##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form 10-Q
  (Mark One)þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    April 30, 2006oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For 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
    incorporation or organization)

(I.R.S. Employer
    Identification No.)8 Centennial Drive,
    Peabody, Massachusetts(Address of principal
    executive offices)

01960(Zip Code)   (978) 977-3000
 (Registrants telephone
    number, including area code)
  þ o
  Rule 12b-2
 o þ o
  Rule 12b-2 o þ




---



##### 



ANALOGIC
    CORPORATION
  TABLE
    OF CONTENTS
  Page No.Part I.
    Financial InformationItem 1.


Financial
    StatementsUnaudited
    Consolidated Balance Sheets as of April 30, 2006 and
    July 31, 2005


3Unaudited
    Consolidated Statements of Operations for the Three and Nine
    Months Ended April 30, 2006 and 2005


4Unaudited
    Consolidated Statements of Cash Flows for the Nine Months Ended
    April 30, 2006 and 2005


5Notes to Unaudited
    Consolidated Financial Statements


6-21Item 2.


Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


22-35Item 3.


Quantitative and
    Qualitative Disclosures about Market Risk


35Item 4.


Controls and
    Procedures


35-36Part II.
    Other InformationItem 2.


Unregistered Sales
    of Equity Securities and Use of Proceeds


36Item 6.


Exhibits


37Signatures


38Exhibit Index


39EX-31.1 Section 302 Certification of CEOEX-31.2 Section 302 Certification of CFOEX-32.1 Section 906 Certification of CEOEX-32.2 Section 906 Certification of CFO   2




---



##### Table of Contents



PART I.
    FINANCIAL INFORMATION  ITEM 1.
    Financial
    Statements  ANALOGIC
    CORPORATION
 CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except per share data) April 30,


July 31,2006


2005ASSETSCurrent assets:Cash and cash equivalents

$
250,907


$
208,116Marketable securities, at fair
    value


6,794



12,338Accounts and notes receivable, net
    of allowance for doubtful accounts of $1,180 at April 30,
    2006, and $1,973 at July 31, 2005


51,634



50,978Inventories


69,624



64,290Refundable and deferred income
    taxes


13,588



11,657Other current assets


7,187



7,343Current assets of discontinued
    operations (Note 2)






41,939Total current assets


399,734



396,661Property, plant and equipment, net


81,481



79,442Investments in and advances to
    affiliated companies


792



983Capitalized software, net


8,608



8,463Intangible assets, net


2,488



3,688Other assets


4,774



5,579Deferred income taxes


2,851



1,889Total Assets

$
500,728


$
496,705LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable, trade

$
21,189


$
20,833Accrued liabilities


22,230



19,802Deferred revenue


5,884



6,114Advance payments


1,891



8,273Accrued income taxes


8,499



11,167Current liabilities of
    discontinued operations (Note 2)






30,445Total current liabilities


59,693



96,634Long-term liabilities:Deferred income taxes


1,391



914Total long-term liabilities


1,391



914Commitments and guarantees
    (Note 14)Stockholders equity:Common stock, $.05 par value


697



691Capital in excess of par value


59,004



47,081Retained earnings


374,612



348,499Accumulated other comprehensive
    income


5,331



2,886Total stockholders equity


439,644



399,157Total Liabilities and
    Stockholders Equity

$
500,728


$
496,705    3




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##### Table of Contents



ANALOGIC
    CORPORATION
 CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data) Three Months Ended


Nine Months EndedApril 30,


April 30,2006


2005


2006


2005Net revenue:Products

$
75,670


$
77,646


$
247,355


$
215,766Engineering


3,415



5,221



13,346



13,630Other


2,221



1,715



7,026



6,426Total net revenue


81,306



84,582



267,727



235,822Cost of sales:Products


46,606



47,543



149,282



132,607Engineering


4,222



3,817



14,064



11,359Other


1,348



1,256



3,926



3,974Total cost of sales


52,176



52,616



167,272



147,940Gross margin


29,130



31,966



100,455



87,882Operating expenses:Research and product development


12,382



13,540



39,558



38,433Selling and marketing


6,972



7,172



21,600



21,694General and administrative


8,757



9,968



27,058



28,488Restructuring and asset impairment
    charges


84



1,988



1,612



2,935Total operating expenses


28,195



32,668



89,828



91,550Income (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



2Equity (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



44,569Provision for income taxes


819



16,282



4,440



16,148Income from continuing operations
    before discontinued operations and cumulative effect of change
    in accounting principle


2,510



28,989



12,670



28,421Income (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


$
24,575Basic earnings (loss) per share:Income from continuing operations

$
0.18


$
2.14


$
0.93


$
2.10Income (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


$
1.81Diluted earnings (loss) per share:Income from continuing operations

$
0.18


$
2.14


$
0.92


$
2.10Income (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


$
1.81Weighted average shares outstanding:Basic


13,732



13,573



13,667



13,546Diluted


13,956



13,614



13,834



13,588    4




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##### Table of Contents



ANALOGIC
    CORPORATION
 CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands) Nine Months EndedApril 30,2006


2005OPERATING ACTIVITIES:Net income

$
33,589


$
24,575Less:Income (loss) from discontinued
    operations


159



(3,846
)Gain on disposal of discontinued
    operations


20,640



Income from continuing operations
    and cumulative effect of change in accounting principle


12,790



28,421Adjustments to reconcile net income
    to net cash provided by operating activities:Deferred income taxes


2,206



(3,127
)Depreciation and amortization


12,044



12,982Cumulative effect of change on
    accounting principle


(120
)


Allowance for doubtful accounts


12



294Gain on sale of property, plant,
    and equipment


(55
)


(15
)Equity (gain) loss in
    unconsolidated affiliates


787



(749
)Equity loss in unconsolidated
    affiliate classified as research and product development expense






759Restructuring and asset impairment
    charges


2,791



2,935Gain on sale of Cedara investment






(43,829
)Share-based compensation expense


2,479



1,532Excess tax benefit from share-based
    compensation


(180
)


Net changes in operating assets and
    liabilities (Note 11)


(25,679
)


20,084NET CASH PROVIDED BY CONTINUING
    OPERATIONS


7,075



19,287NET CASH PROVIDED BY DISCONTINUED
    OPERATIONS


1,898



3,005NET CASH PROVIDED BY OPERATING
    ACTIVITIES


8,973



22,292INVESTING ACTIVITIES:Investments in and advances to
    affiliated companies


(1,149
)


(2,260
)Proceeds from the sale of Cedara
    investment






50,752Proceeds from the sale of Camtronics


38,906



Additions to property, plant and
    equipment


(10,005
)


(8,069
)Capitalized software


(1,039
)


(2,965
)Proceeds from the sale of property,
    plant and equipment


213



90Maturities of marketable securities


5,400



11,060NET CASH PROVIDED BY CONTINUING
    OPERATIONS


32,326



48,608NET CASH USED FOR DISCONTINUED
    OPERATIONS






(1,766
)NET CASH PROVIDED BY INVESTING
    ACTIVITIES


32,326



46,842FINANCING ACTIVITIES:Issuance of stock pursuant to
    exercise of stock options and employee stock purchase plan


8,851



1,159Excess tax benefit from share-based
    compensation


180



Purchase of common stock


(3,883
)


Dividends paid to shareholders


(3,878
)


(3,288
)NET CASH PROVIDED BY (USED FOR)
    CONTINUING OPERATIONS


1,270



(2,129
)NET CASH USED FOR DISCONTINUED
    OPERATIONS






(743
)NET CASH PROVIDED BY (USED FOR)
    FINANCING ACTIVITIES


1,270



(2,872
)EFFECT OF EXCHANGE RATE CHANGES ON
    CASH OF CONTINUING OPERATIONS


222



(383
)EFFECT OF EXCHANGE RATE CHANGES ON
    CASH OF DISCONTINUED OPERATIONS






21222



(362
)NET INCREASE IN CASH AND CASH
    EQUIVALENTS


42,791



65,900CASH AND CASH EQUIVALENTS,
    BEGINNING OF PERIOD


208,116



149,549CASH AND CASH EQUIVALENTS, END OF
    PERIOD

$
250,907


$
215,449Cash paid during the period for:Income taxes, net

$
15,732


$
4,417Interest


43



21    5




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##### Table of Contents



ANALOGIC
    CORPORATIONNOTES TO UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS
 (Dollars in thousands, except share and per share
    data)
  1.
    Basis of
    presentation:  Form 10-Q
  Form 10-K
  2.
    Discontinued
    operations:    Accounting for the Impairment
    or Disposal of Long-Lived Assets,
    Three Months Ended


Nine Months EndedApril 30,


April 30,2006


2005


2006


2005Total net sales

$



$
9,584


$
11,495


$
26,751Net income (loss)






(869
)


159



(3,846
)  6




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##### Table of Contents



ANALOGIC
    CORPORATION
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     July 31,2005Current assets of discontinued
    operations:Accounts receivable, net

$
5,635Inventories


6,422Costs related to deferred revenue


11,771Deferred income taxes


3,271Other current assets


651Property, plant and equipment, net


8,112Capitalized software, net


4,048Goodwill


746Intangible assets, net


1,283Total current assets

$
41,939Current liabilities of
    discontinued operations:Obligations under capital leases

$
162Account payable, trade


1,699Accrued liabilities


2,684Deferred revenue


22,667Advance payments


1,950Deferred income taxes


850Accumulated other comprehensive
    income


433Total current liabilities

$
30,445   3.
    Share-based
    payment:  Share-Based Payment, Accounting for
    Stock Issued to Employees, Accounting for Stock-Based
    Compensation Form 10-Q
 7




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##### Table of Contents



ANALOGIC
    CORPORATION
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Three Months Ended


Nine Months EndedApril 30,


April 30,2006


2006Cost of product sales

$
48


$
164Research and product development


217



755Selling and marketing


48



162General and administrative


463



1,398Share-based compensation expense
    before tax


776



2,479Provision for income tax


143



472Net share-based compensation
    expense

$
633


$
2,007       Three and Nine Months EndedApril 30,2006Expected option term(1)


5.25 yearsExpected volatility factor(2)


30
%Risk-free interest rate(3)


3.94
%Expected annual dividend yield


.7
%     (1)
    
    The option life was determined using the simplified method for
    estimating expected option life, which qualifies as
    plain-vanilla options.(2)
    
    The stock volatility for each grant is determined based on the
    review of the experience of the weighted average of historical
    weekly price changes of the Companys common stock over the
    most recent five years, which approximates the expected option
    life of the grant of 5.25 years.(3)
    
    The risk-free interest rate for periods equal to the expected
    term of the share option is based on the U.S. Treasury
    yield curve in effect at the time of grant.     8




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##### Table of Contents



ANALOGIC
    CORPORATION
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Accounting for Stock-Based
    Compensation  Transition and Disclosure
  Three Months Ended


Nine Months EndedApril 30,


April 30,2005


2005Income from continuing operations,
    as reported

$
28,989


$
28,421Add: Employee compensation expense
    for restricted stock options included in reported income


228



829Less: Total employee compensation
    expense for options determined under the fair value method


(851
)


(2,841
)Pro forma income from continuing
    operations

$
28,366


$
26,409Income per share from continuing
    operations:Basic  as reported

$
2.14


$
2.10 pro
    forma


2.09



1.95Diluted  as
    reported


2.14



2.10 pro
    forma


2.08



1.94     Three Months Ended


Nine Months EndedApril 30,


April 30,2005


2005Expected option term


5 years



5 yearsExpected volatility factor


35
%


39
%Risk-free interest rate


3.65
%


3.32
%Expected annual dividend yield


.7
%


.8
%   Stock
    Incentive Plans
     9




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##### Table of Contents



ANALOGIC
    CORPORATION
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Three and Nine Months EndedApril 30,2006Expected option term


.5 yearsExpected volatility factor


25
%Risk-free interest rate


3.94
%Expected annual dividend yield


.7
%    10




---



##### Table of Contents



ANALOGIC
    CORPORATION
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Options OutstandingWeighted





Restricted StockWeighted


Average








WeightedAverage


Remaining


Aggregate





AverageNumber of


Exercise


Contractual


Intrinsic


Number of


Grant DateShares


Price


Term (Years)


Value


Shares


Fair ValueOutstanding at July 31,
    2005


678,324


$
41.71



4.31


$




188,345


$
43.36Granted


13,600



48.54















Exercised


(20,201
)


37.20















Vesting of restricted stock


















(2,833
)


51.27Cancelled (forfeited and expired)


(3,000
)


46.92















Outstanding at October 31,
    2005


668,723



41.96



4.17







185,512



43.48Granted


7,500



46.85











3,243



52.98Exercised


(83,701
)


37.77Vesting of restricted stock


















(14,875
)


40.42Cancelled (forfeited and expired)


(42,575
)


40.79











(3,750
)


41.64Outstanding January 31,
    2006


549,947



42.75



4.24







170,130



43.80Granted






















Exercised


(113,400
)


41.70















Vesting of restricted stock


















(11,750
)


46.10Cancelled (forfeited and expired)


(2,925
)


41.28















Outstanding April 30,
    2006


433,622



43.03



4.45



8,697



158,380



43.81Options Exercisable at
    April 30, 2006


139,297



40.86



3.57



3,097Options Vested or expected to
    vest at April 30, 2006


396,577



42.92



4.39



7,997    11




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##### Table of Contents



ANALOGIC
    CORPORATION
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Options Outstanding


Vested OptionsWeighted Average


Weighted





WeightedNumber of


of Remaining


Average





AverageShares


Contract Life


Exercise


Number


ExerciseRange of Exercise
    Prices

Outstanding


(years)


Price


Exercisable


Price$29.31 - $40.95


108,990



2.86


$
37.83



62,965


$
36.3740.98 -  41.40


109,425



5.17



41.26



10,867



40.9841.72 -  47.00


115,606



4.89



43.22



50,569



43.3248.54 -  52.20


99,601



4.91



50.47



14,896



51.3629.31 -  52.20


433,622



4.45



43.03



139,297



40.86       4.
    Restructuring
    and asset impairment charges:    Three Months Ended


Nine Months EndedApril 30,


April 30,2006


2005


2006


2005Medical Technology Products:Medical Imaging Products:Shenzhen Anke High-Tech Co. Ltd

$



$



$
275


$
PhotoDetection Systems, Inc.






1,148



216



2,095Capitalized software






479







479Manufacturing license






361







361Corporate and other:SKY Computers, Inc.


84







1,121



Total

$
84


$
1,988


$
1,612


$
2,935   Shenzhen
    Anke High-Tech Co. Ltd. (SAHCO)
  other-than-temporary Accounting for Certain Investments in
    Debt and Equity Securities
  PhotoDetection
    Systems Inc.
   12




---



##### Table of Contents



ANALOGIC
    CORPORATION
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  EITF 02-14, Whether an Investor Should Apply the Equity Method of
    Accounting to Investments Other Than Common Stock (EITF
    02-14). other-than-temporary Accounting for Certain Investments in
    Debt and Equity Securities other-than-temporary
  Consolidation of Variable Interest
    Entities EITF 02-14
  SKY
    Computers, Inc.
  Accounting for Costs Associated
    with Exit or Disposal Activities,
 13




---



##### Table of Contents



ANALOGIC
    CORPORATION
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     InvoluntaryEmployee


Capital Assets


Sub-total


InventorySeverance


Abandoned


Restructuring


Impairment


TotalBalance at July 31, 2005

$



$



$



$



$
Restructuring charge


499



310



809



1,179



1,988Cash payments


(15
)






(15
)






(15
)Balance at October 31, 2005


484



310



794



1,179



1,973Restructuring charge


228







228







228Cash payments


(444
)






(444
)






(444
)Balance at January 31, 2006


268



310



578



1,179



1,757Restructuring charge


84







84







84Cash payments


(95
)






(95
)






(95
)Balance at April 30, 2006

$
257


$
310


$
567


$
1,179


$
1,746     5.
    Balance
    sheet information:    April 30,


July 31,2006


2005Inventories:Raw materials

$
38,566


$
37,461Work-in-process


18,778



15,275Finished goods


12,280



11,554$
69,624


$
64,290Accrued liabilities:Accrued employee compensation and
    benefits

$
10,864


$
9,817Accrued warranty


4,790



4,057Other


6,576



5,928$
22,230


$
19,802Advance payments:Long-lead time components(A)

$



$
6,170Ramp-up
    funds


472



475Customer deposits


1,419



1,628$
1,891


$
8,273     (A)
    
    Long-lead time components represent advance payments received
    from L-3 Communications based on certain orders received for the
    Companys EXACT systems. 14




---



##### Table of Contents



ANALOGIC
    CORPORATION
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   6.
    Results
    of affiliated companies:    Three Months Ended


Nine Months EndedApril 30,


April 30,2006


2005


2006


2005Net revenue

$
2,820


$
9,880


$
11,356


$
47,802Gross margin


845



3,654



4,092



27,773Income (loss) from operations


(1,050
)


2,154



(1,854
)


5,674Net income (loss)


(954
)


2,252



(1,834
)


5,446   7.
    Intangible
    assets:    April 30, 2006


July 31, 2005Accumulated








AccumulatedCost


Amortization


Net


Cost


Amortization


NetIntellectual Property

$
8,264


$
5,776


$
2,488


$
8,264


$
4,576


$
3,688       2006 (Remaining three months)

$
4132007


1,6522008


4062009


17$
2,488   8.
    Net
    income per share:   15




---



##### Table of Contents



ANALOGIC
    CORPORATION
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Three Months Ended


Nine Months EndedApril 30,


April 30,2006


2005


2006


2005Income from continuing operations

$
2,510


$
28,989


$
12,670


$
28,421Income (loss) from discontinued
    operations, net of tax






(869
)


159



(3,846
)Gain on disposal of discontinued
    operations, net of tax










20,640



Cumulative effect of change in
    accounting principle, net of tax










120



Net income

$
2,510


$
28,120


$
33,589


$
24,575Weighted average number of common
    shares outstanding-basic


13,732



13,573



13,667



13,546Effect of dilutive securities:Stock options and restricted stock


224



41



167



42Weighted average number of common
    shares outstanding-diluted


13,956



13,614



13,834



13,588Basic earnings (loss) per share,
    net of tax:Income from continuing operations

$
0.18


$
2.14


$
0.93


$
2.10Income (loss) from discontinued
    operations






(0.07
)


0.01



(0.29
)Gain on disposal of discontinued
    operations










1.51



Cumulative effect of change in
    accounting principle










0.01



Net income

$
0.18


$
2.07


$
2.46


$
1.81Diluted earnings (loss) per share,
    net of tax:Income from continuing operations

$
0.18


$
2.14


$
0.92


$
2.10Income (loss) from discontinued
    operations






(0.07
)


0.01



(0.29
)Gain on disposal of discontinued
    operations










1.50



Cumulative effect of change in
    accounting principle










0.01



Net income

$
0.18


$
2.07


$
2.44


$
1.81Anti-dilutive shares related to
    outstanding stock options


22



288



207



324   9.
    Dividends:   16




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##### Table of Contents



ANALOGIC
    CORPORATION
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   10.
    Comprehensive
    income:    Three Months Ended


Nine Months EndedApril 30,


April 30,2006


2005


2006


2005Income from continuing operations

$
2,510


$
28,989


$
12,670


$
28,421Income (loss) from discontinued
    operations, net of tax






(869
)


159



(3,846
)Gain on disposal of discontinued
    operations, net of tax










20,640



Cumulative effect of change in
    accounting principle, net of tax










120



Net income

$
2,510


$
28,120


$
33,589


$
24,575Other comprehensive income (loss),
    net of taxes:Unrealized losses from marketable
    securities, net of tax benefit of $16 and $72, for the three
    months ended April 30, 2006 and 2005, and tax benefit of
    $57 and $174 for the nine months ended April 30, 2006 and
    2005, respectively


(24
)


(109
)


(87
)


(265
)Unrealized gain from securities
    classified as investment net of taxes of $16,201






(24,743
)






Foreign currency translation
    adjustment, net of tax provision of $68 and $6 for the three
    months ended April 30, 2006 and 2005, and tax provision of
    $421 and $180 for the nine months ended April 30, 2006 and
    2005, respectively


1,891



(585
)


2,532



2,600Total comprehensive income

$
4,377


$
2,683


$
36,034


$
26,910  17




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##### Table of Contents



ANALOGIC
    CORPORATION
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   11.
    Supplemental
    disclosure of cash flow information:    Nine Months EndedApril 30,2006


2005Accounts and notes receivable

$
(379
)

$
(85
)Refundable income taxes


(4,918
)


Accounts receivable from affiliates


773



31Inventories


(5,532
)


(2,344
)Other current assets


(218
)


(1,717
)Other assets


7



(5,185
)Accounts payable, trade


24



2,952Accrued liabilities


2,067



(403
)Advance payments and deferred
    revenue


(6,769
)


10,748Accrued income taxes


(10,734
)


16,087Net changes in operating assets
    and liabilities

$
(25,679
)

$
20,084   12.
    Taxes:  provision-to-return
  13.
    Segment
    information:    Form 10-K
 18




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##### Table of Contents



ANALOGIC
    CORPORATION
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
       Three Months Ended


Nine Months EndedApril 30,


April 30,2006


2005


2006


2005Revenues:Medical technology products from
    external customers:Medical imaging products

$
47,862


$
45,858


$
143,433


$
130,223B-K Medical


17,453



15,571



52,819



53,38665,315



61,429



196,252



183,609Security technology products from
    external customers


11,524



18,290



56,378



36,080Corporate and other


4,467



4,863



15,097



16,133Total

$
81,306


$
84,582


$
267,727


$
235,822Income (loss) from continuing
    operations before income taxes and cumulative effects of change
    in accounting principle:Medical technology products:Medical imaging products(A)

$
(77
)

$
39,166


$
(2,666
)

$
31,272B-K Medical


128



228



1,453



4,10751



39,394



(1,213
)


35,379Security technology products


382



5,989



12,844



7,999Corporate and other(B)


2,896



(112
)


5,479



1,191Total

$
3,329


$
45,271


$
17,110


$
44,569   April 30,


July 31,2006


2005Identifiable assets:Medical imaging products

$
114,098


$
106,947B-K Medical


72,500



71,143Security technology products


16,609



15,497Corporate and other(C)


297,521



261,179Total assets from continuing
    operations


500,728



454,766Assets of discontinued operations






41,939Total

$
500,728


$
496,705     (A)
    
    Includes a gain of $43,829 related to the Companys sale of
    its equity investment in Cedara, for the three and nine months
    ended April 30, 2005. Also includes asset impairment
    charges of $491 for the nine months ended April 30, 2006
    and $1,988 and $2,935 for the three and nine months ended
    April 30, 2005, respectively. 19




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##### Table of Contents



ANALOGIC
    CORPORATION
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   (B)
    
    Includes restructuring and asset impairment charges related to
    SKY of $84 and $2,300 for the three and nine months ended
    April 30, 2006, respectively.(C)
    
    Includes cash equivalents and marketable securities of $234,097
    at April 30, 2006, and $195,321 at July 31, 2005.  14.
    Commitments
    and guarantees:  and/or
  Guarantors Accounting and Disclosure Requirements
    for Guarantees, Including Indirect Guarantees of Indebtedness of
    Others, an interpretation of FASB Statements No. 5, 57, and
    107 and rescission of FASB Interpretation No. 34
    (FIN 45).
     20




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##### Table of Contents



ANALOGIC
    CORPORATION
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Three Months Ended


Nine Months EndedApril 30,


April 30,2006


2005


2006


2005Balance at the beginning of the
    period

$
4,462


$
4,331


$
4,057


$
4,053Accrual for warranties issued
    during the period


1,021



627



2,493



1,837Accrual related to pre-existing
    warranties (including changes in estimate)


473



158



1,876



1,378Settlements made in cash or in
    kind during the period


(1,166
)


(932
)


(3,636
)


(3,084
)Balance at the end of the period

$
4,790


$
4,184


$
4,790


$
4,184   15.
    Subsequent
    events:  Shareholders
    Dividends:
   21




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##### Table of Contents



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations    Form 10-Q Form 10-K
  Summary
      In
    U.S. Dollars (thousands) from Continuing OperationsThree Months Ended


Nine Months EndedApril 30,


April 30,


April 30,


April 30,2006


2005


2006


2005Net Sales

$
81,306


$
84,582


$
267,727


$
235,822Gross Margin %


35.8
%


37.8
%


37.5
%


37.3
%Operating Expenses

$
28,195


$
32,668


$
89,828


$
91,550Net Income from continuing
    operations before discontinued operations and cumulative effect
    of change in accounting principle


2,510



28,989



12,670



28,421Diluted EPS from continuing
    operations


0.18



2.14



0.92



2.10          22




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##### Table of Contents



Consolidation of Variable Interest Entities EITF 02-14
  Accounting for
    the Impairment or Disposal of Long-Lived Assets,
    Results
    of Operations
  Three
    Months Ended April 30, 2006 Compared to Three Months Ended
    April 30, 2005
    Products
  U.S. Dollars
    (in thousands)


Percentage2006


2005


Growth (Decline)Products

$
75,670


$
77,646



(3
%)Gross margin


29,064



30,103



(3
%)Gross margin %


38.4
%


38.8
%    23




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##### Table of Contents



Engineering
  U.S. Dollars
    (in thousands)


Percentage2006


2005


Growth (Decline)Engineering

$
3,415


$
5,221



(35
%)Gross margin


(807
)


1,404



(157
%)Gross margin %


(23.6
%)


26.9
%       Other
    Operating
    Expenses
       24




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##### Table of Contents



Other
    (Income) Expense
        Provision
    for Income Taxes
  provision-to-return provision-to-return
  Net
    Income and Earnings per Share
    U.S. Dollars(in thousands)except EPS2006


2005Income from continuing operations
    before discontinued operations and cumulative effect of change
    in accounting principle

$
2,510


$
28,989% of net sales


3.1
%


34.3
%Diluted EPS from continuing
    operations

$
0.18


$
2.14    25




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##### Table of Contents



Nine
    Months Ended April 30, 2006 Compared to Nine Months Ended
    April 30, 2005
  Net
    Sales
    Products
  U.S. Dollars (in
    thousands)


Growth in2006


2005


PercentageProducts

$
247,355


$
215,766



15
%Gross margin


98,073



83,159



18
%Gross margin %


39.6
%


38.5
%       Engineering
  U.S. Dollars(in thousands)


Percentage2006


2005


Growth (Decline)Engineering

$
13,346


$
13,630



(2
%)Gross margin


(718
)


2,271



(132
%)Gross margin %


(5.4
%)


16.7
%      26




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##### Table of Contents



Other
    Operating
    Expenses
      L-3 Communications
    Other
    (Income) Expense
       27




---



##### Table of Contents



Provision
    for Income Taxes
  provision-to-return
  Net
    Income and Earnings per Share
    U.S. Dollars(in thousands)Except EPS2006


2005Income from continuing operations
    before discontinued operations and cumulative effect of change
    in accounting principle

$
12,670


$
28,421% of net sales


4.7
%


12.1
%Diluted EPS from continuing
    operations

$
0.92


$
2.10     Liquidity
    and Capital Resources
         28




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##### Table of Contents



Commitments,
    Contractual Obligations and Off-Balance Sheet
    Arrangements
    Less Than








More ThanTotal


1 Year


1-3 Years


4 -5 Years


5 YearsOperating leases

$
6,988


$
1,611


$
2,065


$
1,377


$
1,935Purchasing obligations


35,517



30,930



4,587







$
42,505


$
32,541


$
6,652


$
1,377


$
1,935     New
    Accounting Pronouncements
  Accounting Changes and Error Corrections. Accounting Changes, Reporting Accounting Changes in Interim Financial
    Statements.
  No. FAS 115-1, The Meaning of
    Other-Than-Temporary
    Impairment and Its Application to Certain Investments. Issue 03-1 No. D-44, Recognition of Other  Than-Temporary
 29




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##### Table of Contents



Impairment upon the Planned Sale of a Security Whose Cost
    Exceeds Fair Value.
  Critical
    Accounting Policies, Judgments, and Estimates
  Form 10-K
  Revenue
    Recognition
  Revenue Recognition in Financial Statements.
  00-21, Accounting for Revenue Arrangements with Multiple
    Deliverables.
 30




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##### Table of Contents



Software Revenue Recognition (SOP 97-2). SOP 97-2
          Stock
    Based Compensation
  Share-Based Payment, Accounting for
    Stock Issued to Employees, Accounting for Stock-Based
    Compensation Form 10-Q
   31




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##### Table of Contents



Forward-Looking
    Statements
  Form 10-Q
  Risk
    Factors
    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.
    Nine Months EndedApril 30,


Year Ended
    July 31,2006


2005


2004


2003L-3 Communications


19
%


16
%


9
%


47
%Toshiba


18
%


15
%


14
%


7
%Siemens


8
%


9
%


10
%


5
%General Electric


8
%


10
%


9
%


7
%Philips


5
%


7
%


8
%


4
%Ten largest customers as a group


70
%


66
%


68
%


81
%      32




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##### Table of Contents



Competition
    from existing or new companies in the medical and security
    imaging 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
    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.
    If we
    are left with excess inventory, our operating results will be
    adversely affected.
   33




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##### Table of Contents



Uncertainties
    and adverse trends affecting our industry or any of our major
    customers may adversely affect our operating
    results.
    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
    business strategy involves the pursuit of acquisitions or
    business combinations, which may be difficult to integrate,
    disrupt our business, dilute stockholder value or divert
    management attention.
    Our
    annual and quarterly operating results are subject to
    fluctuations, which could affect the market price of our common
    stock.
    
    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; 34




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##### Table of Contents




    changes in competitive and economic conditions generally or in
    our customers markets;
    changes in the cost or availability of components or skilled
    labor;
    foreign currency exposure; and
    investor and analyst perceptions of events affecting the
    Company, our competitors
    and/or our
    industry.    Loss
    of any of our key personnel could hurt our business because of
    their industry experience and their technological
    expertise.
    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.
    Item 3.
    Quantitative
    and Qualitative Disclosures about Market Risk        Item 4.
    Controls
    and Procedures  Rules 13a-15(e) 15d-15(e)
 35




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##### Table of Contents



Rules 13a-15(f) 15d-15(f)
 PART II  OTHER
    INFORMATION  Item 2.
    Unregistered
    Sales of Equity Securities and Use of Proceeds      Total Number of


Approximate DollarShares


Value of Shares thatAverage


Purchased as Part of


May Yet beTotal Number of


Price Paid


Publicity Announced


Purchased UnderPeriod

Shares Purchased(1)


per Share


Program(2)


the Program8/1/05-11/30/05










12/1/05-12/31/05


60,000


$
48.45



60,0001/1/06-1/31/06


20,000



48.77



20,0002/1/06-4/30/06










Total


80,000



48.53



80,000


$
21,000     (1)
    
    All repurchases by the Company of its common stock during the
    periods indicated were done pursuant to the repurchase program
    that the Company publicly announced on June 7, 2005 (The
    Program).(2)
    
    The Companys Board of Directors approved the repurchase of
    $25,000 of the Companys common stock pursuant to the
    Program. 36




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##### Table of Contents



Item 6.
    Exhibits  Exhibit

Description31
.1

Certification of Chief Executive
    Officer pursuant to
    Rule 13a-14(a)/Rule 15d-14(a)
    of the Securities Exchange Act of 1934, as amended31
.2

Certification of Chief Financial
    Officer pursuant to
    Rule 13a-14(a)/Rule 15d-14(a)
    of the Securities Exchange Act of 1934, as amended32
.1

Certification of Chief Executive
    Officer pursuant to
    Rule 13a-14(b)/Rule 15d-14(b)
    of the Securities Exchange Act of 1934, as amended32
.2

Certification of Chief Financial
    Officer pursuant to
    Rule 13a-14(b)/Rule 15d-14(b)
    of the Securities Exchange Act of 1934, as amended  37




---



##### Table of Contents



SIGNATURES    
  /s/  John
    W. Wood Jr.    President and Chief Executive Officer
    (Principal Executive Officer)
    
    Senior Vice President,
    Chief Financial Officer and Treasurer
    (Principal Financial Officer)
   38




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##### Table of Contents



EXHIBIT INDEX  Exhibit

Description31
.1

Certification of Chief Executive
    Officer pursuant to
    Rule 13a-14(a)/Rule 15d-14(a)
    of the Securities Exchange Act of 1934, as amended31
.2

Certification of Chief Financial
    Officer pursuant to
    Rule 13a-14(a)/Rule 15d-14(a)
    of the Securities Exchange Act of 1934, as amended32
.1

Certification of Chief Executive
    Officer pursuant to
    Rule 13a-14(b)/Rule 15d-14(b)
    of the Securities Exchange Act of 1934, as amended32
.2

Certification of Chief Financial
    Officer pursuant to
    Rule 13a-14(b)/Rule 15d-14(b)
    of the Securities Exchange Act of 1934, as amended  39