Analogic Corporation Announces Revenues and Earnings for Its First Quarter

Revenues from continuing operations for the first quarter endedOctober 31, 2005, were $86,410,000 compared with the prior year'sfirst quarter revenues of $75,130,000, an increase of $11,280,000, or15%. Net income from continuing operations for the first quarter was$1,063,000, or $0.08 per diluted share. This compares with $1,478,000,or $0.11 per diluted share, from continuing operations for the prioryear's first quarter. These financial results from continuingoperations include $954,000 and $481,000 of pre-tax, share-basedcompensation expenses for the first quarter and the prior year'squarter, respectively. The current year's first quarter also includespre-tax restructuring and asset impairment charges of $1,988,000associated with the Company's SKY Computers subsidiary.

Net income attributable to discontinued operations and thecumulative effect of a change in accounting principle for the firstquarter ended October 31, 2005, was $279,000, or $0.02 per dilutedshare. This compares to a net loss of $1,313,000 or $0.10 per dilutedshare for the prior year's first quarter.

Net income for the first quarter ended October 31, 2005, was$1,342,000, or $0.10 per diluted share, compared to $165,000 or $0.01per diluted share, for the prior year's first quarter.

The growth in revenue from continuing operations was due in largepart to a continuing increase in demand for the Company's security andmedical systems and subsystems. Security technology sales increased by$9,714,000, or 96%, over the prior year's first quarter. Medicaltechnology sales were up $1,643,000, or 3%, over the prior year'sfirst quarter, reflecting uneven results for different segments. Salesof Computed Tomography (CT) systems, CT Data Acquisition Systems(DASs), and Digital Radiography (DR) Flat-Panel Detectors (FPDs)improved strongly. This growth was offset in part by decreased salesof DR and clinical ultrasound systems and decreased engineeringrevenues.

The Company did not realize the full operating income benefit ofthis quarter's revenue increase due to reduced margins related tocustomer-funded engineering projects, increased sales and marketingexpenses due in part to the costs associated with our ANEXAsubsidiary, and restructuring costs related to SKY Computers.

Research and product development costs were up $1,353,000, or11.6%, from the prior year's first quarter, due primarily to increasedpersonnel costs as the Company enhanced programs focusing on thedevelopment of new complete CT systems, an extended family ofmulti-slice CT DASs, and new security systems. Engineering revenueswere down $1,428,000, or 27%, due primarily to the near completion ofa government-supported security engineering development program.

The Company restructured its SKY Computers subsidiary, a supplierof embedded multi-computing systems, during the quarter. The marketfor high-speed multiprocessing has increasingly lost ground due to theexpanding capabilities of personal computers. SKY will continue tomeet its manufacturing and service commitments to its customers, butits product development and marketing efforts have been concluded.

During the quarter, Analogic received a grant under the TSA'sCAMBRIA program to develop a next-generation checkpoint screeningsystem that establishes very aggressive standards for advancedcheckpoint security systems. The Company's innovative COBRA(TM)system, a compact, CT-based, automatic threat detection system toexamine carry-on baggage for aircraft as well as carry-in items forpublic buildings, will be its platform for CAMBRIA. We are alsoplanning to install COBRA units in several challenging applicationenvironments in the U.S. and abroad to demonstrate the system'sadvanced security imaging capabilities.

The Company is working to broaden the basis for medical growth.Development continues on a number of major new medical products,including the heart of a new multi-slice medical CT system for a majorOriginal Equipment Manufacturer (OEM). At PhotoDetection Systems, workcontinues on a new Positron Emission Tomography (PET) system thatemploys innovative detector technology and can be combined with a CTfor a new generation of hybrid PET/CTs. The first clinical images weretaken subsequent to the close of the quarter. New generations ofhigh-performance subsystems for multi-slice CT, MRI, and clinicalultrasound are also in development, as well as a unique ultrasoundmammography system.

Subsequent to the end of the quarter, the Company sold all itsstock in its Camtronics Medical Systems, Ltd., subsidiary, located inHartland, Wisconsin, to Emageon Inc., of Birmingham, Alabama, for $40million in cash. During the second quarter ending January 31, 2006,the Company expects to realize a gain from the sale of Camtronics. TheCompany, as a result of the sale, has classified the Camtronicsbusiness as a discontinued operation and has recast its financialstatements accordingly to represent these operations as discontinued.

With respect to a change in accounting principle, effective August1, 2005, the Company adopted Statement of Financial AccountingStandard No. 123(R), "Share-Based Payment," which establishesaccounting for equity instruments exchanged for employee services,including the requirement to recognize in the statement of operationsthe value of stock options and other stock-based compensation. Thecumulative effect of the change in accounting principle relating tocertain aspects of the adoption is reflected in the Company's firstquarter financial results. In addition to the cumulative effect, theCompany recognized $954,000 and $481,000 of share-based compensationrelated to stock options and restricted stock awards in the quarterended October 31, 2005 and 2004, respectively.

John Wood, President and CEO, noted, "The growth in our securitybusiness and in certain segments of our medical business is veryencouraging. We believe that several additional medical segments arepoised for growth in the coming year and will confirm that we are onthe right course for long-term growth as "The World Resource forHealth and Security Technology."

CONFERENCE CALL

Analogic will conduct an investor conference call on Thursday,December 8, at 11:00 a.m. ET to discuss the results for the firstquarter and recent developments. To participate in the conferencecall, dial 1-888-282-6043 approximately five to ten minutes before theconference is scheduled to begin. Inform the operator that you wish tojoin the Analogic conference. You will then be asked for your name,organization, and telephone number and be connected to the conference.To listen to the live audio webcast, visit www.analogic.comapproximately five to ten minutes before the conference is scheduledto 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 midnight (ET)Thursday, December 29, 2005.

A telephone digital replay will be available approximately twohours after the call is completed through midnight (ET) Monday,December 12, 2005. To access the digital replay, dial 1-800-642-1687.The conference ID number is 2810857. For more information on theconference call, visit www.analogic.com, call 978-326-4213, or emailproberts@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 Multicomputing.

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 Reform Act of 1995. Forward-lookingstatements (statements that are not historical facts) in thispresentation are made pursuant to the safe harbor provisions of thePrivate Securities Litigation Reform Act of 1995. Investors arecautioned that all forward-looking statements, including statementsabout product development, market and industry trends, strategicinitiatives, regulatory approvals, sales, profits, expenses, pricetrends, research and development expenses and trends, and capitalexpenditures involve risk and uncertainties. Actual results may differmaterially from those indicated by such statements as a result ofvarious factors, including those discussed in the Company's periodicreports filed with the SEC under the heading "Business Environment andRisk Factors." In addition, the forward-looking statements included inthis press release represent the Company's views as of December 8,2005. The Company anticipates that subsequent events and developmentswill cause the Company's views to change. However, while the Companymay elect to update these forward-looking statements at some point inthe future, the Company specifically disclaims any obligation to doso. These forward-looking statements should not be relied upon asrepresenting the Company's views as of any date subsequent to December8, 2005.
Consolidated Statements of Operations
(in thousands, except share data)

Three Months
Ended
October 31,
-----------------
(Unaudited)
2005 2004
-------- --------
Net Revenue:
Product $79,721 $67,125
Engineering 3,812 5,240
Other 2,877 2,765
-------- --------
Total net revenue 86,410 75,130
-------- --------
Cost of sales:
Product 49,002 41,848
Engineering 5,733 4,062
Other 1,386 1,438
-------- --------
Total cost of sales 56,121 47,348
-------- --------
Gross margin 30,289 27,782
-------- --------
Operating expenses:
Research and product development 13,027 11,674
Selling and marketing 7,354 6,719
General and administrative 8,664 9,215
Restructuring and asset impairment charges 1,025 --
-------- --------
Total operating expenses 30,070 27,608
-------- --------
Income from operations 219 174
-------- --------
Other (income) expense:
Interest income -2,033 -864
Interest expense -- 2
Equity gain in unconsolidated affiliates 570 -127
Other 157 -608
-------- --------
-1,306 -1,597
-------- --------
Income from continuing operation before income taxes
and cumulative effect of change in accounting
principle 1,525 1,771
Provision for income taxes 462 293
-------- --------
Net income from continuing operations before
discontinued operations and cumulative effect of
change in accounting principle 1,063 1,478
Income (loss) from discontinued operations (net of
income taxes of $126 in 2005, and $274 in 2004) 159 -1,313
Cumulative effect of change in accounting principle
(net of income tax of $61) 120 --
-------- --------
Net income $1,342 $165
-------- --------
Basic earnings (loss) per share:
Income from continuing operations $0.08 $0.11
Income (loss) from discontinued operations, net of
tax 0.01 -0.10
Cumulative effect of change in accounting principle,
net of tax 0.01 --
-------- --------
$0.10 $0.01
-------- --------
Diluted earnings (loss) per share:
Income from continuing operations $0.08 $0.11
Income (loss) from discontinued operations, net of
tax 0.01 -0.10
Cumulative effect of change in accounting principle,
net of tax 0.01 --
-------- --------
$0.10 $0.01
-------- --------
Dividends declared per share $0.08 $0.08
Shares outstanding:
Basic 13,631 13,521
Diluted 13,734 13,546


Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)


October 31, July 31,
2005 2005
---------- ----------

Assets:
Cash, cash equivalents and marketable securities $218,110 $220,454
Accounts and notes receivable, net 45,849 50,978
Inventories 68,509 63,604
Other current assets 20,777 19,686
Current assets of discontinued operations 41,364 41,939
---------- ----------
Total current assets 394,609 396,661
Property, plant and equipment, net 79,191 79,442
Other assets 20,214 20,602
---------- ----------
Total Assets $494,014 $496,705
---------- ----------
Liabilities and Stockholders' Equity:
Accounts payable $26,596 $20,833
Accrued liabilities 18,352 19,620
Advance payments and deferred revenue 8,777 14,387
Accrued income taxes 8,313 11,167
Current liabilities of discontinued operations 29,795 30,627
----------- ----------
Total current liabilities 91,833 96,634
Deferred income taxes 1,366 914
Stockholders' Equity 400,815 399,157
---------- ----------
Total Liabilities and Stockholders' Equity $494,014 $496,705
----------- ----------