Analogic Corporation Reports Results for Its Third Quarter 2006

Revenues from continuing operations for the third quarter endedApril 30, 2006, were $81,306,000, compared with the prior year'sthird-quarter revenues from continuing operations of $84,582,000, adecrease of 4%. Net income from continuing operations for the thirdquarter was $2,510,000, or $0.18 per diluted share, compared to$28,989,000, or $2.14 per diluted share, from continuing operations ayear earlier.

During the prior third quarter, the Company recorded earnings of$1.92 per diluted share as a result of a gain on the sale ofmarketable securities and a loss on asset writedowns. The sale of theCompany's 14.6% interest in Cedara Software Corp. of Mississauga,Ontario, Canada resulted in a pretax gain of $43,829,000. The netincome from continuing operations attributable to the sale of thesemarketable securities was $27,388,000, or $2.01 per diluted share. TheCompany also recorded pretax asset writedowns from continuingoperations of $1,988,000 during the prior third quarter, whichresulted in a net loss from continuing operations of $1,201,000, or$0.09 per diluted share.

Net income for the third quarter ended April 30, 2006, was$2,510,000, or $0.18 per diluted share, compared with a net income of$28,120,000, or $2.07 per diluted share, for the prior year's thirdquarter.

Revenues from continuing operations for the nine months endedApril 30, 2006, were $267,727,000, compared to the prior year'snine-month revenues from continuing operations of $235,822,000, anincrease of 14%. Net income from continuing operations for thenine-month period was $12,670,000, or $0.92 per diluted share,compared to $28,421,000, or $2.10 per diluted share, for the sameperiod a year earlier.

During the nine-month period ended April 30, 2006, the Companyrecorded pretax restructuring and asset impairment charges of$1,612,000, which resulted in a net loss from continuing operations of$1,022,000, or $0.07 per diluted share. During the prior nine-monthperiod, the Company recorded earnings of $1.88 per diluted share as aresult of a gain on the sale of marketable securities and a loss onasset impairment charges. The sale of the Company's 14.6% interest inCedara Software Corp. of Mississauga, Ontario, Canada resulted in apretax gain of $43,829,000. The net income from continuing operationsattributable to the sale of those marketable securities was$27,388,000, or $2.01 per diluted share. Pretax asset impairmentcharges totaled $2,935,000 during the prior year's nine-month periodresulting in a net loss from continuing operations of $1,774,000, or$0.13 per diluted share.

Net income attributable to discontinued operations, the cumulativeeffect of a change in accounting principle, and the gain on disposalof discontinued operations for the nine months ended April 30, 2006,was $20,919,000, or $1.52 per diluted share. This compares to a netloss from discontinued operations of $3,846,000, or a loss of $0.29per diluted share, for the prior year's first nine months. During thefirst nine months of this year the Company realized a net gain of$20,640,000, or $1.50 per diluted share, from the sale of ourCamtronics Medical Systems subsidiary to Emageon, Inc. of Birmingham,Alabama, on November 1, 2005. As a result of the sale, the Companyclassified the Camtronics business as a discontinued operation andrecast its financial statements accordingly to represent the operationas discontinued.

Net income for the nine months ended April 30, 2006, was$33,589,000, or $2.44 per diluted share, compared with a net income of$24,575,000, or $1.81 per diluted share, for the same period a yearearlier.

Sales of the Company's medical technology products were up 6% forthe quarter, led by increased shipments of clinical ultrasoundsystems, ultrasound subsystems, digital radiography subsystems, andpatient monitors. Sales of advanced multi-slice Data AcquisitionSystems (DASs) for Computed Tomography (CT) remained near the samehigh level of the previous third quarter. Security technology productsales were down 37% from a year earlier. This was expected as ourcustomer had requested that some shipments originally scheduled for Q3be accelerated into Q2 to meet their customers' needs. Sales of poweramplifiers for Magnetic Resonance Imaging (MRI) were also down from astrong quarter a year earlier.

John Wood, President and CEO, commented, "Revenue and income weredown from our strong second quarter this year due primarily to theexpected decrease in the shipment of EXplosive Assessment ComputedTomography (EXACT(TM)) systems. In the second quarter we shipped 44units, accelerating shipments to meet our customer requirements. Inthe third quarter we shipped 17 units, with a backlog of 11 units forthe remainder of the fiscal year. The lower volume of EXACT shipmentsresulted in lower income overall for the quarter. We expect that neworders will be forthcoming as the upgraded EXACT system, known as theAN6400, completes inline field trials later this calendar year. Wealso expect to be able to market the separate upgrade kit later thisyear, which should improve revenue and income in fiscal 2007."

Wood noted that sales of medical technology products had improved,due primarily to strong showings by several of the Company'ssubsidiaries. B-K Medical's shipments of ultrasound systems were upover a year ago, as were sales of ultrasound transducers by theCompany's Sound Technology, Inc. subsidiary. Flat-panel direct digitalradiography detector plate shipments by the Company's Anrad subsidiarywere up strongly over a year ago, reflecting continuing improvement inproduction of these leading-edge subsystems. Patient monitor shipmentsalso increased, as the Company has been expanding the number ofparameters measured non-invasively by its growing LIFEGARD(R) familyof patient and fetal monitors.

Shipments of data acquisition systems for computed tomography wereabout level with a very strong quarter a year earlier, but powersystems, or Radio Frequency (RF) amplifiers, for MRI were down from astrong quarter a year earlier, and orders for medical CT systems werealso lower.

Research and product development costs for the third quarter were$12,382,000, or 15% of total revenue, down from $13,540,000, or 16% oftotal revenue, for the prior year's third quarter. Engineeringrevenues for the quarter were $3,415,000, down from $5,221,000 a yearearlier, due primarily to a large, funded security project that wascompleted in the prior year.

A number of major engineering projects are progressing.Development continues on the COBRA(TM) advanced checkpoint securitysystem, which the Company expects to provide to the U.S.Transportation Security Administration (TSA) early next fiscal yearfor testing under its CAMBRIA program. The Company is also developinga new generation of Explosives Detection Systems (EDSs) under theTSA's Phoenix Program. The new system, with a larger bore and higherthroughput, should be submitted to the TSA for certification testingby the middle of next fiscal year. Major medical development projectsin process include the heart of a new CT system for an OriginalEquipment Manufacturer (OEM); a Positron Emission Tomography (PET)system being developed by PhotoDetection Systems, in which we have anequity interest; and new generations of multi-slice CT dataacquisition systems and liquid-cooled RF amplifiers for MRI. Analogichas also generated considerable interest in a new brushless techniquefor delivering power to and data from a rotating CT gantry.

"The breadth of our technological capabilities and the importanceof applying those capabilities to both health and securityapplications were clearly evident this quarter," said Wood. "Whileshipments of security systems were down over several very strongrecent quarters, and we await approval to market several innovativenew security systems for airports domestically and abroad, severalsegments of our medical business demonstrated solid growth. We areworking to extend that growth over both major application areas tobetter ensure our future as 'The World Resource for Health andSecurity Technology.'"

Analogic will conduct an investor conference call on Wednesday,June 7, at 11:00 a.m. ET to discuss results for the third quarterended April 30, 2006, and recent developments.

Call 1-866-823-6992 approximately five to ten minutes before theconference is scheduled to begin. Inform the operator that you wish tojoin the Analogic conference, Pass Code 03391. You will then be askedfor your name, organization, and telephone number and be connected tothe conference. To listen to the live audio webcast, visitwww.analogic.com approximately five to ten minutes before theconference is scheduled to begin.

A replay of the conference call webcast will be archived on theCompany's website at www.analogic.com approximately three hours afterthe call is completed and will be available through Wednesday, June28. A telephone digital replay will be available approximately twohours after the call is completed through midnight, Friday, June 9. Toaccess the digital replay, dial 1-877-919-4059. The conference IDnumber is 37496664. For more information on the conference call, visitwww.analogic.com, call 978-326-4213, or email proberts@analogic.com.

Analogic Corporation is a leading designer and manufacturer ofadvanced health and security systems and subsystems sold primarily toOriginal Equipment Manufacturers (OEMs). The Company is recognizedworldwide for advancing the state of the art in Computed Tomography(CT), Digital Radiography (DR), Ultrasound, Magnetic Resonance Imaging(MRI), Patient Monitoring, and Embedded Multiprocessing.

This press release contains the Company's or management'sintentions, hopes, beliefs, expectations or predictions. These areconsidered "forward-looking statements" within the meaning of thePrivate Securities Litigation Act of 1995. Forward-looking statements(statements that are not historical facts) in this presentation aremade pursuant to the safe harbor provisions of the Private SecuritiesLitigation Reform Act of 1995. Investors are cautioned that allforward-looking statements, including statements about productdevelopment, market and industry trends, strategic initiatives,regulatory approvals, sales, profits, expenses, price trends, researchand development expenses and trends, and capital expenditures involverisk and uncertainties. Actual results may differ materially fromthose indicated by such statements as a result of various factors,including those discussed in the Company's periodic reports filed withthe SEC under the heading "Business Environment and Risk Factors." Inaddition, the forward-looking statements included in this pressrelease represent the Company's views as of June 7, 2006. The Companyanticipates that subsequent events and developments will cause theCompany's views to change. However, while the Company may elect toupdate these forward-looking statements at some point in the future,the Company specifically disclaims any obligation to do so. Theseforward-looking statements should not be relied upon as representingthe Company's views as of any date subsequent to June 7, 2006.
Consolidated Statements of Operations
(in thousands, except share data)

Three Months Ended Nine Months Ended
April 30, April 30,
------------------ -------------------
(Unaudited) (Unaudited)
2006 2005 2006 2005
------- -------- -------- --------
Net Revenue:
Products $75,670 $ 77,646 $247,355 $215,766
Engineering 3,415 5,221 13,346 13,630
Other 2,221 1,715 7,026 6,426
------- -------- -------- --------
Total net revenue 81,306 84,582 267,727 235,822
------- -------- -------- --------
Cost of sales:
Products 46,606 47,543 149,282 132,607
Engineering 4,222 3,817 14,064 11,359
Other 1,348 1,256 3,926 3,974
------- -------- -------- --------
Total cost of sales 52,176 52,616 167,272 147,940
------- -------- -------- --------
Gross margin 29,130 31,966 100,455 87,882
------- -------- -------- --------
Operating expenses:
Research and product
development 12,382 13,540 39,558 38,433
Selling and marketing 6,972 7,172 21,600 21,694
General and administrative 8,757 9,968 27,058 28,488
Restructuring and asset
impairment charges 84 1,988 1,612 2,935
------- -------- -------- --------
Total operating expenses 28,195 32,668 89,828 91,550
------- -------- -------- --------
Income (loss) from operations 935 (702) 10,627 (3,668)
------- -------- -------- --------
Other (income) expense:
Interest income (2,653) (1,484) (7,155) (3,369)
Interest expense 43 -- 43 2
Equity (gain) loss in
unconsolidated affiliates 332 (972) 787 (749)
Gain on sale of marketable
securities -- (43,829) -- (43,829)
Other (116) 312 (158) (292)
------- -------- -------- --------
Total other (income) expense (2,394) (45,973) (6,483) (48,237)
------- -------- -------- --------
Income from continuing
operations before income taxes
and cumulative effect of
change in accounting principle 3,329 45,271 17,110 44,569
Provision for income taxes 819 16,282 4,440 16,148
------- -------- -------- --------
Income from continuing
operations before discontinued
operations and cumulative
effect of change in accounting
principle 2,510 28,989 12,670 28,421
Income (loss) from discontinued
operations (net of income tax
benefit of $3,664 and $3,805
for the three and nine months
ended April 30, 2005, and
income tax provision of $126
for the nine months ended
April 30, 2006) -- (869) 159 (3,846)
Gain on disposal of
discontinued operations (net
of income tax of $9,104) -- -- 20,640 --
Cumulative effect of change in
accounting principle (net of
income tax of $61) -- -- 120 --
------- -------- -------- --------
Net income $ 2,510 $ 28,120 $ 33,589 $ 24,575
------- -------- -------- --------
Basic earnings (loss) per
share:
Income from continuing
operations $ 0.18 $ 2.14 $ 0.93 $ 2.19
Income (loss) from discontinued
operations, net of tax -- (0.07) 0.01 (0.29)
Gain on disposal of
discontinued operations, net
of tax -- -- 1.51 --
Cumulative effect of change in
accounting principle, net of
tax -- -- 0.01 --
------- -------- -------- --------
Net income $ 0.18 $ 2.07 $ 2.46 $ 1.81
------- -------- -------- --------
Diluted earnings (loss) per
share:
Income from continuing
operations $ 0.18 $ 2.14 $ 0.92 $ 2.10
------- -------- -------- --------
Income (loss) from discontinued
operations, net of tax -- (0.07) 0.01 (0.29)
Gain on disposal of
discontinued operations, net
of tax -- -- 1.50 --
Cumulative effect of change in
accounting principle, net of
tax -- -- 0.01 --
------- -------- -------- --------
Net income $ 0.18 $ 2.07 $ 2.44 $ 1.81
------- -------- -------- --------
Dividends declared per share $ 0.10 $ 0.08 $ 0.28 $ 0.24
Shares outstanding:
Basic 13,732 13,573 13,667 13,546
Diluted 13,956 13,614 13,834 13,588



Condensed Consolidated Balance Sheets (in thousands)

April 30, July 31,
2006 2005
--------- ---------
(Unaudited)(Audited)
Assets:
Cash, cash equivalents and marketable securities $257,701 $220,454
Accounts and notes receivable, net 51,634 50,978
Inventories 69,624 64,290
Other current assets 20,775 19,000
Current assets of discontinued operations -- 41,939
-------- --------
Total current assets 399,734 396,661
Property, plant and equipment, net 81,481 79,442
Other assets 19,513 20,602
-------- --------
Total Assets $500,728 $496,705
-------- --------
Liabilities and Stockholders' Equity:
Accounts payable $ 21,189 $ 20,833
Accrued liabilities 22,230 19,802
Advance payments and deferred revenue 7,775 14,387
Accrued income taxes 8,499 11,167
Current liabilities of discontinued operations -- 30,445
-------- --------
Total current liabilities 59,693 96,634
-------- --------
Deferred income taxes 1,391 914
-------- --------
Total long-term liabilities 1,391 914
-------- --------
Stockholders' Equity 439,644 399,157
-------- --------
Total Liabilities and Stockholders' Equity $500,728 $496,705
-------- --------