAS 133 are effective for all fiscal quarters of years beginning after June 15, 1999. The company believes that this statement will not have an impact on the financial position, results of operations, or cash flows, as the Company does not hold any derivative instruments or engage in hedging activities at the present time.
Year 2000 The Year 2000 issue is the result of computer programs being written using two digits rather than four digits to define the applicable year. Computer programs that have time-sensitive software may recognize a date using "00" as the 1900 rather than the year 2000. If the Company's internal systems do not correctly recognize date information when the year changes to 2000, there could be an adverse impact on the Company's operations.
After over a year of testing, training, software conversion and hardware installation, the Company began implementation of its new Enterprise Resource Planning (ERP) system in the first quarter of fiscal 2000. Due to the size and complexity of the system, the company anticipated and has experienced problems during August and September of 1999. The Company has resolved many of these problems and expects the system to be functioning as planned in advance of January 1, 2000.
The Company surveyed its major vendors for Y2K compliance and ensured all products currently manufactured by the Company are Y2K compliant.
The company currently estimates that Year 2000 costs will range form $6.0 million to $8.0 million, of which approximately $5.6 million was spent through July 31, 1999. The estimated costs are based on management's best projections, yet there can be no guarantee that these forecasts will be achieved and actual results could differ materially from those anticipated. The costs of the project will be funded through operating cash flows.
	Item 8.
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.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None
PART III
Item 10.
Item 10. Directors and Executive Officers of the Registrant
(a) Directors
*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.
	**Mr. Rusch resigned effective July 31, 1999.
(b) Executive Officers
*Mr. Rusch resigned effective July 31, 1999.
Each such officer is elected for a term continuing until the first meeting of the Board of Directors following the annual meeting of stock- holders, 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, was President from 1980 to 1995.
Bruce R. Rusch was appointed a Vice President of the Company in January 1993 and President in January 1995. Mr. Rusch has been President of SKY Computers, Inc. since 1987. SKY Computers, Inc. was acquired by Analogic effective April 1, 1992. Mr. Rusch is a director of Astea International, Inc. Mr. Rusch resigned effective July 31, 1999.
John A. Tarello was the Company's Controller from May 1970 through July 1982, a Vice President of the Company from 1971 to 1980, a 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.
Julian Soshnick joined the Company in October 1981 as General Counsel and has served as a Vice President since July 1982 and Clerk since 1988.
Edward F. Voboril has been President and CEO of Wilson Greatbatch Ltd. of Clarence, New York since December 1990.
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 trustee of Commonwealth Energy Systems and a director of ASECO Corporation.
Dr. Bruce W. Steinhauer became the President and Chief Executive Officer of the Regional Medical Center at Memphis in 1998. Prior to this position, he was the Chief Executive Officer of the Lahey-Hitchcock Clinic from 1992 to 1998. 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 form 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
Upon review of the forms and representations furnished to the Company pursuant to Item 405 of Regulation S-K, the Company identifies M. Ross Brown as the only "reporting person", (as defined in said Item 405) who failed to file on a timely basis a report required by Section 16(a) of the Exchange Act. Mr. Brown failed to timely file three (3) Form 4 on which nine (9) transactions were reported.
Item 11.
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.
Item 11. Executive Compensation (continued)
EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE (continued)
(A) 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 contribu- tions to a trust for the purpose of providing retirement benefits to employees.
*Mr. Rusch resigned effective July 31, 1999.
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, 1999; and (iii) the fiscal year-end value of "in-the-money" unexercised options.
STOCK OPTION GRANTS IN LAST FISCAL YEAR (continued)
(A)The value realized or the unrealized value of in-the-money optons at year- end represents the aggregate difference between the market value on the date of grant and, either the market value on the date of exercise or, in the case of unrealized value, the market value at July 31, 1999.
(B)"In-the-money" options are options whose exercise price was less than the market price of Common Shares at July 31, 1999.
Compensation of Directors
Each director who is not an employee of the Company is entitled to an annual fee of $10,000 plus a fee of $1,000 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 new 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. In June, 1996 the Board of Directors amended the 1988 plan to increase the number options that could be granted to each Non-Employee director to 10,000 shares. As of February 1998, no additional options may be granted unde the 1988 plan.
In June 1996, the Board of Director's adopted and stockholders approved at the January 1997 Annual Meeting of Stockholders, the 1997 Non-Qualified Stock Option Plan for Non-Employee Directors (the "1997 Plan"). Pursuant to the 1997 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 and any subsidiary. The exercise price of options granted under the 1997 Plan is the fair market value of the Common Stock on the date of grant. The 1997 Plan provides each new Non-Employee Director who is elected to the Board shall be granted an option to acquire 5,000 shares, effective as of the date he or shee is first elected to the Board; provided, however, that upon such first election, a new Non-Employee Director shall not receive a grant under both this Plan and the 1988 Plan.
The Board of Directors shall determine under which Plans grants shall be made. Every four (4) years from the date on which a Non-Enployee Director was last granted a Non-Employee Director option, whether under either Plan, that Non- Employee Director shall be granted an option to acquire 5,000 shares, effective as of the date of that fourth anniversary.
Options granted under the both Plans 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 and 1997 Plans are administered by members of the Company's Board of Directors. There were no options granted pursuant to the 1997 Plan as of July 31, 1999.
The following table sets forth options granted pursuant to the 1988 plan as of July 31, 1999:
Item 12.
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 in section 13(d)(3) of the Exchange Act) known by the Company to have owned beneficially 5% or more of its Common Stock, $.05 par value, as of August 31, 1999:
__________________________________
(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. The total shares reported above includes 12,900 shares owned by the Gordon Foundation.
(3)	The Company has been advised informally by T. Rowe Price and Private Capital Management Inc. that in their capacity as investment advisors they may be deemed a beneficial owner on August 31, 1999, of 1,782,480 shares, or 14.0% of the Company's Common Stock and 884,490 shares, or 7.0% of the Company's Common Stock, respectively.
(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 31 1999:
*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.
The total shares reported above includes 12,900 shares owned by the Gordon Foundation.
(4)	These amounts include certain shares deemed beneficially owned under Exchange Act Rule 13d-3(d)(1).
Item 13.
Item 13. Certain Relationships and Related Transactions
(a) Mr. Bernard M. Gordon owns a 48% interest and Mr. Bernard L. Friedman, the Company's former Vice Chairman of the Board (Mr. Friedman resigned on July 31, 1993), own 52% 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. The fixed annual rent on the entire 170,000 square feet was increased from $1,164,000 to $1,219,000 effect8ive March 1, 1998, and shall be adjusted as of March 1 every third year to reflect increases in the cost of living. A total of 155,000 square feet of the facilities are sublet to Siemens Medical Electronics, Inc. for a term which will end on December 1, 2000.
Mr. Gordon owns a 48% interest and Mr. Friedman own a 52% 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 to July 31, 2003. This facility has been utilized by the Company for manufacturing and office space since May 1, 1981. The fixed annual rent for this facility was increased from $333,000 to $357,000 effective May 1, 1999, and shall be adjusted as of May 1 every third year to reflect increases in the cost of living.
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.
The terms of the several lease agreements, at the time they were executed, were at least as favorable as those that could have been obtained from unaffiliated third parties. Prior to execution of each such lease, two independent appraisals were obtained in order to establish the fair market rate for subject premises. A rent, in each case discounted below the fair market rate established by the appraisals, was then agreed upon by the parties.
The leases each incorporated periodic rent escalation clauses, based upon the CPI. At the present time, the rents that the Company is paying under the several leases reflect fair rental value for the properties.
See Item 2 of this Report for information as to the character of the leased premises, and Note 7 of Notes to Consolidated Financial Statements for further information as to the leases.
(b) Certain Business Relationships:
None
c)	Indebtedness of Management:
None
(d)	Transactions with Promoters:
None
PART IV
Item 14
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, 1999 and 1998 			 	30
		Consolidated statements of income for the years ended July 31, 		1999, 1998, and 1997 										31
		Consolidated statements of stockholders' equity for the years 		ended July 31, 1999, 1998, and 1997 								32
		Consolidated statements of cash flows for the years ended 		July 31, 1999, 1998, and 1997 							 	33
		Notes to consolidated financial statements		 34 - 51
	 	II - Valuation and qualifying accounts	 						53
		Other schedules 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						 54 - 59
	(b)	Report on Form 8-K
		No reports on Form 8-K were filed by the registrant during 		the quarter ended July 31, 1999.
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
Date: October 7, 1999 	 		By: /s/ Bernard M. Gordon 				 			 		Bernard M. Gordon 				 	 				Chairman of the Board and 				 					Chief Executive Officer
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 7, 1999 	 /s/ Bernard M. Gordon 				 Bernard M. Gordon 		Chairman of the Board, 						Chief Executive Officer and Director
Date: October 7, 1999 	/s/ John A. Tarello John A. Tarello 				 		Senior Vice President, Treasurer 				 		and Director
Date: October 7, 1999 	/s/ M. Ross Brown M. Ross Brown 			 			Vice President and Director
Date: October 7, 1999 	/s/ Bruce W. Steinhauer Bruce W. Steinhauer 						Director
Date: October 7, 1999 	/s/ Edward F. Voboril Edward F. Voboril 			 	 		Director
Date: October 7, 1999 	/s/ Gerald L. Wilson Gerald L. Wilson 					 	Director
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of Analogic Corporation
In our opinion, the consolidated financial statements listed in the index appearing under Item 14(a)(1)on page 27 present fairly, in all material respects, the financial position of Analogic Corporation and its subsidiaries at July 31, 1999 and 1998, and the results of their operations and their cash flows for each of the three years in the period ended July 31, 1999, in conformity with generally accepted accounting principles. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 14(a)(2)on page 27 presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements and the financial statement schedule based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP Boston, Massachusetts August 27, 1999
Analogic Corporation and Subsidiaries Consolidated Balance Sheets (in thousands)
The accompanying notes are an integral part of these financial statements.
Analogic Corporation and Subsidiaries Consolidated Balance Sheets(in thousands)
The accompanying notes are an integral part of these financial statements.
Analogic Corporation and Subsidiaries Consolidated Statements of Income (in thousands, except per share data)
The accompanying notes are an integral part of these financial statements.
Analogic Corporation and Subsidiaries Consolidated Statements of Stockholders' Equity - Years Ended July 31, 1999, 1998 and 1997 (in thousands, except share data)
Analogic Corporation and Subsidiaries Consolidated Statements of Stockholders' Equity - Years Ended July 31, 1999, 1998 and 1997 (in thousands, except per share data)(continued)
Analogic Corporation and Subsidiaries Consolidated Statements of Stockholder's Equity - Years Ended July 31, 1999, 1998 and 1997 (in thousands, except per share data)(continued)
The accompanying notes are an integral part of these financial statements. Analogic Corporation and Subsidiaries Consolidated Statements of Cash Flows (in thousands)
Analogic Corporation and Subsidiaries Consolidated Statements of Cash Flows (in thousands)(continued)
The accompanying notes are an integral part of these financial statements.
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 to customers in the medical and industrial industry.
Product, service, engineering and licensing export revenue, primarily from customers in Europe and Asia, amounted to approximately $95,504,000 or 37%, $92,292,000 or 33%, and $81,395,000 or 34% of total product, service, engineering and licensing revenue for the years ended July 31, 1999, 1998 and 1997, 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. The annual provisions for depreciation and amortization have been computed in accordance with the following ranges of estimated useful lives:
ANALOGIC CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
1.	Summary of business operations and significant accounting policies: (continued)
	(d) Revenue recognition:
Revenues are recognized when a product is shipped or a service is performed. For certain transactions, at the request of the customer and upon completion of the manufacturing process and acceptance of title by the customer, the Company stores inventory pending shipping instructions and recognizes revenue. Accounts receivables related to such sales were approximately $2,049,000 and $668,000 at July 31, 1999 and 1998, respectively.
	(e) Capitalized software costs:
The Company capitalizes certain computer software costs, after technological feasability has been established, which are amortized utilizing the straight-line method over the economic lives of the related products not to exceed three years. Accumulated amortization approximated $17,104,000 and $15,127,000 at July 31, 1999 and 1998, respectively.
	(f) Warranty costs:
The Company provides for estimated warranty costs as products are shipped.
	(g) Income taxes:
The Company does not provide for 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:
Basic per-share earnings is based upon the weighted average common shares outstanding during the year. Diluted per-share earnings is based upon the weighted average common shares and potential new shares from stock options. The number of shares utilized in the basic per-share computations were 12,683,326, 12,614,303 and 12,553,628 in fiscal 1999, 1998 and 1997. The number of shares utilized in the diluted per-share computations are 12,790,836, 12,793,027 and 12,701,800 in fiscal 1999, 1998, and 1997 respectively.
	(i) Cash and cash equivalents:
The Company considers all short-term deposits with an original maturity of three months or less at acquisition date to be cash equivalents. Cash equivalents amounted to approximately $29,258,000 and $28,684,000 at July 31, 1999 and 1998, 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.
			 ANALOGIC CORPORATION AND SUBSIDIARIES 				 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
1.	Summary of business operations and significant accounting policies: (continued)
	(k) Marketable securities:
The Company's marketable securities are categorized as available-for- sale securities, as defined by the Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities." Unrealized holding gains and losses are reflected as a net amount in a separate component of stockholders' equity until realized. For the purpose of computing realized gains and losses cost is identified on a identification basis.
	(l) Accounting Standards:
Statements of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income," and Statement of Financial Accounting Standards ("SFAS") No. 131, "Disclosures about Segments of an Enterprise and Related Information," have been adopted in fiscal 1999. SFAS 130 establishes new standards for reporting and displaying comprehensive income and its components. SFAS 131 requires disclosure of certain information regarding operating segments, products and serives geographic areas of operation and major customers. Adoption of these Statements has no impact on the Company's consolidated financial position, results, results of operations, or business practices. (See Note 17 or Notes to Consolidated Financial Statements)
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", which established a new model of accounting for derivative and hedging activities and supersedes and amends a number of existing standards. The provisions of SFAS 133 are effective for all fiscal quarters of years beginning after June 15, 1999. The Company believes that this statement will not have an impact on the financial position, results of operations, or cash flows, as the Company does not hold any derivative instruments or engage in hedging activities at the present time.
(m) Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods. Actual results could differ from those estimates.
ANALOGIC CORPORATION AND SUBSIDIARIES 				 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
2. Business combinations:
The company's subsidiary, Camtronics, has entered into an agreement with the three founding stockholders ("Founder") 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 beginning in 1992 pursuant to a predetermined formula. 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 hereafter. The Company's ownership of Camtronics increased from approximately 65% in fiscal 1992 to approximately 77% in fiscal 1998, as a result of the Founders exercising their rights to sell 5% of their shares during this period, and in addition during May 1998, the Company purchased from one of the founders of Camtronics his entire equity interest in Camtronics for $1,600,000. The carrying value of the Company's total investment in Camtronics exceeded its portion of underlying equity in net assets by approximately $1,453,000 which has been fully amortized.
As of January 1, 1993, the Company acquired an interest of approximately 57% in a newly-formed company, B-K Ultrasound Systems 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 operations have been included in the Company's consolidated financial statements since January 1, 1993. The Company's equity in net assets of B-K exceeded the purchase price by approximately $2,662,000, and was fully amortized in 1998. As of July 1, 1996, the Company acquired the remaining 41% interest in B-K for $3,416,000 in cash. The Company's equity in net assets of B-K exceeded the purchase price for this portion of the investment by approximately $565,000. This excess is being amortized over a five year period beginning July 1, 1996. Accumulated amortization amounted to $349,000 and $236,000 as of July 31, 1999 and 1998, respectively.
On June 28, 1999, the Company acquired the assets of Noranda Advanced Materials' medical detectors and pure metal businesses for approximately $5.5 million. The Company was renamed ANRAD and is located in St. Laurent, Quebec. ANRAD's objective is to develop and manufacture selenium-based flat panel x-ray detectors for the medical and industrial markets. The acquisition was accounted for as purchase and ANRAD operations have been included in the Company's consolidated financial statements since June 28, 1999.
ANALOGIC CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
3. Marketable securities:
Marketable securities are categorized as available-for-sale securities and summarized as follows:
Contractual maturities range from one to seven years, with the majority five years or less.
4. Inventories:
The components of inventory are as follows:
					 ANALOGIC CORPORATION AND SUBSIDIARIES 				 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
5.	Investments in and advances to affiliated companies:
The Company owns 50% of Analogic Scientific, Inc. ("Scientific"), 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 Scientific's Loss amounted to $575,000 and $425,000 in fiscal years 1998 and 1997, respectively. The Company did not record any income or loss associated with this investment in fiscal 1999. During fiscal 1996 the Company additional $500,000 in Scientific. The carrying value of this investment was $5,200,000 at July 31, 1999 and 1998. Transactions with Scientific for fiscal years 1999, 1998 and 1997 consisted of revenues of approximately $2,610,000, $1,116,000 and $526,000, respectively. At July 31, 1999 and 1998, accounts receivable from this affiliate were $1,884,000, and $977,000, respectively.
On February 13, 1996, the Company acquired 1,715,384 shares of Park Meditech Inc. Common Stock and an 11% Convertible Unsecured Subordinated Debenture in the principal amount of $750,000 in consideration of the cancellation of the Convertible Subordinated Promissory Note in the amount of $1,500,000 and 200,000 Common Share purchase warrants. With certain restrictions, the Convertible Unsecured Subordinated Debenture may be converted into Common Shares at a price of $1.20 (Canadian) per Common Share. The Company loaned Park Meditech, Inc. $221,000 in December 1996, and an additional $294,000 in February, 1997, both were structured as promissory notes with interest at 11% secured by all of the assets of Park Meditech, Inc.. The debenture and both promissory notes were written off in fiscal 1998. On July 3, 1997 Park Meditech, Inc.'s subsidary, Park Medical Systems, filed for assignment in bankruptcy. A trustee was appointed to sell the assets of Park Medical Systems, which includes patents on imaging technology. In view of this filing, the Company recognized the impairment of its investment in Park Meditech, Inc. and wrote off $1,742,000 in Fiscal 1997.
On February 22, 1996, the Company invested $2,000,000 for a 33% interest in a privately held company which designs and will manufacture medical imaging equipment. Effective May 1, 1997, the Company increased its interest from 33% to 50% with an investment of $340,000. During June, 1997 the Company and the other investor each invested an additional $1,000,000. During fiscal year 1999, the Company and the other investor each invested $3,950,000. The carrying value of this investment was negative $408,000 at July 31, 1999 and $422,000 at July 31, 1998. Transactions with this privately held company for fiscal years 1999 and 1998 consisted of revenues of approximately $10,177,000 and $8,678,000, respectively. At July 31, 1999 and 1998, accounts receivable form this company were $3,061,000 and $1,582,000, respectively.
The Company's $780,000 investment in a limited partnership is accounted for using the cost method, as the Company is a limited partner, and accordingly, has no influence over the partnership. In fiscal 1999, the Company invested $30,000 in the limited partnership for general administrative purposes. During fiscal 1998, the Company received a distribution of stock in a publicly traded company from the limited partnership. The Company sold this stock for a gain of $997,000 in fiscal 1998.
					 ANALOGIC CORPORATION AND SUBSIDIARIES 				 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
6.	Mortgage and other notes payable:
Mortgage and other notes payable consists of the following:
Principal maturities in each of the next five fiscal years on the above notes are as follows: 2000, $356,000; 2001, $363,000; 2002, $369,000; 2003, $376,000; 2004, $383,000.
7.	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 1999, 1998 and 1997.
Property under capital leases is included in property, plant and equipment, as follows:
ANALOGIC CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
7. Lease commitments and related party transactions: (continued)
Certain of the Company's subsidiaries lease manufacturing and office space under non-cancelable operating leases. These leases 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 $764,000, $513,000, and $531,000 (net of sublease income of $1,108,000, $1,144,000, and $1,188,000) in fiscal 1999, 1998 and 1997, respectively.
The following is a schedule by year of future minimum lease payments at July 31, 1999:
Future minimum lease payments under capital leases have not been reduced for sublease rental income of approximately $1,108,000.
Included in accounts and notes receivable for fiscal year 1998 are $200,000 of convertible debentures from UltraAnalog, Inc., a manufacturer of analog-to-digital and digital-to-analog converters. This note was paid in full in fiscal 1999. Bernard M. Gordon, the Company's Chairman, sold his 72% interest in the outstanding common stock of UltraAnalog, Inc., during fiscal year 1999.
8.	Stock option and stock bonus plans:
At July 31, 1999, 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, two non-employee director stock option plans (one of which has lapsed as to the granting of options), and one employee stock purchase plan.
					 ANALOGIC CORPORATION AND SUBSIDIARIES 				 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
8.	Stock option and stock bonus plans: (continued)
Options granted under the 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 non-qualified 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 non-qualified 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. Generally, 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 stock- holders' equity and subsequently amortized over the periods during which the restriction lapse (up to six years). Amortization of $527,000, $538,000, and $663,000 was recorded in fiscal 1999, 1998, and 1997, 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 12,389 in 1999, 6,007 in 1998, and 5,671 in 1997.
At July 31, 1999, 1,211,376 shares were reserved for grant under the above stock option, bonus and purchase plans.
ANALOGIC CORPORATION SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
8.	Stock option and stock bonus plans: (continued)
The following table sets forth the stock option transactions for the years ended July 31, 1999 and 1998:
ANALOGIC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
8. Stock option and stock bonus plans: (continued)
The following table sets forth the stock option transactions for the years ended July 31, 1997:
The following table summarizes information about stock options outstanding at July 31, 1999:
The following table summarized information about stock options exercisable at July 31, 1999:
ANALOGIC CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
8.	Stock option and stock bonus plans: (continued)
Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-based Compensation" encourages, but does not require, recognition of compensation expense based on the fair value of employee stock-based compensation instruments. The Company will not adopt the fair value method of accounting for employee stock-based compensation but will instead comply with the pro forma disclosure requirements. The fair value method of the Company's stock options was estimated using the Black-Scholes option pricing model. This model was developed for use in estimating fair value of traded options that have no vesting restrictions and are fully transferable. This model requires the input of highly subjective assumptions including the expected stock price volatility. Because the Company's stock options have character- istics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing model the exisitng model does not nessarily provide a reliable single measure of the fair value of its stock options. The fair value of the Company's stock options was estimated using the following weighted-average assumptions:
The weighted-average estimated fair value of stock options granted during fiscal 1999, 1998 and 1997 was $19.13,$19.17 and $15.30 per share, respectively. For pro forma purposes, the estimated fair value of the Company's stock options is amortized over the options' vesting period. The Company's pro forma information is as follows:
Because SFAS 123 is applicable only to options granted subsequent to July 31, 1995, its pro forma effect will not be fully reflected until approximately 2000.
ANALOGIC CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
9.	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 $1,000,000 in 1999, $1,000,000 in 1998, and $900,000 in 1997.
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.
10.	Interest:
Total interest incurred amounted to $518,000, $659,000, and $779,000, in 1999, 1998, and 1997, respectively, of which $154,000 in 1999, $151,000 in 1998, and $172,000 in 1997 was capitalized.
11.	Income taxes:
	The components of the provision for income taxes are as follows:
ANALOGIC CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
11.	Income taxes: (continued)
The tax effects of the principal temporary differences resulting in deferred tax expense (benefit) are as follows:
Income (loss) before income taxes from domestic and foreign operations is as follows:
The components of the deferred tax assets and liabilities are as follows:
ANALOGIC CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
11. Income taxes: (continued)
Included in prepaid expenses and other current assets is $4,317,000 and $3,402,000 of current deferred tax assets at July 31, 1999 and 1998, respectively.
A reconciliation of income taxes at the United States statutory rate to the effective tax rate follows:
Two of the Company's subsidiaries have elected to be taxed as Foreign Sales Corporation (FSC).
ANALOGIC CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
12.	Quarterly results of operations (unaudited):
The following is a summary of unaudited quarterly results of operations for the years ended July 31, 1999 and 1998.
13.	Transactions with major customers and industries:
One export customer accounted for approximately $47,000,000 and 45,000,000 or 18% and 16% of total product, service, engineering and licensing revenue in 1999 and 1998, respectively. Of the total product, service, engineering and licensing revenue, one domestic customer accounted for approximately $20,000,000 or 8% and $21,000,000 or 8% in 1999 and 1998, respectively.
The Company's ten largest customers accounted for approximately 60% of product, service, engineering, and 	licensing revenue during fiscal 1999.
Medical Technology Products, consisting primarily of electronic subsystems for medical imaging equipment, accounted for approximately 78% of product, service, engineering, and licensing revenue in fiscal 1999.
ANALOGIC CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
14.	Supplemental disclosure of cash flow information:
During fiscal years 1999, 1998 and 1997, interest paid amounted to $505,000, 586,000 and $745,000, respectively.
Income taxes paid during fiscal years 1999, 1998 and 1997 amounted to $9,092, 000, $13,114,000 and $8,103,000, respectively.
15.	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.
16. Earnings per share:
Earnings per share information has been restated to conform to SFAS No. 128, "earnings per share" which the Company adopted effective in fiscal year 1999. Basic earnings per common share was calculated by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share was calculated by dividing net income by the sum of weighted average number of common shares that would have been outstanding if potentially dilutive common shares had been issued. The following table indicates the number of shares utilized in the earnings per shares calculations for the fiscal years enidng July 31, 1999, 1998 and 1997, respectively.
17. Segment information:
Effective July 31, 1999, the Company adopted SFAS No. 131 "Disclosures about Segments of an enterprise and Selected Information". SFAS No. 131 supersedes previously issued segment reporting disclosures and requires reporting of segment information that is consistent with the way in which management operates the Company. The adoption of SFAS No. 131 did not have any impact on the Company's financial portion or the results of operations. The Company's operations are primarily within a single segment within the electronics industry (Medical Technology Products): the design, manufacture and sale of high, technology, high-performance, high precision, data acquisition, conversion (analog/digital) and signal processing instruments and systems. The (corporate and other ) segment represents the Company's Hotel operation, interest and dividend income and other Company's operations which do not meet the materiality requirements of the statement and thus are not required to be separately disclosed. The segment disclosures presented for prior years have been restated to conform with the presentation adopted for the current fiscal year. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The table below presents information about the Company's reportable segments:
18.	Foreign operations:
Financial information relating to the Company's foreign and domestic operations for fiscal years 1999, 1998 and 1997 are as follows:
ANALOGIC CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
ANALOGIC CORPORATION AND SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
INDEX TO EXHIBITS
TITLE 					INCORPORATED BY REFERENCE TO
3.1 	Restated Articles of Organization, 		Exhibit 3.1 to the Company's Annual as amended March 15, 1988 Report on Form 10-K for the fiscal year ended July 31,1988
3.2 By-laws, as amended January 27, 		Exhibit 3.2 to the Company's Annual 1988 Report on Form 10-K for the fiscal year ended July 31, 1988
10.1 Lease dated March 5, 1976 from 		Exhibit 6(e) to the Company's Bernard M. Gordon to Analogic Registration Statement on Form S-14 (File No. 2-61959)
10.2	Amendment of Lease dated 		Exhibit to the Company's Report on dated May 1, 1977 between Bernard Form 8-K May 1, 1977 	 M. Gordon and Analogic
10.3	Lease dated January 16, 1976 		Exhibit to the Company's Annual from Bernard M. Gordon to 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 July 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 Dedember 31, 1982 Form 10-K for three months ended January 31, 1983
10.5 (a)Lease dated March 16,1981 Exhibit II to the Company's Quarterly from Audubon Realty Ltd. to Report on Form 10-Q for the three Analogic months ended April 30, 1981
(b)Amendment of Lease dated Exhibit to the Company's Annual Report October 31, 1984 on Form 10-K for the fiscal year ended July 31, 1985
10.6 Land Disposition Agreement by Exhibit to the Company's Annual Report and between City of Peabody on Form 10-K for the fiscal year ended Community Development Authority July 31,1981 and Analogic Corporation
10.7 Loan Agreement among the City of Exhibit to the Company's Annual Peabody, its Community Develop- Report on Form 10-K for the fiscal ment Authority, and Analogic year ended July 31,1981 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 30, fiscal year ended July 31, 1986
10.9 Promissory Note of Analogic pay- Exhibit to the Company's Annual able to Peabody Community Develop- Report on Form 10-K for the fiscal ment 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 Siemens Form 8-K dated July 31, 1986 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.
(e)License Agreement I dated as Exhibits to the Company's Report on of July 28, 1986 between Siemens Form 8-K dated July 31, 1986 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 sub- lessor and Medical Electronics Laboratories, Inc. as sublessee
10.11 Stock Purchase Agreement as of Exhibit 10.11 to the Company's Annual March 11, 1988 by and among Report on Form 10-K for fiscal year Siemens AG, SCC, SMS, MEL, ended July 31,1988 and Analogic
10.12(a)Anamass Partnership Agreement Exhibit 10.12(a) to the Company's dated as of July 5, 1988 between Annual Report on Form 10-K for fiscal Ana/dventure Corporation and year ended July 31, 1988 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 fiscal and Anamass Partnership 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 on Annual Report on Form 10-K for fiscal August 8, 1991 year ended July 31, 1991
10.13Key Employee Stock Option Plan Exhibit 10.7 to the Company's Annual dated April 21, 1978, as amend- Report on Form 10-K for the fiscal ed and restated December 4, year ended July 31, 1987 1981, and further amended on October 9, 1984 and January 28,
10.14Key Employee Stock Option Plan Exhibit 10.8 to the Company's Annual dated August 8, 1980, as amend- Report on Form 10-K for the fiscal ed and restated December 4, 1981, year ended July 31, 1987 and further amended on October 9, 1984 and January 28, 1987
10.15(a)Analogic Corporation Profit Exhibit 6(c) to the Company's Sharing Plan dated July 26, 1977 Registration Statement on Form 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 Corpora- Exhibit 10.9(c) to the Company's tion Profit Sharing Plan dated Annual Report on Form 10-K for the July 31, 1985 and Amendment year ended July 31, 1985 No. 1 thereto dated August 20,
10.16Key Employee Stock Bonus Plan Exhibit A to definitive proxy state- dated March 14, 1983, as ment for the Company's Special Meeting amended on January 27, 1988 in lieu of Annual Meeting of Stockholders held January 25, 1984 (File Nol 33-27372)
10.17 Key Employee Incentive Stock Exhibit 10.15 to the Company's Annual Option Plan dated March 14, Report on Form 10-K for the fiscal 1983, as amended and restated year ended July 31, 1987 (File No. on January 28, 1987 2-95091)
10.18 1985 Non-Qualified Stock Option Exhibit 10.19 to the Company's Annual Plan dated May 13, 1985 Report on Form 10-K for the fiscal year ended July 31, 1985 (File No. 33-6835)
10.19 (a) Employee Qualified Stock Exhibit G to the Company's definitive Purchase Plan dated June 10, proxy statement dated December 9, 1985 1986 for the Company's Special Meeting in lieu of Annual Meeting of Stockholders held January 22, 1986 (File No.33-5913)
(b) Said Employee Stock Exhibit A to the Company's definitive Purchase Plan (as amended Proxy statement dated December 1, 1997 on October 9, 1997) for the Company's Annual Meeting to Shareholders held January 23, 1998.
10.20 Proposed 1988 Non-Qualified Exhibit 10.20 to the Company's Annual Stock Option Plan for Non- Report on Form 10-K for the fiscal Employee Directors year ended July 31, 1988 (File No. 33-27372)
10.21 Form of Indemnification Exhibit 10.19 to the Company's Annual Contract Report on Form 10-K for the fiscal year ended July 31, 1987
10.22 Agreement and Plan of Merger Exhibit 10.22 to the Company's Annual between SKY COMPUTERS, Inc., Report on Form 10-K for the fiscal and Analogic Corporation year ended July 31, 1992
10.23(a)Agreement between B-K Medical Exhibits to the Company's Report on Holding A/S and Analogic Corp- Form 8-K dated December 18, 1992 oration 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,
(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 definitive Option Plan dated June 11, Proxy Statement dated December 1, 1993 1983 for the Company's Annual Meeting of Stockholders held January 21, 1994 (File No. 33-53381)
10.25 Non-Qualified Stock Option Plan Exhibit A to the Company's for Non-Employee Directors dated definitive Proxy Statement dated January 31, 1997 December 2, 1996 for the Company's Annual Meeting of Stockholders held January 24, 1997.
10.26 Key Employee Incentive Stock Exhibit A to the Company's Option Plan dated June 11, 1998 definitive Proxy Statement dated December 1, 1998 for the Company's Annual Meeting of Stockholders held January 22, 1999.
EXHIBITS
	 		 TITLE
21.		List of Subsidiaries
23.		Consent of PricewaterhouseCoopers LLP
27.		Financial Data Schedule
EXHIBIT 21
											JURISDICTION OF 		NAME								 	INCORPORATION
Analogic Limited 	 							Massachusetts
Analogic Foreign Sales Corporation	 				Virgin Islands
Analogic Securities Corporation	 					Massachusetts
Anadventure II Corporation	 						Massachusetts
Anadventure 3 Corporation Massachusetts
Anadventure Delaware Corporation	 				Delaware
ANRAD Corporation Province of Nova Scotia
B-K Ultrasound Systems A/S	 					Denmark
Camtronics Foreign Sales Corporation		 			Virgin Islands
Camtronics, Ltd.		 						Wisconsin
International Security Systems Corporation Massachusetts
SKY COMPUTERS, Incorporated		 			Massachusetts
SKY Limited		 							England
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of Analogic Corporation on Form S-8 (File Nos. 2-95091, 33-5913, 33-6835, 33-53381 and 33-27372) of our report dated August 27, 1999 on our audits of the consolidated financial statements and financial statement schedule of Analogic Corporation at July 31, 1999 and 1998, and for each of three years ended July 31, 1999, 1998, and 1997, which report is included in the Annual Report on Form 10-K.
PricewaterhouseCoopers LLP
October 4, 1999