Edgar Filing: ANALOGIC CORP

ANALOGIC CORPORATION

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Amendment No. 1 on

Form 10-Q/A


(Mark One)
o		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
		EXCHANGE ACT OF 1934


		For the period ended April 30, 2002


x		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
		EXCHANGE ACT OF 1934


		For the transition period from to

Commission file number 0-6715

Analogic Corporation

(Exact name of registrant as specified in its charter)


Massachusetts		04-2454372
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

8 Centennial Drive		01960
Peabody, Massachusetts		(Zip Code)
(Address of principal executive offices)

(978) 977-3000
(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report.)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes o No x

The number of shares of Common Stock outstanding at May 31, 2002 was 13,259,031.

ANALOGIC CORPORATION

QUARTERLY REPORT ON FORM 10-Q/A
FOR THE QUARTER ENDED APRIL 30, 2002
INTRODUCTORY NOTE

Pursuant to Rule 12b-15 of the Rules and Regulations under the Securities Exchange Act of 1934, this Amendment on Form 10-Q/A to the Quarterly Report on Form 10-Q of Analogic Corporation (the “Company”) for the quarter ended April 30, 2002 is being filed to (i) restate the Company’s Condensed Consolidated Financial Statements (unaudited) for the three and nine months ended April 30, 2002 and (ii) revise related disclosures included in the Form 10-Q.

On October 15, 2003, the Company reported that it would restate its financial statements for the fiscal years ended July 31, 2002 and July 31, 2001, and condensed financial statements for the quarters within the fiscal years ended July 31, 2003, 2002 and 2001, and would file amended annual reports on Form 10-K/A and amended quarterly reports on Form 10-Q/A. The purpose of this restatement is to reflect the application of the appropriate accounting principles to (1) the recognition of software revenue by Camtronics Medical Systems, Ltd., a 100% owned U.S. subsidiary of the Company, for fiscal years ended July 31, 2003, 2002 and 2001 and (2) the treatment of foreign currency exchange gains and losses related to an inter-company loan between the Company and B-K Medical Systems A/S, a 100% owned Danish subsidiary of the Company, for fiscal years ended July 31, 2003 and 2002. As restated, the Company’s financial results for the three and nine months ended April 30, 2002 reflect a reduction in revenues of $796,000, an increase in net income of $540,000, and diluted earnings per share of $0.04, and for the nine months ending April 30, 2002 reflect a reduction in revenue of $4,094,000, net income of $546,000 and diluted earnings per share of $0.04. See Note 2, “Restatement,” of the Notes to Unaudited Condensed Consolidated Financial Statements for a more complete discussion of the restatement.

This Amendment amends Part I, Items 1 and 2 and Part II, Item 6 of the Quarterly Report on Form 10-Q for the period ended April 30, 2002. This filing should be read in conjunction with the Company’s Annual Report on Form 10-K/A for the year ended July 31, 2001, as filed on October 29, 2003 with the Securities and Exchange Commission and the Company’s Form 10-Q/A for the nine months ended April 30, 2001 as filed with the Securities and Exchange Commission on October 29, 2003. This Amendment continues to reflect circumstances as of the date of the original filing of the Quarterly Report on Form 10-Q, and the Company has not updated the disclosures contained therein to reflect events that occurred at a later date, except for items relating to the restatement.

ANALOGIC CORPORATION

INDEX


			Page No

Part I.	Financial Information
Item 1.		Consolidated Financial Statements
		Unaudited Condensed Consolidated Balance Sheets as of April 30, 2002 (Restated) and July 31, 2001 (Restated)	4-5
		Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended April 30, 2002 (Restated) and 2001 (Restated)	6
		Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended April 30, 2002 (Restated) and 2001 (Restated)	7
		Notes to Unaudited Condensed Consolidated Financial Statements	8-22
Item 2.		Management’s Discussion and Analysis of Results of Operations and Financial Condition	23-33
Part II.	Other Information
Item 6.		Exhibits and Reports on Form 8-K	34
		Signatures	35
		Exhibit Index
		Certification

Part I. Financial Information

Item 1. Financial Statements

ANALOGIC CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands)


			April 30,		July 31,
			2002		2001

			Restated		Restated
ASSETS
Current assets:
	Cash and cash equivalents		$	79,594	$	46,013
	Marketable securities, at market			65,344		76,899
	Accounts and notes receivable, net of allowance for doubtful accounts $1,693 in fiscal 2002, and $1,268 in fiscal 2001			55,386		68,287
	Inventories			62,356		60,696
	Costs related to deferred revenue			1,350		84
	Refundable and deferred income taxes			16,027		10,369
	Other current assets			8,279		7,410

		Total current assets		288,336		269,758
	Property, plant and equipment, net			75,392		68,846
	Investments in and advances to affiliated companies			8,745		4,692
	Capitalized software, net			4,055		5,488
	Costs related to deferred revenue			6,630		4,907
	Other assets			7,046		5,468

		Total assets	$	390,204	$	359,159

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Mortgage and other notes payable		$	224	$	369
	Obligations under capital leases			306		275
	Accounts payable, trade			18,457		15,378
	Accrued liabilities			14,663		20,466
	Deferred revenue			8,598		4,775
	Advance payments and other			34,252		972
	Accrued income taxes			1,567		1,904

		Total current liabilities		78,067		44,139
Long-term liabilities:
	Mortgage and other notes payable			4,126		4,896
	Obligations under capital leases			419		664
	Deferred revenue			10,490		9,130
	Advance payments and other			300
	Deferred income taxes			2,597		1,836

				17,932		16,526
Commitments
	Stockholders’ equity:
	Common stock, $.05 par value			706		703
	Capital in excess of par value			38,514		37,857
	Retained earnings			269,468		275,807


		April 30,			July 31,
		2002			2001

		Restated			Restated
Accumulated other comprehensive loss			(1,364	)		(1,598	)
Treasury stock, at cost			(8,568	)		(9,035	)
Unearned compensation			(4,551	)		(5,240	)

	Total stockholders’ equity		294,205			298,494

	Total liabilities and stockholders’ equity	$	390,204		$	359,159

The accompanying notes are an integral part of these financial statements.

ANALOGIC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share data)


			Three Months Ended						Nine Months Ended
			April 30,						April 30,

			2002			2001			2002			2001

			Restated			Restated			Restated			Restated
Net revenue:
	Product		$	64,183		$	78,606		$	192,635		$	230,923
	Engineering			5,988			6,852			17,726			18,920
	Other			1,941			2,785			6,865			9,542

Total net revenue				72,112			88,243			217,226			259,385

Costs of sales:
	Product			40,060			50,792			121,909			149,462
	Engineering			5,620			5,367			17,474			15,398
	Other			1,126			1,669			3,847			4,901
	Asset impairment charges									8,883

Total cost of sales				46,806			57,828			152,113			169,761

Gross margin				25,306			30,415			65,113			89,624

Operating expenses:
	Research and product development			9,222			10,569			29,766			28,966
	Selling and marketing			8,120			8,612			24,279			23,782
	General and administrative			6,905			7,909			21,681			22,902

				24,247			27,090			75,726			75,650

Income (loss) from operations				1,059			3,325			(10,613	)		13,974

Other (income) expense:
	Interest income, net			(913	)		(1,314	)		(2,946	)		(4,254	)
	Equity in unconsolidated affiliates			688			(1,331	)		(681	)		(1,192	)
	Other, net			(428	)		94			(134	)		516

				(653	)		(2,551	)		(3,761	)		(4,930	)

Income (loss) before income taxes and minority interest				1,712			5,876			(6,852	)		18,904
Provision (benefit) for income taxes				(1,575	)		1,565			(3,288	)		5,804
Minority interest							42						88

Net income (loss)			$	3,287		$	4,269		$	(3,564	)	$	13,012

Net income (loss) per common share:
		Basic	$	0.25		$	0.33		$	(0.27	)	$	1.01
		Diluted		0.25			0.33			(0.27	)		1.00
Weighted average shares outstanding:
		Basic		13,112			12,992			13,107			12,901
		Diluted		13,256			13,127			13,107			13,044

The accompanying notes are an integral part of these financial statements.

ANALOGIC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)


			Nine Months Ended
			April 30,

			2002			2001

			Restated			Restated
Operating Activities:
	Net income (loss)		$	(3,564	)	$	13,012
	Adjustments to reconcile net income (loss) to net cash provided by operating activities:
		Deferred income taxes		(5,181	)		(109	)
		Depreciation and amortization		12,574			10,128
		Minority interest in net income of consolidated subsidiaries					90
		Allowance for doubtful accounts		415			(22	)
		Impairment of assets		8,883
		(Gain) loss on sale of equipment		58			(51	)
		Equity gain in unconsolidated affiliates		(681	)		(1,192	)
		Loss on investment					487
		Compensation from stock grants		733			734
		Net changes in operating assets and liabilities		38,802			(15,696	)

	NET CASH PROVIDED BY OPERATING ACTIVITIES			52,039			7,381

Investing Activities:
	Investments in affiliated companies			(9,500	)
	Return of investment from affiliated company			1,502			1,000
	Additions to property, plant and equipment			(18,332	)		(11,940	)
	Capitalized software			(1,767	)		(2,369	)
	Proceeds from sale of property, plant and equipment			74			109
	Maturities of marketable securities			11,585			10,320

NET CASH USED IN INVESTING ACTIVITIES				(16,438	)		(2,880	)

Financing Activities:
	Payments on debt and capital lease obligations			(1,044	)		(412	)
	Issuance of common stock pursuant to stock options and employee stock purchase plan			1,079			1,230
	Dividends paid to shareholders			(2,776	)		(2,714	)

NET CASH USED IN FINANCING ACTIVITIES				(2,741	)		(1,896	)

	EFFECT OF EXCHANGE RATE CHANGES ON CASH			721			(618	)

	NET INCREASE IN CASH & CASH EQIVALENTS			33,581			1,987

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD				46,013			29,132

CASH AND CASH EQUIVALENTS, END OF PERIOD			$	79,594		$	31,119

The accompanying notes are an integral part of these financial statements.

ANALOGIC CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)

1. Basis of Presentation

The unaudited condensed consolidated financial statements of Analogic Corporation (the “Company”) presented herein have been prepared pursuant to the rules of the Securities and Exchange Commission (“SEC”) for quarterly reports on Form 10-Q and do not include all of the information and note disclosures required by generally accepted accounting principles for complete financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting solely of normal recurring adjustments) necessary for a fair presentation of the results for all periods presented. The results of the operations for the three and nine months ended April 30, 2002 are not necessarily indicative of the results to be expected for the fiscal year ending July 31, 2002, or any other interim period.

These statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended July 31, 2001, included in the Company’s Form 10-K/A as filed with the SEC on October 29, 2003 and the Company’s Form 10-Q/A for the nine months ended April 30, 2001 as filed with the SEC on October 29, 2003.

The condensed financial statements have not been audited by independent certified public accountants. The condensed consolidated balance sheet as of July 31, 2001, contains data derived from audited financial statements.

Certain financial statement items have been reclassified to conform to the current year’s financial presentation format.

2. Restatement:

The Company has restated its prior period condensed financial statements to reflect the application of the appropriate accounting principles to the recognition of software revenue by its 100% owned U.S. subsidiary Camtronics Medical Systems, Ltd., and to the treatment of foreign currency exchange gains and losses related to an inter-company loan between the Company and B-K Medical Systems A/S, (“B-K”). As restated, the Company’s financial results for the three months ended April 30, 2002 reflect a reduction in revenues of $796, and increase in net income of $540, and diluted earnings per share of $0.04, and for the nine months ended April 30, 2002 reflect a reduction in revenue of $4,094, net income of $546 and diluted earnings per share of $0.04, compared to the Company’s financial results previously reported for the three and nine months quarter ended April 30, 2002.

Summarized below is a more detailed discussion of the restatement along with a comparison of the amounts previously reported in the condensed balance sheet and statements of operations in Form 10-Q/A as of and for the three and nine months ended April 30, 2002.

Software Revenue

In connection with the preparation of its Financial Statements for the fiscal year ended July 31, 2003 the Company concluded that its accounting for revenue at its Camtronics subsidiary did not meet required accounting standards. The Company has taken steps to ensure that Camtronics sales transactions will be properly accounted for in the future.

Camtronics previously accounted for all of its revenues in accordance with Staff Accounting Bulletin 101, “Revenue Recognition” (“SAB 101”). The Company has determined that Camtronics’ revenue recognition policy should be in accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 97-2. Accordingly “Software Revenue” (“SOP 97-2”), certain revenues originally recorded in prior periods should have been deferred. In accordance with SAB 101, the Company had previously recognized revenue when the major components of software had been delivered, installed, and accepted by the customer. In the majority of sales transactions involved in the restatement, the customer has already installed and paid for the software it had accepted. As required by SOP 97-2, the Company will recognize the total revenue related to transactions involving software once all components are delivered, installed, and accepted by the customer.

Camtronics’ revenues are derived primarily from the sale of Digital Cardiac Information Systems. System sales revenues consist of the following components: computer software licenses, computer hardware, installation support, and sublicensed software. In addition, Camtronics generates revenues related to system sales for software support, hardware maintenance, training, consulting and other professional services.

Camtronics recognizes revenue in accordance with the provisions of SOP 97-2. SOP 97-2 requires revenue earned on software arrangements involving multiple-elements to be allocated to each element based on the fair values of those elements or by use of the residual method. Under the residual method, revenue is recognized in a multiple-element arrangement when vendor-specific objective evidence (“VSOE”) of fair value exists for all of the undelivered elements in the arrangement, which is determined by the price charged when that element is sold separately (i.e. professional services, software support, hardware maintenance, hardware and sublicensed software), but does not exist for one or more of the delivered elements in the arrangement (i.e. software solutions). Specifically, Camtronics determines the fair value of the maintenance portion of the arrangement based on the renewal price of the maintenance charged to clients, professional services portion of the arrangement, other than installation services, based on hourly rates which Camtronics charges for these services when sold apart from a software license, and the hardware and sublicensed software based on the prices for these elements when they are sold separately from the software. If evidence of the fair value cannot be established for the undelivered elements of a license agreement, the entire amount of revenue under the arrangement is deferred until these elements have been delivered or objective evidence of fair value for the remaining undelivered element is established.

Inherent in the revenue recognition process are significant management estimates and judgments, which influence the timing and the amount of revenue recognition. Camtronics provides several models for the procurement of its digital cardiac information systems. The predominant model includes a perpetual software license agreement, project-related installation services, professional consulting services, computer hardware and sub-licensed software and software support.

Camtronics provides installation services, which include project-scoping services, conducting pre-installation audits detailed installation plans, actual installation of hardware components, and testing of all hardware and software installed at the customer site. Because installation services are deemed to be essential to the functionality of the software, software license and installation services fees are recognized upon completion of installation.

Camtronics also provides professional consulting services, which include consulting activities that fall outside of the scope of the standard installation services. These services vary depending on the scope and complexity requested by the client. Examples of such services may include additional database consulting, system configuration, project management, interfacing to existing systems, and network consulting. Professional consulting services generally are not deemed to be essential to the functionality of the software, and thus, do not impact the timing of the software license revenue recognition. Professional consulting service revenue is recognized as the services are performed.

Hardware and software maintenance fees are marketed under annual and multi-year arrangements and are recognized as revenue ratably over the contracted maintenance term.

Deferred revenue is comprised of 1) license fee, maintenance and other service revenues for which payment has been received and for which services have not yet been performed and 2) revenues which had been invoiced, and paid in the majority of costs, related to delivered components of a multiple-element arrangement for which fair value has not been determined for components not yet delivered or accepted by the customer. Costs related to deferred revenue represents costs of goods sold and services provided and sales commission expenses.

Deferred Revenue and costs related to deferred revenue which have been classified within the Balance Sheet as long-term represent specific transactions where Camtronics has determined that it will not meet VSOE requirements for these transactions under SOP 97-2 within the next twelve calendar months.

Accounting for Foreign Exchange Transactions

The Company also concluded that the application of Financial Accounting Standard No. 52, “Foreign Currency Translation” (“FAS No. 52”), with respect to foreign exchange gains (losses) attributable to an inter-company loan from the Company to its B-K subsidiary did not meet accounting standards. Accordingly, gains (losses), which had been previously reported in Stockholders’ Equity as accumulated comprehensive income, must be recognized as gains (losses) in determining prior period operating results.

The Company had provided funding to B-K in December 2001, March 2002, and May 2002 for its new headquarters building via three interest bearing, U.S. dollar denominated inter-company notes. These notes at their inception totaled $12,900 and were to be repaid quarterly (principal and interest) over a 20 year period.

B-K had determined foreign exchange gain (loss) at the end of each quarter for the then outstanding inter-company debt by marking this debt to the market foreign exchange rates and recording any unrealized gain or loss within Stockholders’ Equity via the accumulative other comprehensive income account. When B-K actually paid down the debt each quarter, realized gains (losses) on these inter-company debt payments were reflected in B-K’s quarterly statement of operations.

Upon further review of the Company’s application of FAS No. 52, it was determined that foreign exchange gains (losses) must be recognized in determining each quarter’s operating results and not recorded within Stockholders’ Equity via the accumulative other comprehensive income account. During the quarter ended July 31, 2003, the Company converted the then outstanding inter-company debt of $12,000 to equity. The Company currently has no outstanding inter-company debt between it and its B-K subsidiary.

The following tables show the effect of the restatement on the Company’s Statements of Operations and Balance Sheets.

Statements of Operations:


			Three Months Ended April 30, 2002

			(unaudited)
			Amounts
			Previously
			Reported			Restated			Change

Net revenue:
	Product		$	64,979		$	64,183		$	(796	)	(a	)
	Engineering			5,988			5,988
	Other			1,941			1,941

Total net revenue				72,908			72,112			(796	)

Costs of sales:
	Product			40,253			40,060			(193	)	(b	)
	Engineering			5,620			5,620
	Other			1,126			1,126

Total cost of sales				46,999			46,806			(193	)

Gross margin				25,909			25,306			(603	)
Operating expenses
	Research and product development			9,643			9,222			(421	)	(c	)
	Selling and marketing			8,200			8,120			(80	)	(d	)
	General and administrative			6,905			6,905

				24,748			24,247			(501	)
Income from operations:				1,161			1,059			(102	)
Other (income) expense:
	Interest income, net			(913	)		(913	)
	Equity in unconsolidated affiliates			688			688
	Other, net			(16	)		(428	)		(412	)	(e	)

				(241	)		(653	)		(412	)
Income before income taxes and minority interest				1,402			1,712			310
Provision (benefit) for income taxes				(1,345	)		(1,575	)		(230	)	(f	)

Net income			$	2,747		$	3,287		$	540

Net income per common share:
		Basic	$	0.21		$	0.25		$	0.04
		Diluted		0.21			0.25			0.04		(g	)
Weighted average shares outstanding:
		Basic		13,112			13,112
		Diluted		13,256			13,256

Statements of Operations components increased (decreased) as a result of the following:


(a	)	Net revenue: Product
		Adjust recognition of revenue for application of SOP 97-2	$	(796	)

(b	)	Cost of sales: Product
		Adjust cost of sales related to transactions for which revenue has been deferred	$	(614	)
		Reclassification not impacting net income		421

		Net decrease	$	(193	)

(c	)	Research and product development
		Reclassification not impacting new income	$	(421	)

(d	)	Selling and marketing
		Adjust commission expense related to transactions for which revenue has been deferred	$	(80	)

(e	)	Other (income) expense: Other, net
		Adjustment related to exchange loss on the B-K loan	$	(412	)

(f	)	Provision (benefit) for income taxes
		Net decrease to provision due to above adjustments	$	(230	)

(g	)	Net income per common share: Diluted
		Net effect to diluted earnings per share due to above adjustments	$	0.04

Statements of Operations:


			Nine Months Ended April 30, 2002

			(unaudited)
			Amounts
			Previously
			Reported			Restated			Change

Net revenue:
	Product		$	196,729		$	192,635		$	(4,094	)	(a	)
	Engineering			17,726			17,726
	Other			6,865			6,865

Total net revenue				221,320			217,226			(4,094	)

Costs of sales:
	Product			123,072			121,909			(1,163	)	(b	)
	Engineering			17,474			17,474
	Other			3,847			3,847
	Asset impairment charges			8,883			8,883

Total cost of sales				153,276			152,113			(1,163	)

Gross margin				68,044			65,113			(2,931	)
Operating expenses:
	Research and product development			31,054			29,766			(1,288	)	(c	)
	Selling and marketing			24,641			24,279			(362	)	(d	)
	General and administrative			21,681			21,681

				77,376			75,726			(1,650	)
Income (loss) from operations:				(9,332	)		(10,613	)		(1,281	)
Other (income) expense:
	Interest income, net			(2,946	)		(2,946	)
	Equity in unconsolidated affiliates			(681	)		(681	)
	Other, net			98			(134	)		(232	)	(e	)

				(3,529	)		(3,761	)		(232	)
Income (loss) before income taxes and minority interest				(5,803	)		(6,852	)		(1,049	)
Provision (benefit) for income taxes				(2,785	)		(3,288	)		(503	)	(f	)

Net income (loss)			$	(3,018	)	$	(3,564	)	$	(546	)

Net income (loss) per common share:
		Basic	$	(0.23	)		(0.27	)	$	(0.04	)
		Diluted		(0.23	)		(0.27	)		(0.04	)	(g	)
Weighted average shares outstanding:
		Basic		13,107			13,107
		Diluted		13,107			13,107

Statements of Operations components increased (decreased) as a result of the following:


(a	)	Net revenue: Product
		Adjust recognition of revenue for application of SOP 97-2	$	(4,094	)

(b	)	Cost of sales: Product
		Adjust cost of sales related to transactions for which revenue has been deferred	$	(2,451	)
		Reclassification not impacting net income		1,288

		Net decrease	$	(1,163	)

(c	)	Research and product development
		Reclassification not impacting new income	$	(1,288	)

(d	)	Selling and marketing
		Adjust commission expense related to transactions for which revenue has been deferred	$	(362	)

(e	)	Other (income) expense: Other, net
		Adjustment related to exchange loss on the B-K loan	$	(232	)

(f	)	Provision (benefit) for income taxes
		Net decrease to provision due to above adjustments	$	(503	)

(g	)	Net income (loss) per common share: Diluted
		Net effect to diluted earnings per share due to above adjustments	$	(0.04	)

Balance Sheets:


			April 30, 2002

			(unaudited)
			Previously
			Reported			Restated			Change

ASSETS
Current assets:
	Cash and cash equivalents		$	79,594		$	79,594
	Marketable securities, at market			65,344			65,344
	Accounts and notes receivable, net of allowance for doubtful Accounts			55,386			55,386
	Inventories			62,356			62,356
	Costs related to deferred revenues						1,350		$	1,350		(a	)
	Refundable and deferred income taxes			14,087			16,027			1,940		(b	)
	Other current assets			8,279			8,279

		Total current assets		285,046			288,336			3,290
	Property, plant and equipment, net			75,392			75,392
	Investments in and advances to affiliated companies			8,745			8,745
	Capitalized software, net			4,055			4,055
	Costs related to deferred revenues						6,630			6,630		(c	)
	Other assets			6,722			7,046			324		(d	)

		Total assets	$	379,960		$	390,204		$	10,244

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Mortgage and other notes payable		$	224		$	224
	Obligations under capital leases			306			306
	Accounts payable, trade			18,457			18,457
	Accrued liabilities			19,152			14,663		$	(4,489	)	(e	)
	Deferred revenue			35,812			8,598			(27,214	)	(f	)
	Advance payments and other						34,252			34,252		(g	)
	Accrued income taxes			858			1,567			709		(h	)

		Total current liabilities		74,809			78,067			3,258
Long-term liabilities
	Mortgage and other notes payable			4,126			4,126
	Obligations under capital leases			419			419
	Deferred revenue						10,490			10,490		(i	)
	Advance payments and other			1,045			300			(745	)	(j	)
	Deferred income taxes			3,028			2,597			(431	)	(k	)

				8,618			17,932			9,314
Commitments
Stockholders’ equity:
	Common stock, $.05 par value			706			706
	Capital in excess of par value			38,514			38,514
	Retained earnings			271,656			269,468			(2,188	)	(l	)
	Accumulated other comprehensive income			(1,224	)		(1,364	)		(140	)	(m	)
	Treasury stock, at cost			(8,568	)		(8,568	)
	Unearned compensation			(4,551	)		(4,551	)

		Total stockholders’ equity		296,533			294,205			(2,328	)

		Total liabilities and stockholders’ equity	$	379,960		$	390,204		$	10,244

The increases (decreases) to the balance sheet components are due to (1) current period recognition of the effect of the current period restatement for foreign currency exchange gains and losses and current period deferrals of revenue and related costs; and (2) the cumulative effect of the beginning of the quarter for the restatements of prior periods for similar matters. On a net basis the balance sheet components increased (decreased) due to the following:


(a	)	Costs related to deferred revenue (short-term)
		Deferred costs related to deferred revenue	$	1,350

(b	)	Refundable and deferred income taxes
		Deferred income tax related to deferred costs and revenue	$	1,848
		Deferred income tax related to comprehensive income		92

		Net increase	$	1,940

(c	)	Costs related to deferred revenue (long-term)
		Deferred costs related to deferred revenue	$	6,630

(d	)	Other assets
		Purchase accounting adjustments related to the acquisition of the remaining 19% of Camtronics in July 2001 due to net effect from these adjustments for periods prior to such acquisition	$	324

(e	)	Accrued liabilities
		Reclassification not impacting net income	$	(4,252	)
		Accrued warranty costs related to deferred revenue		(237	)

		Net decrease	$	(4,489	)

(f	)	Deferred revenue (short-term)
		Deferred revenue classified as short-term	$	2,786
		Reclassification not impacting net income		(30,000	)

		Net decrease	$	(27,214	)

(g	)	Advance payments and other (short-term)
		Reclassification not impacting net income	$	30,000
		Reclassification not impacting net income		4,252

		Net increase	$	34,252

(h	)	Accrued income taxes
		Tax provision adjusted for the change to net income	$	709

(i	)	Deferred revenue (long-term)
		Deferred revenue classified on long-term	$	9,745


		Reclassification not impacting net income	$	745

		Net increase	$	10,490


(j	)	Advance payments and other (long-term)
		Reclassification not impacting net income	$	(745	)


(k	)	Deferred income taxes
		Deferred income taxes related to expenses deferred to future periods	$	(431	)


(l	)	Retained earnings
		Net effect to retained earnings from above adjustments:
		Cumulative effect through July 31, 2001	$	(1,642	)
		Effect for the nine months ended April 30, 2002		(546	)

		Net decrease	$	(2,188	)

(m	)	Accumulated other comprehensive income
		Comprehensive income related to foreign currency gains (losses)	$	(140	)

3. Balance sheet information

Additional information for certain balance sheet accounts is as follows for the periods indicated:


			April 30,		July 31,
			2002		2001

Inventories:
		Raw materials	$	36,065	$	35,660
		Work-in-process		14,392		15,642
		Finished goods		11,899		9,394

			$	62,356	$	60,696

	Accrued liabilities: (Restated)
		Accrued employee compensation and benefits	$	8,951	$	14,617
		Accrued warranty		2,798		2,790
		Other		2,914		3,059

			$	14,663	$	20,466

	Advance payments and other:
		Long lead time components	$	30,000
		Other		4,252	$	972

			$	34,252	$	972

4. Investment in and Advances to Affiliated Companies

In September 2001, the Company acquired a 19% interest in Cedara Software Corporation (“Cedara”) of Mississauga, Ontario, Canada, in exchange for cash of $7,500 and other considerations. The Company recorded an investment of $2,469 and a premium in excess of book value of $5,031, which was applied to intangible assets related to acquired technologies and is being amortized over the estimated useful life of five years. The Company accounts for this investment using the equity method of accounting due to the Company’s ability to exercise influence over operating and financial policies and has two of the seven seats on Cedara’s board of directors. During the nine months of fiscal 2002, the Company recorded a gain of $513 from its share of profit in Cedara, with a carrying value of this investment at April 30, 2002 of $2,982. The company also recognized amortization of the intangible asset of $588 during the nine months of fiscal 2002, with a carrying value of the intangible asset at April 30, 2002 of $4,443, which is classified as and included in Other Assets in the Condensed Consolidated Balance Sheets. The Company has guaranteed the debt owed by Cedara to its bank lender through the provision of a credit facility with Analogic’s principal bank for approximately $6,300.

As part of the Company’s original investment agreement, Cedara agreed to grant the Company pre-emptive rights whereby it has the right to maintain a 19% equity interest in the event of certain future issuances of stock by Cedara. Cedara had issued additional stock and on May 3, 2002 the Company acquired an additional 580,641 of common shares of Cedara for approximately $872 to maintain the Company’s interest of approximately 19%.

During the first quarter of fiscal 2002, the Company’s subsidiary, Camtronics Medical Systems, Ltd. entered into an agreement to purchase a 15% interest in CardioWorks, Inc. for $2,000. CardioWorks specializes in knowledge databases for electronics medical records. Camtronics plans to integrate CardioWorks knowledge databases in a digital charting product to be offered as part of the Company’s VERICIS product line. The Company recorded $1,900 as an investment and $100 as intangible assets related to intellectual property. The Company also recorded its share of the 15% equity loss in CardioWorks in the amount of $76, representing CardioWorks cumulative losses.

5. Dividends

The Company declared dividends of $.07 per common share as follows: on June 11, 2002, payable July 9, 2002 to shareholders of record on June 25, 2002; on March 16, 2002, payable April 15, 2002 to shareholders of record on April 1, 2002; on December 11, 2001, payable January 10, 2002 to shareholders of record on December 26, 2001; and on October 11, 2001, payable November 8, 2001 to shareholders of record on October 25, 2001.

6. Asset impairment charges

During the quarter ending October 31, 2001, Analogic recorded asset impairment charges totaling $8,883 on a pre-tax basis.

As a result of the continued decline in the economic and business conditions in the telecommunications industry, Analogic decided to terminate activities related to Anatel, the Company’s wholly-owned telecommunications subsidiary. The Company recorded a pre-tax charge of $1,901 related to the impairment of purchased intangibles and other long-lived assets. The impairment charge is equal to the amount by which the assets’ carrying value exceeded the present value of their estimated discounted cash flows. Additionally, a pre-tax charge of $557 related to obsolete inventory, as well as a pre-tax charge of $1,120 related to capitalized software, has been recorded as those assets have been deemed to be unrecoverable. The Company also recorded a pretax asset impairment charge of $3,200 in fiscal 2001 primarily for inventory and capitalized software related to Anatel.

The Company decided to discontinue the sales of certain of its older and unprofitable product lines within its semi-conductor test equipment business in order to focus its resources on the highest potential growth areas within this business. As a result, the Company recorded a pre-tax charge of $902 related to the impairment of purchased intangibles and other long-lived assets. The impairment charge is equal to the amount by which the assets’ carrying value exceeded the present value of their estimated discounted cash flows. Additionally, a pre-tax charge of $3,600 related to excess and obsolete test equipment inventory, as well as a pre-tax charge of $803 related to capitalized software, has been recorded as those assets have been deemed to be unrecoverable. The Company also incurred immaterial costs related to involuntary terminations and other related activities. The entire balance of each charge has been recorded within the Cost of Sales section of the Company’s Condensed Consolidated Statements of Operations.

The inventory reserve established in fiscal year 2001 and in the first quarter of fiscal year 2002 as part of the activities noted above totaled $5,657. No inventory specifically related to this reserve was scrapped during the third quarter ended April 30, 2002. A total of $659 of this inventory was scrapped and charged against the reserve during the nine months ended April 30, 2002.

7. Comprehensive Income (Loss)

The following table presents the calculation of total comprehensive income (loss) and its components:


		Three Months Ended						Nine Months Ended
		April 30,						April 30,

		2002			2001			2002			2001

		Restated			Restated			Restated			Restated
Net income (loss)		$	3,287		$	4,269		$	(3,564	)	$	13,012
Other comprehensive income (loss) net of tax:
	Unrealized gains and losses from marketable securities, net of taxes of $156 and $80 for the three months ended April 30, 2002 and 2001, and $11 and $600 for the nine months ended April 30, 2002 and 2001		(237	)		(121	)		19			918
	Foreign currency translation adjustment, net of taxes of $312 and $328 for the three months ended April 30, 2002 and 2001, and $142 and $417 for the nine months ended April 30, 2002 and 2001		476			(502	)		215			(643	)

Total comprehensive income (loss)		$	3,526		$	3,646		$	(3,330	)	$	13,287

8. Net income (loss) per share

The following table sets forth the computation of basic and diluted earnings per share:


			Three Months Ended				Nine Months Ended
			April 30,				April 30,

			2002		2001		2002			2001

			Restated		Restated		Restated			Restated
Net income (loss)			$	3,287	$	4,269	$	(3,564	)	$	13,012

Basic:
	Weighted average number of common shares outstanding			13,112		12,992		13,107			12,901

	Net income (loss) per share		$	0.25	$	0.33	$	(0.27	)	$	1.01

Diluted:
	Weighted average number of common share outstanding			13,112		12,992		13,107			12,901
	Dilutive effect of stock options			144		135					143

		Total		13,256		13,127		13,107			13,044

Net income (loss) per share			$	0.25	$	0.33	$	(0.27	)	$	1.00

For the three months ended April 30, 2002, options to acquire 20 shares of common stock have been excluded from the calculation of diluted earnings per share because the options’ price was greater than the average market price of the common shares. For the nine months ended April 30, 2002, options to acquire 809 shares of common stock and 126 shares of unvested restricted common stock have been excluded from the calculation of diluted earnings per share, as their inclusion would have been antidilutive.

For the three and nine months ended April 30, 2001, options to acquire 130 and 175 shares of common stock, respectively, have been excluded from the calculation of diluted earnings per share because the options’ price was greater than the average market price of the common shares.

9. Supplemental disclosure of cash flow information

Changes in operating assets and liabilities are as follows:


	Nine Months Ended
	April 30,

	2002			2001

	Restated			Restated
Accounts and notes receivable	$	13,121		$	(5,317	)
Inventories		(5,535	)		(10,442	)
Costs related to deferred revenue		(2,989	)		(2,949	)
Other current assets		(1,347	)		(1,694	)
Other assets		139			(456	)
Accounts payable, trade		3,034			2,290
Accrued expenses and other current liabilities		(2,859	)		(357	)
Deferred revenue		35,608			4,966
Accrued income taxes		(370	)		(1,737	)

Net changes in operating assets and liabilities	$	38,802		$	(15,696	)

10. Segment information

The Company’s operations are primarily within a single segment within the electronics industry (Medical Instrumentation Technology Products). These operations encompass the design, manufacture and sale of high technology, high-performance, high precision data acquisition, conversion (analog/digital) and signal processing instruments and systems to customers that both manufacture and market products for medical and industrial use. The other segment represents the Company’s hotel and other operations, which do not meet the materiality requirements for separate disclosure. The table below presents information about the Company’s reportable segments:


			Three Months Ended				Nine Months Ended
			April 30,				April 30,

			2002		2001		2002			2001

			Restated		Restated		Restated			Restated
Revenues:
	Medical instrumentation technology products		$	59,611	$	78,605	$	188,053		$	231,319
	Other			12,501		9,638		29,173			28,066

		Total	$	72,112	$	88,243	$	217,226		$	259,385

Income(loss) before income taxes and minority interest:
	Medical instrumentation technology products		$	1,135	$	4,173	$	(9,705	)	$	12,757
	Other			577		1,703		2,853			6,147

		Total	$	1,712	$	5,876	$	(6,852	)	$	18,904


			April 30, 2002		July 31, 2001

			Restated		Restated
Identifiable assets:
	Medical instrumentation technology products		$	261,398	$	244,282
	Other			128,806		114,877

		Total	$	390,204	$	359,159

11. Taxes

The effective tax rate for the nine months ended April 30, 2002 was 48%. This rate represents the actual effective rate for that period. The effective tax rate was calculated using this methodology, as opposed to a methodology that anticipates the effective tax rate based upon estimated annual operating results, because insignificant changes in estimated operating results for the balance of the year will have a dramatic impact on the effective tax rate. The tax rate of 48% represents the results of the benefit derived from the net operating loss carry back and the benefit of tax free interest income along with the extraterritorial income exclusion.

12. Commitments

The Company’s Danish subsidiary B-K Medical A/S announced in May 2001 the construction of a new 110,000 square foot facility in Herlev, north of Copenhagen, for the manufacturing of specialized diagnostic ultrasound equipment at a cost of $15,500 which was funded internally.

Manufacturing, R&D, service, marketing, sales and administrative functions moved into this new facility in May 2002.

The Company has guaranteed the debt owed by Cedara to its bank lender through the provision of a credit facility with Analogic’s principal bank for approximately $6,300.

13. Significant event

The Company announced in the third quarter of fiscal 2002 that it has received an open-ended order for up to 1,000 of its Explosive Assessment Computed Tomography (EXACT(TM)) Systems from an Original Equipment Manufacturer (OEM). The EXACT is the “heart” of a certified Explosive Detection System (EDS) that is being purchased by the United States Government and installed at major airports across the United States. This order has the potential value of approximately $500,000, including spare parts, associated services, and infrastructure enhancements. The initial release was for approximately $100,000, including initial units, spare parts, infrastructure enhancements, and $30,000 for long-lead-time components for the next release. This amount has been recorded as Advance Payments and Other on the Condensed Consolidated Balance Sheet. Funding of approximately $22,000 for infrastructure enhancements was also included for the Company to quickly ramp up production and significantly increase its manufacturing capacity in preparation for additional releases. As of April 30, 2002, $5,000 of the ramp-up funding had been received and approximately $1,500 had been spent. The balance of $3,500 is recorded as Advanced Payments and Other on the Condensed Consolidated Balance Sheet.

Item 2: Management’s Discussion and Analysis of Results of Operations and Financial Condition

The following information has been amended to reflect the revisions made to the Condensed Consolidated Financial Statements (unaudited), as further discussed in Note 2, “Restatement.” This information should be read in conjunction with the information contained in the Condensed Consolidated Financial Statements (unaudited), and Notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q/A. This Quarterly Report on Form 10-Q/A contains forward-looking statements that involve risks and uncertainties. See the discussion relating to “Forward-Looking Statements” below.

Critical Accounting Policies

Our significant accounting policies are more fully described in Note 1 of the Company’s Form 10K/A for the year ended July 31, 2001 as filed with the Securities and Exchange Commission on October xx, 2003. Certain of our accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. These judgments are based on our historical experience, terms of existing contracts, our observance of trends in the industry, information provided by our customers and information available from other outside sources, as appropriate. Our critical accounting policies include:

Revenue Recognition

The Company recognizes revenue for products in accordance with SEC Staff Accounting Bulletin No. 101 “Revenue Recognition in Financial Statements” (“SAB 101”). Revenue related to product sales is recognized upon shipment provided that title and risk of loss has passed to the customer, there is persuasive evidence of an arrangement, the sales price is fixed or determinable, collection of the related receivable is reasonably assured and customer acceptance criteria, if any, have been successfully demonstrated. For product sales with acceptance criteria that are not successfully demonstrated prior to shipment, revenue is recognized upon customer acceptance provided all other revenue recognition criteria have been met. Hardware maintenance revenues are recognized ratably over the life of the contracts. For business units that sell software licenses, the Company recognizes revenue in accordance with the AICPA’s Statement of Position 97-2, “Software Revenue Recognition.” The application of SOP 97-2 requires judgment, including whether a software arrangement includes multiple elements, and if so, whether vendor-specific objective evidence (VSOE) of fair value exists for those elements. License revenue is recognized upon delivery, provided that persuasive evidence of an arrangement exists, no significant obligations with regards to installation or implementation remain, fees are fixed or determinable, collectibility is reasonably assured and customer acceptance, when applicable, is obtained. Software maintenance revenues are recognized ratably over the life of the contracts. Service revenues are recognized at the time the services are rendered. The Company provides engineering services to some of its customers on a contractual basis and recognizes revenue using the percentage of completion method. The Company estimates the percentage of completion on contracts with fixed fees on a monthly basis utilizing hours incurred to date as a percentage of total estimated hours to complete the project. If the Company does not have a sufficient basis to measure progress towards completion, revenue is recognized upon completion of the contract. When total cost estimates exceed revenues, the Company accrues for the estimated losses immediately. Revenue related to the hotel operations is recognized as services are performed.

Inventories

The Company values inventory at the lower of cost or market using the first-in, first-out (FIFO) method. Management assesses the recoverability of inventory based on types and levels of inventory held, forecasted demand and changes in technology. These assessments require management judgments and estimates, and valuation adjustments for excess and obsolete inventory may be recorded based on these assessments. Estimates of future product demand or judgments related to changes in technology may prove to be inaccurate, in which case the carrying value of inventory could be overstated or understated. In the event of any such inaccuracies, an adjustment would be recognized in cost of goods sold at the time of such determination.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, marketable securities and accounts receivable. The Company places its cash investments and marketable securities in high credit quality financial instruments and by policy, limits the amount of credit exposure to any one financial institution. The Company grants credit to domestic and foreign original equipment manufacturers, distributors and end users, performs ongoing credit evaluations and adjust credit limits based upon payment history and the customer’s current credit worthiness. The Company continuously monitors collections and payments from our customers and maintains a provision for estimated credit losses based upon historical experience and any specific customer collections issues that have been identified. While such credit losses have historically been within expectations and provisions established, there is no guarantee that the Company will continue to experience the same credit loss rates as in the past. Since the accounts receivable are concentrated in a relatively few number of customers, a significant change in liquidity or financial position of any one of these customers could have a material adverse impact on the collectability of accounts receivables and future operating results.

Investments in and Advances to Affiliated Companies

The Company has several investments in affiliated companies related to areas of the Company’s strategic focus. The Company accounts for these investments using the equity method of accounting. In assessing the recoverability of these investments, the Company must make certain assumptions and judgments based on changes in the Company’s overall business strategy, the financial condition of the affiliated companies, market conditions and the industry and economic environment in which the entity operates. Adverse changes in market conditions or poor operating results of affiliated companies could result in losses or an inability to recover the carrying value of the investments, thereby requiring an impairment charge in the future.

Intangible and Other Long-lived Assets

The Company has intangible and other long-lived assets primarily related to technology, licenses, capitalized software and property, plant and equipment. In assessing the recoverability of these assets, the Company must make assumptions regarding estimated future cash flows, the expected period in which the asset is to be utilized, changes in technology and customer demand. If these estimates or their related assumptions change in the future, the Company may be required to record impairment charges for these assets not previously recorded.

RESULTS OF OPERATIONS

Nine Months Fiscal 2002 (April 30, 2002) vs. Nine Months Fiscal 2001 (April 30, 2001) (dollars in thousands)

Product revenue for the nine months ended April 30, 2002 was $192,635 as compared to $230,923 for the same period last year, a decrease of 17%. The decrease in revenue of $38,288 was primarily due to a decrease of sales volume in Industrial Technology Products of $24,480, or 88%, due to a severe decline in volume of its semi-conductor Automatic Test Equipment (ATE) boards and a decrease in revenue in Medical Technology Products of $12,844 or 7%, primarily due to lower volume of the Company’s patient monitoring and medical imaging equipment.

Engineering revenue for the nine months ended April 30, 2002 was $17,726 compared to $18,920 for the same period last year, a decrease of 6%. The change was primarily due to a decrease in the demand for these services.

Other revenues of $6,865 and $9,542 represent revenue from the Hotel operation for the nine months ended April 30, 2002 and 2001, respectively. The decrease in revenues is mostly attributable to the current economic decline in the travel and lodging industries.

Cost of product sales was $121,909 and $149,462 for the nine months ended April 30, 2002 and 2001, respectively. Cost of product sales as a percentage of product revenue was 63% for the nine months ended April 30, 2002 compared to 65% for the same period last year.

Engineering cost of sales was $17,474 for the nine months ended April 30, 2002 compared to $15,398 for the same period last year. The total cost of engineering sales as a percentage of engineering revenue increased to 99% for the nine months ending April 30, 2002 from 81% for the nine months ended April 30, 2001. The increase was primarily attributable to the unanticipated costs associated with the development of leading edge, high precision health and security imaging systems.

Other costs of sales were $3,847 and $4,901 from the Company’s Hotel operation for the nine months ended April 30, 2002 and 2001, respectively.

During the nine months ended April 30, 2002, the Company has recorded asset impairment charges totaling $8,883 on a pre-tax basis.

As a result of the continued decline in the economic and business conditions in the telecommunications industry, the Company decided to terminate activities related to Anatel, the Company’s wholly-owned telecommunications subsidiary. The Company recorded a pre-tax charge of $1,901 related to the impairment of purchased intangibles and other long-lived assets. The impairment charge is equal to the amount by which the assets’ carrying value exceeded the present value of their estimated discounted cash flows. Additionally, a pre-tax charge of $557 related to obsolete inventory, as well as a pre-tax charge of $1,120 related to capitalized software, has been recorded as those assets have been deemed to be unrecoverable. The Company also recorded a pre-tax asset impairment charge of $3,200 in fiscal 2001, primarily for inventory and capitalized software related to Anatel.

The Company also decided to discontinue the sales of certain of its older and unprofitable product lines within its semi-conductor test equipment business, in order to focus its resources on the highest potential growth areas within this business. As a result, the Company recorded a pre-tax charge of $902 related to the impairment of purchased intangibles and other long-lived assets. The impairment charge is equal to the amount by which the assets’ carrying value exceeded the present value of their estimated discounted cash flows. Additionally, a pre-tax charge of $3,600 related to excess and obsolete test equipment inventory, as well as a pre-tax charge of $803 related to capitalized software, has been recorded as those assets have been deemed to be unrecoverable. The Company also incurred immaterial costs related to involuntary terminations and other related activities. The entire balance of each charge has been recorded within the Cost of Sales section of the Company’s Condensed Consolidated Statements of Operations (unaudited).

The inventory reserve established in fiscal year 2001 and in the first quarter of fiscal year 2002 as part of the activities noted above totaled $5,657. A total of $659 of this inventory was scrapped and charged to the reserve during the nine months ended April 30, 2002.

Research and product development expenses were $29,766 for the nine months ended April 30, 2002, or 14% of total revenue, as compared to $28,966 for the same period the prior year, or 11% of total revenue. The increase of $800 was primarily due to research and development activities associated with the development of medical and explosive detection system (EDS) products.

Selling and marketing expenses were $24,279 for the nine months ended April 30, 2002, or 11% of total revenue, as compared to $23,782, or 9% of total revenue for the same period last year. The increase of $497 was primarily due to the Company’s subsidiaries, Camtronics and B-K, as they continue to expand their activities in the end user market.

General and administrative expenses were $21,681, or 10% of total revenue, for the nine months ended April 30, 2002, as compared to $22,902, or 9% of total revenue, for the same period last year. The decrease of $1,221 was primarily due to the Company’s ongoing cost reduction and containment initiatives, including staff reductions and a reduction in discretionary expenditures.

Interest income net of interest expense was $2,946 for the nine months ended April 30, 2002, as compared with $4,254 for the same period last year. The decrease of $1,308 was primarily the result of lower interest rates on short term investments.

The Company recorded income related to equity in unconsolidated affiliates of $681 for the nine months ended April 30, 2002, versus income of $1,192 for the same period last year. The equity income for the nine months ended April 30, 2002 in unconsolidated affiliates primarily consisted of a profit of $1,235 related to its share of profit in Enhanced CT Technology LLC that generated income from license related royalties based on sales of medical imaging equipment, and income of $513 for its share of profit in Cedara Software Corporation, in which the Company acquired a 19% interest in September 2001, partially offset by a loss of $975 related to its share of loss in Shenzhen Anke High-Tech Co., Ltd. (SAHCO). For the nine months ended April 30, 2001 the Company recorded a gain of $1,245 related to its share of profit in Enchanced CT Technology LLC, partially offset by a loss of $111 related to its share of loss in SAHCO.

Other income was $134 for the nine months ended April 30, 2002, as compared to expenses of $516 for the same period last year. The increase was primarily offset by an other than temporary impairment on an investment of restricted securities of approximately $487 recorded in the nine months of fiscal 2001 versus none in fiscal 2002.

For the nine months ended April 30, 2001 the effective tax rate was 31%, which reflected the benefit of tax exempt interest and the utilization of the Foreign Sales Corporations.

Net loss for the nine months ended April 30, 2002 was $3,564 or $0.27 per basic and diluted share as compared with net income of $13,012 or $1.01 per basic share and $1.00 per diluted share for the same period last year. The net loss for the nine months of fiscal 2002 includes a pre-tax asset impairment charge of $8,883 or $4,619 after taxes, related to the Company’s telecommunications subsidiary Anatel, and certain assets of the Company’s Test and Measurement Division. The decrease in net income over the prior year, excluding the asset impairment charges, was primarily the result of decreased revenue in the semi-conductor industry, the effect of the recession in several of the business units, the equity loss in SAHCO, and change in the effective tax rate.

Third Quarter Fiscal 2002 (April 30, 2002) vs Third Quarter Fiscal 2001 (April 30,2001) (dollars in thousands)

Product revenue for the three months ended April 30, 2002 was $64,183 as compared to $78,606 for the same period last year, a decrease of 18%. The decrease in revenue of $14,423 was due to a decrease in sales of Medical Technology Products of $11,456, or 18% , primarily due to the effect of the recession and lower demand for the Company’s cardiovascular and patient monitoring systems and lower demand for medical imaging equipment; a decrease in sales volume in Industrial Technology Products of $6,197 or 86%, due to a decline in its semi-conductor Automatic Test Equipment (ATE) boards; and an increase in sales in Industrial Processing Technology Products of $3,230 mainly for initial shipments of its Explosive Assessment Computed Tomography (EXACT(TM)) Systems as part of a multi-million dollar order the Company has received for the EXACT systems.

Engineering revenue for the three months ended April 30, 2002 was $5,988 compared to $6,852 for the same period last year, a decrease of 13%. The change was primarily due to a decrease in the demand for these services.

Other revenues of $1,941 and $2,785 represent revenue from the Hotel operation for the three months ended April 30, 2002 and 2001, respectively. The decrease in revenues is due to the current economic decline in the travel and lodging industries.

Cost of product sales was $40,060 and $50,792 for the three months ended April 30, 2002 and 2001, respectively. Cost of product sales as a percentage of product revenue was 62% for the three months ended April 30, 2002 compared to 65% for the same period last year. The decrease was primarily due to changes in product mix.

Engineering cost of sales was $5,620 for the three months ended April 30, 2002 compared to $5,367 for the same period last year. The total cost of engineering sales as a percentage of engineering revenue increased to 94% for the three months ended April 30, 2002 from 78% for the three months ended April 30, 2001. This percentage increase was primarily attributable to the unanticipated costs associated with the development of leading edge, high precision health and security imaging systems.

Research and product development expenses were $9,222 for the quarter ended April 30, 2002, or 13% of total revenue, as compared to $10,569 for the same period the prior year, or 12% of total revenue. The decrease of $1,347 was mostly attributable to terminated activities associated with Anatel.

Selling and marketing expenses were $8,120 for the three months ended April 30, 2002, or 11% of total revenue, as compared to $8,612 , or 10% of total revenue for the same period last year. The decrease of $492 was primarily due to the cost containment efforts that had been put in place across the Company.

General and administrative expenses were $6,905, or 10% of total revenue, for the three months ended April 30, 2002, as compared to $7,909, or 9% of total revenue, for the same period last year. The decrease of $1,004 was primarily due to the Company’s on going cost reduction and containment initiatives, including staff reductions and a reduction in discretionary expenditures.

Interest income net of interest expense was $913 for the three months ended April 30, 2002, as compared with $1,314 for the same period last year. The decrease of $401 was primarily the result of lower interest rates on short term investments.

The Company recorded a loss of $688 related to equity in unconsolidated affiliates for the three months ended April 30, 2002, versus a gain of $1,331 for the same period last year. The equity loss for the three months ended April 30, 2002 in unconsolidated affiliates consisted of a loss of $1,308 in SAHCO and a loss of $76 related to its share of loss in CardioWorks (Note 4), partially offset by a gain of $410 for its share of profit in Enhanced CT Technology LLC and a gain of $286 for its share of profit in Cedara Software Corporation, in which the Company acquired a 19% interest in September 2001. For the three months ended April 30, 2001 the Company reported a gain of $525 for its share of profit in Enhanced CT Technology LLC and a gain of $825 related to its share of profit in SAHCO, resulted primarily from a gain of $810 for the sale of 5.4% equity interest in SAHCO to a group of investors.

The effective tax rate for the nine months ended April 30, 2002 was 48%. This rate represents the actual effective rate for that period. The effective tax rate was calculated using this methodology, as opposed to a methodology that anticipates the effective tax rate based upon estimated annual operating results, because insignificant changes in estimated operating results for the balance of the year will have a dramatic impact on the effective tax rate. The tax rate of 48% represents the results of the benefit derived from tax free interest income along with the extra territorial income exclusion. As a result, the tax benefit amount for the three months ended April 30, 2002 reflects the cumulative effect of the change in the effective rate. For the three months ended April 30, 2001 the effective tax rate was 27% , which reflected the benefit of tax exempt interest and the utilization of the Foreign Sales Corporations.

Net income for the third quarter ended April 30, 2002 was $3,287 or $0.25 per basic and diluted share as compared with net income of $4,269 or $0.33 per basic and per diluted share for the same period last year. The decrease in net income over the prior year was primarily the result of decreased revenue in the semi-conductor industry, the effect of the recession in several of the business units, and the equity loss in SAHCO.

Liquidity and Capital Resources (dollars in thousands)

Cash generated by operations in the nine months of fiscal 2002 was $52,039 compared to $7,381 during the same period of the prior year. Although the company generated a net loss of $3,564 for the nine months of fiscal 2002, when the asset impairment charge of $8,883 and other recurring non-cash adjustments are added back to the net loss, operating cash of $52,039 was generated. This is primarily due to the $30,000 advance received for the purchase of certain long-lead-time components as part of the Company’s EXACT(TM) order, and a decrease in accounts receivable. Net cash used in investment activities was $16,438 in the nine months of fiscal 2002, primarily due to the Company’s investment in Cedara of $7,500, the Company’s investment in CardioWorks of $2,000, and $18,332 used for additions to property, plant and equipment, partially offset by a return on investment from an affiliated company and maturities of marketable securities. The increase in property, plant and equipment was primarily for the construction of a new facility by the Company’s Danish subsidiary, B-K Medical. Net cash used from financing activities of $2,741 was mostly due to dividends paid to shareholders and payment of debt.

The Company’s balance sheet reflects a current ratio of 3.7 to 1 at April 30, 2002 and 6.1 to 1 at July 31, 2001. 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. The Company’s debt to equity ratio was .33 to 1 at April 30, 2002 and .20 to 1 at July 31, 2001. The current ratio decrease and the debt to equity ratio increase was mostly attributable to funding received as part of the open-ended order for the Company’s EXACT(TM) Systems. Management does not anticipate any difficulties in financing operations at anticipated levels for the foreseeable future.

During the nine months of fiscal 2002, the Company received a $20,000 revolving line of credit from its principal bank. Of this amount a $6,300 letter of credit was used to guarantee a debt owed by Cedara to its bank lender. The Company has approximately $30,000 in revolving lines of credit.

The carrying amounts reflected in the consolidated balance sheets of cash and cash equivalents, trade receivables, and trade payables approximate fair value at April 30, 2002 due to the short maturities of these instruments.

The Company maintains a bond investment portfolio of various issuers, types, and maturities. The Company’s cash and investments include cash equivalents, which the Company considers to be investments purchased with original maturities of three months or less. Investments having original maturities in excess of three months are stated at amortized cost, which approximates fair value, and are classified as available for sale. A rise in interest rates could have an adverse impact on the fair value of the Company’s investment portfolio. The Company does not currently hedge these interest rate exposures.

Accounts and notes receivable decreased by $12,901 during the nine months ended April 30, 2002, primarily due to an increase in collection activities and a decrease in revenue.

Inventory increased $5,817, before the asset impairment charges of $4,157, during the nine months ended April 30, 2002, primarily due to an increase in raw material purchases associated with the Company’s Explosive Assessment Computed Tomography (EXACT(TM)) Systems business.

Advance payments and other increased $33,280 during the nine months ended April 30, 2002, mainly due to an advance of $30,000 for the purchase of certain long-lead-time components for the next release of the open-ended order the Company received.

Our contractual obligations at April 30, 2002, and the effect such obligations are expected to have on liquidity and cash flows in future periods are as follows:


			Less than						After
	Total		1 year		1-3 years		4-5 years		5 years

Long-term debt	$	4,650	$	224	$	769	$	497	$	3,160
Capital lease obligations		725		306		419
Operating leases		6,697		2,581		4,053		314

	$	12,072	$	3,111	$	5,241	$	811	$	3,160

Forward Looking Statements

This Amendment No. 1 to Quarterly Report on Form 10-Q/A contains statements which, to the extent that they are not recitation of historical facts, constitute “forward-looking statements” pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that all forward-looking statements, including statements about product development, market and industry trends, strategic initiatives, regulatory approvals, sales, profits, expenses, price trends, research and development expenses and trends, and capital expenditures involve risk and uncertainties, and actual events and results may differ significantly from those indicated in any forward-looking statements as a result of a number of important factors, including those discussed below and elsewhere herein.

RISK FACTORS

YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW BEFORE MAKING AN INVESTMENT DECISION. ADDITIONAL RISKS NOT PRESENTLY KNOWN TO US OR THAT WE CURRENTLY DEEM IMMATERIAL MAY ALSO IMPAIR OUR BUSINESS. ANY OF THESE RISKS COULD HAVE A MATERIAL AND NEGATIVE EFFECT ON OUR BUSINESS, FINANCIAL CONDITION OR RESULTS OF OPERATIONS.

Because a significant portion of our revenue currently comes from a small number of customers, any decrease in revenue from these customers could harm our operating results.

We depend on a small number of customers for a large portion of our business, and changes in our customers’ orders may have a significant impact on our operating results. If a major customer were to significantly reduce the amount of business it does with us, there would be an adverse impact on our operating results.

The following table sets forth the percentages of our total net sales of our three largest customers in the last three fiscal years and the percentage of our total net sales to our ten largest customers in those years:


	Year Ended July 31,

	2001			2000			1999

	Restated
Philips		23	%		16	%		18	%
General Electric		11	%		10	%		8	%
Toshiba		7	%		9	%		9	%
Ten largest customers as a group		63	%		60	%		60	%

Although we are seeking to broaden our customer base, we will continue to depend on sales to a relatively small number of major customers. Because it often takes significant time to replace lost business, it is likely that our operating results would be adversely affected if one or more of our major customers were to cancel, delay or reduce significant orders in the future. Our customer agreements typically permit the customer to discontinue future purchases after timely notice. In addition, we generate significant accounts receivable in connection with the products we sell and the services we provide to our major customers. Although our major customers are large corporations, if one or more of our customers were to become insolvent or otherwise be unable to pay for our services, our operating results and financial condition could be adversely affected.

Competition from existing or new companies in the medical instrumentation technology industry could cause us to experience downward pressure on prices, fewer customer orders, reduced margins, the inability to take advantage of new business opportunities and the loss of market share.

We operate in a highly competitive industry. We are subject to competition based upon product design, performance, pricing, quality and services and we believe our innovative engineering and product reliability have been important factors in our growth. While we try to maintain competitive pricing on those products which are directly comparable to products manufactured by others, in many instances our products will conform to more exacting specifications and carry a higher price than analogous products manufactured by others.

Our 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 we have.

Many of our OEM customers and potential OEM customers have the capacity to design and manufacture the products we manufacture for themselves. We face competition from research and product development groups and the manufacturing operations of our current and potential customers, who continually evaluate the benefits of internal research and product development and manufacturing versus outsourcing.

We depend on our suppliers, some of which are the sole source for our components, and our production would be substantially curtailed if these suppliers are not able to meet our demands and alternative sources are not available.

We order raw materials and components to complete our customers’ orders, and some of these raw materials and components are ordered from sole-source suppliers. Although we work with our customers and suppliers to minimize the impact of shortages in raw materials and components, we sometimes experience short-term adverse effects due to price fluctuations and delayed shipments. In the past, there have been industry-wide shortages of electronics components. If a significant shortage of raw materials or components were to occur, we may have to delay shipments or pay premium pricing, which would adversely affect our operating results. In some cases, supply shortages of particular components will substantially curtail production of products using these components. We are not always able to pass on price increases to our customers. Accordingly, some raw material and component price increases could adversely affect our operating results. We also depend on a small number of suppliers, some of whom are affiliated with customers or competitors and others of whom may be small, poorly financed companies, for many of the other raw materials and components that we use in our business. If we are unable to continue to purchase these raw materials and components from our suppliers, our operating results would be adversely affected. Because many of our costs are fixed, our margins depend on our volume of output at our facilities and a reduction in volume will adversely affect our margins.

If we are left with excess inventory, our operating results will be adversely affected.

Because of long-lead times and specialized product designs, we typically purchase components and manufacture products for customer orders or in anticipation of customer orders based on customer forecasts. For a variety of reasons, such as decreased end-user demand for the products we are manufacturing, our customers may not purchase all of the products we have manufactured or for which we have purchased components. In either event, we would attempt to recoup our materials and manufacturing costs by means such as returning components to our vendors, disposing of excess inventory through other channels or requiring our OEM customers to purchase or otherwise compensate us for such excess inventory. Some of our significant customer agreements do not give us the ability to require our OEM customers to do this. To the extent we are unsuccessful in recouping our material and manufacturing costs, not only would our net sales be adversely affected, but also our operating results would be disproportionately adversely affected. Moreover, carrying excess inventory would reduce the working capital we have available to continue to operate and grow our business.

Uncertainties and adverse trends affecting our industry or any of our major customers may adversely affect our operating results.

Our business depends primarily on a specific segment of the electronics industry, medical instrumentation technology products, which is subject to rapid technological change and pricing and margin pressure. This industry has historically been cyclical and subject to significant downturns characterized by diminished product demand, rapid declines in average selling prices and production over-capacity. In addition, changes in government policy relating to reimbursement for the purchase and use of medical capital equipment could also affect our sales. Our customers’ markets are also subject to economic cycles and are likely to experience recessionary periods in the future. The economic conditions affecting our industry, in general, or any of our major customers, in particular, may adversely affect our operating results. Our businesses outside the medical instrumentation technology product sector are subject to the same or greater technological and cyclical pressures.

Our customers’ delay or inability to obtain any necessary United States or foreign regulatory clearances or approvals for their products could have a material adverse effect on our business.

Our products are used by a number of our customers in the production of medical devices that are the subject of a high level of regulatory oversight. A delay or inability to obtain any necessary United States or foreign regulatory clearances or approvals for products could have a material adverse effect on our business. The process of obtaining clearances and approvals can be costly and time-consuming. There is a further risk that any approvals or clearances, once obtained, may be withdrawn or modified. Medical devices cannot be marketed in the United States without clearance or approval by the FDA. Medical devices sold in the United States must also be manufactured in compliance with FDA Good Manufacturing Practices, which regulate the design, manufacture, packing, storage and installation of medical devices. Moreover, medical devices are required to comply with FDA regulations relating to investigational research and labeling. States may also regulate the manufacture, sale and use of medical devices. Medical device products are also subject to approval and regulation by foreign regulatory and safety agencies.

Our annual and quarterly operating results are subject to fluctuations, which could affect the market price of our Common Stock.

Our annual and quarterly results may vary significantly depending on various factors, many of which are beyond our control, and may not meet the expectations of securities analysts or investors. If this were to occur, the price of our Common Stock would likely decline.

These factors include:

	•		variations in the timing and volume of customer orders relative to our manufacturing capacity;

	•		introduction and market acceptance of our customers’ new products;

	•		changes in demand for our customers’ existing products;

	•		the timing of our expenditures in anticipation of future orders;

	•		effectiveness in managing our manufacturing processes;

	•		changes in competitive and economic conditions generally or in our customers’ markets;

	•		changes in the cost or availability of components or skilled labor; and

	•		foreign currency exposure.

As is the case with many technology companies, we typically ship a significant portion of our products in the last month of a quarter. As a result, any delay in anticipated sales is likely to result in the deferral of the associated revenue beyond the end of a particular quarter, which would have a significant effect on our operating results for that quarter. In addition, most of our operating expenses do not vary directly with net sales and are difficult to adjust in the short term. As a result, if net sales for a particular quarter were below our expectations, we could not proportionately reduce operating expenses for that quarter, and, therefore, that revenue shortfall would have a disproportionately adverse effect on our operating results for that quarter.

Loss of any of our key personnel could hurt our business because of their industry experience and their technological expertise.

We operate in a highly competitive industry and depend on the services of our key senior executives and our technological experts. The loss of the services of one or several of our key employees or an inability to attract, train and retain qualified and skilled employees, specifically engineering and operations a personnel, could result in the loss of customers or otherwise inhibit our ability to operate and grow our business successfully.

If we are unable to maintain our technological expertise in research and product development and manufacturing processes we will not be able to successfully compete.

We believe that our future success will depend upon our ability to provide research and product development and manufacturing services that meet the changing needs of our customers. This requires that we successfully anticipate and respond to technological changes in design and manufacturing a processes in a cost-effective and timely manner. As a result, we continually evaluate the advantages and feasibility of new product design and manufacturing processes. We cannot, however, assure you that our development efforts will be successful.

Part II — Other Information

Item 6. Exhibits and Reports on Form 8-K

(a)

Exhibits


Exhibit		Description

31.1		Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

31.2		Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

32.1		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350

32.2		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350

(b)

During the quarter ended April 30, 2002, the Company did not file any reports on Form 8-K.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Amendment to be signed on its behalf by the undersigned thereunto duly authorized.


		Analogic Corporation Registrant

		/s/John W. Wood Jr. John W. Wood Jr. President and Chief Executive Officer (Principal Executive Officer)

Date: October 27, 2003

		/s/John J. Millerick John J. Millerick Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

Date: October 27, 2003

Exhibit Index


Exhibit		Description

31.1		Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

31.2		Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

32.1		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350

32.2		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350