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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549





Form 10-K



|þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
|- | ----------------------------------------------------

| | SECURITIES EXCHANGE ACT OF 1934
| | -------------------------------

For the fiscal year ended July 31, 2011

OR



| ̈ | 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
incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|8 Centennial Drive, Peabody, Massachusetts                     |  | 01960                               
|(Address of principal executive offices)                       |  | (Zip Code)                          

(978) 326-4000

(Registrants telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



|                             |  |                                          
|---------------------------- |  | -----------------------------------------
|Title of Each Class          |  | Name of Each Exchange on Which Registered
|Common Stock, $.05 par value |  | NASDAQ Global Select Market              

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act.    Yes   ̈    No  þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act.    Yes   ̈    No  þ

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  þ    No   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   ̈    No   ̈

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of large accelerated filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the Exchange Act.



|                                                                        |  |                              |  |                     
|----------------------------------------------------------------------- |  | ---------------------------- |  | --------------------
|Large accelerated filer   ̈                                              |  |                              |  | Accelerated filer  þ
|Non-accelerated filer   ̈  (Do not check if a
smaller reporting company) |  | Smaller reporting company   ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act.)     Yes    ̈     No   þ

The aggregate market value of the registrants common stock held by non-affiliates of the registrant at January 31, 2011 was
approximately $643,340,000. As of September 15, 2011, there were 12,535,230 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:

Portions of the registrants definitive proxy statement, which will be issued in connection with the 2012 Annual Meeting of Stockholders, are incorporated by reference in Part III of this Annual
Report on Form 10-K.









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TABLE OF CONTENTS



|                                                                                                                          |  |          |    | 
|------------------------------------------------------------------------------------------------------------------------- |  | -------- | -- | 
|                                                                                                                          |  | Page No. |   
|PART I                                                                                                                    |  |          | 2  | 
|Item 1. Business                                                                                                          |  |          | 2  | 
|Item 1A. Risk Factors                                                                                                     |  |          | 10 | 
|Item 1B. Unresolved Staff Comments                                                                                        |  |          | 19 | 
|Item 2. Properties                                                                                                        |  |          | 20 | 
|Item 3. Legal Proceedings                                                                                                 |  |          | 20 | 
|Item 4. Removed and Reserved                                                                                              |  |          | 20 | 
|PART II                                                                                                                   |  |          | 22 | 
|Item 
5. Market for the Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |  |          | 22 | 
|Item 6. Selected Financial Data                                                                                           |  |          | 24 | 
|Item 7. Managements Discussion and Analysis of Financial Condition and Results of
Operations                             |  |          | 25 | 
|Item 7A. Quantitative and Qualitative Disclosures About Market Risk                                                       |  |          | 43 | 
|Item 8. Financial Statements and Supplementary Data                                                                       |  |          | 43 | 
|Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure                              |  |          | 43 | 
|Item 9A. Controls and Procedures                                                                                          |  |          | 44 | 
|Item 9B. Other Information                                                                                                |  |          | 44 | 
|PART III                                                                                                                  |  |          | 45 | 
|Item 10. Directors, Executive Officers and Corporate Governance                                                           |  |          | 45 | 
|Item 11. Executive Compensation                                                                                           |  |          | 45 | 
|Item 
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                  |  |          | 45 | 
|Item 13. Certain Relationships and Related Transactions, and Director
Independence                                        |  |          | 45 | 
|Item 14. Principal Accountant Fees and Services                                                                           |  |          | 45 | 
|PART IV                                                                                                                   |  |          | 46 | 
|Item 15. Exhibits and Financial Statement Schedule                                                                        |  |          | 46 | 
|SIGNATURES                                                                                                                |  |          | 47 | 
|REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                                                                   |  |          | 48 | 
|EXHIBITS                                                                                                                  |  |          |    | 



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PART I



|Item 1. | Business
|------- | --------

Throughout this Annual Report on Form 10-K, unless the context states otherwise, the words we, us, our and Analogic refer to Analogic Corporation and all of
its subsidiaries taken as a whole, and our board of directors refers to the board of directors of Analogic Corporation. All dollar amounts in this Item 1 are in thousands.

Description of Business

Analogic is a high technology company that designs
and manufactures advanced medical imaging and security systems and subsystems sold to Original Equipment Manufacturers (OEMs) and end users primarily in the healthcare and airport security markets. We were incorporated in the
Commonwealth of Massachusetts in November 1967 and are recognized worldwide for advancing state-of-the-art technology in the areas of computed tomography (CT), ultrasound, magnetic resonance imaging (MRI), digital
mammography, and automated explosive detection systems (EDS) for airport security. Our OEM customers incorporate our technology into systems they in turn sell for various medical and security applications. We also sell our ultrasound
products directly into clinical end-user markets through our direct worldwide sales force under the brand name B-K Medical.

We operate primarily within two major markets: Medical Technology and Security Technology. Our Medical Technology business consists of
two reporting segments:



| |  |  | Medical Imaging, which primarily includes systems and subsystems for CT and MRI medical imaging equipment as well as state-of-the-art,
selenium-based detectors for screening and diagnostic applications in mammography; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Ultrasound, which designs, manufactures, and distributes ultrasound systems and probes primarily in the urology, ultrasound-guided surgery, and
anesthesia markets.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our Security Technology business consists of advanced explosives and weapons detection
systems utilizing our expertise in advanced imaging technology, such as CT, for aviation security.

During the first quarter
of fiscal year 2011, we sold our hotel business, previously reported in the Other segment and realized net proceeds of $10,467, after transaction costs. We recorded a gain on sale of the hotel of $924, net of a tax provision of $505, or $0.07 per
diluted share in fiscal year 2011. The hotel business is being reported as a discontinued operation and all periods presented have been revised accordingly to reflect these operations as discontinued in Parts I and II of this document.



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During the fiscal year ended July 31, 2011 (fiscal year 2011) we changed
our reporting segments. All prior periods presented have been revised accordingly to reflect our new reporting segments. See Note 18 to the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for financial
information regarding our segments. The following chart shows net revenue by segment for the fiscal year 2011:

LOGO

Medical Imaging

Our Medical Imaging business, which accounted for approximately 69% of our net revenue in fiscal year 2011, consists primarily of electronic systems and subsystems for medical imaging, sold globally to
OEM producers of CT, MRI, and Ultrasound equipment as well as digital mammography products.

Computed
Tomography (CT)

Analogic has been at the forefront of developments in computed tomography equipment technology from the
introduction of the first single slice CT systems in 1975 to todays multi-slice volumetric scanners. We are an industry leader in the development and sale of CT x-ray detectors, data acquisition systems (DAS), data management
systems (DMS) and integrated gantries that become part of OEM CT imaging systems around the world. Today, our systems and sub-systems are used in about half of the worlds CT systems installed at major medical facilities around the
world. Our product portfolio consists primarily of the following:



| | 1) | X-Ray Detectors  These sub-systems convert the x-ray energy in a CT machine to useful analog signals for processing in the Data Acquisition System. The detectors
use state-of the art scintillator materials and photodiodes coupled with advanced semiconductor technology to process the signals. These signals are then fed to a computer through a DAS.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2) | Data Acquisition Systems (DAS)  These sub-systems are used to process the signals created by the detectors and feed them as a digital stream to a reconstruction
computer to create high resolution images. The DAS is designed with many multi-channel circuit boards that process the analog signals from the detectors and convert them in to digital signals through an array of A/D (analog to digital) converters.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3) | Data Management Systems (DMS)  This is the brains of the CT system and consists of both the detector array and the DAS in one package. This system provides our
OEM customers a higher level of integration that allows for lower cost and faster time to market.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4) | Integrated Gantries  The components of the CT system (detectors, DAS, x-ray tube and power supplies) are mounted on a rotating ring assembly called a gantry. The
ring enables the components of the CT systems to rotate around the patient at speeds up to 200 RPM for high resolution imaging. We provide integrated gantries to our OEM customers as another level of integration to improve their manufacturing
efficiency.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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LOGO

The detector, DAS and DMS products we sell are used in a wide range of CT systems from single slice
count to the most advanced multi-slice (>256 slices) systems enabling advanced diagnostics such as cardiac imaging. Our CT products are designed to allow our customers to remain at the forefront of this rapidly advancing field. Leveraging our
experience in integrating CT components and technology, we have also developed higher-level integrated systems for the radiotherapy market primarily used for image guided radiation treatment of cancerous tumors.

Magnetic Resonance Imaging (MRI)

For OEM producers of MRI equipment, we supply two key components: gradient amplifiers and Radio Frequency (RF) Amplifiers. We have developed a wide range of amplifier solutions for our
customers ranging from low-magnetic-field systems (< 0.3 Tesla) to ultra high-field systems (> 7.0 Tesla) used in academic research hospitals.

Our product portfolio consists of the following:



| | 1) | Gradient Amplifiers  These high power systems are used to drive a set of coils located inside the MRI system and around the patient. The coils energize the atomic
structure of patients anatomy in order to develop tissue and structure images. Gradient amplifiers must be specifically designed for the different MRI field strengths ranging from 0.3 Tesla to >7.0 Tesla.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | 2) | RF Amplifiers  These power systems are used to control another set of the coils within the MRI system that are used to read-back the signals from the anatomy
generated by the gradient coils. These signals are then processed in a reconstruction computer to create images. The RF amplifiers must have a very high signal-to-noise ratio to produce the cleanest images.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

LOGO

Digital Mammography

Our digital mammography products consist primarily of digital mammography Selenium based x-ray detector plates manufactured and sold
through our ANRAD (Anrad) subsidiary, which sells directly to OEM customers for screening and diagnostic applications in mammography. These x-ray detector plates are used by OEMs in mammography systems to convert x-ray signals into high
resolution 2-D and 3-D images of breast tissues to aid in the detection of breast cancer. Our detector plates for mammography applications are sold to medical OEMs for use in products worldwide. Our mammography product portfolio consists of the
following:



| | 1) | LMAM  our large area detector plate, based on Selenium technology, is used primarily for European markets and was recently introduced in the U.S market. The plate
and power supply is designed to be easily adapted to many types of mammography systems. This detector plate is also compatible with systems that can perform tomosynthesis, which creates 3-D images through a series of exposures to more accurately
detect lesions in the breast.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2) | SMAM  our small area detector plate uses the same Selenium-based technology as the LMAM detector and is manufactured primarily for the Asian markets.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------

LOGO



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Other Products

Within our Medical Imaging business, we also design and manufacture ultrasound transducers sold to OEM customers for use in ultrasound
scanning systems as well as precision motion control systems, which we supply to OEM customers for use in computer-controlled automation systems primarily in the semiconductor and medical markets.

Ultrasound

Our Ultrasound business, which designs and manufactures ultrasound systems and probes primarily for end-user markets in urology, surgery, and anesthesia, accounted for approximately 20% of our net revenue
in fiscal year 2011. Our ultrasound scanners use acoustic waves to generate real-time images of the internal anatomy that are used for medical diagnostic and interventional procedures. These ultrasound systems are also used for guiding surgical
procedures and for guiding prostate cancer treatment employing a procedure called brachytherapy.

Our flagship Ultrasound
product is the Flex Focus, first introduced in our fiscal year ended July 31, 2009 (fiscal year 2009). The Flex Focus system has a unique, award-winning design in a small footprint that can be easily moved from room to room in
a hospital. With its large 19 screen and high resolution imaging engine, the Flex Focus provides a unique solution in the mobile ultrasound market. This system is a portable unit that can be used for multiple applications in a variety of
settings. In the fiscal year ended July 31, 2010 (fiscal year 2010), we introduced two new systems to the Flex Focus family: (i) the Flex Focus 400 Anesthesia, particularly suited for guiding the placement of nerve blocks prior
to surgical procedures, with a superior battery pack that enables up to 4 hours of plug-free imaging, and (ii) the Flex Focus 700, our premium system with a touchscreen display and wireless remote control uniquely positioned for the surgical
environment.

LOGO

Security Technology

Utilizing our CT technology, our Security Technology business designs and manufactures airport security systems and subsystems for both checked bag and checkpoint applications and accounted for
approximately 11% of our net revenue in fiscal year 2011. These systems generate three-dimensional images of objects contained within carry on or checked baggage.



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We sell the following checked baggage systems through L-3 Communications Corporation
(L-3):



|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                               
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|LOGO |  | 1)      eXaminer® XLB (High Speed)  The XLB was the first certified EDS specifically optimized for high speed screening of checked baggage. Capable of scanning up to 1,200 bags
per hour, the XLB keeps bags continuously moving through a meter-wide tunnel. Combining high-resolution helical CT with dual-energy imaging, the XLB offers superior detection capabilities and the most advanced 3-D imaging on the
market.
|     | 
|LOGO |  | 2)      eXaminer 3DX (Medium Speed)  Our CT technology is utilized in the 3DX, a medium speed
EDS that scans up to 550 bags per hour in-line and up to 330 bags in the standalone configuration. The enhanced speed 3DX-ES scans up to 750 bags per hour in the in-line configuration. Both systems are designed to provide high levels of
reliability and low false-alarm rates.                                            
|     | 
|LOGO |  | 3)      eXaminer SX (Reduced Size)  The SX is a lower-cost, reduced size EDS designed
for small and medium-sized airports. Able to scan up to 360 bags per hour in-line and up to 300 bags per hour in the standalone configuration, the SX is well suited for airport lobbies and inline applications. The SX offers customers a reduced
footprint system with high resolution 3-D imaging and low-false alarm rates.       

eXaminer ® is a registered trademark of L-3 Communications.

The EDS product family is sold to the Transportation Security Agency for installation at major U.S. airports and to international airport authorities for installation at airports around the world.

In fiscal year 2010, we signed an agreement with Smiths Detection (Smiths), based in London, England, to develop
advanced imaging subsystems for use in a next-generation explosives detection system. The agreement provides for Smiths to fund the engineering development over a period of approximately two years.

Competition

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

In our Medical Imaging business, our Medical Imaging systems and subsystems are customized for the needs of our customers. In
many cases, due to the limited number of companies with comparable technology to ours, we consider selection by our OEM customers for the design and manufacture of these products and our other medical products to be due more to the
make-or-buy decision of the individual OEM customers rather than a function of other competitors in the field as many of our existing and potential OEM customers have the capacity to design and manufacture these products for themselves.

The Ultrasound segment of our Medical Technology business participates in niche markets primarily focused in urology and
image- guided surgery. We compete in these specialized markets based on image quality, ease of use, mobility, reliability and flexibility with a variety of ultrasound probes. Our competitors are primarily smaller companies focused in these niche
areas and business units of larger medical device companies.



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Our primary competitors in the Security Technology business for CT-level explosives
detection systems are dominated by divisions of a small number of large companies; our customer, L-3; Safran Morpho (formerly GEs security business); and Science Applications International Corp. (SAIC).

Marketing and Distribution

The Medical Imaging segment of our Medical Technology business and our Security Technology business directly sell to OEM customers, both domestically and abroad, primarily through our headquarters in the
United States. Products are also sold through our subsidiaries in Canada, China, and the United States.

The Ultrasound
segment of our Medical Technology business globally distributes its products to end users both through a direct sales force and through a network of independent sales representatives and distributors located around the world. Our direct sales force,
located in the United States, Germany, Belgium, United Kingdom, Italy, and Scandinavia, accounted for approximately 75% of our Ultrasound revenues in fiscal year 2011 generated from product sales, service and application support. Our remaining
Ultrasound revenue was generated through a network of non-exclusive, specialized independent distributors in more than 50 other countries.

Seasonal Aspect of Business

There are no material seasonal elements to the Medical Imaging segment of our Medical Technology business and our Security Technology business, although plant closings in the summer, particularly in
Europe, tend to decrease the procurement activities of certain customers during the first quarter of our fiscal year. However, in the Ultrasound segment of our Medical Technology business we see favorable seasonality in the second and fourth
quarters of our fiscal year.

Material Customers

We had three customers, as set forth in the table below, who accounted for 10% or more of our net revenue during fiscal year 2011, fiscal year 2010, or fiscal year 2009.



|                                                 |  |                     |    |   |      |  |    |      |  |  |    |  
|------------------------------------------------ |  | ------------------- | -- | - | ---- |  | -- | ---- |  |  | -- | -
|                                                 |  | Year Ended July 31, |   
|                                                 |  | 2011                |    |   | 2010 |  |    | 2009 | 
|Koninklijke Philips Electronics N.V. (Philips) |  |                     | 13 | % |      |  | 15 | %    |  |  | 15 | %
|Toshiba Corporation (Toshiba)                  |  |                     | 11 | % |      |  | 12 | %    |  |  | 14 | %
|L-3                                              |  |                     | *  |   |      |  | *  |      |  |  | 11 | %



Note
(*): Total net revenue was less than 10% in this fiscal year.

Philipss and Toshibas revenue are in the Medical
Imaging segment and L-3s revenue is in the Security Technology segment.

Our ten largest customers as a group accounted
for 64%, 66%, and 67% of our net product and engineering revenue for fiscal years 2011, 2010, and 2009, respectively. The loss of any one of these customers could have a material adverse effect on our business. Philips accounted for 17% and 16% of
net accounts receivable at July 31, 2011 and 2010, respectively, and L-3 accounted for 13% of net accounts receivable at July 31, 2010.

Backlog

Our OEM business involves large customers whose placement of large
orders can vary based on timing. Our backlog, which consists of cancellable and non-cancellable orders primarily shippable within twelve months, was $180,800 at July 31, 2011 as compared to $119,105 at July 31, 2010. The increase in
backlog of $61,695 was due



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primarily to increased backlog of $38,252 and $21,369 in the Medical Imaging and Security Technology segments. The increase in backlog for Medical Imaging was due primarily to higher demand and
new product introductions in the CT and MRI businesses. The increase in backlog for Security Technology was due primarily to the timing of orders to our OEM partners from the Transportation Security Administration.

Government Contracts

We
do a significant amount of business with agencies of the Federal Government through our Security Technology segment, either directly or as a subcontractor. Our contracts with government agencies, and the government contracts of other parties under
which we serve as a subcontractor, are subject to termination at the election of the government agency. While none of our government contracts or subcontracts provide for renegotiation of profits at the election of the Government, it is possible
that the government agency could request, and that we could under certain circumstances agree to, the renegotiation of the payments provided for under such contracts. However, we have not in the past renegotiated significant payment terms under our
government contracts or subcontracts.

Sources of Raw Materials and Components

In general, our products are composed of internally-designed electronic and mechanical elements, including proprietary integrated
circuits, printed circuit boards, detectors, power supplies, and displays manufactured by us and others in accordance with our specifications. 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. We believe that most items procured from third-party suppliers are available from more than one source. However, if a given component ceases to be available, it might become necessary
for us to modify a product design to adapt to a substitute component, or to purchase new tooling to enable a new supplier to manufacture the component, either of which could result in additional expense and/or delay in product sales. Also, from time
to time the availability of certain electronic components has been disrupted. Accordingly, we carry a safety stock of raw materials and components in an effort to ensure our ability to make timely delivery to our customers.

Patents and Licenses

We
hold patents of varying duration issued in the United States, which cover technologies that we have developed. In many instances, we hold corresponding foreign patents. We regularly file U.S. patent applications and, where appropriate, foreign
patent applications. We also file continuations to cover both new and improved methods, apparatus, processes, designs, and products.

We rely on a combination of trade secret, copyright, and trademark laws, as well as contractual agreements to safeguard our proprietary rights in technology and products. In seeking to limit access to
sensitive information to the greatest practical extent, we routinely enter into confidentiality and assignment of invention agreements with each of our employees, and confidentiality agreements with our key customers and vendors.

We believe that any legal protection afforded by patent and copyright laws is of secondary importance as a factor in our ability to
compete. Future prospects are more a function of the continuing level of excellence and creativity of our engineers in developing products that satisfy customer needs, and the marketing skills and managerial competence of our personnel in selling
those products. Moreover, we believe that market positioning and rapid market entry are important to the success of our products. Our management believes that the loss of patent protection would not have a material effect on our competitive
position.

Research and Product Development

Research and product development (R&D) is a significant element of our business. We maintain a constant and comprehensive R&D program directed toward the creation of new products, the
improvement and



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refinement of our present products, and the expansion of their applications. Certain R&D projects are funded by our OEM customers and such funding is generally treated as engineering revenue,
with the associated costs classified as engineering cost of sales. The cost of internally-funded R&D efforts are included within operating expenses.

The cost of internally-funded R&D, included in operating expenses, amounted to $63,125 in fiscal year 2011, $49,150 in fiscal year 2010, and $45,276 in fiscal year 2009. The cost of customer-funded
R&D, which is classified as engineering cost of sales, amounted to $22,479 in fiscal year 2011, $18,566 in fiscal year 2010, and $21,398 in fiscal year 2009.

Environment

Our manufacturing facilities are subject to numerous
environmental laws and regulations, particularly with respect to industrial waste and emissions. Compliance with these laws and regulations has not had a material impact on our capital expenditures, earnings, or competitive position.

Employees

As of
July 31, 2011, we employed approximately 1,500 employees.

Financial Information about Foreign and Domestic Operations and Export
Revenue

Our domestic revenues in fiscal year 2011 totaled $161,720 or 34% of total revenue, and foreign revenues totaled
$311,875 or 66% of total revenue. This compares to domestic revenues in fiscal year 2010 totaling $139,474, or 34% of total revenue, and foreign revenues of $275,339 or 66% of total revenue, and domestic revenues in fiscal year 2009 totaling
$146,083, or 38% of total revenue, and foreign revenues of $240,777, or 62%, of total revenue. See Note 18 to the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for financial information regarding our domestic
and foreign revenue and long lived assets.

Available Information

Our website address is www.analogic.com. The information on our website is not incorporated by reference into this document and
should not be considered to be a part of this document. Our website address is included in this document as an inactive textual reference only.

We make available free of charge through our website our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to the reports as soon as reasonably
practicable after we electronically file such material with, or furnish such material to, the Securities and Exchange Commission (SEC).



|Item 1A. | Risk Factors
|-------- | ------------

This Annual Report on Form 10-K contains statements, which, to the extent that they are not a recitation of historical facts, constitute forward-looking statements pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. In some cases these forward-looking statements can be identified by the use of words such as may, will, could, should,
would, expect, project, predict, potential or the negative of these words or comparable words. Investors are cautioned that all forward-looking statements, including without limitation,
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 statement as a result of a number of important factors, including those discussed below and elsewhere in this Form 10-K.



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You should carefully consider the risks described below before making an investment
decision with respect to our common stock. Additional risks not presently known to us, or that we currently deem immaterial, may also impair our business. Any of these 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 could have a significant impact on our operating results. If a major customer significantly reduces the amount of business it does with us, there would be an adverse
impact on our operating results.

We had three customers, as set forth in the table below, who accounted for 10% or more of
our net product and engineering revenue during fiscal years 2011, 2010, or 2009.



|        |  |                     |    |   |      |  |    |      |  |  |    |  
|------- |  | ------------------- | -- | - | ---- |  | -- | ---- |  |  | -- | -
|        |  | Year Ended July 31, |   
|        |  | 2011                |    |   | 2010 |  |    | 2009 | 
|Philips |  |                     | 13 | % |      |  | 15 | %    |  |  | 15 | %
|Toshiba |  |                     | 11 | % |      |  | 12 | %    |  |  | 14 | %
|L-3     |  |                     | *  |   |      |  | *  |      |  |  | 11 | %



Note
(*): Total net revenue was less than 10% in this fiscal year.

Our ten largest customers as a group accounted for 64%, 66%,
and 67% of our net revenue for fiscal years 2011, 2010, and 2009, respectively. Philips accounted for 17% and 16% of net accounts receivable at July 31, 2011 and 2010, respectively, and L-3 accounted for 13% of net accounts receivable at
July 31, 2010.

Although we seek 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 products and services, our operating results and financial condition could be adversely affected.

Competition from existing or new companies in the medical and security imaging technology industries 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 on product design, performance, pricing, quality, and service offerings, and we believe our innovative engineering and
product reliability have been important factors in our historical 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 conform to more
exacting specifications and may carry a higher price than analogous products manufactured by others.

Our competitors include
divisions of larger, more diversified organizations as well as specialized companies. Some of them have greater resources and larger staffs than we have. Many of our existing and potential OEM customers have the ability to design and manufacture
internally the products that we manufacture for them. We face competition from the research and product development groups and manufacturing operations of our existing and potential customers, who continually compare the benefits of internal
research, product development, and manufacturing with the costs and benefits of outsourcing.



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We depend on our suppliers, some of which are the sole-source for certain components,
and our production could be substantially curtailed if these suppliers were not able to meet our demands and alternative sources were 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 might have to delay shipments or pay premium pricing, which could adversely affect our operating results. In some cases, supply shortages of particular components
could substantially curtail our 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 to provide many of the other raw materials and components that we use in our business. Some of these suppliers are affiliated with customers or competitors, and others are small companies. If we
were unable to continue to purchase these raw materials and components from our suppliers, our operating results could be adversely affected. Because many of our costs are fixed, our margins depend on the volume of output at our facilities, and a
reduction in volume could adversely affect our margins.

We rely on successful performance by and relationships with
subcontractors. This reliance could have a material adverse effect on our results of operations and financial condition.

We have formed arrangements with subcontractors for various services and components. We have formed these arrangements because it is
commercially more efficient to outsource these services and purchase these components than it would be for us to perform these services or manufacture these components, which in some cases require, among other things, a high degree of technical
skill and advanced equipment that is not practical or cost-effective for us to develop or acquire. As a result, if one of our subcontractors were to experience quality problems, capacity constraints, decreased yields, or delivery delays, or were to
raise prices significantly, we could face product liability claims, product shortages, decreased revenues or lost customers, which could adversely affect our operating results.

If we were to be left with excess inventory, our operating results could be adversely affected.

Because of long lead times and specialized product designs, in certain cases we purchase components and manufacture products in
anticipation of customer orders based on customer forecasts. For a variety of reasons, such as decreased end-user demand for our products, inadequate or inaccurate forecasts, or other issues that might impact production planning, our customers might
not purchase all the products that we have manufactured or for which we have purchased components. In any such event, we would attempt to recoup material 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 that we were unsuccessful in recouping our material and manufacturing costs, our net sales and operating results could be 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 could adversely affect our operating results.

Our business operates primarily within two major markets: Medical
Technology and Security Technology. These markets are subject to changes in technology, pricing, and profit margins and have been historically subject to cyclical 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



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purchase or use of medical and security-related 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, might adversely affect our operating results.

In Security Technology, our OEM customers purchasing dynamics are generally affected by the level of government funding, the
expansion of airport terminals and the fluctuations in airline passenger volume.

Our customers or our delay in
obtaining 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.

Our products are finished medical devices or are components used by our customers in the production of finished medical devices that are
subject to a high level of regulatory oversight. A delay in obtaining 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, might be withdrawn or modified. Medical devices cannot be marketed in the United States without clearance
from the FDA. Medical devices sold in the United States must also be manufactured in compliance with FDA rules and regulations, which regulate the design, manufacturing, 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 manufacturing, sale, and use of medical devices. Medical devices are also subject to approval and regulation by
foreign regulatory and safety agencies.

Our business strategy includes the pursuit of acquisitions or business
combinations, which, if consummated, could be difficult to integrate, disrupt our business, dilute stockholder value, or divert management attention.

As part of our business strategy, we may seek attractive acquisitions and other business combinations. Acquisitions are typically accompanied by a number of risks, including the difficulty of integrating
the operations and personnel of the acquired companies, the potential disruption of our ongoing business and distraction of management, expenses related to the acquisition, and potential unknown or underestimated liabilities associated with acquired
businesses. If we do not successfully complete acquisitions that we pursue in the future, we could incur substantial expenses and devote significant management time and resources without generating any benefit to us. In addition, substantial
portions of our available cash might be utilized as consideration for these acquisitions.

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 could 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 occurs, the price of our common stock could 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 or our own new products;
| | - |  | -----------------------------------------------------------------------------



| |  |  | changes in demand for our customers or our own 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 in our or our customers markets;
| | - |  | ------------------------------------------------------------------------------------------



| |  |  | changes in the cost or availability of components or skilled labor;
| | - |  | -------------------------------------------------------------------



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| |  |  | changes in our effective tax rate;
| | - |  | ----------------------------------



| |  |  | fluctuations in manufacturing yields;
| | - |  | -------------------------------------



| |  |  | foreign currency and commodity price exposures; and
| | - |  | ---------------------------------------------------



| |  |  | investor and analyst perceptions of events affecting us, our competitors, and/or our industry.
| | - |  | ----------------------------------------------------------------------------------------------

A delay in anticipated sales could result in the deferral of the associated revenue beyond the end of a particular quarter, which could
have a significant effect on our operating results for that quarter. In addition, most of our operating expenses do not vary directly with net revenue and are difficult to adjust in the short term. As a result, if revenue for a particular quarter
was below our expectations, we could not proportionately reduce operating expenses for that quarter. Hence, the revenue shortfall could have a disproportionate 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 personnel, could result in the loss of customers or
otherwise inhibit our ability to operate and grow our business successfully.

If we fail effectively to manage our growth
or, alternatively, our spending during economic downturns, our business could be disrupted, which could harm our operating results.

Our ability to offer our products and implement our business plan in evolving markets successfully requires an effective planning and management process. We must effectively manage our spending and
operations to ensure our competitive position during economic downturns, and must preserve our future opportunities when the economy improves. A failure to manage our spending and operations effectively could disrupt our business and harm our
operating results. A growth in sales, combined with the challenges of managing geographically dispersed operations, can place a significant strain on our management systems and resources, and growth in future operations could continue to place such
a strain. The failure to manage our growth effectively could disrupt our business and harm our operating results.

If we
are unable to maintain our expertise in research and product development, manufacturing processes, and marketing new products, we might not be able to compete successfully.

We believe that our future success depends upon our ability to provide research and product development, provide manufacturing services that meet the changing needs of our customers, and market new
products. This requires that we successfully anticipate and respond to technological changes in design and manufacturing processes in a cost-effective and timely manner. As a result, we continually evaluate the advantages and feasibility of new
product designs and manufacturing processes. We may not be able to develop and introduce new and improved products in a timely or efficient manner. New and improved products, if developed, may not achieve price and profitability targets or market
acceptance. Commercialization of new products may prove challenging, and we may be required to invest more time and money than expected to introduce these products into the market successfully. Once introduced, new products may adversely impact
orders and sales of our existing products, or make them less desirable or even obsolete.

Major terrorist attacks and
threats have increased financial expectations that may not materialize.

Major terrorist attacks and threats have created
increased interest in our security and inspection systems. However, the level of demand for our products is not predictable and may vary over time. We do not know what solutions will continue to be adopted by the U.S. Department of Homeland Security
as a result of terrorism and whether our products will continue to be a part of the solutions. Additionally, should our products be considered



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as a part of future security solutions, it is unclear what the level of purchases may be and how quickly funding to purchase our products may be made available. These factors could adversely
impact us and create unpredictability in our revenues and operating results.

We are exposed to risks associated with
international operations and markets.

We source and manufacture certain components and systems outside the U.S, we market
and sell products in international markets, and have established offices and subsidiaries in Europe, Canada, and Asia. Our foreign revenue accounted for 66%, 66%, and 62% of our total net revenue for fiscal years 2011, 2010, and 2009, respectively.
There are inherent risks in transacting business internationally, including:



| |  |  | changes in applicable laws and regulatory requirements;
| | - |  | -------------------------------------------------------



| |  |  | export and import restrictions;
| | - |  | -------------------------------



| |  |  | export controls relating to technology;
| | - |  | ---------------------------------------



| |  |  | tariffs and other trade barriers;
| | - |  | ---------------------------------



| |  |  | intellectual property laws that offer less protection for our proprietary rights;
| | - |  | ---------------------------------------------------------------------------------



| |  |  | difficulties in staffing and managing foreign operations;
| | - |  | ---------------------------------------------------------



| |  |  | problems in collecting accounts receivable and longer payment cycles;
| | - |  | ---------------------------------------------------------------------



| |  |  | political instability;
| | - |  | ----------------------



| |  |  | fluctuations in currency exchange rates;
| | - |  | ----------------------------------------



| |  |  | difficulties in managing employee relations;
| | - |  | --------------------------------------------



| |  |  | difficulties in maintaining uniform standards, controls, procedures and policies across our global operations, including inventory management and
financial consolidation;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | expatriation controls; and
| | - |  | --------------------------



| |  |  | Potential adverse tax consequences.
| | - |  | -----------------------------------

We must comply with the U.S. Foreign Corrupt Practices Act and antitrust, anti-competition and similar laws in other jurisdictions and our failure to do so could lead to substantial liability. We could
also face investigations by one or more government agencies that could be costly to respond to and divert the attention of key personnel from our business operations. An adverse outcome from any such investigation could subject us to fines or other
penalties, which could adversely affect our business, financial condition and results of operations.

Any one or more of these
factors may have a material adverse effect on our future international activities and, consequently, on our business and results of operations.

There are risks associated with our operations in China.

We are currently
in the process of transitioning certain of our manufacturing operations to a leased facility in Shanghai, China, and are in the process of building a new 145,000 square foot facility there that is expected to be completed in early calendar 2012.
This effort is part of a process to reduce costs and streamline our manufacturing operations. There are certain administrative, legal, and governmental risks to operating in China that could result in increased operating expenses or could hamper us
in the development of our operations in China. The risks from operating in China that could increase our operating expenses and adversely affect our operating results, financial condition and ability to deliver our products and grow our business
include, without limitation:



| |  |  | difficulties in staffing and managing foreign operations, particularly in attracting and retaining personnel qualified to design, sell, test and
support our products;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | difficulties in managing employee relations;
| | - |  | --------------------------------------------



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| |  |  | increases in the value of the Chinese Yuan, or CNY;
| | - |  | ---------------------------------------------------



| |  |  | difficulties in coordinating our operations in China with those in the United States and Europe;
| | - |  | ------------------------------------------------------------------------------------------------



| |  |  | difficulties in enforcing contracts in China;
| | - |  | ---------------------------------------------



| |  |  | difficulties in protecting intellectual property;
| | - |  | -------------------------------------------------



| |  |  | diversion of management attention;
| | - |  | ----------------------------------



| |  |  | imposition of burdensome governmental regulations;
| | - |  | --------------------------------------------------



| |  |  | difficulties in maintaining uniform standards, controls, procedures and policies across our global operations, including inventory management and
financial consolidation;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | regional political and economic instability, which could have an adverse impact on foreign exchange rates in Asia and impair our ability to conduct our
business in China; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | inadequacy of the local infrastructure to support our operations.
| | - |  | -----------------------------------------------------------------

Our operations are vulnerable to interruption or loss due to natural disasters, epidemics, terrorist acts and other events beyond our
control, which would adversely affect our business.

Although we perform manufacturing in multiple locations, each location
is for discrete products and processes and we do not have back-up manufacturing for any particular product. As a result, we depend on our current facilities for the continued operation of our business. A natural disaster, pandemic, terrorist act,
act of war, or other natural or manmade disaster affecting any of our facilities could significantly disrupt our operations, or delay or prevent product manufacturing and shipment for the time required to repair, rebuild, or replace our
manufacturing facilities. This delay could be lengthy and we could incur significant expenses to repair or replace the facilities. Any similar natural or manmade disaster that affects a key supplier or customer could lead to a similar disruption in
our business.

Our business could be harmed if we are unable to protect our intellectual property or if we become subject
to intellectual property infringement claims.

We rely on a combination of trade secrets, patents, trademarks, copyrights
and confidentiality procedures to protect our technology. Despite our efforts, the steps we have taken to protect our technology may be inadequate. Existing trade secret, patent, trademark and copyright laws offer only limited protection. Our
patents could be invalidated or circumvented. In addition, others may develop substantially equivalent or superseding proprietary technology, or competitors may offer similar competing products, thereby substantially reducing the value of our
proprietary rights. The laws of some foreign countries in which our products are or may be manufactured or sold may not protect our products or intellectual property rights to the same extent as do the laws of the United States. The steps we have
taken to protect our intellectual property may not be adequate to prevent misappropriation of our technology. Our inability to protect our intellectual property could have a negative impact on our operations and financial results.

We may also become subject to claims that we infringe the intellectual property rights of others in the future. We cannot ensure that, if
made, these claims will not be successful. Any claim of infringement could cause us to incur substantial costs defending against the claim even if the claim is invalid, and could distract management from other business. Any judgment against us could
require substantial payment in damages and could also include an injunction or other court order that could prevent us from offering certain products.

We rely significantly on information technology and any failure, inadequacy, interruption or security lapse of that technology could harm our ability to operate our business effectively.

Our ability to manage and maintain our inventory and internal reports effectively, and to ship products to customers and
invoice them on a timely basis depends significantly on our enterprise resource planning,



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production management, and other information systems. The failure of these systems to operate effectively or to integrate with other systems, or a breach in security of these systems could cause
delays in product fulfillment and reduced efficiency of our operations, and could require significant capital investments to remediate any such failure, problem or breach.

If our security and inspection systems fail to detect weapons, explosives or other devices that are used to commit a terrorist act, we could be exposed to product liability and related claims for which
we may not have adequate insurance coverage.

Our business exposes us to potential product liability risks that are
inherent in the development, manufacturing, sale and service of security inspection systems. Our customers use our security and inspection systems to help them detect items that could be used in performing terrorist acts or other crimes. The
training, reliability and competence of the customers operators are crucial to the detection of suspicious items. In addition, our security and inspection systems are not designed to work under all circumstances. We test the reliability
of our security and inspection systems during both their development and manufacturing phases. We also perform such tests if we are requested to perform installation, warranty or post-warranty servicing. However, our security inspection systems are
advanced mechanical and electronic devices and therefore can malfunction.

As a result of the September 11, 2001, and 1993
World Trade Center terrorist attacks, and the potential for future attacks, product liability insurance coverage for such threats is extremely difficult and costly to obtain. It is possible, subject to the applicability of the Support Anti-terrorism
by Fostering Effective Technologies Act of 2002 (the SAFETY Act), that if we were found liable following a major act of terrorism, our insurance might not fully cover the claims for damages.

The SAFETY Act is a Federal law enacted to provide certain legal liability protections for providers of certain anti-terrorism
technologies. If applicable to claims against Analogic, the SAFETY Act could mitigate some of this risk.

Our Security
Technology business depends in part on purchases of products and services by the U.S. Federal Government and its agencies, which purchases may be only partially funded, and are subject to potential termination and reductions and delays in government
spending.

Sales of our security and inspection systems, in some cases as an indirect subcontractor or team member with
prime contractors and in other cases directly to the U.S. Government and its agencies, accounted for approximately 11%, 12% and 12% of our total net revenue for fiscal years 2011, 2010, and 2009, respectively. Our security and inspection systems are
included in many different domestic programs. Over the lifetime of a program, the award of many different individual contracts and subcontracts could impact our products requirements. The funding of U.S. Government programs is subject to
Congressional appropriations. Although multiple-year contracts may be planned in connection with major procurements, Congress generally appropriates funds only on a single fiscal year basis. Consequently, programs are often only partially funded
initially, and additional funds are committed only as Congress makes further appropriations and prime contracts receive such funding. The reduction or delay in funding or termination of a government program in which we are involved could result in a
loss of or delay in receiving anticipated future revenues attributable to that program and contracts or orders received. The U.S. Government could reduce or terminate a prime contract under which we are a subcontractor or team member
irrespective of the quality of our products or services. The termination of a program or reduction in, or failure to commit additional funds to, a program in which we are involved could negatively impact our revenue and have a material adverse
effect on our financial condition and results of operations.

Changes in laws affecting the health care industry could
adversely affect our business, operations and financial condition.

In recent years, the healthcare industry has undergone
significant changes driven by various efforts to reduce costs, including increased levels of managed care, cuts in Medicare, consolidation of healthcare



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distribution companies and collective purchasing arrangements by office-based healthcare practitioners. In addition, numerous governments have undertaken efforts to control healthcare costs
through legislation and regulation. In the United States in March 2010, President Obama signed a new health care reform law. This law imposes significant new taxes on manufacturers of medical equipment of approximately $20 billion over ten
years, which will result in a significant increase in the tax burden on our industry and which could have a material, negative impact on our results of operations and our cash flows. Other elements of the law, such as comparative effectiveness
research, an independent payment advisory board and payment system reforms, including shared savings pilots, could meaningfully change the way healthcare is developed and delivered, and may materially impact numerous aspects of our business, results
of operations and financial condition. Many significant parts of the law will be phased in over the next decade and require further guidance and clarification in the form of regulations. As a result, many of the impacts of the law will not be known
until those regulations are enacted, which we expect to occur over the next several years.

We anticipate that the current
administration, Congress and certain state legislatures will continue to review and assess alternative healthcare delivery systems and payment methods with an objective of ultimately reducing healthcare costs and expanding access. Public debate of
these issues will likely continue in the future. The implementation of health care reform and medical cost containment measures in the United States and in foreign countries in which we operate could:



| |  |  | limit the use of our products and adversely affect the use of new therapies for which our products may be targeted;
| | - |  | -------------------------------------------------------------------------------------------------------------------



| |  |  | reduce reimbursement available to our customers for using our products; and
| | - |  | ---------------------------------------------------------------------------



| |  |  | decrease the price we might establish for our products and products that we may develop, which would result in lower product revenues to us.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------

In addition, because we operate in a highly regulated industry, other governmental actions may adversely
affect our business, operations and financial condition, including:





| |  |  | changes in FDA and foreign regulations that may require additional safety monitoring, labeling changes, restrictions on product distribution or use, or
other measures after the introduction of our products to market, which could increase our costs of doing business, or otherwise adversely affect the market for our products;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | new laws, regulations and judicial decisions affecting pricing or marketing practices; and
| | - |  | ------------------------------------------------------------------------------------------



| |  |  | changes in the tax laws relating to our operations.
| | - |  | ---------------------------------------------------

We are investigating whether certain transactions between our Danish subsidiary, BK Medical, and certain of its distributors may have violated applicable law, including Danish law and the United States
Foreign Corrupt Practices Act, and remedial actions we may take as a result of our investigation could adversely affect our sales to these distributors.

In the fourth quarter of fiscal year 2011, we identified certain transactions involving our Danish subsidiary BK Medical, and certain of its foreign distributors, with respect to which we have raised
questions concerning compliance with law, including Danish law and the United States Foreign Corrupt Practices Act, and our business policies. These have included transactions in which the distributors paid BK Medical amounts in excess of amounts
owed and BK Medical transferred the excess amounts, at the direction of the distributors, to third parties identified by the distributors. We have been unable to ascertain with certainty the ultimate beneficiaries or the purpose of these
transfers. We have voluntarily disclosed this matter to the Danish Government, the United States Department of Justice and the Securities and Exchange Commission. We are unable to estimate the potential penalties and/or sanctions, if any, that might
be assessed in connection with this matter. We have concluded that the transactions identified to date have been properly accounted for in our reported financial



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statements in all material respects. We have terminated the employment of certain BK Medical employees that were involved in the transactions. We have decided to wind down our relationship with
certain of the BK Medical distributors, and are evaluating our relationship with certain other of the BK Medical distributors, that were involved in the transactions. Replacing these employees and distributors could have an adverse impact on BK
Medicals distributor sales until their replacements are in place and productive. Revenue from sales to the BK Medical distributors with whom we have decided to wind down our relationship represented less than 1% of our total fiscal year 2011
revenue. Revenue from sales to the BK Medical distributors that were involved in the identified transactions, including those distributors with whom we have decided to wind down our relationship, represented approximately 1.5% of our total fiscal
year 2011 revenue.

Compliance or the failure to comply with current and future environmental regulations could cause us
significant expense.

We are subject to various environmental regulations. From time to time new regulations are enacted,
and it is difficult to anticipate how such regulations will be implemented and enforced. We continue to evaluate the necessary steps for compliance with environmental regulations as they are enacted. These regulations include, for example, the
Registration, Evaluation, Authorization and Restriction of Chemical substances (REACH), the Restriction on the Use of Certain Hazardous Substances in Electrical and Electronic Equipment Directive (RoHS) and the Waste
Electrical and Electronic Equipment Directive (WEEE) enacted in the European Union which regulate the use of certain hazardous substances in, and require the collection, reuse and recycling of waste from, certain products we manufacture.
This and similar legislation that has been or is in the process of being enacted in Japan, China, Korea and various states of the United States may require us to redesign our products to ensure compliance with the applicable standards, for example
by requiring the use of different types of materials. These redesigns or alternative materials may detrimentally impact the performance of our products, add greater testing lead-times for product introductions or have other similar effects. We
believe we comply with all such legislation where our products are sold and we will continue to monitor these laws and the regulations being adopted under them to determine our responsibilities. In addition, we are monitoring legislation relating to
the reduction of carbon emissions from industrial operations to determine whether we may be required to incur any material, additional material costs, or expenses associated with our operations. Our failure to comply with any of the foregoing
regulatory requirements could result in our being directly or indirectly liable for costs, fines or penalties and third-party claims, and could jeopardize our ability to conduct business in the United States and foreign countries.



|Item 1B. | Unresolved Staff Comments
|-------- | -------------------------

Not applicable



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##### Table of Contents

|Item 2. | Properties
|------- | ----------

As of July 31, 2011, we owned or leased the primary facilities described below:



|                    |  |                     |        |  |                  |  |                     |  |  |                                                                                       |  |                               
|------------------- |  | ------------------- | ------ |  | ---------------- |  | ------------------- |  |  | ------------------------------------------------------------------------------------- |  | ------------------------------
|Location            |  | Approximate Sq. Ft. |        |  | Principal Use(s) |  | PrincipalSegment(s)
|Peabody, MA*        |  |                     | Owned  |  |                  |  | 514,000             |  |  | Executive and administrative offices, manufacturing, R&D, customer service, and sales |  | **                            
|State College, PA   |  |                     | Leased |  |                  |  | 41,000              |  |  | Administrative offices, manufacturing, R&D, customer service, and sales               |  | Medical Imaging and Ultrasound
|Canton, MA          |  |                     | Leased |  |                  |  | 104,000             |  |  | R&D                                                                                   |  | Medical Imaging               
|Denver, CO          |  |                     | Leased |  |                  |  | 33,000              |  |  | Manufacturing                                                                         |  | Ultrasound                    
|Copenhagan, Denmark |  |                     | Owned  |  |                  |  | 135,000             |  |  | Administrative offices, manufacturing, R&D, customer service, and sales               |  | Ultrasound                    
|Shanghai, China *** |  |                     | Leased |  |                  |  | 12,000              |  |  | Administrative offices, manufacturing, customer service, and sales                    |  | Medical Imaging and Ultrasound
|Montreal, Canada    |  |                     | Leased |  |                  |  | 54,000              |  |  | Administrative offices, manufacturing, R&D, customer service, and sales               |  | Medical Imaging               



|* | We own approximately 58 acres of land at this location, which can accommodate future expansion as required.
|- | -----------------------------------------------------------------------------------------------------------

|** | All segments of our business generally utilize this facility.
|-- | -------------------------------------------------------------

|*** | We will be moving from our leased facility into a new 145,000 square feet facility we are currently building in early calendar 2012.
|--- | ------------------------------------------------------------------------------------------------------------------------------------

We believe that our existing facilities are generally adequate to meet our current needs, and that suitable additional or substitute
space will be available on commercially reasonable terms when needed. See Note 12 to the Consolidated Financial Statements for further information concerning certain leases.



|Item 3. | Legal Proceedings
|------- | -----------------

Not applicable



|Item 4. | Removed and Reserved
|------- | --------------------

Executive Officers of the Registrant

Our current executive officers are:



|                     |  |     |    |  |          |                                                                      |                                |  |      | 
|-------------------- |  | --- | -- |  | -------- | -------------------------------------------------------------------- | ------------------------------ |  | ---- | 
|Name                 |  | Age |    |  | Position |                                                                      | Date Since OfficeHas Been
Held | 
|James W. Green       |  |     | 53 |  |          | President and Chief Executive Officer                                |                                |  | 2007 | 
|Michael L. Levitz    |  |     | 38 |  |          | Senior Vice President, Chief Financial Officer, and Treasurer        |                                |  | 2009 | 
|John J. Fry          |  |     | 49 |  |          | Senior Vice President, General Counsel, and Secretary                |                                |  | 2007 | 
|Donald B. Melson     |  |     | 59 |  |          | Vice President and Corporate Controller                              |                                |  | 2006 | 
|Mervat Faltas        |  |     | 59 |  |          | Senior Vice President and General Manager Medical Business           |                                |  | 2010 | 
|Farley Peechatka Jr. |  |     | 50 |  |          | Senior Vice President and General Manager Global Ultrasound Business |                                |  | 2011 | 

Our executive officers are elected annually by our Board of Directors (the Board) and hold
office until their successors are chosen and qualified, subject to earlier removal by the Board.

There are no arrangements or
understandings between any of our executive officers and any other person(s) pursuant to which such executive officer was selected as an officer.



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James W. Green joined us as President and Chief Executive Officer in May 2007.
Mr. Green was previously Regional Vice President, California Division, of Quest Diagnostics Incorporated, a leading provider of diagnostic testing, information, and services, from April 2005 to May 2007. Before joining Quest Diagnostics
Incorporated, Mr. Green was Senior Vice President & General Manager of Computed Tomography for Philips Medical Systems, a global leader in the business of developing, manufacturing, and marketing computed tomography equipment used in
medical imaging applications, from October 2001 to April 2005.

Michael L. Levitz is our Senior Vice President, Chief
Financial Officer, and Treasurer. Mr Levitz joined us in July 2009. From October 2007 to July 2009, Mr. Levitz was Vice President and Controller of the Cytyc business unit of Hologic Inc., a developer, manufacturer, and supplier of premium
diagnostic products, medical imaging systems, and surgical products focused on the healthcare needs of women. From April 2006 until Cytyc Corporations merger with Hologic Inc. in October 2007, Mr. Levitz was Vice President and Corporate
Controller of Cytyc Corporation, a global leader in innovative diagnostic and medical devices focused on womens health. Mr. Levitz held a number of financial management positions in Neon Communications, Inc. and Cytyc Corporation.
Mr. Levitz began his career in the audit practice of Arthur Andersen LLP and is a certified public accountant.

John J.
Fry is our Senior Vice President, General Counsel, and Secretary. He joined us in November 2007. From April 2005 until joining us, Mr. Fry was a principal of the law firm, Driggs, Hogg, & Fry Co., L.P.A. (formerly Driggs, Lucas,
Brubaker & Hogg Co., L.P.A.), where his practice focused primarily on technology and intellectual property law. From August 1995 to April 2005, he held various legal positions at Philips Medical Systems (formerly Marconi Medical Systems and
Picker International), including Senior Corporate Counsel and Intellectual Property Manager and counsel to Philips computed tomography business.

Donald B. Melson joined us as Vice President and Corporate Controller in March 2006. Mr. Melson was previously Vice President and Corporate Controller of Millipore Corporation, a publicly held global
manufacturer of products and services for biopharmaceutical manufacturing and life science laboratories, from 2000 to 2006. Prior to this position, Mr. Melson held a number of financial management positions in Millipore Corporation and W. R.
Grace & Co. Mr. Melson began his career in the audit practice of Ernst & Young and is a certified public accountant.

Mervat Faltas has served as Senior Vice President of our OEM Medical Group since May 2010 and was named an executive officer of Analogic in January 2011. She joined our Anrad subsidiary in July 2005 as
Vice President of Operations and was named President of Anrad in January 2006. From May 2000 until June 2005, Mrs. Faltas served in various capacities at ITF Optical Technologies, a Montreal-based provider of fiber optic components for
terrestrial and undersea communication networks, including as President and CEO. From 1990 to 2000, Mrs. Faltas held various positions at PerkinElmer Corporation, including General Manager of PerkinElmers Montreal operation.

Farley Peechatka Jr. has served as Senior Vice President of our Global Ultrasound business since May 2011. Mr. Peechatka joined us in
November of 2002 as Vice President of Operations for our subsidiary Sound Technology, Inc. (STI), when we acquired STI from Siemens Medical. In October of 2008 he assumed the position of President of Sound Technology. Mr. Peechatka
is a co-founder of Sound Technology, a leading provider of medical ultrasound transducers, and held multiple positions in the company, most recently as the Vice President of Operations and President. Prior to founding Sound Technology in 1987, he
held engineering positions with Johnson & Johnson, and with GE ultrasound.



21



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##### Table of Contents

PART II



|Item 5. | Market for the Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|------- | ----------------------------------------------------------------------------------------------------------------

Our common stock trades on the NASDAQ Global Select Market under the symbol: ALOG. The following table sets
forth the high and low sales prices per share of our common stock, as reported by the NASDAQ Global Select Market, for each quarterly period indicated in the table below:



|               |  |      |       |  |     |   |       | 
|-------------- |  | ---- | ----- |  | --- | - | ----- | 
|Fiscal Year    |  | High |       |  | Low |  
|2010           |  |      |       |  |     |   |       | 
|First Quarter  |  | $    | 41.26 |  |     | $ | 33.20 | 
|Second Quarter |  |      | 42.01 |  |     |   | 34.40 | 
|Third Quarter  |  |      | 48.51 |  |     |   | 37.35 | 
|Fourth Quarter |  |      | 48.58 |  |     |   | 40.70 | 
|               |  |     
|2011           |  |      |       |  |     |   |       | 
|First Quarter  |  | $    | 46.75 |  |     | $ | 39.21 | 
|Second Quarter |  |      | 53.33 |  |     |   | 43.23 | 
|Third Quarter  |  |      | 58.96 |  |     |   | 50.74 | 
|Fourth Quarter |  |      | 58.04 |  |     |   | 49.47 | 

As of August 31, 2011, there were approximately 815 holders of record of our common stock. Because
many of the shares are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of individual stockholders represented by these holders of record. Our Board declared cash dividends of $0.10 per
share for each of the quarters of fiscal years 2011 and 2010. Our policy is to retain sufficient earnings to provide funds for the operation and expansion of our business.

The following table contains information about our purchases of our equity securities during the three months ended July 31, 2011.



|               |  |                                        |        |  |                                 |   |       |                                                                               |  |  |                                                                                       |  |  |   |            | 
|-------------- |  | -------------------------------------- | ------ |  | ------------------------------- | - | ----- | ----------------------------------------------------------------------------- |  |  | ------------------------------------------------------------------------------------- |  |  | - | ---------- | 
|Period         |  | Total Number ofSharesPurchased (1) (2) |        |  | Average Price Paidper Share (3) |   |       | Total Number ofShares Purchasedas Part of PubliclyAnnounced 
Plans orPrograms |  |  | Approximate Dollar Valueof Shares that
MayYet Be Purchased Under thePlans or Programs | 
|5/1/11-5/31/11 |  |                                        | 2,593  |  |                                 | $ | 52.40 |                                                                               |  |  | 1,800                                                                                 |  |  | $ | 16,139,497 | 
|6/1/11-6/30/11 |  |                                        | 25,700 |  |                                 |   | 51.59 |                                                                               |  |  | 25,700                                                                                |  |  |   | 14,813,697 | 
|7/1/11-7/31/11 |  |                                        | 9,498  |  |                                 |   | 53.86 |                                                                               |  |  |                                                                                      |  |  |   | 14,813,697 | 
|               |  |                                        |        |  |                                 |   |       |                                                                               |  |  |                                                                                       |  |  |   |            | 
|Total          |  |                                        | 37,791 |  |                                 | $ | 52.21 |                                                                               |  |  | 27,500                                                                                |  |  | $ | 14,813,697 | 
|               |  |                                        |        |  |                                 |   |       |                                                                               |  |  |                                                                                       |  |  |   |            | 



|(1) | Includes 793 and 9,498 shares of our common stock surrendered by employees in order to meet tax withholding obligations in connection with the vesting of
restricted stock awards in May 2011 and July 2011, respectively.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Includes 1,800 and 25,700 shares of our common stock purchased in open-market transactions in May 2011 and June 2011, respectively. These shares were purchased
pursuant to a repurchase program authorized by the Board that was announced on December 9, 2010 to repurchase up to $30.0 million of our common stock. During the fourth quarter of fiscal year 2011, we repurchased 27,500 shares of our common
stock under this repurchase program for $1.4 million at an average purchase price of $51.62 per share. The repurchase program does not have a fixed expiration date.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | For purposes of determining the number of shares to be surrendered, the price per share deemed to be paid was the closing price of our common stock on the NASDAQ
Global Select Market on the vesting date.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



22



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##### Table of Contents

Comparison of Five-Year Cumulative Total Returns

The graph below compares the cumulative total stockholder return on our common stock with the cumulative total return of the Center for
Research in Security Prices of the University of Chicago (CRSP) Total Return Index for the NASDAQ Stock Market (U.S. Companies) and the CRSP Total Return Index for all NASDAQ stocks with SIC Codes related to our business in the areas of
measuring instruments, photo goods, medical goods, optical goods, and timepieces. The graph below also compares the cumulative total stockholder return on our common stock with the cumulative total return of the Russell 2000 Index. The graph assumes
$100 invested on July 31, 2006, in our common stock and $100 invested at that time in each of the NASDAQ indexes. The comparison assumes that all dividends are reinvested.

LOGO

The stock price performance included in this graph is not necessarily indicative of future stock price performance.



23



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##### Table of Contents

|Item 6. | Selected Financial Data
|------- | -----------------------

The following selected consolidated financial data are derived from our Consolidated Financial Statements and notes thereto and should be read in connection with, and are qualified in their entirety by,
our Consolidated Financial Statements and notes thereto and other financial information included elsewhere in this Annual Report on Form 10-K.



|                                                                     |  |                                       |         |  |      |   |         |      |  |   |         |   |  |      |         |  |  |   |         | 
|-------------------------------------------------------------------- |  | ------------------------------------- | ------- |  | ---- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------- |  |  | - | ------- | 
|                                                                     |  | (In thousands, except per share data) |        
|                                                                     |  | Year Ended July 31,                   |        
|                                                                     |  | 2011                                  |         |  | 2010 |   |         | 2009 |  |   | 2008    |   |  | 2007 |        
|Total net revenue                                                    |  | $                                     | 473,595 |  |      | $ | 414,813 |      |  | $ | 386,860 |   |  | $    | 402,595 |  |  | $ | 330,103 | 
|Total cost of sales                                                  |  |                                       | 300,632 |  |      |   | 266,916 |      |  |   | 264,255 |   |  |      | 255,137 |  |  |   | 208,308 | 
|Gross profit                                                         |  |                                       | 172,963 |  |      |   | 147,897 |      |  |   | 122,605 |   |  |      | 147,458 |  |  |   | 121,795 | 
|Income (loss) from operations (A)                                    |  |                                       | 20,736  |  |      |   | 21,320  |      |  |   | (4,496  | ) |  |      | 23,202  |  |  |   | 1,094   | 
|Income from continuing operations before discontinued operations (B) |  |                                       | 16,620  |  |      |   | 15,799  |      |  |   | 3,517   |   |  |      | 22,842  |  |  |   | 14,666  | 
|Income (loss) from discontinued operations, net of tax               |  |                                       | 289     |  |      |   | (244    | )    |  |   | 188     |   |  |      | 644     |  |  |   | 714     | 
|Gain on disposal of discontinued operations, net of tax (C)          |  |                                       | 924     |  |      |   |        |      |  |   |        |   |  |      |        |  |  |   |        | 
|                                                                     | 
|Net income (D)                                                       |  | $                                     | 17,833  |  |      | $ | 15,555  |      |  | $ | 3,705   |   |  | $    | 23,486  |  |  | $ | 15,380  | 
|                                                                     | 
|Basic net income per share:                                          |  |                                       |         |  |      |   |         |      |  |   |         |   |  |      |         |  |  |   |         | 
|Income from continuing operations                                    |  | $                                     | 1.33    |  |      | $ | 1.26    |      |  | $ | 0.27    |   |  | $    | 1.73    |  |  | $ | 1.06    | 
|Income (loss) from discontinued operations, net of tax               |  |                                       | 0.02    |  |      |   | (0.02   | )    |  |   | 0.02    |   |  |      | 0.05    |  |  |   | 0.05    | 
|Gain on disposal of discontinued operations, net of tax              |  |                                       | 0.08    |  |      |   |        |      |  |   |        |   |  |      |        |  |  |   |        | 
|                                                                     | 
|Basic net income per share                                           |  | $                                     | 1.43    |  |      | $ | 1.24    |      |  | $ | 0.29    |   |  | $    | 1.78    |  |  | $ | 1.11    | 
|                                                                     | 
|Diluted net income per share:                                        |  |                                       |         |  |      |   |         |      |  |   |         |   |  |      |         |  |  |   |         | 
|Income from continuing operations                                    |  | $                                     | 1.33    |  |      | $ | 1.25    |      |  | $ | 0.27    |   |  | $    | 1.72    |  |  | $ | 1.05    | 
|Income (loss) from discontinued operations, net of tax               |  |                                       | 0.02    |  |      |   | (0.02   | )    |  |   | 0.02    |   |  |      | 0.05    |  |  |   | 0.05    | 
|Gain on disposal of discontinued operations, net of tax              |  |                                       | 0.07    |  |      |   |        |      |  |   |        |   |  |      |        |  |  |   |        | 
|                                                                     | 
|Diluted net income per share                                         |  | $                                     | 1.42    |  |      | $ | 1.23    |      |  | $ | 0.29    |   |  | $    | 1.77    |  |  | $ | 1.10    | 
|                                                                     | 
|Cash dividends declared per common share                             |  | $                                     | 0.40    |  |      | $ | 0.40    |      |  | $ | 0.40    |   |  | $    | 0.40    |  |  | $ | 0.40    | 
|Weighted average shares outstanding:                                 |  |                                       |         |  |      |   |         |      |  |   |         |   |  |      |         |  |  |   |         | 
|Basic                                                                |  |                                       | 12,491  |  |      |   | 12,584  |      |  |   | 12,835  |   |  |      | 13,180  |  |  |   | 13,814  | 
|Diluted                                                              |  |                                       | 12,572  |  |      |   | 12,655  |      |  |   | 12,932  |   |  |      | 13,290  |  |  |   | 13,946  | 
|Cash, cash equivalents, and marketable securities                    |  | $                                     | 169,656 |  |      | $ | 169,254 |      |  | $ | 160,293 |   |  | $    | 186,442 |  |  | $ | 228,545 | 
|Working capital                                                      |  |                                       | 294,387 |  |      |   | 281,727 |      |  |   | 264,140 |   |  |      | 287,260 |  |  |   | 300,114 | 
|Total assets                                                         |  |                                       | 521,552 |  |      |   | 485,776 |      |  |   | 464,114 |   |  |      | 511,165 |  |  |   | 459,141 | 
|Long-term liabilities                                                |  |                                       | 9,254   |  |      |   | 6,665   |      |  |   | 6,444   |   |  |      | 8,993   |  |  |   | 456     | 
|Stockholders equity                                                 |  |                                       | 423,472 |  |      |   | 409,042 |      |  |   | 397,519 |   |  |      | 428,506 |  |  |   | 393,357 | 



|(A) | In fiscal year 2011, we recorded a pre-tax $7,066 restructuring charge primarily for the severance and personnel related costs of 155 employees that
were involuntarily terminated, all of which were recorded in operating expenses. Also, in fiscal year 2011, we recorded a net of tax bargain purchase gain of $1,042 in operating expenses related to the acquisition of an OEM ultrasound transducer and
probe business in November 2010. The revenue in fiscal year 2011 for this OEM ultrasound transducer and probe business was approximately $6,500. In fiscal year 2009, we recorded a pre-tax $6,619 restructuring charge for the severance and
personnel related costs of 201 employees that were involuntarily terminated as well as for facility exit costs, all of which were recorded in operating expenses. Also, in fiscal year 2009, we recorded $811 in general and administrative expenses for
a settlement of a dispute with a customer. In fiscal year 2008, we recorded a pre-tax voluntary retirement charge of $3,419 related to a fiscal year 2008 voluntary retirement program and a pre-tax restructuring charge of $597 for severance and
personnel related costs for the involuntary termination of 32 employees, all of which were recorded in operating expenses. In fiscal year 2007, we recorded $9,705 of
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



24



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##### Table of Contents

| | pre-tax charges related primarily to the future use and realizability of certain inventory, software license, and capitalized software. Of the total charges, $8,625 was recorded in cost of sales
and $1,080 was recorded in operating expenses.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(B) | In fiscal year 2008, we recorded a gain on the sale of other investments on a pre-tax basis of $2,000 related to our sale of 20% of our 45% equity interest in a China
based company (for a remaining interest of 25%). In fiscal year 2007 we recorded a gain on the sale of other investments on a pre-tax basis of $4,036 related to the sale of equity interests in fiscal year 2007.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(C) | We recorded a gain of $924, net of taxes, in discontinued operations, for the sale of our hotel in fiscal year 2011.
|--- | --------------------------------------------------------------------------------------------------------------------

|(D) | We had an income tax benefit in fiscal year 2009 of $4,915, which was due primarily to Internal Revenue Service (IRS) refunds of $8,143 received in fiscal
year 2009. The impact of these refunds, which included $1,262 of interest, was a reduction of unrecognized tax benefits by approximately $3,280, of which $1,356 was recorded as a tax benefit in fiscal year 2009. Also contributing to the income tax
benefit for fiscal year 2009 was $1,820 for the reversal of a valuation allowance on Belgium net operating loss carryforwards that management has determined are more likely than not to be recognized.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Item 7. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

The following discussion provides an analysis of our financial condition and results of operations and should be read in conjunction with
the audited consolidated financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K. The discussion contains statements, which, to the extent that they are not a recitation of historical facts, constitute
forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, 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, we make in this document or in any document incorporated by reference
are forward-looking. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors, which may cause our actual results, performance, or achievements to differ from the projected results. See Risk
Factors in Item 1A for a discussion of the primary risks and uncertainties known to us at this time.

Our
Managements Discussion and Analysis is presented in six sections as follows:



| |  |  | Business Overview
| | - |  | -----------------



| |  |  | Fiscal Year 2011 Overview
| | - |  | -------------------------



| |  |  | Results of Operations
| | - |  | ---------------------



| |  |  | Liquidity and Capital Resources
| | - |  | -------------------------------



| |  |  | Critical Accounting Policies
| | - |  | ----------------------------



| |  |  | New Accounting Pronouncements
| | - |  | -----------------------------

We report our financial condition and results of operations on a fiscal year basis ending July 31. All dollar amounts in this Item 7 are in thousands except per share data.

Business Overview

Analogic is a high technology company that designs and manufactures advanced medical imaging and security systems and subsystems sold to OEMs and end users primarily in the healthcare and airport security
markets. We were incorporated in the Commonwealth of Massachusetts in November 1967 and are recognized worldwide for advancing state-of-the-art technology in the areas of medical CT, ultrasound, MRI, digital mammography, and Automated Explosive
Detection Systems for airport security. Our OEM customers



25



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##### Table of Contents

incorporate our technology into systems they in turn sell for various medical and security applications. We also sell our ultrasound products directly into clinical end-user markets through our
direct worldwide sales force under the brand name B-K Medical.

We operate primarily within two major markets: Medical
Technology and Security Technology. Medical Technology consists of two reporting segments: Medical Imaging and Ultrasound. Security Technology is a single reporting segment.

A significant portion of our products are sold to OEMs, whose purchasing dynamics have an impact on our reported sales. OEMs that purchase our Medical Imaging products generally incorporate those products
as components in their systems, which are in turn sold to end users, which are primarily hospitals and medical clinics. In our Security Technology business, a major OEM customer purchases and resells our products to end users including domestic and
foreign airports as well as the U.S Transportation Security Administration (TSA). In Security Technology, our OEM customers purchasing dynamics are affected by the level of government funding, the expansion of airport terminals and
fluctuations in airline passenger volume.

Fiscal Year 2011 Overview

The following table sets forth the percentage of total net revenue by reporting segment for fiscal years 2011 and 2010. All periods
presented have been revised accordingly to reflect new reporting segments.



|                         |  |             |     |   |      |  |     |  
|------------------------ |  | ----------- | --- | - | ---- |  | --- | -
|                         |  | Fiscal Year |    
|                         |  | 2011        |     |   | 2010 | 
|Medical Technology:      |  |             |     |   |      |  |     |  
|Medical Imaging          |  |             | 69  | % |      |  | 66  | %
|Ultrasound               |  |             | 20  | % |      |  | 22  | %
|                         | 
|Total Medical Technology |  |             | 89  | % |      |  | 88  | %
|Security Technology      |  |             | 11  | % |      |  | 12  | %
|                         | 
|Total                    |  |             | 100 | % |      |  | 100 | %
|                         | 

The following is a summary of the metrics that our management believes are most important in
understanding our results of operations for the periods indicated. This summary is not a substitute for the detail provided in the following pages or for the audited consolidated financial statements and notes that appear elsewhere in this document.



|                             |  |             |         |   |                  |   |         |   |  |  |    |  
|---------------------------- |  | ----------- | ------- | - | ---------------- | - | ------- | - |  |  | -- | -
|                             |  | Fiscal Year |         |   | PercentageChange |  
|                             |  | 2011        |         |   | 2010             |   |        
|Total net revenue            |  | $           | 473,595 |   |                  | $ | 414,813 |   |  |  | 14 | %
|Gross profit                 |  |             | 172,963 |   |                  |   | 147,897 |   |  |  | 17 | %
|Gross margin                 |  |             | 37      | % |                  |   | 36      | % |  |  |    |  
|Income from operations       |  |             | 20,736  |   |                  |   | 21,320  |   |  |  | -3 | %
|Operating margin percentage  |  |             | 4       | % |                  |   | 5       | % |  |  |    |  
|Net income                   |  | $           | 17,833  |   |                  | $ | 15,555  |   |  |  | 15 | %
|Diluted net income per share |  |             | 1.42    |   |                  |   | 1.23    |   |  |  | 15 | %

Total net revenue increased $58,782, or 14%, in fiscal year 2011 as compared to fiscal year 2010, due
primarily to the increase in net revenue of $51,872 for the Medical Imaging segment of our Medical Technology business from increased demand for new and existing products. Gross profit increased $25,066 to $172,963 in fiscal 2011. Operating expenses
increased by $25,650, due primarily to declines in R&D funding from our customers, increases in restructuring charges and sales channel expenses, and an increase in non-cash share-



26



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##### Table of Contents

based compensation costs primarily associated with the increased accrual for performance based awards as a result of improving company financial performance. Net income and diluted net income per
share benefited from a lower tax rate in fiscal year 2011, primarily as a result of the full year benefit of the federal research and experimentation credit, the tax benefit of $536 for the reinstatement of the federal research and experimentation
credit back to January 1, 2010, lower foreign tax rates as compared to the U.S statutory rate of 35%, and the discrete benefit of $599 from the reversal of tax reserves as a result of the expiration of the statute of limitations for the fiscal
year 2007 and settlements with various taxing authorities.

During the first quarter of fiscal year 2011, we sold our hotel
business, and realized net proceeds of $10,467, after transaction costs. We recorded a gain on sale of the hotel business of $924, net of a tax provision of $505, or $0.07 per diluted share in fiscal year 2011. The hotel business, previously
reported in the Other segment, is being reported as a discontinued operation and all periods presented have been revised accordingly to reflect these operations as discontinued.

Revenue and net income (loss) for the hotel business for fiscal years 2011, 2010, and 2009 were as follows:



|                  |  |                     |       |  |      |   |       |      |  |   |       | 
|----------------- |  | ------------------- | ----- |  | ---- | - | ----- | ---- |  | - | ----- | 
|                  |  | Year Ended July 31, |      
|                  |  | 2011                |       |  | 2010 |   |       | 2009 | 
|Total net revenue |  | $                   | 2,906 |  |      | $ | 8,784 |      |  | $ | 9,289 | 
|Net income (loss) |  |                     | 289   |  |      |   | (244  | )    |  |   | 188   | 

We had cash and cash equivalents and marketable securities of $169,656 and $169,254 at July 31, 2011
and 2010, respectively. The interest earned on our cash and cash equivalents over the past 12 month continued to be impacted by the global decline in interest rates. We have historically invested our cash and cash equivalents primarily in U.S
government backed securities, bonds, and certificates of deposit. The interest rates of these instruments have remained low over the last year. As of July 31, 2011 our investment portfolio primarily consisted of demand deposits at highly rated
banks and financial institutions. The following table sets forth an overview of our cash flows for fiscal years 2011 and 2010.



|                                                                              |  |                     |         |   |      |   |        |  
|----------------------------------------------------------------------------- |  | ------------------- | ------- | - | ---- | - | ------ | -
|                                                                              |  | Year ended July 31, |        
|                                                                              |  | 2011                |         |   | 2010 |  
|Net cash provided by continuing operations for operating activities           |  | $                   | 31,867  |   |      | $ | 26,349 |  
|Net cash (used by) provided by continuing operations for investing activities |  |                     | (10,967 | ) |      |   | 29,006 |  
|Net cash used for financing activities                                        |  |                     | (20,126 | ) |      |   | (4,520 | )
|Net cash (used by) provided by discontinued operations                        |  |                     | (335    | ) |      |   | 661    |  
|Effect of exchange rate changes on cash                                       |  |                     | (37     | ) |      |   | (2,097 | )
|                                                                              | 
|Net increase (decrease) in cash and cash equivalents                          |  | $                   | 402     |   |      | $ | 49,399 |  
|                                                                              | 

During fiscal year 2011, we generated $31,867 of cash from operating activities of continuing operations
as compared to $26,349 in the prior year. The increase was due primarily to an increase in sales volumes partially offset by increased operating expenses. Net cash used by continuing operations for investing activities in fiscal year 2011 was due
primarily to capital spending of $22,502, which includes the construction of a manufacturing facility in Shanghai, China. The capital spending was partially offset by $10,467 of proceeds from the sale of our hotel business. The net cash used for
financing activities in fiscal year 2011 primarily reflected $15,187 used to repurchase common stock.



27



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##### Table of Contents

Results of Operations

Fiscal Year 2011 Compared to Fiscal Year 2010

Net Revenue

Product Revenue

Product revenue for fiscal year 2011 as compared with fiscal year 2010 is summarized in the table below.



|                         |  |                     |         |  |                  |   |         |  |  |  |     |  
|------------------------ |  | ------------------- | ------- |  | ---------------- | - | ------- |  |  |  | --- | -
|                         |  | Year Ended July 31, |         |  | PercentageChange |  
|                         |  | 2011                |         |  | 2010             |   |        
|Product Revenue:         |  |                     |         |  |                  |   |         |  |  |  |     |  
|Medical Technology :     |  |                     |         |  |                  |   |         |  |  |  |     |  
|Medical Imaging          |  | $                   | 316,572 |  |                  | $ | 264,635 |  |  |  | 20  | %
|Ultrasound               |  |                     | 96,356  |  |                  |   | 89,986  |  |  |  | 7   | %
|                         | 
|Total Medical Technology |  |                     | 412,928 |  |                  |   | 354,621 |  |  |  | 16  | %
|Security Technology      |  |                     | 34,694  |  |                  |   | 39,144  |  |  |  | -11 | %
|                         | 
|Total                    |  | $                   | 447,622 |  |                  | $ | 393,765 |  |  |  | 14  | %
|                         | 

Medical Imaging

The increases for fiscal year 2011 versus the prior year was driven primarily by growth in our CT, product line as well as growth in our
digital mammography, MRI, and Ultrasound product lines. The growth in our CT and MRI product lines was driven primarily by higher sales volume of new and existing products. The growth in our digital mammography product line was due primarily to
increased sales volumes with a large OEM customer. The growth in our ultrasound probe product line was due primarily to the acquisition of an OEM ultrasound transducer and probe business, which contributed approximately $6,500 of product revenue in
fiscal year 2011.

Ultrasound

The increase for fiscal year 2011 versus the prior year was due primarily to increased sales volume of our Flex Focus platform of products, with notable growth of 10% in the US market over fiscal year
2010.

Security Technology

The decreases in product revenues for fiscal year 2011 versus the prior year was due primarily to sales of fewer baggage scanners as demand from our customer was negatively impacted by the timing of
bridge orders from the TSA, which is in the process of moving to a new procurement process, and product mix.

Engineering
Revenue

Engineering revenue for fiscal year 2011 as compared with fiscal year 2010 is summarized in the table below.



|                         |  |                     |        |  |                  |   |        |  |  |  |    |  
|------------------------ |  | ------------------- | ------ |  | ---------------- | - | ------ |  |  |  | -- | -
|                         |  | Year Ended July 31, |        |  | PercentageChange |  
|                         |  | 2011                |        |  | 2010             |   |       
|Engineering Revenue:     |  |                     |        |  |                  |   |        |  |  |  |    |  
|Medical Technology :     |  |                     |        |  |                  |   |        |  |  |  |    |  
|Medical Imaging          |  | $                   | 9,541  |  |                  | $ | 9,606  |  |  |  | -1 | %
|Ultrasound               |  |                     |       |  |                  |   |       |  |  |  | 0  | %
|                         | 
|Total Medical Technology |  |                     | 9,541  |  |                  |   | 9,606  |  |  |  | -1 | %
|Security Technology      |  |                     | 16,432 |  |                  |   | 11,442 |  |  |  | 44 | %
|                         | 
|Total                    |  | $                   | 25,973 |  |                  | $ | 21,048 |  |  |  | 23 | %
|                         | 



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##### Table of Contents

Medical Imaging

The engineering revenue in fiscal year 2011 remained relatively consistent with fiscal year 2010.

Security Technology

The increase for fiscal year 2011 versus the prior year was due primarily to the amount of work performed on a significant engineering development project that began in December 2009 for an OEM customer.

Gross Margin

Product Gross Margin

Product gross margin for fiscal year 2011 as compared with fiscal year 2010 is summarized in the table below.



|                     |  |                     |         |   |                  |   |         |   |  |  |      |  
|-------------------- |  | ------------------- | ------- | - | ---------------- | - | ------- | - |  |  | ---- | -
|                     |  | Year Ended July 31, |         |   | PercentageChange |  
|                     |  | 2011                |         |   | 2010             |   |        
|Product gross profit |  | $                   | 169,469 |   |                  | $ | 145,415 |   |  |  | 16.5 | %
|Product gross margin |  |                     | 37.9    | % |                  |   | 36.9    | % |  |  |      |  

Product gross margin percentage increased in fiscal year 2011 versus the prior year due primarily to
improved manufacturing efficiency in the Medical Imaging segment of our Medical Technology business with higher production throughput on growing volume along with improved component pricing from our vendors. Manufacturing transition costs related to
the restructuring of our Ultrasound segment as well as a lower mix of higher margin Ultrasound and Security Technology sales partially offset the Medical Imaging segments gross margin improvements.

Engineering Gross Margin

Engineering gross margin for fiscal year 2011 as compared with fiscal year 2010 is summarized in the table below.



|                         |  |                     |       |   |                  |   |       |   |  |  |      |  
|------------------------ |  | ------------------- | ----- | - | ---------------- | - | ----- | - |  |  | ---- | -
|                         |  | Year Ended July 31, |       |   | PercentageChange |  
|                         |  | 2011                |       |   | 2010             |   |      
|Engineering gross profit |  | $                   | 3,494 |   |                  | $ | 2,482 |   |  |  | 40.8 | %
|Engineering gross margin |  |                     | 13.5  | % |                  |   | 11.8  | % |  |  |      |  

The increases in the engineering gross margin in fiscal year 2011 versus the prior year was due primarily
to the mix of engineering projects worked on in fiscal year 2011 as compared to the prior year.

Operating Expenses

Operating expenses increased $25,650, or 20%, in fiscal year 2011 as compared with fiscal year 2010 as shown below.



|                                 |  |             |         |  |                           |   |         |      |  |  |      |   |  |  |      |  
|-------------------------------- |  | ----------- | ------- |  | ------------------------- | - | ------- | ---- |  |  | ---- | - |  |  | ---- | -
|                                 |  | Fiscal Year |         |  | Percentage of Net Revenue |  
|                                 |  | 2011        |         |  | 2010                      |   |         | 2011 |  |  | 2010 |  
|Research and product development |  | $           | 63,125  |  |                           | $ | 49,150  |      |  |  | 13.3 | % |  |  | 11.8 | %
|Selling and marketing            |  |             | 41,413  |  |                           |   | 36,793  |      |  |  | 8.7  | % |  |  | 8.9  | %
|General and administrative       |  |             | 40,623  |  |                           |   | 39,944  |      |  |  | 8.6  | % |  |  | 9.6  | %
|Restructuring charges            |  |             | 7,066   |  |                           |   | 690     |      |  |  | 1.5  | % |  |  | 0.2  | %
|                                 | 
|Total operating expenses         |  | $           | 152,227 |  |                           | $ | 126,577 |      |  |  | 32.1 | % |  |  | 30.5 | %
|                                 | 



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##### Table of Contents

Research and product development expenses are related to projects not funded by our
customers. These expenses increased $13,975 in fiscal year 2011 versus the prior year due primarily to an increase in self funded development projects associated with new product introduction and advanced development. Also contributing to the growth
was an increase in share-based compensation expense of $1,623 in fiscal year 2011 versus the prior year primarily associated with the increased accrual for performance based awards as a result of improving company financial performance.

Selling and marketing expenses increased $4,620 in fiscal year 2011 versus the prior year due primarily to an increase in selling
resources in the Ultrasound segment as we expanded our sales force and product offerings in existing and adjacent markets.

General and administrative expenses remained relatively consistent, increasing $679 in fiscal year 2011 versus the prior year including
share-based compensation expense, which increased by $1,646 in fiscal year 2011 versus the prior year primarily associated with the increased accrual for performance based awards as a result of improving company financial performance. The increase
in share-based compensation was offset by a net of tax bargain purchase gain of $1,042 related to the acquisition of an OEM ultrasound transducer and probe business in November 2010.

Restructuring charges in fiscal year 2011 includes severance and personnel related costs for our plan to reduce our headcount by 155
employees worldwide. We expect that this restructuring will result in annual expense savings of approximately $11,500, a portion of which will fund strategic growth initiatives. Restructuring charges in fiscal year 2010 included severance and
personnel related costs for the termination of 17 employees worldwide.

Other Income (Expense)



|                     |  |                     |      |   |      |   |      |  
|-------------------- |  | ------------------- | ---- | - | ---- | - | ---- | -
|                     |  | Year Ended July 31, |     
|                     |  | 2011                |      |   | 2010 |  
|Interest income, net |  | $                   | 711  |   |      | $ | 633  |  
|Other expense        |  |                     | (515 | ) |      |   | (486 | )

Net other expense during fiscal years 2011 and 2010 consisted predominantly of foreign currency exchange
losses from our Canadian, Danish, and British subsidiaries.

Provision (Benefit) for Income Taxes



|                                     |  |                     |       |   |      |   |       |  
|------------------------------------ |  | ------------------- | ----- | - | ---- | - | ----- | -
|                                     |  | Year Ended July 31, |      
|                                     |  | 2011                |       |   | 2010 |  
|Provision (benefit) for income taxes |  | $                   | 4,312 |   |      | $ | 5,668 |  
|Effective tax rate                   |  |                     | 21    | % |      |   | 26    | %

For fiscal year 2011, the effective tax rate of 21% as compared to the U.S. statutory rate of 35% was due
primarily to the full year benefit of the federal research and experimentation credit, the discrete tax benefit of $536 for the reinstatement of the federal research and experimentation credit back to January 1, 2010, lower foreign tax rates as
compared to the U.S statutory rate of 35%, the discrete benefit of $599 from the reversal of tax reserves as a result of the expiration of the statute of limitations for the fiscal year 2007, and settlements with various taxing authorities. In
addition, taxes of $621 related to the bargain purchase gain from the acquisition of an OEM ultrasound transducer and probe business were recorded in operating expenses in the quarter ended January 31, 2011.

For fiscal year 2010, the effective tax rate of 26% as compared to the U.S. statutory rate of 35% was due primarily to lower foreign tax
rates and discrete benefits of approximately $1,750 due primarily to the reversal of



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##### Table of Contents

tax reserves as a result of the expiration of the statute of limitations for fiscal years ended July 31, 2004 and 2006 (fiscal year 2004 and fiscal year 2006,
respectively) in fiscal year 2010 and the settlement of foreign and domestic tax audits. Also contributing to the reduced effective tax rate were federal research and experimentation credits.

Discontinued Operations

Discontinued Operations for fiscal year 2011 as compared with fiscal year 2010 is summarized in the table below.



|                                                       |  |                     |     |  |      |   |      |  
|------------------------------------------------------ |  | ------------------- | --- |  | ---- | - | ---- | -
|                                                       |  | Year Ended July 31, |    
|                                                       |  | 2011                |     |  | 2010 |  
|Income (loss) from discontinued operations, net of tax |  | $                   | 289 |  |      | $ | (244 | )

During the first quarter of fiscal year 2011, we sold our hotel business. The increase in income from
discontinued operations, net of tax, in fiscal year 2011 versus the prior year was due primarily to increased occupancy and higher room rates at the hotel due primarily to the improving economy in the three months ended October 31, 2010 as
compared to fiscal year 2010.

Income from continuing operations and diluted net income per share from continuing operations

Income from continuing operations and diluted net income per share from continuing operations for fiscal years 2011 and
2010 were as follows:



|                                                        |  |                     |        |   |      |   |        |  
|------------------------------------------------------- |  | ------------------- | ------ | - | ---- | - | ------ | -
|                                                        |  | Year Ended July 31, |       
|                                                        |  | 2011                |        |   | 2010 |  
|Income from continuing operations                       |  | $                   | 16,620 |   |      | $ | 15,799 |  
|% of net revenue                                        |  |                     | 3.5    | % |      |   | 3.8    | %
|Diluted net income per share from continuing operations |  | $                   | 1.33   |   |      | $ | 1.25   |  

The increases in income from continuing operations and diluted net income per share from continuing
operations for fiscal year 2011 versus the prior year was due primarily to increased sales volumes and gross margin partially offset by increased operating expenses.

Fiscal Year 2010 Compared to Fiscal Year 2009

Net Revenue

Product Revenue

Product revenue for fiscal year 2010 as compared with fiscal year 2009 is summarized in the table below.



|                         |  |                     |         |  |                  |   |         |  |  |  |    |  
|------------------------ |  | ------------------- | ------- |  | ---------------- | - | ------- |  |  |  | -- | -
|                         |  | Year Ended July 31, |         |  | PercentageChange |  
|                         |  | 2010                |         |  | 2009             |   |        
|Product Revenue:         |  |                     |         |  |                  |   |         |  |  |  |    |  
|Medical Technology :     |  |                     |         |  |                  |   |         |  |  |  |    |  
|Medical Imaging          |  | $                   | 264,635 |  |                  | $ | 242,593 |  |  |  | 9  | %
|Ultrasound               |  |                     | 89,986  |  |                  |   | 82,599  |  |  |  | 9  | %
|                         | 
|Total Medical Technology |  |                     | 354,621 |  |                  |   | 325,192 |  |  |  | 9  | %
|Security Technology      |  |                     | 39,144  |  |                  |   | 40,578  |  |  |  | -4 | %
|                         | 
|Total                    |  | $                   | 393,765 |  |                  | $ | 365,770 |  |  |  | 8  | %
|                         | 



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##### Table of Contents

Medical Imaging

The increase in product revenue for our Medical Imaging segment for fiscal year 2010 versus the prior year was due primarily to increases
in demand by our OEM customers as a result of the improvement in hospital spending on capital equipment, as well as the impact of new products introduced in fiscal year 2010. Also contributing to the increase in product revenue were increased
shipments of mammography detectors to OEM customers outside the United States.

Ultrasound

The increase in Ultrasound product revenue in fiscal year 2010 versus the prior year was due primarily to increases in demand for our new
product lines, the Flex Focus and Pro Focus UltraView ultrasound scanners, which were introduced late in the second and third quarters of fiscal year 2009, respectively, the improvement in hospital spending on capital equipment in general, and
expansion of our direct sales force.

Security Technology

The decrease in product revenue for Security Technology in fiscal year 2010 versus the prior year was due primarily to the fluctuating
demand by our OEM customer as a result of changing requirements and procurement procedures in the United States by the TSA. This decrease was offset in large part by an increase in sales of spare parts and accessories and initial revenues from the
introduction of our new high-speed explosives detection system, which was certified by the TSA in fiscal year 2010.

Engineering Revenue

Engineering revenue for fiscal year 2010 as compared with fiscal year 2009 is summarized in the table below.



|                         |  |                     |        |  |                  |   |        |  |  |  |     |  
|------------------------ |  | ------------------- | ------ |  | ---------------- | - | ------ |  |  |  | --- | -
|                         |  | Year Ended July 31, |        |  | PercentageChange |  
|                         |  | 2010                |        |  | 2009             |   |       
|Engineering Revenue:     |  |                     |        |  |                  |   |        |  |  |  |     |  
|Medical Technology :     |  |                     |        |  |                  |   |        |  |  |  |     |  
|Medical Imaging          |  | $                   | 9,606  |  |                  | $ | 12,612 |  |  |  | -24 | %
|Ultrasound               |  |                     |       |  |                  |   |       |  |  |  | 0   | %
|                         | 
|Total Medical Technology |  |                     | 9,606  |  |                  |   | 12,612 |  |  |  | -24 | %
|Security Technology      |  |                     | 11,442 |  |                  |   | 8,478  |  |  |  | 35  | %
|                         | 
|Total                    |  | $                   | 21,048 |  |                  | $ | 21,090 |  |  |  | 0   | %
|                         | 

Medical Imaging

The decrease in Medical Imaging engineering revenue in fiscal year 2010 versus the prior year was due primarily to the timing of completed
milestones on projects for various OEM customers.

Security Technology

The increase in Security Technology engineering revenue in fiscal year 2010 versus the prior year was due primarily to an engineering
project that began in December 2009 for an OEM customer. This was partially offset by a decrease in engineering revenue on a time and materials project with an OEM customer to transition the high-speed XLB explosive detection system from a prototype
into a manufacturable product.



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##### Table of Contents

Gross Margin

Product Gross Margin

Product gross margin for fiscal year 2010 as compared
with fiscal year 2009 is summarized in the table below.



|                     |  |                     |         |   |                  |   |         |   |  |  |      |  
|-------------------- |  | ------------------- | ------- | - | ---------------- | - | ------- | - |  |  | ---- | -
|                     |  | Year Ended July 31, |         |   | PercentageChange |  
|                     |  | 2010                |         |   | 2009             |   |        
|Product gross profit |  | $                   | 145,415 |   |                  | $ | 122,913 |   |  |  | 18.3 | %
|Product gross margin |  |                     | 36.9    | % |                  |   | 33.6    | % |  |  |      |  

Product gross margin percentage increased in fiscal year 2010 versus the prior year due primarily to
lower labor costs as a result of restructuring, improved manufacturing efficiency as a result of higher production throughput and improved component pricing from our vendors.

Engineering Gross Margin

Engineering gross margin for fiscal year 2010 as
compared with fiscal year 2009 is summarized in the table below.



|                                |  |                     |       |   |                  |   |      |   |  |  |     | 
|------------------------------- |  | ------------------- | ----- | - | ---------------- | - | ---- | - |  |  | --- | 
|                                |  | Year Ended July 31, |       |   | PercentageChange |  
|                                |  | 2010                |       |   | 2009             |   |     
|Engineering gross profit (loss) |  | $                   | 2,482 |   |                  | $ | (308 | ) |  |  | N/A | 
|Engineering gross margin        |  |                     | 11.8  | % |                  |   | -1.5 | % |  |  |     | 

The increases in the engineering gross margin in fiscal year 2010 versus the prior year was due primarily
to the improved pricing for non-recurring engineering projects undertaken for OEM customers partially offset by costs in excess of revenues on Medical Imaging business projects. We incurred a gross loss on engineering revenue in fiscal year 2009
primarily as a result of the write down of deferred engineering costs of $365 due to the settlement agreement that was reached with CAS Medical Systems, Inc. (CAS) in August 2009 and costs incurred in excess of revenue on certain
customer funded Medical Imaging projects.

Operating Expenses

Operating expenses decreased $524, or 0.4%, in fiscal year 2010 as compared with fiscal year 2009 as shown below.



|                                 |  |             |         |  |                           |   |         |      |  |  |      |   |  |  |      |  
|-------------------------------- |  | ----------- | ------- |  | ------------------------- | - | ------- | ---- |  |  | ---- | - |  |  | ---- | -
|                                 |  | Fiscal Year |         |  | Percentage of Net Revenue |  
|                                 |  | 2010        |         |  | 2009                      |   |         | 2010 |  |  | 2009 |  
|Research and product development |  | $           | 49,150  |  |                           | $ | 45,276  |      |  |  | 11.8 | % |  |  | 11.7 | %
|Selling and marketing            |  |             | 36,793  |  |                           |   | 36,541  |      |  |  | 8.9  | % |  |  | 9.4  | %
|General and administrative       |  |             | 39,944  |  |                           |   | 38,665  |      |  |  | 9.6  | % |  |  | 10.0 | %
|Restructuring charges            |  |             | 690     |  |                           |   | 6,619   |      |  |  | 0.2  | % |  |  | 1.7  | %
|                                 | 
|Total operating expenses         |  | $           | 126,577 |  |                           | $ | 127,101 |      |  |  | 30.5 | % |  |  | 32.8 | %
|                                 | 

Research and product development expenses increased $3,874 for fiscal year 2010 versus the prior year due
primarily to an increase in performance-based variable cash and share-based compensation expense of $2,545 as a result of improved operating results. These increases were partially offset by realizing the benefit of the workforce reductions that
took place in fiscal year 2009.

Selling and marketing expenses increased $252 for fiscal year 2010 versus the prior year due
primarily to an increase in performance-based variable cash and share-based compensation expense of $303 as a result of



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improved operating results. Also contributing to the increase were increased sales commissions of $374 due to increased sales of ultrasound products and expansion of our direct sales force. These
increases were partially offset by realizing the benefit of the workforce reductions that took place in fiscal year 2009.

General and administrative expenses increased $1,279 for fiscal year 2010 versus the prior year due primarily to an increase in
performance-based variable cash and share-based compensation expense of $4,185 as a result of improved operating results. These increases were partially offset by realizing the benefit of the workforce reductions that took place in fiscal year 2009,
$1,160 of contingent professional fees related to income tax refunds and related interest of $8,389 received from the IRS and the State of Massachusetts in fiscal year 2009, and $811 related to the settlement agreement reached with CAS in August
2009.

Restructuring charges decreased $5,929 for fiscal year 2010 versus the prior year. The fiscal year 2010 amount includes
severance and personnel-related costs of $764 for involuntary terminations and $420 for facility exit costs primarily related to our office facility in Canton, MA. This was offset in part by a reversal of prior year severance and related benefit
expenses of $494 due to a change in estimated severance benefits and changes in the employee population expected to receive such benefits. The fiscal year 2009 amount includes severance and personnel related costs of $5,561 for involuntary
terminations and $1,058 for facility exit costs primarily related to vacating 50% of our office facility in Canton, MA on July 31, 2009 as a result of moving certain operations to our Peabody, MA facility.

Other Income (Expense)



|                                  |  |                     |      |   |      |   |       |  
|--------------------------------- |  | ------------------- | ---- | - | ---- | - | ----- | -
|                                  |  | Year Ended July 31, |     
|                                  |  | 2010                |      |   | 2009 |  
|Interest income, net              |  | $                   | 633  |   |      | $ | 2,564 |  
|Gain on sale of other investments |  |                     |     |   |      |   | 838   |  
|Other income (expense)            |  |                     | (486 | ) |      |   | (436  | )

The decrease in net interest income in fiscal year 2010 versus the prior year was due primarily to a
decline in interest rates.

The gain on sale of other investments for fiscal year 2009 was due to the receipt of escrow
proceeds of $838 in fiscal year 2009 relating to the sale of our 17% ownership interest in another company during fiscal year 2007.

Net other expense during fiscal years 2010 and 2009 consisted predominantly of foreign currency exchange losses from our Canadian, Danish, and British subsidiaries.

Provision (Benefit) for Income Taxes



|                                     |  |                     |       |   |      |   |        |  
|------------------------------------ |  | ------------------- | ----- | - | ---- | - | ------ | -
|                                     |  | Year Ended July 31, |      
|                                     |  | 2010                |       |   | 2009 |  
|Provision (benefit) for income taxes |  | $                   | 5,668 |   |      | $ | (5,047 | )
|Effective tax rate                   |  |                     | 26    | % |      |   | 330    | %

For fiscal year 2010, the effective tax rate of 26% as compared to the U.S. statutory rate of 35% was due
primarily to lower foreign tax rates and discrete benefits of approximately $1,750 due primarily to the reversal of tax reserves as a result of the expiration of the statute of limitations for fiscal years 2004 and 2006 in fiscal year 2010 and the
settlement of foreign and domestic tax audits. Also contributing to the reduced effective tax rate were federal research and experimentation credits.

For fiscal year 2009, the benefit for income taxes was due primarily to IRS refunds of $8,143 received in fiscal year 2009. The refunds, which included $1,262 of interest, were for the carryback of a loss
and research



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##### Table of Contents

and development credits from fiscal year 2004 and from additional research and development tax credits and timing items claimed on amended income tax returns for fiscal years 2001 through
2006. We had recognized $2,701 of these refunds and related interest within stockholders equity in fiscal year 2008. The impact of these refunds and related interest was a reduction of unrecognized tax benefits by approximately $3,280, of
which $1,356 was recorded as a tax benefit in fiscal year 2009. Also contributing to the benefit for income taxes in fiscal year 2009 was $1,820 for the reversal of a valuation allowance on Belgium net operating loss carryforwards that management
has determined are more likely than not to be recognized and the reversal of $920 of tax reserves due to the expiration of statutes of limitations. These benefits were partially offset by additional provisions for agreed federal and state
adjustments and typical taxes owed related to our operations in that period.

Income (loss) from discontinued operations, net of tax

Discontinued operations revenue for fiscal year 2010 as compared with fiscal year 2009 is summarized in the table below.



|                                                       |  |                     |      |   |      |   |     | 
|------------------------------------------------------ |  | ------------------- | ---- | - | ---- | - | --- | 
|                                                       |  | Year Ended July 31, |     
|                                                       |  | 2010                |      |   | 2009 |  
|Income (loss) from discontinued operations, net of tax |  | $                   | (244 | ) |      | $ | 188 | 

The decreases in fiscal year 2010 versus the prior year was due primarily to lower occupancy and a
decline in room rates at the hotel due to lower business and personal travel as a result of the continuing economic pressures in the consumer market.

Income from continuing operations and diluted net income per share from continuing operations

Net income and diluted net income per share for fiscal years 2010 and 2009 were as follows:



|                                                        |  |                     |        |   |      |   |       |  
|------------------------------------------------------- |  | ------------------- | ------ | - | ---- | - | ----- | -
|                                                        |  | Year Ended July 31, |       
|                                                        |  | 2010                |        |   | 2009 |  
|Income from continuing operations                       |  | $                   | 15,799 |   |      | $ | 3,517 |  
|% of net revenue                                        |  |                     | 3.8    | % |      |   | 0.9   | %
|Diluted net income per share from continuing operations |  | $                   | 1.25   |   |      | $ | 0.27  |  

The increase in net income and diluted net income per share for fiscal year 2010 versus the prior year
was due primarily to increases in sales volumes and gross margins driven by increased demand in the Medical Technology business. Also contributing to the increases were lower restructuring charges in fiscal year 2010 versus the prior year. These
increases were partially offset by a decrease in interest income, an increase in performance-based variable cash and share-based compensation expense as a result of improved operating results, and lower income tax benefits.

Liquidity and Capital Resources

Key liquidity and capital resources information is summarized in the table below.



|                          |  |               |         |  |               |   |         | 
|------------------------- |  | ------------- | ------- |  | ------------- | - | ------- | 
|                          |  | July 31, 2011 |         |  | July 31, 2010 |  
|Cash and cash equivalents |  | $             | 169,656 |  |               | $ | 169,254 | 
|Working capital           |  |               | 294,387 |  |               |   | 281,727 | 
|Short and long term debt  |  |               |        |  |               |   |        | 
|Stockholders equity      |  |               | 423,472 |  |               |   | 409,042 | 

The increase in working capital from July 31, 2010 to July 31, 2011 was due primarily to
increases in inventories and accounts receivable of $17,439 and $14,318, respectively, reflecting increased customer demand and increased sales volumes during fiscal year 2011 as well as stocking associated with consolidation of our manufacturing
operations and establishing our Shanghai manufacturing facility. These increases were partially offset by increases in account payable due primarily to timing of vendor payments.



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##### Table of Contents

We periodically review our investment portfolio to determine if any investments are
impaired due to changes in credit risk or other potential valuation concerns. We believe that our cash equivalents were appropriately valued at July 31, 2011 and we are not aware of any market events that would impact their valuation. This
could change in the future should new developments arise in the credit markets.

We face exposure to financial market risks,
including adverse movements in foreign currency exchange rates, and changes in interest rates. These exposures can change over time as business practices evolve and could have a material adverse impact on our financial results. Our primary exposure
is related to fluctuations between the U.S. dollar and local currencies for our subsidiaries in Canada, Europe, and China. Our investment in international subsidiaries is sensitive to fluctuations in currency exchange rates. The effect of a change
in currency exchange rates on our net investment in international subsidiaries is reflected in the accumulated other comprehensive income component of stockholders equity. A 10% depreciation in the July 31, 2011 and 2010
functional currencies, relative to the U.S. dollar, would result in a reduction of stockholders equity of approximately $1,458 and $700, respectively.

The carrying amounts reflected in the consolidated balance sheets of cash and cash equivalents, trade receivables, and trade payables approximate fair value at July 31, 2011, due to the short
maturities of these instruments.

Cash and cash equivalents totaled $169,656 at July 31, 2011 and consisted entirely of
highly liquid investments with maturities of three months or less from the time of purchase.

Cash Flows

The following table summarizes our sources and uses of cash over the periods indicated:



|                                                                              |  |                     |         |   |      |   |        |      |  |   |         |  
|----------------------------------------------------------------------------- |  | ------------------- | ------- | - | ---- | - | ------ | ---- |  | - | ------- | -
|                                                                              |  | Year Ended July 31, |        
|                                                                              |  | 2011                |         |   | 2010 |   |        | 2009 | 
|Net cash provided by continuing operations for operating activities           |  | $                   | 31,867  |   |      | $ | 26,349 |      |  | $ | 15,704  |  
|Net cash (used by) provided by continuing operations for investing activities |  |                     | (10,967 | ) |      |   | 29,006 |      |  |   | (37,892 | )
|Net cash used for financing activities                                        |  |                     | (20,126 | ) |      |   | (4,520 | )    |  |   | (30,185 | )
|Net cash (used by) provided by discontinued operations                        |  |                     | (335    | ) |      |   | 661    |      |  |   | 421     |  
|Effect of exchange rate changes on cash                                       |  |                     | (37     | ) |      |   | (2,097 | )    |  |   | (2,105  | )
|                                                                              | 
|Net increase (decrease) in cash and cash equivalents                          |  | $                   | 402     |   |      | $ | 49,399 |      |  | $ | (54,057 | )
|                                                                              | 

The cash flows generated from operating activities of our continuing operations in fiscal year 2011
primarily reflects our pre-tax earnings from continuing operations of $20,932, which included depreciation and amortization expenses of $17,918, and non-cash share-based compensation expense of $9,638. The positive impact of our operating earnings
on cash flows, excluding the non-cash acquisition-related bargain purchase gain of $1,042, was partially offset by increases in inventories and accounts receivable of $17,439 and $14,318, respectively, which were net of increases in accounts payable
and accrued liabilities of $11,925 and $4,039, respectively, as well as a decrease in other assets of $2,578. The increase in inventories of $17,439 was due primarily to demand related inventory increases and planned increases in Ultrasound and
Medical Imaging inventories associated with the shift in production from Denmark to the United States and China. The increase in accounts receivable of $14,318 was due primarily to growth in net revenue as well as an increase in unbilled receivables
of $5,578 on engineering projects due to the timing of completing milestones. The increase in accounts payable of $11,925 was due primarily to the timing of vendor payments and increased inventory purchases. The increase in accrued liabilities of
$4,039 was due primarily to the restructuring charges of $7,066 partially offset by payments made for the restructuring charges.

The net cash used by continuing operations for investing activities in fiscal year 2011 was due primarily to purchases of property, plant, and equipment of $22,502, of which approximately $6,200 relates
to the construction of a manufacturing facility in Shanghai, China. These uses of cash were partially offset by the net proceeds of $10,467 from the sale of our hotel business.



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The net cash used for financing activities in fiscal year 2011 primarily reflected $15,187
used to repurchase common stock and $5,154 of dividends paid to stockholders.

We believe that our balances of cash and cash
equivalents and cash flows expected to be generated by future operating activities will be sufficient to meet our cash requirements for at least the next 12 months.

Commitments, Contractual Obligations and Off-Balance Sheet Arrangements

Our contractual obligations at July 31, 2011, and the effect such obligations are expected to have on liquidity and cash flows in
future periods are as follows:



|                       |  |       |        |  |                 |   |        |             |  |   |                             |  |  |                  |       |  |  |   |       | 
|---------------------- |  | ----- | ------ |  | --------------- | - | ------ | ----------- |  | - | --------------------------- |  |  | ---------------- | ----- |  |  | - | ----- | 
|Contractual Obligation |  | Total |        |  | Less than 1year |   |        | 1 - 3 years |  |   | More than3 years 
- 5 years |  |  | More than5 years |      
|Operating leases       |  | $     | 7,581  |  |                 | $ | 2,109  |             |  | $ | 1,927                       |  |  | $                | 1,296 |  |  | $ | 2,249 | 
|Purchasing obligations |  |       | 50,231 |  |                 |   | 49,213 |             |  |   | 1,018                       |  |  |                  |      |  |  |   |      | 
|                       |  |       |        |  |                 |   |        |             |  |   |                             |  |  |                  |       |  |  |   |       | 
|                       |  | $     | 57,812 |  |                 | $ | 51,322 |             |  | $ | 2,945                       |  |  | $                | 1,296 |  |  | $ | 2,249 | 
|                       |  |       |        |  |                 |   |        |             |  |   |                             |  |  |                  |       |  |  |   |       | 

As of July 31, 2011, the total liabilities associated with uncertain tax positions were $7,431. Due
to the complexity associated with our tax uncertainties, we cannot make a reasonably reliable estimate of the period in which we expect to settle the non-current liabilities associated with these uncertain tax positions. Therefore, these amounts
have not been included in the contractual obligations table.

We currently have approximately $24,400 in revolving credit
facilities with banks available for direct borrowings. Our revolving credit facility agreements contain a number of covenants, including a covenant requiring us to maintain a tangible net worth (as defined in the revolving credit facility agreement)
of no less than $255,000 as of the end of any fiscal quarter. We were in compliance with this covenant and all other covenants at July 31, 2011 with a tangible net worth of approximately $383,000. As of July 31, 2011, we had no direct
borrowings or off-balance sheet arrangements.

The Company expects to spend approximately $8,800 after July 31, 2011 to
complete the construction of our new Shanghai, China facility.

Impact of Investigation Regarding our Danish Subsidiary

We are investigating transactions involving our Danish subsidiary, BK Medical, and certain of its foreign distributors, with respect to
which we have raised questions concerning compliance with law, including Danish law and the United States Foreign Corrupt Practices Act, and our business policies. These have included transactions in which the distributors paid BK Medical amounts in
excess of amounts owed and BK Medical transferred the excess amounts, at the direction of the distributors, to third parties identified by the distributors. We have been unable to ascertain with certainty the ultimate beneficiaries or the
purpose of these transfers. We have voluntarily disclosed this matter to the Danish government, the United States Department of Justice and the Securities and Exchange Commission. We have concluded that the transactions identified to date have been
properly accounted for in our reported financial statements in all material respects. We have terminated the employment of certain BK Medical employees that were involved in the transactions. We have decided to wind down our relationship with
certain of the BK Medical distributors, and are evaluating our relationship with certain other of the BK Medical distributors, that were involved in the transactions. Replacing these employees and distributors could have an adverse impact on BK
Medicals distributor sales until their replacements are in place and productive. Revenue from sales to the BK Medical distributors with whom we have decided to wind down our relationship represented less than 1% of our total fiscal year 2011
revenue. Revenue from sales to the BK Medical distributors that were involved in the identified transactions, including those distributors with whom we have decided to wind down our relationship, represented approximately 1.5% of our total fiscal
year 2011 revenue.



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Recent Accounting Pronouncements

Recently adopted

Special
purpose entities

In June 2009, the Financial Accounting Standards Board (FASB) issued guidance that eliminates
the concept of a qualified special-purpose entity and related guidance, creates more stringent conditions for reporting a transfer of a portion of a financial asset as a sale, clarifies other sale-accounting criteria, and changes the initial
measurement of a transferors interest in transferred financial assets. This guidance was effective for us on August 1, 2010 and did not have a material impact on our financial position, results of operations, or cash flows.

In June 2009, the FASB issued guidance that requires former qualified special-purpose entities to be evaluated for consolidation, changes
the approach to determining a variable interest entitys (VIE) primary beneficiary, and requires companies to more frequently reassess whether they must consolidate VIEs. This guidance was effective for us on August 1, 2010 and
did not have a material impact on our financial position, results of operations, or cash flows.

Revenue recognition

In March 2010, the FASB issued guidance related to revenue recognition that applies to arrangements with milestones relating to
research or development deliverables. This guidance provides criteria that must be met to recognize consideration that is contingent upon achievement of a substantive milestone in its entirety in the period in which the milestone is achieved. This
guidance was effective for us on August 1, 2010 and did not have a material impact on our financial position, results of operations, or cash flows.

Not yet effective

Impairment testing

In December 2010, the FASB issued an amendment to the guidance on goodwill impairment testing. The amendment modifies Step 1 of the
goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists.
In making that determination, an entity should consider whether there are any adverse qualitative factors indicating that an impairment may exist. This guidance is effective for us on August 1, 2011 and it is not expected to have a material impact
on our financial position, results of operations, or cash flows.

Business combinations and noncontrolling interests

In December 2010, the FASB issued guidance specifying that if a public entity presents comparative financial statements, the entity
(acquirer) should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. It also expands
the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. This
guidance is effective for us prospectively for material business combinations for which the acquisition date is on or after August 1, 2011.

Fair value measurements

In May 2011, the FASB issued an update to the
accounting on fair value measurement to provide a consistent definition of fair value and ensure that the fair value measurement and disclosure requirements are similar between U.S. GAAP and International Financial Reporting Standards
(IFRS). This update changes certain fair value measurement principles and enhances the disclosure requirements for fair value measurements. This update does not extend the use of fair value accounting, but provides guidance on how it
should be applied where its use is already required or permitted by other standards within U.S. GAAP or IFRS. This update is effective for interim and annual periods beginning after December 15, 2011 and is applied prospectively. Early adoption
is prohibited. This guidance is effective for us on August 1, 2012 and we are currently evaluating the impact, if any, of this new accounting update on our financial position, results of operations, or cash flows.



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Presentation of Comprehensive Income

In June 2011, the FASB issued an update to the accounting on comprehensive income to increase the prominence of items reported in other
comprehensive income and to facilitate convergence of U.S. GAAP and IFRS. This update requires that all non-owner changes in stockholders equity be presented either in a single continuous statement of comprehensive income or in two separate
but consecutive statements. This update does not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. Further, this update does not affect how earnings
per share is calculated or presented. This update is effective for interim and annual periods beginning after December 15, 2011 and is applied retrospectively. Early adoption is permitted. This guidance is effective for us on August 1,
2012 and it is not expected to have a material impact on our financial position, results of operations, or cash flows.

Critical Accounting Policies

Managements discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting
principles generally accepted in the United States of America. Our most critical accounting policies, and the estimates involved in their application, have a significant impact on the preparation of these consolidated financial statements. These
policies involve significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expense, and related disclosures of contingent assets and liabilities. We continue to evaluate our estimates and judgments on
an on-going basis. By their nature, the policies discussed below require management to make its most difficult and subjective estimates and judgments, often on matters that are inherently uncertain. Our estimates and 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.

For a complete discussion of our significant accounting policies, see Note 1, Summary of business operations and significant
accounting policies, of the Notes to Consolidated Financial Statements, included in Item 15, Exhibits and Financial Statements Schedule, of this Annual Report on Form 10-K. We believe the following accounting policies require
management to make the most difficult estimates and judgments in the preparation of our consolidated financial statements and accordingly are critical to an understanding of our financial statements.

Revenue Recognition

PolicyWe provide engineering services to some of our customers on a contractual basis and generally recognize revenue using the percentage of completion method. We generally estimate
the progress towards completion on contracts with a fixed-fee arrangement on a monthly basis utilizing costs incurred to date as a percentage of total estimated costs at completion of the project or on a milestone basis based on contractual terms,
as appropriate. When total cost estimates exceed revenues, we accrue for the estimated losses immediately.

Judgments and
UncertaintiesOur revenue recognition accounting methodology for engineering services with a fixed fee arrangement involves uncertainties because it requires management to make estimates of our total estimated costs at completion of
projects. The timing of when revenue, profits, and loss reserves are recognized may fluctuate if changes to the estimates of costs at completion of projects are needed.

Effect if Actual Results Differ From AssumptionsWe have not made any material changes in the accounting methodology used to determine our estimated costs at completion of projects
during the past three fiscal years. If actual results are not consistent with our estimates or assumptions, we may be exposed to losses or gains that could be material.

Allocation of Consideration in Multiple Element Revenue Arrangements

PolicyWe allocate arrangement consideration to each deliverable in an arrangement based on its relative selling price.
We determine selling price using vendor specific objective evidence (VSOE), if it exists,



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and otherwise third party evidence (TPE). If neither VSOE nor TPE of selling price exists for a unit of accounting, we use estimated selling price (ESP). We generally
expect that we will not be able to establish TPE due to the nature of the markets in which we compete, and, as such, we typically will determine selling price using VSOE or if not available, ESP. If we are unable to establish selling price using
VSOE or TPE, and the order was received or materially modified after July 31, 2009, we use ESP in the allocation of arrangement consideration. The objective of ESP is to determine the price at which we would transact if the product or service
were sold by us on a standalone basis.

Judgments and UncertaintiesOur determination of ESP involves a
weighting of several factors based on the specific facts and circumstances of the arrangement. Specifically, we will consider the cost to produce the deliverable, the anticipated margin on that deliverable, the selling price and profit margin for
similar parts, our ongoing pricing strategy and policies (as evident in the price list as established and updated on a regular basis), the value of any enhancements that have been built into the deliverable and the characteristics of the varying
markets in which the deliverable is sold.

Effect if Actual Results Differ From AssumptionsThere is limited
risk that changes in assumptions would result in a material impact to the reported financial results as these arrangements are not significant to the Company.

Inventory Reserves

PolicyWe value our inventory
at the lower of the cost of the inventory or fair market value through the establishment of inventory reserves. Management assesses the recoverability of inventory based on types and levels of inventory held, product life cycles, and changes in
technology. A variety of methodologies are used to determine the amount of inventory reserves necessary for excess and obsolete inventory. Reserves are based upon the age of the inventory, lower of cost or market, along with significant management
judgments concerning future demands for the inventory. If actual demand for our products is less than our estimates, or we experience a higher incidence of inventory obsolescence because of rapidly changing technology and customer requirements,
additional reserves for existing inventories might be recorded in future periods. Once recorded, inventory valuation reserves are not subsequently reversed until the inventory is used or disposed of.

Judgments and uncertaintiesOur inventory reserves involve uncertainties because the calculation requires management to
make assumptions and to apply judgment regarding inventory aging, forecasted customer demand, and technological obsolescence.

Effect if actual results differ from assumptionsWe have not made any material changes in the accounting methodology we
use to establish our inventory reserves during the past three fiscal years. If estimates regarding customer demand are inaccurate or changes in technology affect demand for certain products in an unforeseen manner, we may be exposed to losses that
could be material. A 10% difference in our actual reserves at July 31, 2011, would have affected net earnings by approximately $286 in fiscal year 2011.

Share-based compensation

PolicyWe have
share-based compensation plans, which include stock options and unvested restricted stock awards, and an employee stock purchase plan. We estimate the fair value of stock options using the Black-Scholes valuation model and the fair value of the
Companys restricted stock awards, which include shares of restricted stock and restricted stock units, based on the quoted market price of its common stock or the use of a Monte-Carlo Simulation Model.

We recognize the associated share-based compensation expense for time-based awards on a straight-line basis over the vesting periods of
the awards, net of estimated forfeitures. Forfeiture rates are estimated based on historical pre-vesting forfeitures and are updated on the vesting dates to reflect actual forfeitures. The amount of share-based compensation expense for
performance-based unvested restricted stock awards that



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is recognized on a straight-line basis over the performance period is based upon the number of shares that management ultimately expects to vest.

For performance-based awards with an earnings per share related target, management evaluates the probability of meeting the performance
criteria at each balance sheet date by looking at projected non-GAAP earnings per share for future periods part of the plan and related compensation cost is amortized over the performance period on a straight-line basis because such awards vest only
at the end of the measurement period. Changes to the probability assessment and the estimate of shares expected to vest will result in adjustments to the related share-based compensation expense that will be recorded in the period of the change. If
the performance is not achieved, no compensation cost is recognized and any previously recognized compensation cost is reversed. For performance-based awards with a market condition related target, related compensation cost is amortized over the
performance period on a straight-line basis, net of estimated forfeitures, regardless of whether the awards are ultimately earned.

Judgments and uncertaintiesOption-pricing models and generally accepted valuation techniques require management to make assumptions and to apply judgment to determine the fair value of
our awards. These assumptions and judgments include estimating the future volatility of our stock price, expected dividend yield, future employee turnover rates and future employee stock option exercise behaviors. Performance-based non-vested
restricted stock awards require management to make assumptions regarding the likelihood of achieving company or personal performance goals. Changes in these assumptions can materially affect the fair value estimate and the amount of compensation
expense we recognize.

Effect if actual results differ from assumptionsWe have not made any material
changes in the accounting methodology we use to determine our share-based compensation expense during the past three fiscal years. If actual results are not consistent with our estimates or assumptions, particularly those used in determining the
accrual percentage for performance-based non-vested restricted stock awards, we may be exposed to changes in share-based compensation expense that could be material. A 10% change in our share-based compensation expense for the year ended
July 31, 2011, would have affected net earnings by approximately $964 in fiscal year 2011.

Warranty Reserves

PolicyWe estimate the costs of product warranties based on specific warranty claims, historical
data, and engineering estimates, where applicable.

Judgments and uncertaintiesOur warranty reserve
involves uncertainties because the calculation requires management to make assumptions based on specific warranty claims, historical data, and engineering estimates, where applicable.

Effect if actual results differ from assumptionsWe have not made any material changes in the accounting methodology we
use to establish our warranty reserves during the past three fiscal years. If actual product failure rates or service delivery costs differ from our estimates, revisions to the estimated warranty liability would be required. Such revisions could
adversely affect our operating results. A 10% change in our warranty reserve at July 31, 2011, would have affected net earnings by approximately $517 in fiscal year 2011.

Purchase Price Allocation For Business Combinations

PolicyWe apply the purchase accounting method to account for business combinations, which requires extensive use of
accounting estimates and judgments to assign the purchase price to the fair value of the assets and liabilities purchased, with the excess value, if any, being classified as goodwill. For those assets with finite lives, useful lives are assigned to
those intangibles and their values are amortized over their remaining life.

Judgments and uncertaintiesOur
purchase price allocation methodology involves uncertainties because it requires management to make assumptions and to apply judgment to estimate the fair value of acquired



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assets and liabilities. Management estimates the fair value of assets and liabilities based upon widely accepted valuation techniques, including discounted cash flows and market multiple
analyses. Unanticipated events or circumstances may occur which could affect the accuracy of our fair value estimates, including assumptions regarding industry economic factors and business strategies.

Effect if actual results differ from assumptionsIf actual results are not consistent with our estimates or
assumptions, impairment charges could result on intangible assets or goodwill.

Impairment of Goodwill and Indefinite
Lived Intangible Assets

PolicyWe evaluate goodwill and indefinite lived intangible assets for
impairment annually and whenever events or changes in circumstances indicate the carrying value of the goodwill or other intangible assets may not be recoverable. We conduct our impairment evaluation by performing internal valuation analyses, which
consider both the market approach and income approach for goodwill and the relief from royalty approach for the indefinite lived intangible assets. Under the market approach, the fair value of the reporting unit is based on trading and acquisition
multiples. Under the income approach, the fair value of the reporting unit is based on the present value of estimated future cash flows. Under the relief from royalty approach, the fair value of the indefinite lived intangible asset is based on
after tax royalty rate and discount rate applied to future forecasted sales. In the second quarter of fiscal year 2011, we completed our annual impairment testing of goodwill and indefinite lived intangible assets using the methodologies described
herein, and determined there was no impairment.

The carrying values of goodwill and indefinite lived intangible assets related
to acquisitions at July 31, 2011 were $1,849 and $7,607, respectively.

Judgments and uncertaintiesThe
valuation analyses described above involve uncertainties because they require management to make assumptions and to apply judgment to estimate industry economic factors and the profitability of future business strategies. It is our policy to conduct
impairment testing based on our current business strategy in light of present industry and economic conditions, as well as our future expectations.

Effect if actual results differ from assumptionsIf actual results are not consistent with our estimates or assumptions, we may be exposed to an impairment charge that could be
material. A 10% change in our calculation of our reporting units fair value at December 31, 2010 would still yield a fair value of our reporting units in excess of the carrying value of our reporting units assets.

Income tax contingencies

PolicyOur income tax returns, like those of most companies, are periodically audited by domestic and foreign tax authorities. These audits include questions regarding our tax filing
positions, including the timing and amount of deductions and the allocation of income among various tax jurisdictions. At any one time, multiple tax years are subject to audit by the various tax authorities. In evaluating the exposures associated
with our various tax filing positions, we record a liability for exposures subject to a minimum threshold of more likely than not before any benefit is recognized. A number of years may elapse before a particular matter, for which we have
established a liability, is audited and fully resolved or clarified. We adjust our liability for unrecognized tax benefits and income tax provision in the period in which an uncertain tax position is effectively settled, the statute of limitations
expires for the relevant taxing authority to examine the tax position or when more information becomes available.

Judgments and uncertaintiesOur liability for unrecognized tax benefits involves uncertainties because management is
required to make assumptions and to apply judgment to estimate the exposures associated with our various filing positions.

Effect if actual results differ from assumptionsAlthough we believe that the judgments and estimates discussed herein
are reasonable, actual results could differ, and we may be exposed to losses or gains that could be material.





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To the extent we prevail in matters for which a liability has been established, or are
required to pay amounts in excess of our established liability, the effective income tax rate in a given financial statement period could be materially affected. An unfavorable tax settlement generally would require use of our cash and result in an
increase in our effective income tax rate in the period of resolution. A favorable tax settlement would be recognized as a reduction in our effective income tax rate in the period of resolution.

Deferred tax valuation allowances

PolicyWe are required to estimate our income taxes in each of the jurisdictions within which we operate. This process involves assessing temporary differences resulting from different
treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included within the balance sheet. We must then assess the likelihood that the deferred tax assets will be recovered from
future taxable income and, to the extent that recovery is not more than likely, a valuation allowance must be established. To the extent a valuation allowance is established, we must include an expense within the tax provision in the statement of
operations.

Judgments and uncertaintiesOur effective income tax rate is affected by changes in tax law,
the tax jurisdiction of new business ventures, the level of earnings, and the results of tax audits.Our deferred tax valuation allowances involve uncertainties because the calculations require management to make assumptions based on
historical data, future book income, and tax-planning strategies.

Effect if actual results differ from
assumptionsWe have not made any material changes in the accounting methodology we use to establish our deferred tax asset valuation allowances during the past three fiscal years. In the event that actual results differ from the
estimates and assumptions we use in determining our effective tax rate, the provision for income taxes and results of operations could be materially impacted.



|Item 7A. | Quantitative and Qualitative Disclosures About Market Risk
|-------- | ----------------------------------------------------------

All dollar amounts in this Item 7A are in thousands.

Certain of our foreign operations enter into transactions in currencies other than their functional currency, primarily the U.S. dollar and the Euro. We also have foreign currency exposure arising from
the translation of our net equity investment in our foreign operations to U.S. dollars. We generally view our investments in foreign operations with functional currencies other than the U.S. dollar as long-term. The currencies to which we are
exposed are the British pound, Chinese yuan, Canadian dollar, Danish kroner, Euro, and Japanese Yen. A 10% depreciation in the July 31, 2011 and 2010 functional currencies, relative to the U.S. dollar, would result in a reduction of
stockholders equity of approximately $1,458 and $700, respectively.

We place our cash investments in high quality
financial instruments and, by policy, limit the amount of credit exposure to any one financial institution. Our cash and investments include cash equivalents, which we consider 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 held to maturity. Total interest income for fiscal year 2011 was $711. A 10% change in interest
income would not have a material impact on the fair value of our portfolio or on future earnings.



|Item 8. | Financial Statements and Supplementary Data
|------- | -------------------------------------------

The financial statements and supplementary data are listed under Part IV, Item 15 in this Annual Report on Form 10-K and are included
at the end of this Annual Report on Form 10-K.



|Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|------- | ------------------------------------------------------------------------------------

Not applicable.



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|Item 9A. | Controls and Procedures
|-------- | -----------------------

Disclosure Controls and Procedures

Our management, with the participation
of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of July 31, 2011. The term disclosure controls and procedures, as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by the company in the reports that
its files or submits under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the SECs rules and forms. Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the companys management, including its principal executive
officer and principal financial officer, as appropriate, to allow timely decisions to be made regarding required disclosure. It should be noted that any system of controls and procedures, however well designed and operated, can provide only
reasonable, and not absolute, assurance that the objectives of the system are met and that management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our
disclosure controls and procedures as of July 31, 2011, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Managements Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules
13a-15(f) and 15d-15(f) under the Exchange Act). A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the interim or annual consolidated financial statements. Because of its inherent limitations, internal
control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.

Our management, with the participation of our chief
executive officer and chief financial officer, conducted an evaluation of the effectiveness of our internal control over financial reporting as of July 31, 2011, based on the framework in Internal Control Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, our management concluded that, as of July 31, 2011, our internal control over financial reporting was effective based on those criteria.

The effectiveness of our internal control over financial reporting as of July 31, 2011 has been audited by PricewaterhouseCoopers
LLP, an independent registered public accounting firm, as stated in their report which appears herein.

Changes in Internal Control Over
Financial Reporting

There were no changes to our internal control over financial reporting during the fourth quarter ended
July 31, 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



|Item 9B. | Other Information
|-------- | -----------------

Not applicable.



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PART III



|Item 10. | Directors, Executive Officers and Corporate Governance
|-------- | ------------------------------------------------------

We will furnish to the SEC a definitive proxy statement for our 2012 Annual Meeting of Stockholders not later than 120 days after the
close of fiscal year 2011 (the Proxy Statement). Certain information required by this item is incorporated herein by reference to the Proxy Statement under the captions Proposal 1  Election of Directors, Corporate
Governance and Section 16(a) Beneficial Ownership Reporting Compliance. Also see Executive Officers of the Registrant in Part I of this Annual Report on Form 10-K.

We have a code of ethics that applies to all of our employees and non-employee directors. This code (available on our website) satisfies
the requirements set forth in Item 406 of Regulation S-K and applies to all relevant persons set forth therein. We intend to disclose on our website at www.analogic.com amendments to, and, if applicable, waivers of, our code of ethics.



|Item 11. | Executive Compensation
|-------- | ----------------------

The information required by this item is incorporated herein by reference to the Proxy Statement under the captions Executive Compensation, Director Compensation,
Compensation Committee Interlocks and Insider Participation and Compensation Committee Report.



|Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|-------- | ----------------------------------------------------------------------------------------------

The information required by this item is incorporated herein by reference to the Proxy Statement under the captions Security
Ownership of Certain Beneficial Owners, Directors, and Management and Securities Authorized for Issuance Under Equity Compensation Plans.



|Item 13. | Certain Relationships and Related Transactions, and Director Independence
|-------- | -------------------------------------------------------------------------

The information required by this item is incorporated herein by reference to the Proxy Statement under the captions Corporate
Governance and Certain Relationships and Related Transactions.



|Item 14. | Principal Accountant Fees and Services
|-------- | --------------------------------------

The information required by this item is incorporated herein by reference to the Proxy Statement under the caption Independent
Registered Public Accounting Firms Fees.



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PART IV



|Item 15. | Exhibits and Financial Statement Schedules
|-------- | ------------------------------------------



|    |  |    |  |                                                                                                                                                                          |  |           
|--- |  | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------
|    |  |    |  |                                                                                                                                                                          |  | PageNumber
|(a) |  |    |  |                                                                                                                                                                          |  |           
|    |  | 1. |  | Financial Statements                                                                                                                                                     |  |           
|    |  |    |  | Report of Independent Registered Public Accounting Firm                                                                                                                  |  | 48        
|    |  |    |  | Consolidated Balance Sheets at July 31, 2011 and 2010                                                                                                                    |  | 49        
|    |  |    |  | Consolidated Statements of Operations for the years ended July 31, 2011, 2010, and
2009                                                                                  |  | 50        
|    |  |    |  | Consolidated Statements of Changes in Stockholders Equity for the years ended July 31, 2011, 2010, and 2009                                                             |  | 51        
|    |  |    |  | Consolidated Statements of Cash Flows for the years ended July 31, 2011, 2010, and
2009                                                                                  |  | 52        
|    |  |    |  | Notes to Consolidated Financial Statements                                                                                                                               |  | 53        
|    |  | 2. |  | Financial Statement Schedule IIValuation and Qualifying Accounts                                                                                                        |  | 89        
|    |  |    |  | Other schedules have been omitted because they are not required, not applicable, or
the required information is furnished in the consolidated statements or notes hereto |  |           

(b) The Index to Exhibits immediately following the Companys Financial Statements and Financial Statement Schedule
II is incorporated herein by reference.



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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                      |  |  |  |                      |  |                                                     
|--------------------- |  |  |  | -------------------- |  | ----------------------------------------------------
|                      |  |  |  | ANALOGIC CORPORATION
|                      |  |  | 
|                      |  |  |  | By                   |  | /s/    JAMES W.
GREEN                               
|Date: October 4, 2011 |  |  |  |                      |  | James W. Green President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on the dates indicated.



|                                                 |  |                                                                                             |  |                
|------------------------------------------------ |  | ------------------------------------------------------------------------------------------- |  | ---------------
|Name                                             |  | Title                                                                                       |  | Date           
|                                                 |  |                                                                                            
|/s/    JAMES. W.
GREEN James W. Green            |  | President and Chief Executive Officer (Principal Executive Officer) and Director            |  | October 4, 2011
|                                                 | 
|                                                 |  |                                                                                            
|/s/    MICHAEL L.
LEVITZ Michael L. Levitz       |  | Senior Vice President, Chief Financial Officer, and Treasurer
(Principal Financial Officer) |  | October 4, 2011
|                                                 | 
|                                                 | 
|                                                 | 
|                                                 |  |                                                                                            
|/s/    DONALD B.
MELSON Donald B. Melson         |  | Vice President - Corporate Controller
(Principal Accounting Officer)                        |  | October 4, 2011
|                                                 | 
|                                                 |  |                                                                                            
|/s/    EDWARD F.
VOBORIL Edward F. Voboril       |  | Chairman of the Board                                                                       |  | October 4, 2011
|                                                 | 
|                                                 |  |                                                                                            
|/s/    GERALD L.
WILSON Gerald L. Wilson         |  | Vice Chairman of the Board                                                                  |  | October 4, 2011
|                                                 | 
|                                                 |  |                                                                                            
|/s/    BERNARD C.
BAILEY Bernard C. Bailey       |  | Director                                                                                    |  | October 4, 2011
|                                                 | 
|                                                 |  |                                                                                            
|/s/    JEFFREY P.
BLACK Jeffrey P. Black         |  | Director                                                                                    |  | October 4, 2011
|                                                 | 
|                                                 |  |                                                                                            
|/s/    JAMES J.
JUDGE James J. Judge             |  | Director                                                                                    |  | October 4, 2011
|                                                 | 
|                                                 |  |                                                                                            
|/s/    KEVIN C.
MELIA Kevin C. Melia             |  | Director                                                                                    |  | October 4, 2011
|                                                 | 
|                                                 |  |                                                                                            
|/s/    MICHAEL T.
MODIC Michael T. Modic         |  | Director                                                                                    |  | October 4, 2011
|                                                 | 
|                                                 |  |                                                                                            
|/s/    FRED B.
PARKS Fred B. Parks               |  | Director                                                                                    |  | October 4, 2011
|                                                 | 
|                                                 |  |                                                                                            
|/s/    SOPHIE V.
VANDEBROEK Sophie V. Vandebroek |  | Director                                                                                    |  | October 4, 2011
|                                                 | 



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REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM

To Board of Directors and Stockholders of Analogic Corporation:

In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a) present fairly, in all material
respects, the financial position of Analogic Corporation and its subsidiaries at July 31, 2011 and July 31, 2010, and the results of their operations and their cash flows for each of the three years in the period ended July 31, 2011
in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information
set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of July 31, 2011, based
on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Companys management is responsible for these financial statements and financial
statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Managements Report on Internal Control over Financial
Reporting under Item 9A. Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Companys internal control over financial reporting based on our integrated audits. We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements
are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting
included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.
Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal control over financial reporting includes those policies and
procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management
and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial
statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.

/s/ PricewaterhouseCoopers LLP

Boston, Massachusetts

October 4, 2011



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ANALOGIC CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)



|                                                                                                                                                                                                                           |  |          |         |  |      |   |         | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------- | ------- |  | ---- | - | ------- | 
|                                                                                                                                                                                                                           |  | July 31, |        
|                                                                                                                                                                                                                           |  | 2011     |         |  | 2010 |  
|Assets                                                                                                                                                                                                                     |  |          |         |  |      |   |         | 
|Current assets:                                                                                                                                                                                                            |  |          |         |  |      |   |         | 
|Cash and cash equivalents                                                                                                                                                                                                  |  | $        | 169,656 |  |      | $ | 169,254 | 
|Accounts receivable, net of allowance for doubtful accounts of $599 and $616 as of July 31, 2011 and 2010,
respectively                                                                                                    |  |          | 88,558  |  |      |   | 74,211  | 
|Inventories                                                                                                                                                                                                                |  |          | 105,483 |  |      |   | 86,060  | 
|Refundable and deferred income taxes                                                                                                                                                                                       |  |          | 9,677   |  |      |   | 8,860   | 
|Other current assets                                                                                                                                                                                                       |  |          | 9,839   |  |      |   | 13,112  | 
|Current assets of discontinued operations (Note 2)                                                                                                                                                                         |  |          |        |  |      |   | 299     | 
|                                                                                                                                                                                                                           | 
|Total current assets                                                                                                                                                                                                       |  |          | 383,213 |  |      |   | 351,796 | 
|                                                                                                                                                                                                                           | 
|Property, plant, and equipment, net                                                                                                                                                                                        |  |          | 83,157  |  |      |   | 69,403  | 
|Capitalized software, net                                                                                                                                                                                                  |  |          | 1,594   |  |      |   | 3,223   | 
|Intangible assets, net                                                                                                                                                                                                     |  |          | 37,403  |  |      |   | 39,761  | 
|Goodwill                                                                                                                                                                                                                   |  |          | 1,849   |  |      |   | 1,849   | 
|Other assets                                                                                                                                                                                                               |  |          | 6,117   |  |      |   | 1,630   | 
|Deferred income tax assets                                                                                                                                                                                                 |  |          | 8,219   |  |      |   | 8,904   | 
|Non-current assets of discontinued operations (Note 2)                                                                                                                                                                     |  |          |        |  |      |   | 9,210   | 
|                                                                                                                                                                                                                           | 
|Total Assets                                                                                                                                                                                                               |  | $        | 521,552 |  |      | $ | 485,776 | 
|                                                                                                                                                                                                                           | 
|Liabilities and Stockholders Equity                                                                                                                                                                                       |  |          |         |  |      |   |         | 
|Current liabilities:                                                                                                                                                                                                       |  |          |         |  |      |   |         | 
|Accounts payable                                                                                                                                                                                                           |  | $        | 37,478  |  |      | $ | 23,868  | 
|Accrued liabilities                                                                                                                                                                                                        |  |          | 41,438  |  |      |   | 33,103  | 
|Advance payments and deferred revenue                                                                                                                                                                                      |  |          | 9,249   |  |      |   | 8,888   | 
|Accrued income taxes                                                                                                                                                                                                       |  |          | 661     |  |      |   | 2,917   | 
|Current liabilities of discontinued operations (Note 2)                                                                                                                                                                    |  |          |        |  |      |   | 1,293   | 
|                                                                                                                                                                                                                           | 
|Total current liabilities                                                                                                                                                                                                  |  |          | 88,826  |  |      |   | 70,069  | 
|                                                                                                                                                                                                                           | 
|Long-term liabilities:                                                                                                                                                                                                     |  |          |         |  |      |   |         | 
|Accrued income taxes                                                                                                                                                                                                       |  |          | 5,322   |  |      |   | 4,777   | 
|Other long-term liabilities                                                                                                                                                                                                |  |          | 3,932   |  |      |   | 1,528   | 
|Deferred income tax liabilities                                                                                                                                                                                            |  |          |        |  |      |   | 360     | 
|                                                                                                                                                                                                                           | 
|Total long-term liabilities                                                                                                                                                                                                |  |          | 9,254   |  |      |   | 6,665   | 
|                                                                                                                                                                                                                           | 
|Commitments, guarantees, and contingencies (Notes 11 and 12)                                                                                                                                                               |  |          |         |  |      |   |         | 
|                                                                                                                                                                                                                           |  |         
|Stockholders equity:                                                                                                                                                                                                      |  |          |         |  |      |   |         | 
|Common stock, $.05 par value; 30,000,000 shares authorized and 12,535,007 shares issued and outstanding as of July 31, 2011;
30,000,000 shares authorized and 12,884,708 shares issued and outstanding as of July 31, 2010 |  |          | 627     |  |      |   | 645     | 
|Capital in excess of par value                                                                                                                                                                                             |  |          | 85,407  |  |      |   | 77,085  | 
|Retained earnings                                                                                                                                                                                                          |  |          | 325,941 |  |      |   | 326,590 | 
|Accumulated other comprehensive income                                                                                                                                                                                     |  |          | 11,497  |  |      |   | 4,722   | 
|                                                                                                                                                                                                                           | 
|Total stockholders equity                                                                                                                                                                                                 |  |          | 423,472 |  |      |   | 409,042 | 
|                                                                                                                                                                                                                           | 
|Total Liabilities and Stockholders Equity                                                                                                                                                                                 |  | $        | 521,552 |  |      | $ | 485,776 | 
|                                                                                                                                                                                                                           | 

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



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ANALOGIC CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)



|                                                                                                                                                                                                |  |                     |         |   |      |   |         |      |  |   |         |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                                                                                                                                                |  | Year Ended July 31, |        
|                                                                                                                                                                                                |  | 2011                |         |   | 2010 |   |         | 2009 | 
|Net revenue:                                                                                                                                                                                    |  |                     |         |   |      |   |         |      |  |   |         |  
|Product                                                                                                                                                                                         |  | $                   | 447,622 |   |      | $ | 393,765 |      |  | $ | 365,770 |  
|Engineering                                                                                                                                                                                     |  |                     | 25,973  |   |      |   | 21,048  |      |  |   | 21,090  |  
|                                                                                                                                                                                                | 
|Total net revenue                                                                                                                                                                               |  |                     | 473,595 |   |      |   | 414,813 |      |  |   | 386,860 |  
|                                                                                                                                                                                                | 
|Cost of sales:                                                                                                                                                                                  |  |                     |         |   |      |   |         |      |  |   |         |  
|Product                                                                                                                                                                                         |  |                     | 278,153 |   |      |   | 248,350 |      |  |   | 242,857 |  
|Engineering                                                                                                                                                                                     |  |                     | 22,479  |   |      |   | 18,566  |      |  |   | 21,398  |  
|                                                                                                                                                                                                | 
|Total cost of sales                                                                                                                                                                             |  |                     | 300,632 |   |      |   | 266,916 |      |  |   | 264,255 |  
|                                                                                                                                                                                                | 
|Gross profit                                                                                                                                                                                    |  |                     | 172,963 |   |      |   | 147,897 |      |  |   | 122,605 |  
|                                                                                                                                                                                                | 
|Operating expenses:                                                                                                                                                                             |  |                     |         |   |      |   |         |      |  |   |         |  
|Research and product development                                                                                                                                                                |  |                     | 63,125  |   |      |   | 49,150  |      |  |   | 45,276  |  
|Selling and marketing                                                                                                                                                                           |  |                     | 41,413  |   |      |   | 36,793  |      |  |   | 36,541  |  
|General and administrative                                                                                                                                                                      |  |                     | 40,623  |   |      |   | 39,944  |      |  |   | 38,665  |  
|Restructuring                                                                                                                                                                                   |  |                     | 7,066   |   |      |   | 690     |      |  |   | 6,619   |  
|                                                                                                                                                                                                | 
|Total operating expenses                                                                                                                                                                        |  |                     | 152,227 |   |      |   | 126,577 |      |  |   | 127,101 |  
|                                                                                                                                                                                                | 
|Income from operations                                                                                                                                                                          |  |                     | 20,736  |   |      |   | 21,320  |      |  |   | (4,496  | )
|                                                                                                                                                                                                | 
|Other income (expense):                                                                                                                                                                         |  |                     |         |   |      |   |         |      |  |   |         |  
|Interest income                                                                                                                                                                                 |  |                     | 711     |   |      |   | 633     |      |  |   | 2,564   |  
|Gain on sale of other investments                                                                                                                                                               |  |                     |        |   |      |   |        |      |  |   | 838     |  
|Other, net                                                                                                                                                                                      |  |                     | (515    | ) |      |   | (486    | )    |  |   | (436    | )
|                                                                                                                                                                                                | 
|Total other income, net                                                                                                                                                                         |  |                     | 196     |   |      |   | 147     |      |  |   | 2,966   |  
|                                                                                                                                                                                                | 
|Income (loss) from continuing operations before income taxes                                                                                                                                    |  |                     | 20,932  |   |      |   | 21,467  |      |  |   | (1,530  | )
|Provision for income taxes                                                                                                                                                                      |  |                     | 4,312   |   |      |   | 5,668   |      |  |   | (5,047  | )
|                                                                                                                                                                                                | 
|Income from continuing operations                                                                                                                                                               |  |                     | 16,620  |   |      |   | 15,799  |      |  |   | 3,517   |  
|Income (loss) from discontinued operations (net of income tax provisions of $168 and $134, for fiscal years 2011 and 2009,
respectively, and an income tax benefit of $66 for fiscal year 2010. |  |                     | 289     |   |      |   | (244    | )    |  |   | 188     |  
|Gain on disposal of discontinued operations (net of income tax provision of $505)                                                                                                               |  |                     | 924     |   |      |   |        |      |  |   |        |  
|                                                                                                                                                                                                | 
|Net income                                                                                                                                                                                      |  | $                   | 17,833  |   |      | $ | 15,555  |      |  | $ | 3,705   |  
|                                                                                                                                                                                                | 
|Basic net income (loss) per share:                                                                                                                                                              |  |                     |         |   |      |   |         |      |  |   |         |  
|                                                                                                                                                                                                | 
|Income from continuing operations                                                                                                                                                               |  | $                   | 1.33    |   |      | $ | 1.26    |      |  | $ | 0.27    |  
|Income (loss) from discontinued operations, net of tax                                                                                                                                          |  |                     | 0.02    |   |      |   | (0.02   | )    |  |   | 0.02    |  
|Gain on disposal of discontinued operations, net of tax                                                                                                                                         |  |                     | 0.08    |   |      |   |        |      |  |   |        |  
|                                                                                                                                                                                                | 
|Basic net income per share                                                                                                                                                                      |  | $                   | 1.43    |   |      | $ | 1.24    |      |  | $ | 0.29    |  
|                                                                                                                                                                                                | 
|Diluted net income (loss) per share:                                                                                                                                                            |  |                     |         |   |      |   |         |      |  |   |         |  
|                                                                                                                                                                                                | 
|Income from continuing operations                                                                                                                                                               |  | $                   | 1.33    |   |      | $ | 1.25    |      |  | $ | 0.27    |  
|Income (loss) from discontinued operations, net of tax                                                                                                                                          |  |                     | 0.02    |   |      |   | (0.02   | )    |  |   | 0.02    |  
|Gain on disposal of discontinued operations, net of tax                                                                                                                                         |  |                     | 0.07    |   |      |   |        |      |  |   |        |  
|                                                                                                                                                                                                | 
|Diluted net income per share                                                                                                                                                                    |  | $                   | 1.42    |   |      | $ | 1.23    |      |  | $ | 0.29    |  
|                                                                                                                                                                                                | 
|Weighted average shares outstanding:                                                                                                                                                            |  |                     |         |   |      |   |         |      |  |   |         |  
|Basic                                                                                                                                                                                           |  |                     | 12,491  |   |      |   | 12,584  |      |  |   | 12,835  |  
|Diluted                                                                                                                                                                                         |  |                     | 12,572  |   |      |   | 12,655  |      |  |   | 12,932  |  

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



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ANALOGIC CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY

Years Ended July 31, 2011, 2010, and 2009

(In thousands, except share data)



|                                                              |  |              |            |   |                                |   |     |                  |  |   |                                       |   |  |                           |         |   |  |   |        |   |  |   |         |  
|------------------------------------------------------------- |  | ------------ | ---------- | - | ------------------------------ | - | --- | ---------------- |  | - | ------------------------------------- | - |  | ------------------------- | ------- | - |  | - | ------ | - |  | - | ------- | -
|                                                              |  | Common Stock |            |   | Capital in 
Excessof Par Value |   |     | RetainedEarnings |  |   | Accumulated 
OtherComprehensiveIncome |   |  | TotalStockholders
Equity |        
|                                                              |  | Shares       |            |   | Amount                         |   |     |                  |  |  
|Balance, July 31, 2008                                        |  |              | 13,447,640 |   |                                | $ | 672 |                  |  | $ | 70,593                                |   |  | $                         | 338,669 |   |  | $ | 18,572 |   |  | $ | 428,506 |  
|Shares issued for:                                            |  |              |            |   |                                |   |     |                  |  |   |                                       |   |  |                           |         |   |  |   |        |   |  |   |         |  
|Stock options exercised                                       |  |              | 4,475      |   |                                |   |    |                  |  |   | 198                                   |   |  |                           |        |   |  |   |       |   |  |   | 198     |  
|Restricted stock grants and cancellations, net                |  |              | 79,263     |   |                                |   | 4   |                  |  |   | (313                                  | ) |  |                           |        |   |  |   |       |   |  |   | (309    | )
|Stock purchase plan                                           |  |              | 14,050     |   |                                |   | 1   |                  |  |   | 320                                   |   |  |                           |        |   |  |   |       |   |  |   | 321     |  
|Provision for share-based compensation                        |  |              |           |   |                                |   |    |                  |  |   | (188                                  | ) |  |                           |        |   |  |   |       |   |  |   | (188    | )
|Share-based compensation expense                              |  |              |           |   |                                |   |    |                  |  |   | 3,968                                 |   |  |                           |        |   |  |   |       |   |  |   | 3,968   |  
|Repurchase of common stock                                    |  |              | (736,694   | ) |                                |   | (37 | )                |  |   | (3,874                                | ) |  |                           | (21,111 | ) |  |   |       |   |  |   | (25,022 | )
|Dividends paid ($0.40 per share)                              |  |              |           |   |                                |   |    |                  |  |   |                                      |   |  |                           | (5,184  | ) |  |   |       |   |  |   | (5,184  | )
|Comprehensive loss:                                           |  |              |            |   |                                |   |     |                  |  |   |                                       |   |  |                           |         |   |  |   |        |   |  |   |         |  
|Net income for the year                                       |  |              |           |   |                                |   |    |                  |  |   |                                      |   |  |                           | 3,705   |   |  |   |       |   |  |   | 3,705   |  
|Actuarial loss on pension plan (net of tax benefit of $1,309) |  |              |           |   |                                |   |    |                  |  |   |                                      |   |  |                           |        |   |  |   | (1,998 | ) |  |   | (1,998  | )
|Translation adjustments (net of tax benefit of $264)          |  |              |           |   |                                |   |    |                  |  |   |                                      |   |  |                           |        |   |  |   | (6,478 | ) |  |   | (6,478  | )
|                                                              |  |              |            |   |                                |   |     |                  |  |   |                                       |   |  |                           |         |   |  |   |        |   |  |   |         |  
|Total comprehensive loss                                      |  |              |            |   |                                |   |     |                  |  |   |                                       |   |  |                           |         |   |  |   |        |   |  |   | (4,771  | )
|                                                              | 
|Balance, July 31, 2009                                        |  |              | 12,808,734 |   |                                |   | 640 |                  |  |   | 70,704                                |   |  |                           | 316,079 |   |  |   | 10,096 |   |  |   | 397,519 |  
|Shares issued for:                                            |  |              |            |   |                                |   |     |                  |  |   |                                       |   |  |                           |         |   |  |   |        |   |  |   |         |  
|Stock options exercised                                       |  |              | 17,883     |   |                                |   | 1   |                  |  |   | 691                                   |   |  |                           |        |   |  |   |       |   |  |   | 692     |  
|Restricted stock grants and cancellations, net                |  |              | 46,974     |   |                                |   | 4   |                  |  |   | (304                                  | ) |  |                           |        |   |  |   |       |   |  |   | (300    | )
|Stock purchase plan                                           |  |              | 11,117     |   |                                |   |    |                  |  |   | 350                                   |   |  |                           |        |   |  |   |       |   |  |   | 350     |  
|Provision for share-based compensation                        |  |              |           |   |                                |   |    |                  |  |   | (147                                  | ) |  |                           |        |   |  |   |       |   |  |   | (147    | )
|Share-based compensation expense                              |  |              |           |   |                                |   |    |                  |  |   | 5,791                                 |   |  |                           |        |   |  |   |       |   |  |   | 5,791   |  
|Dividends paid ($0.40 per share)                              |  |              |           |   |                                |   |    |                  |  |   |                                      |   |  |                           | (5,044  | ) |  |   |       |   |  |   | (5,044  | )
|Comprehensive income:                                         |  |              |            |   |                                |   |     |                  |  |   |                                       |   |  |                           |         |   |  |   |        |   |  |   |         |  
|Net income for the year                                       |  |              |           |   |                                |   |    |                  |  |   |                                      |   |  |                           | 15,555  |   |  |   |       |   |  |   | 15,555  |  
|Actuarial loss on pension plan (net of tax provision of $90)  |  |              |           |   |                                |   |    |                  |  |   |                                      |   |  |                           |        |   |  |   | (191   | ) |  |   | (191    | )
|Translation adjustments (net of tax provision of $508)        |  |              |           |   |                                |   |    |                  |  |   |                                      |   |  |                           |        |   |  |   | (5,183 | ) |  |   | (5,183  | )
|                                                              |  |              |            |   |                                |   |     |                  |  |   |                                       |   |  |                           |         |   |  |   |        |   |  |   |         |  
|Total comprehensive income                                    |  |              |            |   |                                |   |     |                  |  |   |                                       |   |  |                           |         |   |  |   |        |   |  |   | 10,181  |  
|                                                              | 
|Balance, July 31, 2010                                        |  |              | 12,884,708 |   |                                |   | 645 |                  |  |   | 77,085                                |   |  |                           | 326,590 |   |  |   | 4,722  |   |  |   | 409,042 |  
|Shares issued for:                                            |  |              |            |   |                                |   |     |                  |  |   |                                       |   |  |                           |         |   |  |   |        |   |  |   |         |  
|Stock options exercised                                       |  |              | 26,173     |   |                                |   | 1   |                  |  |   | 1,121                                 |   |  |                           |        |   |  |   |       |   |  |   | 1,122   |  
|Stock grants and vesting of restricted stock units            |  |              | 14,079     |   |                                |   | 1   |                  |  |   | 392                                   |   |  |                           |        |   |  |   |       |   |  |   | 393     |  
|Restricted stock cancellations and shares traded for taxes    |  |              | (98,585    | ) |                                |   | (5  | )                |  |   | (1,169                                | ) |  |                           |        |   |  |   |       |   |  |   | (1,174  | )
|Stock purchase plan                                           |  |              | 8,921      |   |                                |   |    |                  |  |   | 368                                   |   |  |                           |        |   |  |   |       |   |  |   | 368     |  
|Provision for share-based compensation                        |  |              |           |   |                                |   |    |                  |  |   | (184                                  | ) |  |                           |        |   |  |   |       |   |  |   | (184    | )
|Share-based compensation expense                              |  |              |           |   |                                |   |    |                  |  |   | 9,638                                 |   |  |                           |        |   |  |   |       |   |  |   | 9,638   |  
|Repurchase of common stock                                    |  |              | (300,289   | ) |                                |   | (15 | )                |  |   | (1,844                                | ) |  |                           | (13,328 | ) |  |   |       |   |  |   | (15,187 | )
|Dividends paid ($0.40 per share)                              |  |              |           |   |                                |   |    |                  |  |   |                                      |   |  |                           | (5,154  | ) |  |   |       |   |  |   | (5,154  | )
|Comprehensive income:                                         |  |              |            |   |                                |   |     |                  |  |   |                                       |   |  |                           |         |   |  |   |        |   |  |   |         |  
|Net income for the year                                       |  |              |           |   |                                |   |    |                  |  |   |                                      |   |  |                           | 17,833  |   |  |   |       |   |  |   | 17,833  |  
|Actuarial loss on pension plan (net of tax benefit of $395)   |  |              |           |   |                                |   |    |                  |  |   |                                      |   |  |                           |        |   |  |   | (793   | ) |  |   | (793    | )
|Translation adjustments (net of tax benefit of $34)           |  |              |           |   |                                |   |    |                  |  |   |                                      |   |  |                           |        |   |  |   | 7,568  |   |  |   | 7,568   |  
|                                                              |  |              |            |   |                                |   |     |                  |  |   |                                       |   |  |                           |         |   |  |   |        |   |  |   |         |  
|Total comprehensive income                                    |  |              |            |   |                                |   |     |                  |  |   |                                       |   |  |                           |         |   |  |   |        |   |  |   | 24,608  |  
|                                                              | 
|Balance, July 31, 2011                                        |  |              | 12,535,007 |   |                                | $ | 627 |                  |  | $ | 85,407                                |   |  | $                         | 325,941 |   |  | $ | 11,497 |   |  | $ | 423,472 |  
|                                                              | 

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



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ANALOGIC CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)



|                                                                                                                                                    |  |                     |         |   |      |   |         |      |  |   |          |  
|--------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------- | ------- | - | ---- | - | ------- | ---- |  | - | -------- | -
|                                                                                                                                                    |  | Year Ended July 31, |        
|                                                                                                                                                    |  | 2011                |         |   | 2010 |   |         | 2009 | 
|OPERATING ACTIVITIES:                                                                                                                               |  |                     |         |   |      |   |         |      |  |   |          |  
|Net income                                                                                                                                          |  | $                   | 17,833  |   |      | $ | 15,555  |      |  | $ | 3,705    |  
|Less:                                                                                                                                               |  |                     |         |   |      |   |         |      |  |   |          |  
|Income (loss) from discontinued operations                                                                                                          |  |                     | 289     |   |      |   | (244    | )    |  |   | 188      |  
|Gain on disposal of discontinued operations                                                                                                         |  |                     | 924     |   |      |   |        |      |  |   |         |  
|                                                                                                                                                    |  |                     |         |   |      |   |         |      |  |   |          |  
|Income from continuing operations                                                                                                                   |  |                     | 16,620  |   |      |   | 15,799  |      |  |   | 3,517    |  
|                                                                                                                                                    |  |                     |         |   |      |   |         |      |  |   |          |  
|Adjustments to reconcile income from continuing operations to net cash provided by operating activities:                                            |  |                     |         |   |      |   |         |      |  |   |          |  
|Benefit from deferred income taxes                                                                                                                  |  |                     | (1,646  | ) |      |   | (2,216  | )    |  |   | (1,164   | )
|Depreciation and amortization                                                                                                                       |  |                     | 17,918  |   |      |   | 16,814  |      |  |   | 17,160   |  
|Allowance for doubtful accounts                                                                                                                     |  |                     | 17      |   |      |   | 112     |      |  |   | 270      |  
|Net loss (gain) on sale of property, plant, and equipment                                                                                           |  |                     | 111     |   |      |   | 26      |      |  |   | (73      | )
|Gain on sale of other investments                                                                                                                   |  |                     |        |   |      |   |        |      |  |   | (838     | )
|Bargain purchase gain                                                                                                                               |  |                     | (1,042  | ) |      |   |        |      |  |   |         |  
|Share-based compensation expense                                                                                                                    |  |                     | 9,638   |   |      |   | 5,791   |      |  |   | 3,968    |  
|Excess tax provision for share-based compensation                                                                                                   |  |                     | 132     |   |      |   | 146     |      |  |   | 189      |  
|Net changes in operating assets and liabilities, net of acquired business (Note 17)                                                                 |  |                     | (9,881  | ) |      |   | (10,123 | )    |  |   | (7,325   | )
|                                                                                                                                                    |  |                     |         |   |      |   |         |      |  |   |          |  
|NET CASH PROVIDED BY CONTINUING OPERATIONS FOR OPERATING ACTIVITIES                                                                                 |  |                     | 31,867  |   |      |   | 26,349  |      |  |   | 15,704   |  
|NET CASH (USED BY) PROVIDED BY DISCONTINUED OPERATIONS FOR OPERATING ACTIVITIES                                                                     |  |                     | (335    | ) |      |   | 768     |      |  |   | 1,024    |  
|                                                                                                                                                    |  |                     |         |   |      |   |         |      |  |   |          |  
|NET CASH PROVIDED BY OPERATING ACTIVITIES                                                                                                           |  |                     | 31,532  |   |      |   | 27,117  |      |  |   | 16,728   |  
|                                                                                                                                                    |  |                     |         |   |      |   |         |      |  |   |          |  
|INVESTING ACTIVITIES:                                                                                                                               |  |                     |         |   |      |   |         |      |  |   |          |  
|Proceeds from sale of discontinued operations, net                                                                                                  |  |                     | 10,467  |   |      |   |        |      |  |   |         |  
|Acquisition of business                                                                                                                             |  |                     | (346    | ) |      |   |        |      |  |   | (350     | )
|Additions to property, plant, and equipment                                                                                                         |  |                     | (22,502 | ) |      |   | (9,300  | )    |  |   | (9,627   | )
|Investments in and advances to affiliated companies                                                                                                 |  |                     |        |   |      |   | (1,920  | )    |  |   | (2       | )
|Capitalized software development costs                                                                                                              |  |                     |        |   |      |   | (461    | )    |  |   | (1,672   | )
|Purchase of short-term held-to-maturity marketable securities                                                                                       |  |                     |        |   |      |   |        |      |  |   | (220,945 | )
|Maturities of short-term held-to-maturity marketable securities                                                                                     |  |                     |        |   |      |   | 40,438  |      |  |   | 193,037  |  
|Proceeds from the sale of other investments                                                                                                         |  |                     |        |   |      |   |        |      |  |   | 838      |  
|Proceeds from the sale of property, plant, and equipment and other assets                                                                           |  |                     | 1,414   |   |      |   | 249     |      |  |   | 829      |  
|                                                                                                                                                    |  |                     |         |   |      |   |         |      |  |   |          |  
|NET CASH (USED BY) PROVIDED BY CONTINUING OPERATIONS FOR INVESTING ACTIVITIES                                                                       |  |                     | (10,967 | ) |      |   | 29,006  |      |  |   | (37,892  | )
|NET CASH USED BY DISCONTINUED OPERATIONS FOR INVESTING ACTIVITIES                                                                                   |  |                     |        |   |      |   | (107    | )    |  |   | (603     | )
|                                                                                                                                                    |  |                     |         |   |      |   |         |      |  |   |          |  
|NET CASH (USED BY) PROVIDED FOR INVESTING ACTIVITIES                                                                                                |  |                     | (10,967 | ) |      |   | 28,899  |      |  |   | (38,495  | )
|                                                                                                                                                    |  |                     |         |   |      |   |         |      |  |   |          |  
|FINANCING ACTIVITIES:                                                                                                                               |  |                     |         |   |      |   |         |      |  |   |          |  
|Issuance of stock pursuant to exercise of stock options, employee stock purchase plan, restricted stock plans, and non-employee
director stock plan |  |                     | 347     |   |      |   | 670     |      |  |   | 210      |  
|Excess tax provision for share-based compensation                                                                                                   |  |                     | (132    | ) |      |   | (146    | )    |  |   | (189     | )
|Purchase of common stock                                                                                                                            |  |                     | (15,187 | ) |      |   |        |      |  |   | (25,022  | )
|Dividends paid to shareholders                                                                                                                      |  |                     | (5,154  | ) |      |   | (5,044  | )    |  |   | (5,184   | )
|                                                                                                                                                    |  |                     |         |   |      |   |         |      |  |   |          |  
|NET CASH USED FOR FINANCING ACTIVITIES                                                                                                              |  |                     | (20,126 | ) |      |   | (4,520  | )    |  |   | (30,185  | )
|                                                                                                                                                    |  |                     |         |   |      |   |         |      |  |   |          |  
|EFFECT OF EXCHANGE RATE CHANGES ON CASH                                                                                                             |  |                     | (37     | ) |      |   | (2,097  | )    |  |   | (2,105   | )
|                                                                                                                                                    |  |                     |         |   |      |   |         |      |  |   |          |  
|NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                                                                                                |  |                     | 402     |   |      |   | 49,399  |      |  |   | (54,057  | )
|                                                                                                                                                    |  |                     |         |   |      |   |         |      |  |   |          |  
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                                                                                      |  |                     | 169,254 |   |      |   | 119,855 |      |  |   | 173,912  |  
|                                                                                                                                                    |  |                     |         |   |      |   |         |      |  |   |          |  
|CASH AND CASH EQUIVALENTS, END OF PERIOD                                                                                                            |  | $                   | 169,656 |   |      | $ | 169,254 |      |  | $ | 119,855  |  
|                                                                                                                                                    |  |                     |         |   |      |   |         |      |  |   |          |  
|Supplemental disclosures of cash flow information:                                                                                                  |  |                     |         |   |      |   |         |      |  |   |          |  
|Refunds received (cash paid) for income taxes, net                                                                                                  |  | $                   | 8,643   |   |      | $ | (3,183  | )    |  | $ | 8,892    |  

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



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ANALOGIC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

1.
Summary of business operations and significant accounting policies:

Business operations:

Analogic Corporation (the Company) was incorporated in the Commonwealth of Massachusetts in November 1967. The Company is a
high technology company that designs and manufactures advanced medical imaging and security systems and subsystems sold to Original Equipment Manufacturers (OEMs) and end users primarily in the healthcare and airport security markets.
The Company is recognized worldwide for advancing state-of-the-art technology in the areas of medical Computed Tomography (CT), Ultrasound, Magnetic Resonance Imaging (MRI), Digital Mammography, and Automatic Explosives
Detection Systems for airport security. The Companys OEM customers incorporate its technology into systems they in turn sell for various medical and security applications. The Company also sells its ultrasound products directly into clinical
end-user markets through its direct worldwide sales force under the brand name B-K Medical (B-K Medical).

The Company reports its financial condition and results of operations on a fiscal year basis ending on July 31stof each year.

Significant accounting policies:

(a) Principles of consolidation:

The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are
wholly owned. Investments in companies in which ownership interests range from 10 to 50 percent, and the Company exercises significant influence over the investees operating and financial policies, are accounted for using the equity method.
Other investments are accounted for using the cost method. All intercompany accounts and transactions have been eliminated.

(b)
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, product life cycle, and changes in technology. A variety of methodologies are used to determine the amount of inventory reserves necessary for excess
and obsolete inventory. The reserves are based upon the age of the inventory, lower of cost or market, along with other significant management judgments concerning future demands for the inventory. Once recorded, inventory valuation provisions are
not subsequently reversed, unless the inventory is used or disposed of.

(c) Property, plant, and equipment:

Property, plant, and equipment is recorded at cost and depreciated using the straight-line method over their estimated useful lives.
Leasehold improvements are amortized over the shorter of their estimated useful lives or the term of the respective leases. Upon retirement or disposal, the cost of the asset disposed of and the related accumulated depreciation are removed from the
accounts and any gain or loss is reflected in the Companys Statements of Operations. Expenditures for maintenance and repairs are charged to expense when incurred while the costs of significant improvements, which extend the life of the
underlying asset, are capitalized.



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ANALOGIC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)



The annual provisions for depreciation and amortization have been computed in
accordance with the following ranges of estimated useful lives:



|                                            |  |                                         
|------------------------------------------- |  | ----------------------------------------
|Buildings                                   |  | 35 to 40 years                          
|Manufacturing equipment                     |  | 4 to 7 years                            
|Furniture, fixtures, and computer equipment |  | 3 to 7 years                            
|Leasehold improvements                      |  | shorter of useful life or the lease term
|Motor vehicles                              |  | 3 to 5 years                            

The Company reviews property, plant, and equipment for impairment whenever events or changes in
circumstances indicate that the carrying amount of assets may not be recoverable. Recoverability of these assets is measured by comparison of their carrying amount to the future undiscounted cash flows the assets are expected to generate over their
remaining economic lives. If such assets are considered to be impaired, the impairment to be recognized in earnings equals the amount by which the carrying value of the assets exceeds their fair market value determined by either a quoted market
price, if any, or a value determined by utilizing a discounted cash flow technique. If such assets are not impaired, but their useful lives have decreased, the remaining net book value is amortized over the revised useful life.

Property, plant, and equipment consisted of the following:



|                                               |  |          |         |   |      |   |          |  
|---------------------------------------------- |  | -------- | ------- | - | ---- | - | -------- | -
|                                               |  | July 31, |        
|                                               |  | 2011     |         |   | 2010 |  
|Property, plant, and equipment:                |  |          |         |   |      |   |          |  
|Land and land improvements                     |  | $        | 6,457   |   |      | $ | 6,108    |  
|Building and improvements                      |  |          | 58,276  |   |      |   | 55,218   |  
|Leasehold and capital lease improvements       |  |          | 11,371  |   |      |   | 10,008   |  
|Manufacturing and engineering equipment        |  |          | 80,261  |   |      |   | 149,372  |  
|Furniture, fixtures, and computer equipment    |  |          | 16,119  |   |      |   | 31,026   |  
|Motor vehicles                                 |  |          | 1,872   |   |      |   | 1,643    |  
|                                               | 
|                                               |  |          | 174,356 |   |      |   | 253,375  |  
|Less accumulated depreciation and amortization |  |          | (91,199 | ) |      |   | (183,972 | )
|                                               | 
|                                               |  | $        | 83,157  |   |      | $ | 69,403   |  
|                                               | 

The decrease in gross property, plant, and equipment and the related accumulated depreciation and
amortization was due primarily to the write-off of fully depreciated assets that are no longer in service. Total depreciation of property, plant, and equipment was $12,890, $11,962, and $12,569 for fiscal years 2011, 2010, and 2009, respectively.
The Company did not capitalize any interest in fiscal years 2011, 2010, or 2009.

(d) Revenue recognition and accounts receivable:

The Company recognizes revenue related to product sales upon shipment provided that title and risk of loss have 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 upon shipment, revenue is recognized upon customer acceptance, provided all other revenue recognition criteria have been met. The Companys sales contracts generally
provide for the customer to accept title and risk of loss when the product leaves the Companys facilities. When shipping terms or local laws do not



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ANALOGIC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)



allow for passage of title and risk of loss at the shipping point, the Company defers recognizing revenue until title and risk of loss transfer to the customer. The Company classifies shipping
and handling invoiced to customers as revenue and the related costs in cost of sales. Sales and other taxes collected from customers and subsequently remitted to government authorities are recorded as accounts receivable with a corresponding offset
recorded to sales taxes payable. These balances are removed from the consolidated balance sheet when the cash is remitted to the tax authority. The Company includes service revenue, related primarily to extended warranty contracts and repairs, in
the product revenue line item of its Consolidated Statement of Operations, as they are deemed immaterial for separate classification.

The Companys transactions sometimes involve multiple elements (i.e., products and services). At the inception of an agreement, the Company allocates arrangement consideration to each deliverable
qualifying as a separate unit of accounting in an arrangement based on its relative selling price. The Company determines selling price using vendor specific objective evidence (VSOE), if it exists, and otherwise third party evidence
(TPE). If neither VSOE nor TPE of selling price exists for a unit of accounting, the Company uses estimated selling price (ESP). The Company generally expects that it will not be able to establish TPE due to the nature of the
markets in which the Company competes, and, as such, the Company typically will determine selling price using VSOE or if not available, ESP.

VSOE is generally limited to the price charged when the same or similar product or service is sold separately or, if applicable, the stated substantive renewal rate in the agreement. If a product or
service is seldom sold separately, it is unlikely that the Company can determine VSOE for the product or service. The Company defines VSOE as a median price of recent standalone transactions that are priced within a narrow range, as defined by the
Company, or stated renewal rates in contracts.

TPE is determined based on the prices charged by competitors of the Company
for a similar deliverable when sold separately. As noted above, the Company typically is not able to use TPE, as the Company is usually not able to obtain sufficient information on competitor pricing to substantiate TPE.

If the Company is unable to establish selling price using VSOE or TPE, and the order was received or materially modified after
July 31, 2009, the Company will use ESP in its allocation of arrangement consideration. The objective of ESP is to determine the price at which the Company would transact if the product or service were sold by the Company on a standalone basis.

The Companys determination of ESP involves a weighting of several factors based on the specific facts and circumstances
of the arrangement. Specifically, the Company will consider the cost to produce the deliverable, the anticipated margin on that deliverable, the selling price and profit margin for similar parts and the Companys ongoing pricing strategy and
policies.

The Company will determine ESP for deliverables in future agreements based on the specific facts and circumstances
of the arrangement. The Company plans to analyze the selling prices used in its allocation of arrangement consideration at least annually. Selling prices will be analyzed on a more frequent basis if a significant change in the Companys
business necessitates a more timely analysis or if the Company experiences significant variances in its selling prices.

Maintenance or service revenues are recognized ratably over the life of the contract.

The Company provides engineering services to some of its customers on a contractual basis and recognizes revenue using the percentage of
completion method and the completed contract method. The Company generally



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ANALOGIC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)



estimates the progress towards completion on contracts with a fixed-fee arrangement on a monthly basis utilizing costs incurred to date as a percentage of total estimated costs at completion of
the project or on a milestone basis based on contractual terms, as appropriate, and short-term unbilled receivables are included in accounts receivable and long-term unbilled receivables are included in noncurrent other assets in the Consolidated
Balance Sheet. When total cost estimates exceed revenues, the Company accrues for the estimated losses immediately.

Deferred
revenue is comprised of maintenance and other service revenues for which payment has been received and for which services have not yet been performed.

The Company grants credit to domestic and foreign original equipment manufacturers, distributors, and end users, and performs ongoing credit evaluations of its customers financial condition. The
Company continuously monitors collections and payments from its customers and maintains a provision for estimated credit losses based upon specific customer collection issues that have been identified.

(e) Warranty costs:

The Company provides for the estimated cost of product warranties at the time products are shipped. Although the Company engages in extensive product-quality programs and processes, its warranty
obligations are affected by product failure rates and service delivery costs incurred to correct product failures. Should actual product failure rates or service delivery costs differ from the Companys estimates (which are based on specific
warranty claims, historical data, and engineering estimates, where applicable), revisions to the estimated warranty liability would be required. Such revisions could adversely affect the Companys operating results. Generally, the Company
warrants that its products will perform in all material respects in accordance with its standard published specifications in effect at the time of delivery of the products to the customer for a period ranging from 12 to 26 months from the date of
delivery.

(f) Research and development and capitalized software development costs:

Research and product development costs are expensed as incurred and include primarily engineering salaries, share-based compensation,
overhead and materials used in connection with research and product development activities. Research and product development costs related to non-recurring engineering projects undertaken for customers are reclassified to engineering cost of sales
if the project is accounted for under the percentage of completion method or deferred costs if the project is accounted for under the completed contract method.

Software development costs incurred subsequent to establishing technological feasibility through general release of the software products are capitalized. Technological feasibility is demonstrated by the
completion of a detailed program design. Capitalized costs are amortized on a straight-line basis over the economic lives of the related products, generally three years. Amortization expense of software development expense was $1,940, $1,921, and
$809 in fiscal years 2011, 2010, and 2009, respectively, and is included in product cost of sales. The unamortized balance of capitalized software was $1,594 and $3,223 at July 31, 2011 and 2010, respectively.

(g) Income taxes:

The Company accounts for income taxes under the asset and liability method, which requires recognition of deferred tax assets, subject to
valuation allowances, and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred income taxes reflect the net tax effects of temporary differences between the
carrying amounts of asset and liabilities for financial reporting and



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ANALOGIC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)



income tax purposes. A valuation allowance is established if it is more likely than not that all or a portion of the net deferred tax assets will not be realized. The Company does not provide for
U.S. Federal income taxes on undistributed earnings of all consolidated foreign subsidiaries as such earnings are considered to be indefinitely reinvested in those operations. For disclosure purposes, calculations of the potential deferred income
tax liability on these undistributed earnings is not practicable because such liability, if any, is dependent on circumstances existing if and when remittance occurs.

(h) Net income per share:

Basic net income per share is computed
using the weighted average number of common shares outstanding during the period. Diluted net income per share is computed using the weighted average number of common and diluted common equivalent shares outstanding during the period. Dilutive
common equivalent shares consist of stock options and restricted stock.

(i) Cash and cash equivalents:

The Company considers all highly liquid investments with a maturity of three months or less at acquisition date to be cash equivalents.
Cash and cash equivalents amounted to $169,656 and $169,254 at July 31, 2011 and 2010, respectively.

(j) 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. Cash and cash equivalents not required for working capital purposes are placed primarily in short-term investments of government agency discounted notes, certificates of
deposit instruments that are 100% insured by the FDIC, money market funds, or demand notes of financial institutions of banks that meet stringent credit rating requirements. The Company grants credit to domestic and foreign original equipment
manufacturers, distributors, and end users, and performs ongoing credit evaluations on its customers financial condition.

(k) Use
of estimates:

The preparation of financial statements in conformity with accounting principles generally accepted in
the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the
reported amounts of sales and expenses during the reporting periods. Such management estimates include allowances for doubtful accounts receivable; provisions for inventory to reflect net realizable value; estimates of percentage of completion of
contracts; estimates of fair value for investments in privately held companies; intangible assets; valuation allowances against deferred tax assets; and accruals for product warranty, other liabilities, income taxes, estimate for goodwill and
indefinite lived intangible asset testing; and various estimates used in the calculation of share-based compensation. Actual results could differ from those estimates.

(l) Comprehensive income:

Components of comprehensive income
include net income and certain transactions that have generally been reported in the Consolidated Statements of Changes in Stockholders Equity. Other comprehensive income



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)



consists of reported foreign currency translation gains and losses (net of taxes), changes in the unrealized value of marketable securities (net of taxes), and actuarial gains and losses on
pension plan assets (net of taxes). As of July 31, 2011 and 2010, accumulated other comprehensive income in stockholders equity totaled $11,497 and $4,722, respectively.

(m) Share-Based Compensation:

The Company accounts for share-based
compensation expense for equity instruments exchanged for employee and director services. Share-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the employees
requisite service period (generally the vesting period of the equity grant).

The Company estimates the fair value of stock
options using the Black-Scholes valuation model and the fair value of the Companys restricted stock awards, which include shares of restricted stock and restricted stock units, based on the quoted market price of its common stock or the use of
a Monte-Carlo Simulation Model. For time or service-based awards, the Company recognizes the associated share-based compensation expense on a straight-line basis over the vesting periods of the awards, net of estimated forfeitures. Forfeiture rates
are estimated based on historical pre-vesting forfeitures and are updated on the vesting dates to reflect actual forfeitures. For performance-based awards with an earnings per share related target, management evaluates the probability of meeting the
performance criteria at each balance sheet date and if probable related compensation cost is amortized over the performance period on a straight-line basis because such awards vest only at the end of the measurement period.

Changes to the probability assessment and the estimate of shares expected to vest will result in adjustments to the related share-based
compensation expense that will be recorded in the period of the change. If the performance is not achieved, no compensation cost is recognized and any previously recognized compensation cost is reversed. For performance-based awards with a market
condition related target, related compensation cost is amortized over the performance period on a straight-line basis, net of estimated forfeitures, regardless of whether the awards are ultimately earned.

(n) Fair value of financial instruments:

The carrying amounts of cash equivalents and receivables approximate fair value due to their short-term nature. The fair values of marketable securities are estimated based on quoted market price for
these securities.

(o) Impairment of long-lived assets:

The Company evaluates the recoverability of its long-lived assets recognizing the impairment of long-lived assets in the event the net book value of such assets exceeds the estimated future undiscounted
cash flows attributable to such assets. If impairment is indicated, the asset is written down to its estimated fair value based on a discounted cash flow analysis. The Company reviews long-lived assets for impairment whenever events or changes in
business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the estimated undiscounted cash
flows of the asset group as compared to the recorded value of the asset group.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)



(p) Segment information:

The Company operates primarily within two major markets: Medical Technology and Security Technology. During the first quarter of fiscal
year 2011, as part of a strategic review, the Company modified its segment reporting as well as the names of certain of its segments based on the information reviewed by its principal executive officer. Medical Technology now consists of two
reporting segments:



| | 1. | Medical Imaging, which consists primarily of systems and subsystems for CT and MRI medical imaging equipment and direct conversion digital x-ray detectors for
mammography sold primarily through OEM customers (the current Medical Imaging segment combines the formerly separate segments of CT and MRI and Digital Radiography)
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | Ultrasound (formerly Specialized Ultrasound), which consists of ultrasound systems and probes for the urology, ultrasound-guided surgery and radiology markets sold
primarily through our direct sales force.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Security Technology consists of advanced explosives and weapons detection systems
utilizing the Companys expertise in advanced imaging technology, such as CT, for aviation security. All periods presented have been revised accordingly to reflect the new reporting segments.

(q) Translation of foreign currencies:

The assets and liabilities of the Companys foreign subsidiaries, whose cash flows are primarily in their local currency, have been translated into U.S. dollars using the current exchange rates at
each balance sheet date. The operating results of these foreign subsidiaries have been translated at average exchange rates that prevailed during each reporting period. Adjustments resulting from translation of foreign currency financial statements
are reflected as accumulated other comprehensive income in the consolidated balance sheet. Exchange gains and losses resulting from foreign currency transactions (transactions denominated in a currency other than that of the entities primary cash
flow), excluding long-term intercompany receivables, payables, and investments, are included in operations in the period in which they occur and are reflected in the results of operations under the caption (Other, net). The Company had
foreign exchange losses totaling $678, $612 and $828 in fiscal years 2011, 2010 and 2009, respectively.

(r) Business combinations:

In accordance with the purchase method of accounting, the fair values of assets acquired and liabilities assumed are
determined and recorded as of the date of the acquisition. Costs to acquire the business prior to August 1, 2009, including transaction costs, were allocated to the fair value of net assets acquired. Any excess of the purchase price
over the estimated fair value of the net assets acquired is recorded as goodwill. Any excess of the fair value of assets acquired over the purchase price is recorded as a bargain purchase gain in general and administrative expenses.

(s) Intangible assets and goodwill:

Intangible assets consist of intellectual property, licenses, capitalized software, and certain identifiable intangible assets resulting from business combinations, including trade names, customer
relationships, backlog, and developed technology. These assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of assets may not be recoverable. Recoverability of these assets is measured by
comparison of their carrying value to future undiscounted cash flows the assets are expected to generate over their remaining economic life. If such assets are considered to be impaired, the impairment to be



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)



recognized in earnings equals the amount by which the carrying value of the assets exceeds their fair market value determined by either a quoted market price, if any, or a value determined by
utilizing a discounted cash flow technique. Evaluation of impairment of long-lived assets requires estimates of future operating results that are used in the preparation of the expected future undiscounted cash flows. Actual future operating results
and the remaining economic lives of long-lived assets could differ from the estimates used in assessing the recoverability of these assets. These differences could result in impairment charges, which could have a material adverse impact on the
Companys results of operations.

The Company performs annual reviews in its second quarter of each fiscal year for
impairment of goodwill and indefinite lived intangible assets related to the acquisitions or more frequently whenever events or changes in circumstances indicate that the carrying values may not be recoverable. Goodwill may be considered to be
impaired if the Company determines that the carrying value of the reporting unit, including goodwill, exceeds the reporting units fair value. Assessing the impairment of goodwill requires the Company to make assumptions and judgments regarding
the fair value of the net assets of its reporting units. The Company estimates the fair value of its reporting units using a combination of valuation techniques, including discounted cash flows and cash earnings multiples, and compares the values to
its estimated overall market capitalization.

An indefinite lived intangible asset may be considered to be impaired if the
Company determines that the carrying value exceeds the assets fair value. Assessing the impairment of an indefinite lived intangible asset requires the Company to make assumptions and judgments regarding the fair value of the asset using the relief
from royalty approach valuation technique.

(t) New accounting pronouncements:

Recently adopted

Special
purpose entities

In June 2009, the Financial Accounting Standards Board (FASB) issued guidance that eliminates
the concept of a qualified special-purpose entity and related guidance, creates more stringent conditions for reporting a transfer of a portion of a financial asset as a sale, clarifies other sale-accounting criteria, and changes the initial
measurement of a transferors interest in transferred financial assets. This guidance was effective for the Company on August 1, 2010 and did not have a material impact on its financial position, results of operations, and cash flows.

In June 2009, the FASB issued guidance that requires former qualified special-purpose entities to be evaluated for
consolidation, changes the approach to determining a variable interest entitys (VIE) primary beneficiary, and requires companies to more frequently reassess whether they must consolidate VIEs. This guidance was effective for the
Company on August 1, 2010 and did not have a material impact on its financial position, results of operations, and cash flows.

Revenue recognition

In
March 2010, the FASB issued guidance related to revenue recognition that applies to arrangements with milestones relating to research or development deliverables. This guidance provides criteria that must be met to recognize consideration
that is contingent upon achievement of a substantive milestone in its entirety in the period in which the milestone is achieved. This guidance was effective for the Company on August 1, 2010 and did not have a material impact on its financial
position, results of operations, and cash flows.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)



Not yet effective

Impairment testing

In December 2010, the FASB issued an amendment to
the guidance on goodwill impairment testing. The amendment modifies Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill
impairment test if it is more likely than not that a goodwill impairment exists. In making that determination, an entity should consider whether there are any adverse qualitative factors indicating that an impairment may exist. This guidance is
effective for the Company on August 1, 2011 and it is not expected to have a material impact on its financial position, results of operations, or cash flows.

Business combinations and noncontrolling interests

In December 2010, the
FASB issued guidance specifying that if a public entity presents comparative financial statements, the entity (acquirer) should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the
current year had occurred as of the beginning of the comparable prior annual reporting period only. It also expands the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma
adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. This guidance is effective for the Company prospectively for material business combinations for which the acquisition date is on
or after August 1, 2011.

Fair value measurements

In May 2011, the FASB issued an update to the accounting on fair value measurement to provide a consistent definition of fair value and ensure that the fair value measurement and disclosure requirements
are similar between U.S. GAAP and International Financial Reporting Standards (IFRS). This update changes certain fair value measurement principles and enhances the disclosure requirements for fair value measurements. This update does
not extend the use of fair value accounting, but provides guidance on how it should be applied where its use is already required or permitted by other standards within U.S. GAAP or IFRS. This update is effective for interim and annual periods
beginning after December 15, 2011 and is applied prospectively. Early adoption is prohibited. This guidance is effective for the Company on August 1, 2012 and it is currently evaluating the impact, if any, of this new accounting update on
its financial position, results of operations, or cash flows.

Presentation of Comprehensive Income

In June 2011, the FASB issued an update to the accounting on comprehensive income to increase the prominence of items reported in other
comprehensive income and to facilitate convergence of U.S. GAAP and IFRS. This update requires that all non-owner changes in stockholders equity be presented either in a single continuous statement of comprehensive income or in two separate
but consecutive statements. This update does not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. Further, this update does not affect how earnings
per share is calculated or presented. This update is effective for interim and annual periods beginning after December 15, 2011 and is applied retrospectively. Early adoption is permitted. This guidance is effective for the Company on
August 1, 2012 and it is not expected to have a material impact on the Companys financial position, results of operations, or cash flows.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)



(u) Basis of Presentation:

Certain financial statement items have been reclassified to conform to the current period presentation. During the first quarter of fiscal
year 2011, the Company sold its hotel business. The hotel business has been reported as a discontinued operation and all periods presented have been revised accordingly to reflect these operations as discontinued.

2. Discontinued operations:

During the first quarter of fiscal year 2011, the Company sold its hotel business, and realized net proceeds of $10,467, after transaction costs. The Company recorded a gain on sale of the hotel business
of $924, net of a tax provision of $505, or $0.07 per diluted share in fiscal year 2011. A former member of the Companys Board of Directors also serves on the Board of Directors of the entity that acquired the hotel business.

Revenue and net income (loss) for the hotel business for fiscal years 2011, 2010, and 2009 were as follows:



|                  |  |                     |       |  |      |   |       |      |  |   |       | 
|----------------- |  | ------------------- | ----- |  | ---- | - | ----- | ---- |  | - | ----- | 
|                  |  | Year Ended July 31, |      
|                  |  | 2011                |       |  | 2010 |   |       | 2009 | 
|Total net revenue |  | $                   | 2,906 |  |      | $ | 8,784 |      |  | $ | 9,289 | 
|Net income (loss) |  |                     | 289   |  |      |   | (244  | )    |  |   | 188   | 

The following represents a detailed listing of the assets and liabilities of discontinued operations.
There were no assets or current liabilities of the discontinued operations as of July 31, 2011.



|                                                |  |               |       | 
|----------------------------------------------- |  | ------------- | ----- | 
|                                                |  | July 31, 2010 |      
|Current assets of discontinued operations:      |  |               |       | 
|Accounts receivable, net                        |  | $             | 282   | 
|Other current assets                            |  |               | 17    | 
|                                                | 
|Total current assets                            |  |               | 299   | 
|Property, plant, and equipment, net             |  |               | 9,210 | 
|                                                | 
|Total assets                                    |  | $             | 9,509 | 
|                                                |  |               |       | 
|Current liabilities of discontinued operations: |  |               |       | 
|Accounts payable, trade                         |  | $             | 945   | 
|Accrued liabilities                             |  |               | 188   | 
|Advance payments                                |  |               | 160   | 
|                                                | 
|Total current liabilities                       |  | $             | 1,293 | 
|                                                | 

3. Share-based payment:

The following table presents share-based compensation expenses for continuing operations included in the Companys consolidated statements of operations for fiscal years 2011, 2010, and 2009:



|                                            |  |                     |       |  |      |   |       |      |  |   |       | 
|------------------------------------------- |  | ------------------- | ----- |  | ---- | - | ----- | ---- |  | - | ----- | 
|                                            |  | Year Ended July 31, |      
|                                            |  | 2011                |       |  | 2010 |   |       | 2009 | 
|Cost of product sales                       |  | $                   | 570   |  |      | $ | 445   |      |  | $ | 272   | 
|Research and product development            |  |                     | 3,181 |  |      |   | 1,558 |      |  |   | 887   | 
|Selling and marketing                       |  |                     | 1,110 |  |      |   | 657   |      |  |   | 504   | 
|General and administrative                  |  |                     | 4,777 |  |      |   | 3,131 |      |  |   | 2,305 | 
|                                            | 
|Share-based compensation expense before tax |  | $                   | 9,638 |  |      | $ | 5,791 |      |  | $ | 3,968 | 
|                                            | 



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)



The Company estimates the fair value of stock options using the Black-Scholes valuation
model. Key input assumptions used to estimate the fair value of stock options include the exercise price of the award, the expected option term, the expected volatility of the Companys stock over the options expected term, the risk-free
interest rate over the options expected term, and the Companys expected annual dividend yield. The Company believes that the valuation technique and the approach utilized to develop the underlying assumptions are appropriate in
calculating the fair values of the Companys outstanding stock options granted during fiscal years 2011, 2010, and 2009. The Company estimates the fair value of performance based restricted stock and restricted stock units with market
conditions based on the use of a Monte-Carlo Simulation Model. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by persons who receive equity awards.

The fair value of each option grant was estimated on the grant date using the Black-Scholes option-pricing model with the following
assumptions for fiscal years 2011, 2010 and 2009 as follows:



|                               |  |                     |            |   |      |  |            |      |  |  |            |  
|------------------------------ |  | ------------------- | ---------- | - | ---- |  | ---------- | ---- |  |  | ---------- | -
|                               |  | Year Ended July 31, |           
|                               |  | 2011                |            |   | 2010 |  |            | 2009 | 
|Expected option term (1)       |  |                     | 4.74 years |   |      |  | 4.84 years |      |  |  | 4.74 years |  
|Expected volatility factor (2) |  |                     | 43         | % |      |  | 43         | %    |  |  | 34         | %
|Risk-free interest rate (3)    |  |                     | 1.18       | % |      |  | 2.20       | %    |  |  | 3.04       | %
|Expected annual dividend yield |  |                     | 1.0        | % |      |  | 1.0        | %    |  |  | 0.6        | %



|(1) | The option life was determined by estimating the expected option life, using historical data.
|--- | ---------------------------------------------------------------------------------------------

|(2) | The stock volatility for each grant is determined based on the review of the experience of the weighted average of historical daily price changes of the Companys
common stock over the most recent five years, which approximates the expected option life of the grant.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | The risk-free interest rate for periods equal to the expected term of the stock option is based on the U.S. Treasury yield curve in effect at the time of grant.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

Stock Incentive Plans

On January 29, 2010, the Companys stockholders approved a new share-based compensation plan named the 2009 Stock Incentive Plan. Under the Companys 2009 Stock Incentive Plan,
up to 1,600,000 shares of the Companys common stock, $.05 par value per share, may be awarded to employees. Awards may be in the form of stock options, stock appreciation rights (SARs), shares of restricted stock, restricted stock
units or other stock-based awards. Stock options granted under the 2009 Stock Incentive Plan may not be granted at an exercise price less than 100% of the fair market value of the common stock on the date of grant. Options may not be granted for a
term in excess of ten years. Except in certain circumstances, options that vest based on continued service of the option recipient may not vest earlier than one year from the date of grant. SARs granted under the 2009 Stock Incentive Plan must have
a measurement price not less than 100% of the fair market value on the date of grant. SARs may not be granted for a term in excess of ten years. Restricted stock may be granted subject to the Companys right to repurchase all or part of such
shares at their issue price or other stated or formula price (or to require forfeiture if such shares are issued at no cost) from the recipient in the event that conditions of the grant are not satisfied prior to the end of the restriction period.
Such conditions may include the achievement of performance goals or continued service with the Company. Except in certain circumstances, restricted stock that vests solely based on the passage of time will not vest prior to the first anniversary of
the date of grant, be no more than one-third vested prior to the second anniversary of the date of grant, and be no more than two-thirds vested prior to the third anniversary of the date of grant.

On January 28, 2008, the Companys stockholders approved a new share-based director compensation plan for the non-employee
members of the Companys Board of Directors (the Board) named the Analogic



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)



Corporation Non-Employee Director Stock Plan (the Director Plan). Under the Companys Director Plan, up to 100,000 shares of the Companys common stock, $.05 par value
per share, may be awarded to directors. During fiscal years 2011, 2010, and 2009, 3,492, 2,325, and 2,800 shares, respectively, were granted under this plan. The Director Plan provides for an Annual Share Retainer to be granted to each participant
on each February 1. The Annual Share Retainer for calendar years 2011, 2010, and 2009 had a value of $55, $35, $35, respectively. Each participant may elect to receive some or all of (i) his or her Annual Share Retainer for a given
calendar year or (ii) his or her Annual Cash Retainer (which consists of the annual base cash compensation he or she receives for service on the Board and on any committees of the Board, and, if applicable, all other compensation received for
service as Chairman of the Board and as a Committee Chairman) in the form of Deferred Stock Units, as elected by the participant no later than December 15 of the preceding calendar year. The value of the Deferred Stock Units
credited to this account changes in relation to changes in the value of a share of the Companys common stock. Additional Deferred Stock Units are credited to this account based on the value of dividend equivalents that are earned on Deferred
Stock Units, and which will be equal to dividends that are paid on a corresponding number of shares of common stock. The payout of the deferred stock units value shall be made in a single cash payment within thirty days following a
Directors termination of service on the Board or sooner, if so elected by the Director. During fiscal year 2011, approximately $330 of Annual Share Retainers and $88 of Annual Cash Retainers were deferred into approximately 8,221 Deferred
Stock Units at a weighted average price of $50.79 per share. Dividend equivalents on deferred stock units were deferred into approximately 179 Deferred Stock Units during fiscal year 2011. During fiscal year 2010, approximately $210 of Annual Share
Retainers and $50 of Annual Cash Retainers were deferred into approximately 6,533 Deferred Stock Units at a weighted average price of $39.80 per share. Dividend equivalents on deferred stock units were deferred into approximately 117 Deferred Stock
Units during fiscal year 2010. During fiscal year 2009, approximately $210 of Annual Share Retainers and $38 of Annual Cash Retainers were deferred into approximately 9,580 Deferred Stock Units at a weighted average price of $25.83 per share.
Dividend equivalents on deferred stock units were deferred into approximately 99 Deferred Stock Units during fiscal year 2009.

During fiscal year 2007, the Companys stockholders approved two share-based compensation plans, named the 2007 Stock Option
Plan and the 2007 Restricted Stock Plan.

Under the Companys 2007 Stock Option Plan, options may
either be non-qualified options or incentive stock options and may not be granted at an exercise price less than 100% of the fair market value of the common stock on the date of grant (or less than 110% of the fair market value in the case of
incentive stock options granted to optionees holding more than 10% of the voting power of the Company). Under the Companys 2007 Stock Option Plan, up to 250,000 shares of the Companys common stock, $.05 par value per share, may be
awarded to employees. Options may not be granted for a term in excess of ten years (or five years in the case of incentive stock options granted to optionees holding more than 10% of the voting power of the Company). Except in certain circumstances,
options that vest based on continued service of the optionee may not vest earlier than one year from the date of grant. Unless otherwise provided by the Compensation Committee of the Board (the Committee) in the specific option
agreement, each option will vest as to 25% of the number of shares of common stock underlying the option on each of the second, third, fourth, and fifth anniversaries of the date of grant.

Under the Companys 2007 Restricted Stock Plan, recipients are awarded shares of common stock, subject to the right of the Company
to repurchase all or part of such shares from the recipient in the event that the conditions specified in the applicable award are not satisfied prior to the end of the applicable restriction period established for such award. Under the
Companys 2007 Restricted Stock Plan, up to 500,000 shares of the Companys common stock, $.05 par value per share, may be awarded to employees. Such conditions may include



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)



the achievement of performance goals or continued service with the Company. Except in certain circumstances, awards that vest based on continued service may not vest earlier than in three equal
installments on each of the first three anniversaries of the date of grant. The Committee may condition an award on the recipient not competing with the Company for a one-year period following termination of such recipients employment with the
Company.

Beginning in fiscal year 2008, the Committee began granting performance contingent restricted stock awards. In
fiscal year 2008, the Committee granted performance contingent restricted shares (performance awards) under the Companys 2007 Restricted Stock Plan, of which 15,239 shares were forfeited. These shares vested if specific
pre-established levels of performance were achieved at the end of a three-year performance cycle, which was July 31, 2010 for the 84,944 shares not forfeited. The performance goal for the performance awards was based solely on the cumulative
growth of an adjusted earnings per share metric. The actual number of shares issued was determined at the end of the three-year performance cycle and could range from zero to 200% of the target award. The actual number of shares issued included the
payment of dividends on the actual number of shares earned. Compensation expense was recognized over the performance period based on the number of shares that were deemed to be probable of vesting at the end of the three-year performance cycle. The
total number of shares that vested at July 31, 2010 was approximately 15,700. The expense (income) on these vested shares was approximately $1,100, of which $429 and ($349) was recorded in fiscal years 2010 and 2009, respectively.

In fiscal year 2009, the Committee granted performance awards under the Companys 2007 Restricted Stock Plan, of which 7,280 shares
have been forfeited at July 31, 2011. These shares will vested if specific pre-established levels of performance were achieved at the end of a three-year performance cycle, which was July 31, 2011 for the outstanding 38,471 shares granted.
The performance goal for the performance awards was based solely on the cumulative growth of an adjusted earnings per share metric. The actual number of shares issued was determined at the end of the three-year performance cycle and could range from
zero to 200% of the target award. The actual number of shares to be issued included the payment of dividends on the actual number of shares earned. Compensation expense was recognized over the performance period based on the number of shares that
were deemed to be probable of vesting at the end of the three-year performance cycle. The total number of shares that vested at July 31, 2011 was approximately 8,700. The expense (income) on these vested shares was approximately $498, of which
$498, ($63), and $63 was recorded in fiscal years 2011, 2010, and 2009, respectively.

In fiscal year 2010, the Committee
granted 223,834 performance awards in the form of shares of restricted stock and restricted stock units pursuant to the Companys 2007 Restricted Stock Plan and 2009 Stock Incentive Plan, of which 28,328 performance awards have been forfeited
through July 31, 2011. These awards will vest as follows: 97,757 will vest based upon achievement of certain targets over the three-year period ending July 31, 2012 with respect to the Companys cumulative non-GAAP earnings per share
and 97,749 will vest based upon achievement of certain targets over the three-year period ending July 31, 2012 with respect to the Companys relative total shareholder return (TSR) as determined against a specified peer group.
The actual number of shares/units to be issued will be determined at the end of the three-year performance cycle and can range from zero to 200% of the target award, or up to 391,012 shares/units. The issuance of the shares/units will be accompanied
by the payment of accumulated dividends on the actual number of shares earned. The maximum compensation expense for the performance awards with the non-GAAP earnings per share target is $7,847, based on a weighted average grant date fair value of
$40.14 per share as determined by the closing price of the Companys common stock on the date of grant. The Company is recognizing compensation expense over the performance period for the performance awards with the non-GAAP earnings per share
target based on the number of shares/units that are deemed to be probable of vesting at the end of the three-year performance cycle.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)



As of July 31, 2011, the Company estimated that total non-GAAP earnings per share awards covering 83,672 shares/units with a value of $3,352 were deemed probable of vesting. During fiscal
years 2011 and 2010 compensation expense of $1,656 and $468, respectively, was recognized for the performance awards with the non-GAAP earnings per share target based on the number of shares deemed probable of vesting.

In fiscal year 2011, the Committee granted 217,233 performance awards in the form of shares of restricted stock units pursuant to the
Companys 2009 Stock Incentive Plan, of which 3,966 performance awards have been forfeited through July 31, 2011. These awards will vest as follows: 133,660 will vest based upon achievement of certain targets over the three-year period
ending July 31, 2013 with respect to the Companys cumulative non- GAAP earnings per share and 79,607 will vest based upon achievement of certain targets over the three-year period ending July 31, 2013 with respect to the
Companys relative TSR as determined against the Russell 2000 Index, of which the Company is a member. The actual number of units to be issued will be determined at the end of the three-year performance cycle and can range from zero to 200% of
the target award, or up to 426,532 units. The issuance of the units will be accompanied by the payment of accumulated dividends on the actual number of shares earned. The maximum compensation expense for the performance awards with the non-GAAP
earnings per share target is $11,229, based on a weighted average grant date fair value of $42.01 per share as determined by the closing price of the Companys common stock on the date of grant. The Company is recognizing compensation expense
over the performance period for the performance awards with the non-GAAP earnings per share target based on the number of units that are deemed to be probable of vesting at the end of the three-year performance cycle. As of July 31, 2011, the
Company estimated that total non-GAAP earnings per share awards covering 108,030 units with a value of $4,538 were deemed probable of vesting. During fiscal year 2011 compensation expense of $1,398 was recognized for the performance awards with
the non-GAAP earnings per share target based on the number of shares deemed probable of vesting.

The compensation expense for
the performance awards granted with a TSR target was approximately $3,700 and $4,600 for awards granted in fiscal years 2011 and 2010, respectively. The compensation expense is being recognized on a straight-line basis, net of estimated forfeitures,
over a derived service period of 2.8 and 2.7 years for the awards granted in fiscal years 2011 and 2010, respectively. The weighted average grant date fair values of awards granted with a TSR target was $54.27 and $47.47 per share during fiscal
years, 2011 and 2010, respectively. The fair value of awards with a TSR target at date of grant was estimated using a Monte-Carlo simulation model with the following assumptions:



|                                   |  |                     |       |   |      |   |       |  
|---------------------------------- |  | ------------------- | ----- | - | ---- | - | ----- | -
|                                   |  | Year Ended July 31, |      
|                                   |  | 2011                |       |   | 2010 |  
|Stock Price (1)                    |  | $                   | 41.96 |   |      | $ | 40.06 |  
|Expected volatility factor (2)     |  |                     | 49    | % |      |   | 51    | %
|Risk-free interest rate (3)        |  |                     | 0.73  | % |      |   | 1.19  | %
|Expected annual dividend yield (4) |  |                     | 0.0   | % |      |   | 0.0   | %



|(1) | The stock price is the weighted average closing price of the Companys common stock on the dates of grant.
|--- | ----------------------------------------------------------------------------------------------------------

|(2) | The stock volatility for each grant is determined based on the historical volatility for the peer group companies over a period equal to the remaining term of the
performance period from the date of grant for all awards.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | The risk-free interest rate for periods equal to the performance period is based on the U.S. Treasury yield curve in effect at the time of grant.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Dividends are considered reinvested when calculating TSR. For the purpose of the fair value model, the dividend yield is therefore considered to be 0%.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------



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ANALOGIC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)



Prior to fiscal year 2007, the Company had two key employee stock option plans (one of
which has lapsed as to the granting of options), two key employee stock bonus plans, two non-employee director stock option plans (one of which has lapsed as to the granting of options), and one employee stock purchase plan.

Options granted under the two key employee stock option plans generally become exercisable in installments commencing no earlier than two
years from the date of grant and ending no later than six years from the date of grant. Unexercised options expire up to seven years from date of grant. Options issued under the plans are non-qualified options or incentive stock options and are
issued at prices of not less than 100% of the fair market value of the common stock at the date of grant. Options granted under the two non-employee director stock option plans become exercisable in equal installments over three years commencing one
year from the date of grant and remain exercisable for ten years from the date of grant. Options issued under the plans are non-qualified options and are issued at prices of 100% of the fair market value of the common stock at the date of grant.

Under the Companys key employee stock bonus plans, restricted common stock may be granted to key employees under terms
and conditions as determined by the Board. Generally, participants under the stock bonus plans may not dispose or otherwise transfer stock granted for three years from date of grant. Stock granted under these plans generally vest in four equal
installments beginning in the third year from the date of grant.

Under the employee stock purchase plan, eligible
participants are granted options to purchase the Companys common stock twice a year at the lower of 85% of market value at the beginning or end of each period. Calculation of the number of options granted, and subsequent purchase of these
shares, is based upon voluntary payroll deductions during each six-month period. The number of options granted to each employee under this plan, when combined with options issued under other plans, is limited to a maximum outstanding value of $25
during each calendar year.

The fair value of each option granted under the employee stock purchase plan was estimated on the
expected grant date using the Black-Scholes option pricing model with the following assumptions:



|                               |  |                     |          |   |      |  |          |      |  |  |          |  
|------------------------------ |  | ------------------- | -------- | - | ---- |  | -------- | ---- |  |  | -------- | -
|                               |  | Year Ended July 31, |         
|                               |  | 2011                |          |   | 2010 |  |          | 2009 | 
|Expected option term           |  |                     | .5 years |   |      |  | .5 years |      |  |  | .5 years |  
|Expected volatility factor     |  |                     | 42       | % |      |  | 50       | %    |  |  | 50       | %
|Risk-free interest rate        |  |                     | 0.27     | % |      |  | 2.58     | %    |  |  | 2.08     | %
|Expected annual dividend yield |  |                     | 1.0      | % |      |  | 1.1      | %    |  |  | 1.3      | %

At July 31, 2011, 790,739 shares were reserved for grant under the above stock option, bonus, and
purchase plans.



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ANALOGIC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)



The following table sets forth the stock option and restricted stock awards
transactions for fiscal year 2011:



|                                                        |  |                           |         |   |                                           |   |       |                                                                       |  |  |                         |  |  |                       |       |  |                                     |  |         |                           |  |   |                                     |  |  |  |         |   |  |   |       | 
|------------------------------------------------------- |  | ------------------------- | ------- | - | ----------------------------------------- | - | ----- | --------------------------------------------------------------------- |  |  | ----------------------- |  |  | --------------------- | ----- |  | ----------------------------------- |  | ------- | ------------------------- |  | - | ----------------------------------- |  |  |  | ------- | - |  | - | ----- | 
|                                                        |  | Stock Options Outstanding |         |   | Time-Based UnvestedRestricted StockAwards |   |       | Performance-BasedUnvested RestrictedContingent Restricted StockAwards | 
|                                                        |  | Numberof Shares           |         |   | WeightedAverageExercisePrice              |   |       | WeightedAverageRemainingContractualTerm(years)                        |  |  | AggregateIntrinsicValue |  |  | Number ofShares/Units |       |  | WeightedAverageGrant DateFair Value |  |         | Number ofShares/Units (1) |  |   | WeightedAverageGrant DateFair Value | 
|Outstanding at July 31, 2010                            |  |                           | 320,009 |   |                                           | $ | 54.38 |                                                                       |  |  | 4.66                    |  |  | $                     | 754   |  |                                     |  | 108,816 |                           |  | $ | 52.26                               |  |  |  | 340,906 |   |  | $ | 49.12 | 
|Granted                                                 |  |                           | 7,000   |   |                                           |   | 41.59 |                                                                       |  |  |                         |  |  |                       |       |  |                                     |  | 12,395  |                           |  |   | 42.40                               |  |  |  | 217,233 |   |  |   | 46.44 | 
|Exercised                                               |  |                           | (26,173 | ) |                                           |   | 42.87 |                                                                       |  |  |                         |  |  |                       |       |  |                                     |  |         |                           |  |   |                                     |  |  |  |         |   |  |   |       | 
|Vesting of restricted stock                             |  |                           |         |   |                                           |   |       |                                                                       |  |  |                         |  |  |                       |       |  |                                     |  | (67,572 | )                         |  |   | 56.05                               |  |  |  | (15,711 | ) |  |   | 59.16 | 
|Cancelled (forfeited and expired)                       |  |                           | (26,314 | ) |                                           |   | 54.04 |                                                                       |  |  |                         |  |  |                       |       |  |                                     |  | (1,839  | )                         |  |   | 53.76                               |  |  |  | (95,184 | ) |  |   | 51.55 | 
|                                                        |  |                           |         |   |                                           |   |       |                                                                       |  |  |                         |  |  |                       |       |  |                                     |  |         |                           |  |   |                                     |  |  |  |         |   |  |   |       | 
|Outstanding at July 31, 2011                            |  |                           | 274,522 |   |                                           |   | 55.18 |                                                                       |  |  | 4.34                    |  |  | $                     | 1,466 |  |                                     |  | 51,800  |                           |  |   | 44.90                               |  |  |  | 447,244 |   |  |   | 46.95 | 
|Options vested or expected to vest at July 31, 2011 (2) |  |                           | 272,662 |   |                                           |   | 55.28 |                                                                       |  |  | 4.32                    |  |  |                       | 1,441 |  |                                     |  |         |                           |  |   |                                     |  |  |  |         |   |  |   |       | 
|Options exercisable at July 31, 2011                    |  |                           | 228,650 |   |                                           |   | 56.52 |                                                                       |  |  | 4.05                    |  |  |                       | 1,031 |  |                                     |  |         |                           |  |   |                                     |  |  |  |         |   |  |   |       | 



|(1) | The number of performance-based unvested restricted stock awards is shown in this table at target. As of July 31, 2011, the maximum number of performance-based
unvested restricted stock awards available to be earned is 894,488.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | In addition to the vested options, the Company expects a portion of the unvested options to vest at some point in the future. Options expected to vest are calculated by
applying an estimated forfeiture rate to the unvested options.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The weighted average fair value of stock options
granted during fiscal years 2011, 2010, and 2009 were $15.42, $15.39, and, $18.14 per share, respectively.

During fiscal
years 2011, 2010, and 2009, the total intrinsic value of options exercised (i.e., the difference between the market price and the price paid by the employee to exercise the options) was $195, $80, and $101, respectively, and the total amount of cash
received from the exercise of these options was $1,122, $693, and $198, respectively. The total fair value of restricted stock grants that vested during fiscal years 2011, 2010, and 2009 was $4,138, $1,379, and $1,580, respectively.

The following table summarizes information about stock options outstanding at July 31, 2011:



|                        |  |                     |         |  |                                                  |  |      |                                |  |   |                   |  |  |                                |         |  |  |   |       | 
|----------------------- |  | ------------------- | ------- |  | ------------------------------------------------ |  | ---- | ------------------------------ |  | - | ----------------- |  |  | ------------------------------ | ------- |  |  | - | ----- | 
|                        |  | Options Outstanding |         |  | Vested Options                                   | 
|Range ofExercise Prices |  | Number ofShares     |         |  | Weighted Averageof RemainingContract Life(years) |  |      | WeightedAverageExercise 
Price |  |   | NumberExercisable |  |  | WeightedAverageExercise 
Price |        
|$27.11 - 41.32          |  |                     | 62,332  |  |                                                  |  | 4.69 |                                |  | $ | 35.92             |  |  |                                | 43,834  |  |  | $ | 35.85 | 
|41.34 - 61.47           |  |                     | 56,250  |  |                                                  |  | 4.39 |                                |  |   | 49.46             |  |  |                                | 42,542  |  |  |   | 50.41 | 
|62.72 - 62.72           |  |                     | 87,940  |  |                                                  |  | 4.09 |                                |  |   | 62.72             |  |  |                                | 87,940  |  |  |   | 62.72 | 
|64.70 - 71.86           |  |                     | 58,000  |  |                                                  |  | 4.16 |                                |  |   | 66.80             |  |  |                                | 46,834  |  |  |   | 67.10 | 
|72.22 - 75.35           |  |                     | 10,000  |  |                                                  |  | 5.00 |                                |  |   | 73.78             |  |  |                                | 7,500   |  |  |   | 73.26 | 
|                        | 
|$27.11 - 75.35          |  |                     | 274,522 |  |                                                  |  | 4.34 |                                |  |   | 55.18             |  |  |                                | 228,650 |  |  |   | 56.52 | 
|                        | 



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##### Table of Contents

ANALOGIC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)



As of July 31, 2011, there was $10,991 of total unrecognized compensation cost
related to non-vested share-based compensation arrangements granted under the Companys stock option and restricted stock bonus plans. That cost is expected to be recognized over a weighted-average period of 1.69 years. The Company amortizes
share-based compensation on the straight-line method with the exception of performance contingent restricted stock.

The
actual tax benefit realized for the tax deductions from option exercises totaled $49, $28, and $25 for fiscal years 2011, 2010, and 2009, respectively.

4. Business combination

On November 19, 2010, the
Company acquired certain assets of an OEM ultrasound transducer and probe business. The acquisition was undertaken by the Company in order to increase its market share in the transducer and probe business, expand its relationships with a major
customer, and expand its product portfolio. The acquisition resulted in a bargain purchase as the seller was motivated to sell the assets of the transducer and probe business since they were not a core part of the sellers business.

The acquisition has been accounted for as an acquisition under authoritative guidance for business combinations. The purchase price of
the acquisition has been allocated to the net tangible and intangible assets acquired, with the excess of the fair value of assets acquired over the purchase price recorded as a bargain purchase gain in fiscal year 2011.

The results of operations and estimated fair value of assets acquired and liabilities assumed were included in the Companys audited
consolidated financial statements beginning November 19, 2010.

The total purchase consideration is expected to be
approximately $686 in cash, of which approximately $346 was paid at the closing. The purchase consideration also includes contingent consideration of $340, which represents the fair value of future cash payments expected to be made by the Company
based on the sale of certain acquired products over a two year period commencing on November 1, 2010. The Company estimated the contingent consideration based on probability weighted expected future cash flows, and it is included under other
long term liabilities in the Consolidated Balance Sheet at April 30, 2011. These cash flows were discounted at a rate of approximately 22.1%. The contingent consideration is marked to market at the end of each fiscal quarter. As of
July 31, 2011, there was no material change in the fair value of contingent consideration compared to the fair value estimated at November 19, 2010. Acquisition-related costs were insignificant.

The final fair value allocated to each of the major classes of tangible and identifiable intangible assets acquired on November 19,
2010 and the bargain purchase gain recorded in general and administrative expenses in the unaudited Consolidated Statements of Operations were computed as follows:



|                                   |  |   |       |  
|---------------------------------- |  | - | ----- | -
|Inventory                          |  | $ | 1,284 |  
|Property, plant, and equipment     |  |   | 489   |  
|Intangible assets                  |  |   | 730   |  
|Accrued liabilities                |  |   | (154  | )
|Deferred tax liabilities           |  |   | (621  | )
|                                   |  |   |       |  
|Net tangible and intangible assets |  |   | 1,728 |  
|Estimated purchase price           |  |   | 686   |  
|                                   |  |   |       |  
|Bargain purchase gain              |  | $ | 1,042 |  
|                                   |  |   |       |  



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ANALOGIC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)



The deferred tax liability associated with the estimated fair value adjustments of
tangible and intangible assets acquired is recorded at an estimated weighted average effective tax rate in the jurisdictions where the fair value adjustments may occur.

The following table sets forth the components of the identifiable intangible assets acquired and being amortized over their estimated useful lives, with a maximum amortization period of five years, on a
straight-line basis:



|                                              |  |            |     |  |             |           
|--------------------------------------------- |  | ---------- | --- |  | ----------- | ----------
|                                              |  | Fair Value |     |  | Useful Life
|Backlog                                       |  | $          | 70  |  |             | 3.5 months
|Developed Technology                          |  |            | 420 |  |             | 5 years   
|Customer Relationships                        |  |            | 240 |  |             | 5 years   
|                                              |  |            |    
|Total acquired identifiable intangible assets |  | $          | 730 |  |             |           
|                                              |  |            |    

In determining the purchase price allocation, the Company considered, among other factors, its intention
to use the acquired assets and the historical and estimated future demand for the acquired products and services. The fair value of developed technology was based upon the relief from royalty approach while the customer relationship and backlog
intangible assets were based on the income approach. The rate used to discount the estimated future net cash flows to their present values for each intangible asset was based upon a weighted average cost of capital ranging from 22.1% to 24.1%. The
discount rate was determined after consideration of market rates of return on debt and equity capital, the weighted average return on invested capital and the risk associated with achieving forecasted sales related to the technology and assets
acquired.

The Companys results would not have been materially different from its reported results had the acquisition
occurred at the beginning of fiscal years 2011, 2010, and 2009.

5. Restructuring and voluntary retirement charges:

In the first quarter of fiscal year 2011, the Company recorded a restructuring charge of $3,562 for severance and
personnel related costs of plan it initiated to reduce its workforce by 104 employees worldwide. The purpose of this workforce reduction was to streamline its operations and consolidate its Denmark and Canton, Massachusetts manufacturing operations
into its existing facilities. During the second quarter of 2011, the Company recorded an adjustment of $134 for a change in estimate of severance and related benefit expenses related to this plan.

In the fourth quarter of fiscal year 2011, the Company recorded a restructuring charge of $3,587 for severance and personnel related
costs of a plan to streamline its operations by reducing its workforce by 51 employees worldwide.

In the second quarter of
fiscal year 2010, the Company reduced its workforce by 17 employees worldwide. The total costs of this plan, including severance and personnel related costs, was $764 and was recorded as a restructuring charge during fiscal year 2010.

In the fourth quarter of fiscal year 2010, the Company recorded an additional restructuring charge of $420 for estimated sub-lease income
that is no longer expected to be received for facility space the Company exited in the fourth quarter of fiscal year 2010. Offsetting this expense was an adjustment of severance and related benefit expenses of $494 related to a change in estimated
severance benefits as well as changes in the employee population expected to receive such benefits.



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ANALOGIC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)



In the second quarter of fiscal year 2009, the Company reduced its workforce by 145
employees worldwide and recorded a restructuring charge of $3,488 for severance and personnel related costs. Included in the second quarter restructuring for Copley were 29 employees. The severance and personnel related costs for the Copley
employees of $323 were accrued for in fiscal year 2008 in connection with the acquisition.

In the fourth quarter of fiscal
year 2009, the Company recorded a restructuring charge of $3,131. The restructuring charge included $2,073 in severance and personnel related costs for the reduction of its workforce by 85 employees worldwide and $1,058 for facility exit costs, due
primarily to the Company vacating 50% of its office facility in Canton, MA on July 31, 2009 as a result of moving certain operations to its Peabody, MA facility. The facility exit costs consist primarily of ongoing lease payments less estimated
sublease income for the vacated portion of the Canton lease over the remainder of the lease term, which ends in calendar year 2011.

The following table summarizes accrued voluntary retirement and other restructuring costs activity from July 31, 2008 through July 31, 2011:



|                          |  |                              |        |   |                   |   |       |                            |  |   |                   |   |  |       |       |   |  |   |        |  
|------------------------- |  | ---------------------------- | ------ | - | ----------------- | - | ----- | -------------------------- |  | - | ----------------- | - |  | ----- | ----- | - |  | - | ------ | -
|                          |  | InvoluntaryEmployeeSeverance |        |   | FacilityExitCosts |   |       | VoluntaryRetirementProgram |  |   | CopleyAcquisition |   |  | Total |      
|Balance at July 31, 2008  |  | $                            | 309    |   |                   | $ |      |                            |  | $ | 3,395             |   |  | $     | 1,376 |   |  | $ | 5,080  |  
|Restructuring charge      |  |                              | 5,561  |   |                   |   | 1,058 |                            |  |   |                  |   |  |       |      |   |  |   | 6,619  |  
|Cash payments             |  |                              | (3,171 | ) |                   |   |      |                            |  |   | (3,395            | ) |  |       | (975  | ) |  |   | (7,541 | )
|Reversal through goodwill |  |                              |       |   |                   |   |      |                            |  |   |                  |   |  |       | (375  | ) |  |   | (375   | )
|Foreign exchange          |  |                              | 29     |   |                   |   |      |                            |  |   |                  |   |  |       |      |   |  |   | 29     |  
|                          | 
|Balance at July 31, 2009  |  |                              | 2,728  |   |                   |   | 1,058 |                            |  |   |                  |   |  |       | 26    |   |  |   | 3,812  |  
|Restructuring charge      |  |                              | 764    |   |                   |   | 420   |                            |  |   |                  |   |  |       |      |   |  |   | 1,184  |  
|Adjustments               |  |                              | (494   | ) |                   |   |      |                            |  |   |                  |   |  |       |      |   |  |   | (494   | )
|Cash payments             |  |                              | (2,854 | ) |                   |   | (756  | )                          |  |   |                  |   |  |       | (26   | ) |  |   | (3,636 | )
|Foreign exchange          |  |                              | 9      |   |                   |   |      |                            |  |   |                  |   |  |       |      |   |  |   | 9      |  
|                          | 
|Balance at July 31, 2010  |  |                              | 153    |   |                   |   | 722   |                            |  |   |                  |   |  |       |      |   |  |   | 875    |  
|Restructuring charge      |  |                              | 7,147  |   |                   |   |      |                            |  |   |                  |   |  |       |      |   |  |   | 7,147  |  
|Adjustments               |  |                              | (134   | ) |                   |   | 53    |                            |  |   |                  |   |  |       |      |   |  |   | (81    | )
|Cash payments             |  |                              | (2,212 | ) |                   |   | (620  | )                          |  |   |                  |   |  |       |      |   |  |   | (2,832 | )
|Foreign exchange          |  |                              | 81     |   |                   |   |      |                            |  |   |                  |   |  |       |      |   |  |   | 81     |  
|                          | 
|Balance at July 31, 2011  |  | $                            | 5,035  |   |                   | $ | 155   |                            |  | $ |                  |   |  | $     |      |   |  | $ | 5,190  |  
|                          | 

The cash expenditures subsequent to July 31, 2011 of approximately $5,035 in employee severance and
$155 of facility exit costs will be paid within the next twelve months.

6. Net income per share:

Basic net income per share is computed using the weighted average number of common shares outstanding during the period. Diluted net
income per share is computed using the sum of the weighted average number of common shares outstanding during the period and, if dilutive, the weighted average number of potential shares of common stock, including unvested restricted stock awards
and the assumed exercise of stock options using the treasury stock method.



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ANALOGIC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)



The following table sets forth the computation of basic and diluted net income per
share for fiscal years 2011, 2010, and 2009:



|                                                                                        |  |                                       |        |  |      |   |        |      |  |   |        | 
|--------------------------------------------------------------------------------------- |  | ------------------------------------- | ------ |  | ---- | - | ------ | ---- |  | - | ------ | 
|                                                                                        |  | (In thousands, except per share data) |       
|                                                                                        |  | Year Ended July, 31                   |       
|                                                                                        |  | 2011                                  |        |  | 2010 |   |        | 2009 | 
|Income from continuing operations                                                       |  | $                                     | 16,620 |  |      | $ | 15,799 |      |  | $ | 3,517  | 
|Income (loss) from discontinued operations, net of tax                                  |  |                                       | 289    |  |      |   | (244   | )    |  |   | 188    | 
|Gain on disposal of discontinued operations, net of tax                                 |  |                                       | 924    |  |      |   |       |      |  |   |       | 
|                                                                                        | 
|Net income                                                                              |  | $                                     | 17,833 |  |      | $ | 15,555 |      |  | $ | 3,705  | 
|                                                                                        | 
|Weighted average number of common shares outstanding-basic                              |  |                                       | 12,491 |  |      |   | 12,584 |      |  |   | 12,835 | 
|Effect of dilutive securities:                                                          |  |                                       |        |  |      |   |        |      |  |   |        | 
|Stock options and restricted stock awards                                               |  |                                       | 81     |  |      |   | 71     |      |  |   | 97     | 
|                                                                                        | 
|Weighted average number of common shares outstanding-diluted                            |  |                                       | 12,572 |  |      |   | 12,655 |      |  |   | 12,932 | 
|                                                                                        | 
|Basic net income (loss) per share:                                                      |  |                                       |        |  |      |   |        |      |  |   |        | 
|                                                                                        | 
|Income from continuing operations                                                       |  | $                                     | 1.33   |  |      | $ | 1.26   |      |  | $ | 0.27   | 
|Income (loss) from discontinued operations, net of tax                                  |  |                                       | 0.02   |  |      |   | (0.02  | )    |  |   | 0.02   | 
|Gain on disposal of discontinued operations, net of tax                                 |  |                                       | 0.08   |  |      |   |       |      |  |   |       | 
|                                                                                        | 
|Basic net income per share                                                              |  | $                                     | 1.43   |  |      | $ | 1.24   |      |  | $ | 0.29   | 
|                                                                                        | 
|Diluted net income (loss) per share:                                                    |  |                                       |        |  |      |   |        |      |  |   |        | 
|                                                                                        | 
|Income from continuing operations                                                       |  | $                                     | 1.33   |  |      | $ | 1.25   |      |  | $ | 0.27   | 
|Income (loss) from discontinued operations, net of tax                                  |  |                                       | 0.02   |  |      |   | (0.02  | )    |  |   | 0.02   | 
|Gain on disposal of discontinued operations, net of tax                                 |  |                                       | 0.07   |  |      |   |       |      |  |   |       | 
|                                                                                        | 
|Diluted net income per share                                                            |  | $                                     | 1.42   |  |      | $ | 1.23   |      |  | $ | 0.29   | 
|                                                                                        | 
|Anti-dilutive shares related to outstanding stock options and unvested restricted stock |  |                                       | 204    |  |      |   | 344    |      |  |   | 432    | 

Anti-dilutive shares related to outstanding stock options may become dilutive in future years.

7. Risks and uncertainties:

The Company is subject to risks common to companies in the medical and security technology industries. These risks, which could have a material and negative impact on the Companys business,
financial condition, and results of operations, include, but are not limited to, loss of any significant customer, dependence on key suppliers, and United States and foreign regulatory clearances and approvals.



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ANALOGIC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)



Customers

The Company had three customers, as set forth in the table below, who accounted for 10% or more of the net product and engineering revenue during fiscal years 2011, 2010, and 2009.



|                                                 |  |                     |    |   |      |  |    |      |  |  |    |  
|------------------------------------------------ |  | ------------------- | -- | - | ---- |  | -- | ---- |  |  | -- | -
|                                                 |  | Year Ended July 31, |   
|                                                 |  | 2011                |    |   | 2010 |  |    | 2009 | 
|Koninklijke Philips Electronics N.V. (Philips) |  |                     | 13 | % |      |  | 15 | %    |  |  | 15 | %
|Toshiba Corporation (Toshiba)                  |  |                     | 11 | % |      |  | 12 | %    |  |  | 14 | %
|L-3 Communications Corporation (L-3)           |  |                     | *  |   |      |  | *  |      |  |  | 11 | %



|Note | (*):  Total net revenue was less than 10% in this fiscal year.
|---- | --------------------------------------------------------------

Philipss and Toshibas revenue was in the Medical Imaging segment and L-3s revenue was in the Security Technology segment.

The Companys ten largest customers as a group accounted for 64%, 66%, and 67% of the Companys net product and engineering
revenue for fiscal years 2011, 2010, and 2009, respectively. Philips accounted for 17% and 16% of net accounts receivable at July 31, 2011 and 2010, respectively, and L-3 accounted for 13% of net accounts receivable at July 31, 2010.

Although the Company is seeking to broaden its customer base, the Company 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 operating results would be adversely affected if one or more major customers were to cancel, delay, or reduce significant orders in
the future. Customer agreements typically permit the customer to discontinue future purchases after timely notice. In addition, the Company generates significant accounts receivable in connection with the products it sells and the services it
provides to its major customers. Although its major customers are large well established corporations, if one or more of its customers were to become insolvent or otherwise be unable to pay for the Companys products and services, the
Companys operating results and financial condition could be adversely affected.

8. Marketable securities and fair
value:

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an
exit price) in the principal or most advantageous market for the asset transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use
of unobservable inputs. The Company uses a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value:

Level 1  Quoted prices in active markets for identical assets or liabilities.

Level 2  Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or
liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3  Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the
assets or liabilities.

The Companys cash equivalents at July 31, 2011 are comprised primarily of demand deposits
at highly rated financial institutions.



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The Company did not have any financial or non-financial assets or liabilities measured
at fair value at July 31, 2010. The following table provides the financial or non-financial assets and liabilities carried at fair value measured on a recurring basis at July 31, 2011:



|                         |  |                                                            |   |  |                                         |   |       |                                      |  |   |     |  |  |   |       | 
|------------------------ |  | ---------------------------------------------------------- | - |  | --------------------------------------- | - | ----- | ------------------------------------ |  | - | --- |  |  | - | ----- | 
|                         |  | Fair Value Measurements at July 31, 2011 using             |   |  | TotalCarryingValue                      |  
|Liabilities              |  | Quoted Prices inActive Marketsfor IndenticalAssets Level 1 |   |  | SignificantOtherObservableInputsLevel 2 |   |       | SignificantUnobservableInputsLevel 3 |  |  
|Cash equivalents         |  | $                                                          |  |  |                                         | $ | 9,600 |                                      |  | $ |    |  |  | $ | 9,600 | 
|                         | 
|Total assets             |  | $                                                          |  |  |                                         | $ | 9,600 |                                      |  | $ |    |  |  | $ | 9,600 | 
|                         | 
|Contingent consideration |  | $                                                          |  |  |                                         | $ |      |                                      |  | $ | 340 |  |  |   | 340   | 
|                         | 
|Total liabilities        |  | $                                                          |  |  |                                         | $ |      |                                      |  | $ | 340 |  |  | $ | 340   | 
|                         | 

9. Balance sheet information:

Additional information for certain balance sheet accounts is as follows for the years ended:



|                                           |  |          |         |  |      |   |        | 
|------------------------------------------ |  | -------- | ------- |  | ---- | - | ------ | 
|                                           |  | July 31, |        
|                                           |  | 2011     |         |  | 2010 |  
|Accounts receivable, net of allowance:     |  |          |         |  |      |   |        | 
|Billed                                     |  | $        | 81,314  |  |      | $ | 69,158 | 
|Unbilled (A)                               |  |          | 7,244   |  |      |   | 5,053  | 
|                                           | 
|                                           |  | $        | 88,558  |  |      | $ | 74,211 | 
|                                           | 
|Inventories:                               |  |          |         |  |      |   |        | 
|Raw materials                              |  | $        | 75,434  |  |      | $ | 54,106 | 
|Work-in-process                            |  |          | 10,544  |  |      |   | 12,896 | 
|Finished goods                             |  |          | 19,505  |  |      |   | 19,058 | 
|                                           | 
|                                           |  | $        | 105,483 |  |      | $ | 86,060 | 
|                                           | 
|Accrued liabilities:                       |  |          |         |  |      |   |        | 
|Accrued employee compensation and benefits |  | $        | 21,521  |  |      | $ | 18,765 | 
|Accrued restructuring charges              |  |          | 5,190   |  |      |   | 875    | 
|Accrued warranty                           |  |          | 5,174   |  |      |   | 6,103  | 
|Other                                      |  |          | 9,553   |  |      |   | 7,360  | 
|                                           | 
|                                           |  | $        | 41,438  |  |      | $ | 33,103 | 
|                                           | 
|Advance payments and deferred revenue:     |  |          |         |  |      |   |        | 
|Deferred revenue                           |  | $        | 7,380   |  |      | $ | 5,492  | 
|Customer deposits                          |  |          | 1,869   |  |      |   | 3,396  | 
|                                           | 
|                                           |  | $        | 9,249   |  |      | $ | 8,888  | 
|                                           | 



|(A) | Total unbilled receivables at July 31, 2011 and 2010 were $11,617 and $6,039, respectively. At July 31, 2011 and 2010, the long-term portion of unbilled
receivables of $4,373 and $986, respectively, was included in non-current other assets.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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10. Goodwill and other intangible assets:

The carrying amount of the goodwill at July 31, 2011 and July 31, 2010 was $1,849.

Other intangible assets include the value assigned to intellectual property and other technology, patents, customer contracts and
relationships, a trade name, and in-process research and development. The estimated useful lives for all of these intangible assets, excluding the trade name and in-process research and development, as they are considered to have an indefinite
life, are 0.5 to 14 years.Intangible assets at July 31, 2011 and 2010 consisted of the following:



|                                    |  |               |        |  |                         |   |       |     |  |   |        |  |  |                         |        |  |     |   |       |  |  |   |        | 
|----------------------------------- |  | ------------- | ------ |  | ----------------------- | - | ----- | --- |  | - | ------ |  |  | ----------------------- | ------ |  | --- | - | ----- |  |  | - | ------ | 
|                                    |  | July 31, 2011 |        |  | July 31, 2010           |  
|                                    |  | Cost          |        |  | AccumulatedAmortization |   |       | Net |  |   | Cost   |  |  | AccumulatedAmortization |        |  | Net |  
|Developed technology                |  | $             | 12,191 |  |                         | $ | 3,762 |     |  | $ | 8,429  |  |  | $                       | 11,771 |  |     | $ | 2,578 |  |  | $ | 9,193  | 
|Customer relationships              |  |               | 25,440 |  |                         |   | 5,973 |     |  |   | 19,467 |  |  |                         | 25,200 |  |     |   | 4,139 |  |  |   | 21,061 | 
|Trade name                          |  |               | 7,607  |  |                         |   |      |     |  |   | 7,607  |  |  |                         | 7,607  |  |     |   |      |  |  |   | 7,607  | 
|Backlog                             |  |               | 70     |  |                         |   | 70    |     |  |   |       |  |  |                         |       |  |     |   |      |  |  |   |       | 
|In-process research and development |  |               | 1,900  |  |                         |   |      |     |  |   | 1,900  |  |  |                         | 1,900  |  |     |   |      |  |  |   | 1,900  | 
|                                    |  |               |        |  |                         |   |       |     |  |   |        |  |  |                         |        |  |     |   |       |  |  |   |        | 
|Total                               |  | $             | 47,208 |  |                         | $ | 9,805 |     |  | $ | 37,403 |  |  | $                       | 46,478 |  |     | $ | 6,717 |  |  | $ | 39,761 | 
|                                    |  |               |        |  |                         |   |       |     |  |   |        |  |  |                         |        |  |     |   |       |  |  |   |        | 

Amortization expense related to acquired intangible assets was $3,088, $2,931, and $3,782 for fiscal
years 2011, 2010, and 2009, respectively.

The estimated future amortization expenses related to intangible assets for each of
the five succeeding fiscal years is expected to be as follows:



|     |  |   |        | 
|---- |  | - | ------ | 
|2012 |  | $ | 3,063  | 
|2013 |  |   | 3,063  | 
|2014 |  |   | 3,063  | 
|2015 |  |   | 3,063  | 
|2016 |  |   | 2,975  | 
|     |  |   |        | 
|     |  | $ | 15,227 | 
|     |  |   |        | 

The Companys goodwill and indefinite lived intangible assets are tested for impairment at the
reporting unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying value. Goodwill represents the purchase price
in excess of the net amount assigned to assets acquired and liabilities assumed by the Company in connection with the acquisition of Copley on April 14, 2008. The trade name represents the value allocated to the Copley trade name in connection
with the acquisition of Copley. The goodwill and Copley trade name are part of the OEM reporting unit (the Reporting Unit), both of which the Company tests for impairment during the second quarter of each fiscal year.

In the second quarter of fiscal year 2011, the Company performed an annual impairment test for the goodwill, trade name, and in-process
research development. For the goodwill, the Company compared the fair value of the OEM reporting unit to its carrying value. The Companys approach considered both the market approach and income approach. Equal weight was given to each
approach. Under the market approach, the fair



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value of the reporting unit is based on trading multiples. In the market approach, the Company assumed a control premium of 15% for the reporting unit, which was determined based on an analysis
of control premiums for relevant recent acquisitions. Under the income approach, the fair value of the reporting unit is based on the present value of estimated future cash flows. The income approach is dependent on a number of significant
management assumptions including estimates of future sales, future gross margin percentage, and discount rates. The discount rate of 15.7% was determined after consideration of market rates of return on debt and equity capital, the weighted average
return on invested capital and the risk associated with achieving forecasted sales for the reporting unit. The Company determined that the fair value of the reporting unit was significantly in excess of the carrying value of the net assets of the
reporting unit, and thus it was not necessary for the Company to perform step two of the impairment test for the goodwill.

For the trade name, the Company compared the fair value of the Copley trade name using the relief from royalty approach to its carrying
value during the second quarter of fiscal year 2011. The relief from royalty approach utilized a 1.3% aftertax royalty rate and a discount rate of 17.7%. The aftertax royalty rate was determined based on royalty research and margin analysis while
the discount rate was determined after consideration of market rates of return on debt and equity capital, the weighted average return on invested capital and the risk associated with achieving forecasted sales for the Copley trade name. The Company
determined that the fair value of the Copley trade name was more than its carrying value.

For the in-process research and
development, the Company compared the fair value of the in-process research and development using the income approach to its carrying value during the second quarter of fiscal year 2011. The income approach utilized a discount rate of 15.7%, which
was determined after consideration of market rates of return on debt and equity capital, the weighted average return on invested capital and the risk associated with achieving forecasted sales from the in-process research and development. The
Company determined that the fair value of the in-process research and development was more than its carrying value.

Given the
current economic environment and the uncertainties regarding its impact on the Companys business, the Companys estimates and assumptions regarding the duration of the ongoing economic downturn, or the period or strength of recovery, made
for purposes of its goodwill, trade name, and in-process research and development impairment testing during the second quarter of fiscal year 2011 may not be accurate predictions of the future. If the Companys assumptions regarding forecasted
revenue or margin growth rates of the reporting unit and trade name are not achieved, the Company may be required to record an impairment charge for the goodwill and trade name in future periods, whether in connection with the Companys next
annual impairment testing in the second quarter of the fiscal year ending July 31, 2012, or prior to that if any such change constitutes a triggering event outside of the quarter from when the annual goodwill and trade name impairment test is
performed. It is not possible at this time to determine if any such future impairment charge would result or, if it does, whether such charge would be material.

11. Commitments, guarantees, and contingencies:

In August
2009, the Company reached a settlement related to a claim associated with a former distributor of Medical Imaging Products, CAS Medical Systems, Inc. (CAS), in which the Company agreed to pay CAS the sum of $811 in full satisfaction of
all matters in dispute. The $811 was recorded in general and administrative expenses in fiscal year 2009. The Company and CAS have negotiated an orderly conclusion to their contractual relationship by allowing CAS to continue distributing
products until July 31, 2010. In connection with the settlement agreement, the Company also wrote down deferred engineering costs of $365 to engineering cost of sales in fiscal year 2009.



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(Continued)



The following is a summary of agreements that the Company determined require to be
recognized at the inception of a guarantee, a liability for the fair value of the obligation undertaken by issuing the guarantee.

The Companys standard OEM and supply agreements entered in the ordinary course of business typically contain an indemnification provision pursuant to which the Company indemnifies, holds harmless,
and agrees to reimburse the indemnified party for losses suffered or incurred by the indemnified party in connection with any United States patent, or any copyright or other intellectual property infringement claim by any third party with respect to
the Companys products. Such provisions generally survive termination or expiration of the agreements. The potential amount of future payments the Company could be required to make under these indemnification provisions is, in some instances,
unlimited. The Company has never incurred costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, the Company believes that its estimated exposure on these agreements is currently minimal. Accordingly, the
Company has no liabilities recorded for these agreements as of July 31, 2011.

Generally, the Company warrants that its
products will perform in all material respects in accordance with its standard published specifications in effect at the time of delivery of the products to the customer for a period ranging from 12 to 26 months from the date of delivery. The
Company provides for the estimated cost of product and service warranties based on specific warranty claims, claim history, and engineering estimates, where applicable.

The following table presents the Companys product general warranty liability for the years then ended:



|                                                      |  |          |        |   |      |   |        |  
|----------------------------------------------------- |  | -------- | ------ | - | ---- | - | ------ | -
|                                                      |  | July 31, |       
|                                                      |  | 2011     |        |   | 2010 |  
|Balance at the beginning of the period                |  | $        | 6,103  |   |      | $ | 5,918  |  
|Accrual                                               |  |          | 5,381  |   |      |   | 5,307  |  
|Settlements made in cash or in kind during the period |  |          | (6,310 | ) |      |   | (5,122 | )
|                                                      |  |          |        |   |      |   |        |  
|Balance at the end of the period                      |  | $        | 5,174  |   |      | $ | 6,103  |  
|                                                      |  |          |        |   |      |   |        |  

At July 31, 2011 and 2010, the Company had deferred revenue for product extended warranty contracts
of $6,528 and $4,150, respectively.

The Company currently has approximately $24,400 in revolving credit facilities with banks
available for direct borrowings. The Companys revolving credit facility agreements contains a number of covenants, including a covenant requiring the Company to maintain a tangible net worth (as defined in the revolving credit facility
agreement) of no less than $255,000 as of the end of any fiscal quarter. The Company was in compliance with this covenant and all other covenants at July 31, 2011 with a tangible net worth of approximately $383,000. As of July 31, 2011,
there were no direct borrowings or off-balance sheet arrangements.

In the fourth quarter of fiscal year 2011, the Company
identified certain transactions involving our Danish subsidiary BK Medical, and certain of its foreign distributors, with respect to which the Company has raised questions concerning compliance with law, including Danish law and the United States
Foreign Corrupt Practices Act, and the Companys business policies. The Company has voluntarily disclosed this matter to the Danish Government, the United States Department of Justice and the Securities and Exchange Commission. The Company has
concluded that the transactions identified to date have been properly accounted for in its reported financial statements in all material respects. The Company is unable to estimate the potential penalties and/or sanctions, if any, that might be
assessed in connection with this matter and therefore, the Company has not recorded any liability with respect to this matter at July 31, 2011.



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12. Leases and other commitments:

Certain of the Companys subsidiaries lease manufacturing and office space under non-cancelable operating leases. These leases
contain renewal options. The Company leases certain other real property and equipment under operating leases which, in the aggregate, are not significant.

Rent expense associated with the Companys operating leases was approximately $2,623, $2,560, and $3,539 in fiscal years 2011, 2010 and 2009, respectively.

The following is a schedule by year of future minimum lease payments at July 31, 2011:



|            |  |                  |       | 
|----------- |  | ---------------- | ----- | 
|            |  | Operating Leases |      
|Fiscal Year |  |                  |       | 
|2012        |  | $                | 2,109 | 
|2013        |  |                  | 1,022 | 
|2014        |  |                  | 905   | 
|2015        |  |                  | 724   | 
|2016        |  |                  | 572   | 
|Thereafter  |  |                  | 2,249 | 
|            |  |                  |       | 
|            |  | $                | 7,581 | 
|            |  |                  |       | 

At July 31, 2011, the Company had outstanding non-cancelable purchase orders aggregating to $50,231.
The purchase orders are for manufacturing and non-manufacturing related goods and services.

13. Other income (expense):

Other income (expense) consists primarily of interest income on short- and long-term marketable securities, gain or (loss)
attributable to investments on unconsolidated affiliates, which the Company accounts for under the cost or equity method, and foreign exchange gains (losses).

The Company had foreign exchange losses totaling $678, $612, and $828 in fiscal years 2011, 2010 and 2009, respectively.

14. Retirement Plans:

401(k) Plan

The Company has a qualified retirement plan called the Analogic 401(k) Plan (the Plan) to provide retirement income for
eligible employees through employee contributions and contributions from the Company. Employer contributions are discretionary and may be in the form of a direct profit sharing contribution or a discretionary matching contribution as determined and
approved by the Board. The Company contribution each year shall in no event exceed the maximum allowable under applicable provisions of the Internal Revenue Code. All contributions vest immediately.

The Plan, as allowed under Section 401(k) of the Internal Revenue Code, permits tax-deferred salary/wage deductions for eligible
employees. Employees may contribute from 1% to 80% of their eligible compensation to the Plan, limited to a maximum annual amount as determined by the Internal Revenue Service.



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Beginning in fiscal year 2003, the Company decided to contribute 5% of its net income,
as defined by the Plan, to the Plan. For fiscal years 2008, the Company decided to contribute to the Plan the greater of 5% of its net income, as defined by the Plan, or $1,200. Beginning in fiscal year 2009, the Company began matching employee
contributions up to 4% of eligible compensation. The Companys contributions to the Plan totaled $2,729, $2,632, and $2,792, in fiscal years 2011, 2010, and 2009, respectively.

Defined Benefit Retirement Plan

The Companys Canadian subsidiary,
ANRAD Corporation, sponsors a defined benefit retirement plan called the Anrad Retirement Plan (the Anrad Plan). The Anrad Plan provides benefits to employees based on a formula recognizing length of service and final average earnings.
The measurement date used for the plan is July 31. The Company recognizes the periodic pension expense in its consolidated statement of operations and the associated assets or liabilities on its consolidated balance sheet.

The estimated net prior service cost, net transition asset, and net actuarial loss for the Anrad Plan that are expected to be amortized
from stockholders equity into pension cost in fiscal year 2012 are $10, $28, and $222, respectively. Comparable amortized amounts of net prior service cost, net transition asset, and net actuarial loss in fiscal year 2011 were $10, $28, and
$184, respectively.

Amounts Recognized in Accumulated Other Comprehensive Loss



|                      |  |                    |      |   |      |   |      |  
|--------------------- |  | ------------------ | ---- | - | ---- | - | ---- | -
|                      |  | Year EndedJuly 31, |     
|                      |  | 2011               |      |   | 2010 |  
|Net actuarial loss    |  | $                  | (793 | ) |      | $ | (191 | )
|                      |  |                    |      |   |      |   |      |  
|Net amount recognized |  | $                  | (793 | ) |      | $ | (191 | )
|                      |  |                    |      |   |      |   |      |  

Net Periodic Benefit Cost



|                                              |  |          |       |   |      |   |       |      |  |   |      |  
|--------------------------------------------- |  | -------- | ----- | - | ---- | - | ----- | ---- |  | - | ---- | -
|                                              |  | July 31, |      
|                                              |  | 2011     |       |   | 2010 |   |       | 2009 | 
|                                              |  |          |       |   |      |   |       |      |  |   |      |  
|Service cost                                  |  | $        | 1,064 |   |      | $ | 982   |      |  | $ | 547  |  
|Interest cost                                 |  |          | 523   |   |      |   | 392   |      |  |   | 275  |  
|Expected return on plan assets                |  |          | (568  | ) |      |   | (429  | )    |  |   | (355 | )
|Amortization of transition asset obligations  |  |          | (28   | ) |      |   | (25   | )    |  |   | (23  | )
|Amortization of prior service costs           |  |          | 10    |   |      |   | 9     |      |  |   | 8    |  
|Amortization of net actuarial loss recognized |  |          | 184   |   |      |   | 174   |      |  |   |     |  
|                                              |  |          |       |   |      |   |       |      |  |   |      |  
|Total cost                                    |  | $        | 1,185 |   |      | $ | 1,103 |      |  | $ | 452  |  
|                                              |  |          |       |   |      |   |       |      |  |   |      |  



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Actuarial Assumptions

Actuarial assumptions for the Anrad Plan are described below. The discount rates at July 31 were used to measure the year-end benefit obligations and the earnings effects for the subsequent year.



|                          |  |          |      |   |      |  |      |      |  |  |      |  
|------------------------- |  | -------- | ---- | - | ---- |  | ---- | ---- |  |  | ---- | -
|                          |  | July 31, |     
|                          |  | 2011     |      |   | 2010 |  |      | 2009 | 
|Discount rate             |  |          | 4.90 | % |      |  | 5.50 | %    |  |  | 5.50 | %
|Expected return on assets |  |          | 6.25 | % |      |  | 6.25 | %    |  |  | 6.50 | %
|Salary increase           |  |          | 3.75 | % |      |  | 4.00 | %    |  |  | 4.00 | %

To determine the expected long-term rate of return on the Anrad Plan assets, the Company considers the
current and expected asset allocations, as well as historical and expected returns on various categories of plan assets.

The
Company amortizes experienced gains and losses, as well as the effects of changes in actuarial assumptions and plan provisions over a period no longer than the average future service of employees.

Funding Policy

The
funding policy for the Anrad Plan is to contribute amounts sufficient to meet minimum funding requirements as set forth in employee benefit and tax laws plus such additional amounts as the Company may determine to be appropriate. During fiscal
years 2011, 2010, and 2009, the Company made contributions to the Anrad Plan of $1,168, $1,256, and $1,156, respectively, and made payments for benefits and administrative expenses of $209, $169, and $363, respectively. In fiscal year 2012, the
Company expects to make contributions and payments for benefits and administrative expenses of $966 and $318, respectively.

Projected
Benefit Obligation



|                               |  |      |        |   |      |   |       |  
|------------------------------ |  | ---- | ------ | - | ---- | - | ----- | -
|                               |  | 2011 |        |   | 2010 |  
|Balance at August 1            |  | $    | 8,965  |   |      | $ | 7,010 |  
|Current service cost           |  |      | 1,064  |   |      |   | 982   |  
|Foreign currency exchange loss |  |      | 692    |   |      |   | 364   |  
|Interest cost                  |  |      | 523    |   |      |   | 392   |  
|Net actuarial loss             |  |      | 1,266  |   |      |   | 242   |  
|Plan participant contributions |  |      | 192    |   |      |   | 104   |  
|Benefit payments               |  |      | (156   | ) |      |   | (129  | )
|                               |  |      |        |   |      |   |       |  
|Balance at July 31             |  | $    | 12,546 |   |      | $ | 8,965 |  
|                               |  |      |        |   |      |   |       |  

Accumulated Benefit Obligation

ABO balances for the Anrad Plan were $5,952 and $5,532 at July 31, 2011 and 2010, respectively.



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(Continued)



Fair Value of Plan Assets



|                                      |  |      |        |   |      |   |       |  
|------------------------------------- |  | ---- | ------ | - | ---- | - | ----- | -
|                                      |  | 2011 |        |   | 2010 |  
|Balance at August 1                   |  | $    | 7,965  |   |      | $ | 5,846 |  
|Actual return on plan assets          |  |      | 1,168  |   |      |   | 577   |  
|Employer contributions                |  |      | 754    |   |      |   | 1,256 |  
|Plan participant contributions        |  |      | 192    |   |      |   | 104   |  
|Benefits paid                         |  |      | (156   | ) |      |   | (129  | )
|Foreign currency exchange (gain) loss |  |      | 613    |   |      |   | 311   |  
|                                      |  |      |        |   |      |   |       |  
|Balance at July 31                    |  | $    | 10,536 |   |      | $ | 7,965 |  
|                                      |  |      |        |   |      |   |       |  

Plan Assets

The Anrad Plan assets are held in trust, as follows:



|                  |  |                  |       |   |                  |  |       |                  |  |  |       |  
|----------------- |  | ---------------- | ----- | - | ---------------- |  | ----- | ---------------- |  |  | ----- | -
|                  |  | July 31, 2011    |       |   | July 31, 2010    | 
|                  |  | Targetallocation |       |   | Actualallocation |  |       | Actualallocation | 
|Equity securities |  |                  | 65.0  | % |                  |  | 63.0  | %                |  |  | 66.0  | %
|Debt securities   |  |                  | 35.0  | % |                  |  | 37.0  | %                |  |  | 34.0  | %
|                  |  |                  |       |   |                  |  |       |                  |  |  |       |  
|Total             |  |                  | 100.0 | % |                  |  | 100.0 | %                |  |  | 100.0 | %
|                  |  |                  |       |   |                  |  |       |                  |  |  |       |  

The Pension Committee of the Anrad Plan sets investment policies and strategies for the Anrad Plan.
Long-term strategic investment objectives include preserving the funded status of the Anrad Plan and balancing risk and return. The Pension Committee oversees the investment allocation process, which includes selecting investment managers,
commissioning periodic asset-liability studies, setting long-term strategic targets and monitoring asset allocations.

Target
allocation ranges are guidelines, not limitations, and occasionally the Pension Committee will approve allocations above or below a target range.



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ANALOGIC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)



The fair value of the Anrad pension assets by asset category at July 31, 2011 and
2010 were as follows:



|                 |  |                                                            |   |  |                                         |   |   |                                      |  |   |                     |  |  |   |        | 
|---------------- |  | ---------------------------------------------------------- | - |  | --------------------------------------- | - | - | ------------------------------------ |  | - | ------------------- |  |  | - | ------ | 
|                 |  | Fair Value Measurements at July 31, 2011                   |  
|Assets           |  | Quoted Prices inActive Marketsfor IndenticalAssets Level 1 |   |  | SignificantOtherObservableInputsLevel 2 |   |   | SignificantUnobservableInputsLevel 3 |  |   | Assets atFair Value | 
|Mutual funds (a) |  | $                                                          |  |  |                                         | $ |  |                                      |  | $ | 10,536              |  |  |   | 10,536 | 
|                 |  |                                                            |   |  |                                         |   |   |                                      |  |   |                     |  |  |   |        | 
|Total            |  | $                                                          |  |  |                                         | $ |  |                                      |  | $ | 10,536              |  |  | $ | 10,536 | 
|                 |  |                                                            |   |  |                                         |   |   |                                      |  |   |                     |  |  |   |        | 
|                 | 
|                 |  | Fair Value Measurements at July 31, 2010                   |  
|Assets           |  | Quoted Prices inActive Marketsfor IndenticalAssets Level 1 |   |  | SignificantOtherObservableInputsLevel 2 |   |   | SignificantUnobservableInputsLevel 3 |  |   | Assets atFair Value | 
|Mutual funds (a) |  | $                                                          |  |  |                                         | $ |  |                                      |  | $ | 7,965               |  |  |   | 7,965  | 
|                 |  |                                                            |   |  |                                         |   |   |                                      |  |   |                     |  |  |   |        | 
|Total            |  | $                                                          |  |  |                                         | $ |  |                                      |  | $ | 7,965               |  |  | $ | 7,965  | 
|                 |  |                                                            |   |  |                                         |   |   |                                      |  |   |                     |  |  |   |        | 



|(a) | -This comprises debt and equity securities which have an underlying value traded on an active market based on the closing price of each trading day.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------



|                                                    |  |                                                                    |        |  |              |   |       | 
|--------------------------------------------------- |  | ------------------------------------------------------------------ | ------ |  | ------------ | - | ----- | 
|                                                    |  | Fair ValueMeasurementsUsing SignificantUnobservableInputs(Level 3) |       
|                                                    |  | July 31,2011                                                       |        |  | July 31,2010 |  
|Balance at beginning of fiscal year                 |  | $                                                                  | 7,965  |  |              | $ | 5,846 | 
|Actual return on plan assets                        |  |                                                                    |        |  |              |   |       | 
|Relating to assets still held at end of fiscal year |  |                                                                    | 812    |  |              |   | 616   | 
|Relating to assets sold during the period           |  |                                                                    |        |  |              |   |       | 
|Purchases, sales, and settlements                   |  |                                                                    | 1,146  |  |              |   | 1,192 | 
|Transfers in and/or out of Level 3                  |  |                                                                    |        |  |              |   |       | 
|Foreign currency exchange gain/(loss)               |  |                                                                    | 613    |  |              |   | 311   | 
|                                                    |  |                                                                    |        |  |              |   |       | 
|Balance at end of fiscal year                       |  | $                                                                  | 10,536 |  |              | $ | 7,965 | 
|                                                    |  |                                                                    |        |  |              |   |       | 

Estimated Future Benefit Payments

Estimated future benefit payments under the Anrad Plan are as follows:



|     |  |      |  |      |  |      |  |      |  |        
|---- |  | ---- |  | ---- |  | ---- |  | ---- |  | -------
|2012 |  | 2013 |  | 2014 |  | 2015 |  | 2016 |  | 2017-21
|$265 |  | $280 |  | $282 |  | $302 |  | $330 |  | $2,100 



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ANALOGIC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)



Funded Status

The amounted recognized on Companys balance sheet for the Anrad Plan were as follows:



|                                    |  |          |        |   |      |   |        |  
|----------------------------------- |  | -------- | ------ | - | ---- | - | ------ | -
|                                    |  | July 31, |       
|                                    |  | 2011     |        |   | 2010 |  
|Noncurrent liabilities              |  | $        | (2,010 | ) |      | $ | (1,000 | )
|                                    |  |          |        |   |      |   |        |  
|Net balance sheet asset (liability) |  | $        | (2,010 | ) |      | $ | (1,000 | )
|                                    |  |          |        |   |      |   |        |  

15. Income taxes:

A reconciliation of income taxes at the United States statutory rate to the effective tax rate follows:



|                                                         |  |                     |     |   |      |  |    |      |  |  |      |  
|-------------------------------------------------------- |  | ------------------- | --- | - | ---- |  | -- | ---- |  |  | ---- | -
|                                                         |  | Year Ended July 31, |    
|                                                         |  | 2011                |     |   | 2010 |  |    | 2009 | 
|U.S. Federal statutory tax rate                          |  |                     | 35  | % |      |  | 35 | %    |  |  | -35  | %
|State income taxes, net of federal tax benefit           |  |                     | -2  | % |      |  | -1 | %    |  |  | -60  | %
|Incentive stock options net of disqualified dispositions |  |                     | 0   | % |      |  | 0  | %    |  |  | 14   | %
|Domestic production benefit                              |  |                     | -2  | % |      |  | -2 | %    |  |  | -5   | %
|General business credit                                  |  |                     | -10 | % |      |  | -2 | %    |  |  | -171 | %
|Valuation allowance                                      |  |                     | 0   | % |      |  | 3  | %    |  |  | -85  | %
|Effect of international operations                       |  |                     | -3  | % |      |  | -4 | %    |  |  | -7   | %
|Increase (decrease) in tax reserves                      |  |                     | 5   | % |      |  | -3 | %    |  |  | 3    | %
|Nondeductable meals and entertainment                    |  |                     | 0   | % |      |  | 0  | %    |  |  | 3    | %
|Lobbying expense                                         |  |                     | 0   | % |      |  | 0  | %    |  |  | 13   | %
|Other items, net                                         |  |                     | -2  | % |      |  | 0  | %    |  |  | 0    | %
|                                                         |  |                     |     |   |      |  |    |      |  |  |      |  
|Effective tax rate                                       |  |                     | 21  | % |      |  | 26 | %    |  |  | -330 | %
|                                                         |  |                     |     |   |      |  |    |      |  |  |      |  

The components of the provision (benefit) for income taxes on continuing operations are as follows:



|                                 |  |          |        |   |      |   |        |      |  |   |        |  
|-------------------------------- |  | -------- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                 |  | July 31, |       
|                                 |  | 2011     |        |   | 2010 |   |        | 2009 | 
|Current income taxes (benefit):  |  |          |        |   |      |   |        |      |  |   |        |  
|Federal                          |  | $        | 5,461  |   |      | $ | 7,723  |      |  | $ | (3,902 | )
|State                            |  |          | 534    |   |      |   | 344    |      |  |   | (54    | )
|Foreign                          |  |          | (37    | ) |      |   | (183   | )    |  |   | 73     |  
|                                 |  |          |        |   |      |   |        |      |  |   |        |  
|                                 |  |          | 5,958  |   |      |   | 7,884  |      |  |   | (3,883 | )
|                                 |  |          |        |   |      |   |        |      |  |   |        |  
|Deferred income taxes (benefit): |  |          |        |   |      |   |        |      |  |   |        |  
|Federal                          |  |          | (113   | ) |      |   | (2,361 | )    |  |   | 1,961  |  
|State                            |  |          | 167    |   |      |   | 107    |      |  |   | 309    |  
|Foreign                          |  |          | (1,700 | ) |      |   | 38     |      |  |   | (3,434 | )
|                                 |  |          |        |   |      |   |        |      |  |   |        |  
|                                 |  |          | (1,646 | ) |      |   | (2,216 | )    |  |   | (1,164 | )
|                                 |  |          |        |   |      |   |        |      |  |   |        |  
|                                 |  | $        | 4,312  |   |      | $ | 5,668  |      |  | $ | (5,047 | )
|                                 |  |          |        |   |      |   |        |      |  |   |        |  



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ANALOGIC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)



Income (loss) from continuing operations before income taxes from domestic and foreign
operations is as follows:



|         |  |          |        |  |      |   |        |      |  |   |        |  
|-------- |  | -------- | ------ |  | ---- | - | ------ | ---- |  | - | ------ | -
|         |  | July 31, |       
|         |  | 2011     |        |  | 2010 |   |        | 2009 | 
|Domestic |  | $        | 15,676 |  |      | $ | 16,336 |      |  | $ | (2,984 | )
|Foreign  |  |          | 5,256  |  |      |   | 5,131  |      |  |   | 1,454  |  
|         |  |          |        |  |      |   |        |      |  |   |        |  
|         |  | $        | 20,932 |  |      | $ | 21,467 |      |  | $ | (1,530 | )
|         |  |          |        |  |      |   |        |      |  |   |        |  

Net deferred taxes, detailed below, recognize the impact of temporary differences between the amounts of
assets and liabilities recorded for financial statement purposes and such amounts measured in accordance with tax laws:



|                                            |  |          |        |   |      |   |        |  
|------------------------------------------- |  | -------- | ------ | - | ---- | - | ------ | -
|                                            |  | July 31, |       
|                                            |  | 2011     |        |   | 2010 |  
|Depreciation related                        |  | $        | (4,523 | ) |      | $ | (3,314 | )
|Goodwill and intangibles                    |  |          | 2,168  |   |      |   | 2,452  |  
|Compensation                                |  |          | 9,863  |   |      |   | 6,482  |  
|Accruals and reserves                       |  |          | 4,149  |   |      |   | 3,966  |  
|Comprehensive income                        |  |          | 2,849  |   |      |   | 3,225  |  
|Net operating loss and credit carryforwards |  |          | 6,730  |   |      |   | 7,272  |  
|Other                                       |  |          | 538    |   |      |   | 1,023  |  
|                                            |  |          |        |   |      |   |        |  
|                                            |  | $        | 21,774 |   |      | $ | 21,106 |  
|Valuation allowance                         |  |          | (5,167 | ) |      |   | (4,890 | )
|                                            |  |          |        |   |      |   |        |  
|Total deferred taxes                        |  | $        | 16,607 |   |      | $ | 16,216 |  
|                                            |  |          |        |   |      |   |        |  

The Company does not provide for U.S. Federal income taxes on undistributed earnings of consolidated
foreign subsidiaries, as such earnings are intended to be indefinitely reinvested in those operations. Determination of the potential deferred income tax liability on these undistributed earnings is not practicable because such liability, if any, is
dependent on circumstances that exist if and when remittance occurs.

As of July 31, 2011, the Company had net operating
loss carryforwards in Belgium of approximately $4,465 which have no expiration date and losses of $591 in China, which will expire in 2015. As of July 31, 2011, the Company also had state tax credit carryforwards of $7,722 that will expire in
2026.

Management has determined that it is more likely than not that the Company will not recognize the benefit of certain
foreign losses, state losses, and tax credits and, as a result, valuation allowances have been established at July 31, 2011 and July 31, 2010. The change in the valuation allowance in fiscal year 2010 is primarily the result of the
reduction of the valuation allowance of the operation in China of $229 and the addition of state tax credits where use cannot be assured.

Management performs a two-step evaluation of all tax positions, ensuring that these tax return positions meet the more likely than not recognition threshold and can be measured with sufficient
precision to determine the benefit recognized in the financial statements. These evaluations provide management with a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements certain tax
positions that the Company has taken or expects to take on its income tax returns.



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ANALOGIC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)



The following table summarizes the changes in the Companys unrecognized income
tax benefits for fiscal years 2011 and 2010:



|                                                                |  |      |        |   |      |   |        |  
|--------------------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | -
|                                                                |  | 2011 |        |   | 2010 |  
|Balance as of beginning of fiscal year                          |  | $    | 12,124 |   |      | $ | 12,877 |  
|Increases based on tax positions related to current year        |  |      | 1,180  |   |      |   | 733    |  
|Increases for tax positions of prior years                      |  |      | 3,455  |   |      |   |       |  
|Decreases for tax positions of prior years                      |  |      | (37    | ) |      |   | (33    | )
|Decreases due to settlements with taxing authorities            |  |      | (111   | ) |      |   | (411   | )
|Decreases due to lapse of the applicable statute of limitations |  |      | (387   | ) |      |   | (1,001 | )
|Adjustment due to foreign exchange rate                         |  |      | 26     |   |      |   | (41    | )
|                                                                |  |      |        |   |      |   |        |  
|Balance as of end of fiscal year                                |  | $    | 16,250 |   |      | $ | 12,124 |  
|                                                                |  |      |        |   |      |   |        |  
|Net interest as of end of fiscal year                           |  | $    | 1,485  |   |      | $ | 1,270  |  
|                                                                |  |      |        |   |      |   |        |  

The unrecognized tax benefits have increased to $16,250 at July 31, 2011 and, if recognized in a
future period, the timing of which is not estimable, the net unrecognized tax benefit of approximately $16,250 would reduce the Companys effective tax rate.

The Company is subject to U.S. Federal income tax as well as the income tax of multiple state and foreign jurisdictions. The Company has concluded all U.S. Federal income tax matters through fiscal year
2002 and for fiscal years 2004 through 2007. In the next four fiscal quarters, the statute of limitations may close on the 2003 and 2008 federal and state income tax returns. It is reasonably expected that net unrecognized benefits of $10,831 and
related interest of approximately $1,300 from these jurisdictions may be recognized within the next four quarters. During fiscal year 2011, the Company reversed $498 of tax reserves due to the expiration of federal, state and foreign statutes of
limitation and the effective settlements of foreign and domestic tax audits. During fiscal year 2010, the Company reversed $1,750 of tax reserves due to the expiration of statutes of limitations, which were partially offset by additional provisions
for agreed federal and state adjustments and typical taxes owed related to the Companys operations in that period.

The
Company accrues interest and, if applicable, penalties for uncertain tax positions. This interest and penalty expense is treated as a component of income tax expense. At July 31, 2011 and 2010, the Company had approximately $1,485 and $1,270,
respectively, accrued for interest on uncertain tax benefits.

Refundable and deferred income taxes at July 31, 2011
consisted of deferred tax assets of $8,389 and refundable income tax assets of $1,288. Refundable and deferred income taxes at July 31, 2010 consisted of deferred tax assets of $7,672 and refundable income tax assets of $1,188. The refundable
income tax assets include expected federal, state, and foreign refunds that are expected to be received within the next twelve months.



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ANALOGIC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)



16. Quarterly results of operations (unaudited):

The following is a summary of unaudited quarterly results of operations for fiscal years 2011 and 2010:



|                                                           |  |                  |         |   |               |   |         |              |  |   |               |  |  |   |         | 
|---------------------------------------------------------- |  | ---------------- | ------- | - | ------------- | - | ------- | ------------ |  | - | ------------- |  |  | - | ------- | 
|                                                           |  | Fiscal Year 2011 |        
|                                                           |  | FirstQuarter     |         |   | SecondQuarter |   |         | ThirdQuarter |  |   | FourthQuarter | 
|Net revenue                                                |  | $                | 103,822 |   |               | $ | 117,253 |              |  | $ | 117,171       |  |  | $ | 135,349 | 
|Gross profit                                               |  |                  | 39,019  |   |               |   | 40,809  |              |  |   | 44,160        |  |  |   | 48,975  | 
|Income from continuing operations                          |  |                  | 1,381   |   |               |   | 5,296   |              |  |   | 4,318         |  |  |   | 5,625   | 
|Diluted income per share from continuing operations        |  | $                | 0.11    |   |               | $ | 0.42    |              |  | $ | 0.35          |  |  | $ | 0.45    | 
|                                                           | 
|                                                           |  | Fiscal Year 2010 |        
|                                                           |  | FirstQuarter     |         |   | SecondQuarter |   |         | ThirdQuarter |  |   | FourthQuarter | 
|Net revenue                                                |  | $                | 92,806  |   |               | $ | 101,533 |              |  | $ | 105,472       |  |  | $ | 115,002 | 
|Gross profit                                               |  |                  | 29,862  |   |               |   | 38,021  |              |  |   | 37,918        |  |  |   | 42,096  | 
|Income (loss) from continuing operations                   |  |                  | (190    | ) |               |   | 3,887   |              |  |   | 5,092         |  |  |   | 7,010   | 
|Diluted income (loss) per share from continuing operations |  | $                | (0.01   | ) |               | $ | 0.31    |              |  | $ | 0.40          |  |  | $ | 0.55    | 

17. Supplemental disclosure of cash flow information:

Changes in operating assets and liabilities, net of the impact of acquisitions, are as follows:



|                                                |  |                     |         |   |      |   |         |      |  |   |        |  
|----------------------------------------------- |  | ------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------ | -
|                                                |  | Year Ended July 31, |        
|                                                |  | 2011                |         |   | 2010 |   |         | 2009 | 
|Accounts and notes receivable                   |  | $                   | (14,318 | ) |      | $ | (12,703 | )    |  | $ | 34     |  
|Inventories                                     |  |                     | (17,439 | ) |      |   | (7,435  | )    |  |   | (800   | )
|Other assets                                    |  |                     | 2,578   |   |      |   | (2,506  | )    |  |   | (415   | )
|Refundable income taxes                         |  |                     | (315    | ) |      |   | 2,831   |      |  |   | 5,556  |  
|Accounts payable, trade                         |  |                     | 11,925  |   |      |   | 2,654   |      |  |   | (4,669 | )
|Accrued liabilities                             |  |                     | 4,039   |   |      |   | 2,489   |      |  |   | (3,560 | )
|Other liabilities                               |  |                     | 2,405   |   |      |   | 625     |      |  |   | 569    |  
|Advance payments and deferred revenue           |  |                     | (54     | ) |      |   | 1,535   |      |  |   | (3,699 | )
|Accrued income taxes                            |  |                     | 1,298   |   |      |   | 2,387   |      |  |   | (341   | )
|                                                |  |                     |         |   |      |   |         |      |  |   |        |  
|Net changes in operating assets and liabilities |  | $                   | (9,881  | ) |      | $ | (10,123 | )    |  | $ | (7,325 | )
|                                                |  |                     |         |   |      |   |         |      |  |   |        |  

Supplemental disclosure of non-cash investing activities:

The Company accrued milestone payments towards the construction of a manufacturing facility in Shanghai, China, of $1,785 during fiscal
year 2011 that were not paid as of July 31, 2011. The Company expects to pay the $1,785 in the first quarter of fiscal year 2012.



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ANALOGIC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)



18. Segment and geographic information:

The table below presents information about the Companys reportable segments:



|                                                             |  |                     |         |   |      |   |         |      |  |   |         |  
|------------------------------------------------------------ |  | ------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                             |  | Year Ended July 31, |        
|                                                             |  | 2011                |         |   | 2010 |   |         | 2009 | 
|Net Revenue:                                                 |  |                     |         |   |      |   |         |      |  |   |         |  
|Medical Technology from external customers:                  |  |                     |         |   |      |   |         |      |  |   |         |  
|Medical Imaging                                              |  | $                   | 326,113 |   |      | $ | 274,241 |      |  | $ | 255,205 |  
|Ultrasound                                                   |  |                     | 96,356  |   |      |   | 89,986  |      |  |   | 82,599  |  
|                                                             | 
|Total Medical Technology                                     |  |                     | 422,469 |   |      |   | 364,227 |      |  |   | 337,804 |  
|Security Technology from external customers                  |  |                     | 51,126  |   |      |   | 50,586  |      |  |   | 49,056  |  
|                                                             |  |                     |         |   |      |   |         |      |  |   |         |  
|Total                                                        |  | $                   | 473,595 |   |      | $ | 414,813 |      |  | $ | 386,860 |  
|                                                             |  |                     |         |   |      |   |         |      |  |   |         |  
|Income (loss) from operations                                |  |                     |         |   |      |   |         |      |  |   |         |  
|Medical Technology:                                          |  |                     |         |   |      |   |         |      |  |   |         |  
|Medical Imaging (A)                                          |  | $                   | 18,568  |   |      | $ | 12,941  |      |  | $ | (7,270  | )
|Ultrasound (B)                                               |  |                     | (4,807  | ) |      |   | 1,941   |      |  |   | (2,374  | )
|                                                             |  |                     |         |   |      |   |         |      |  |   |         |  
|Total Medical Technology                                     |  |                     | 13,761  |   |      |   | 14,882  |      |  |   | (9,644  | )
|Security Technology (C)                                      |  |                     | 6,975   |   |      |   | 6,438   |      |  |   | 5,148   |  
|                                                             |  |                     |         |   |      |   |         |      |  |   |         |  
|Total income (loss) from operations                          |  |                     | 20,736  |   |      |   | 21,320  |      |  |   | (4,496  | )
|Total other income, net (D)                                  |  |                     | 196     |   |      |   | 147     |      |  |   | 2,966   |  
|                                                             |  |                     |         |   |      |   |         |      |  |   |         |  
|Income (loss) from continuing operations before income taxes |  | $                   | 20,932  |   |      | $ | 21,467  |      |  | $ | (1,530  | )
|                                                             |  |                     |         |   |      |   |         |      |  |   |         |  



|                                                |  |          |         |  |      |   |         |      |  |   |         | 
|----------------------------------------------- |  | -------- | ------- |  | ---- | - | ------- | ---- |  | - | ------- | 
|                                                |  | July 31, |        
|                                                |  | 2011     |         |  | 2010 |   |         | 2009 | 
|Identifiable assets:                            |  |          |         |  |      |   |         |      |  |   |         | 
|Medical Imaging (E)                             |  | $        | 210,792 |  |      | $ | 186,494 |      |  | $ | 162,764 | 
|Ultrasound                                      |  |          | 109,235 |  |      |   | 88,873  |      |  |   | 92,551  | 
|Security Technology                             |  |          | 23,644  |  |      |   | 17,506  |      |  |   | 11,849  | 
|                                                |  |          |         |  |      |   |         |      |  |   |         | 
|Total reportable segment assets                 |  |          | 343,671 |  |      |   | 292,873 |      |  |   | 267,164 | 
|Corporate and discontinued operation assets (F) |  |          | 177,881 |  |      |   | 192,903 |      |  |   | 196,950 | 
|                                                |  |          |         |  |      |   |         |      |  |   |         | 
|Total assets                                    |  | $        | 521,552 |  |      | $ | 485,776 |      |  | $ | 464,114 | 
|                                                |  |          |         |  |      |   |         |      |  |   |         | 



|(A) | Includes restructuring charges of $2,829 for fiscal year 2011. Includes restructuring charges of $527 for fiscal year 2010. Includes restructuring charges of $4,581 and
$811 for settlement of a dispute with a customer in fiscal year 2009.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(B) | Includes restructuring charges of $3,668 for fiscal year 2011. Includes restructuring charges of $1,591 for fiscal year 2009.
|--- | -----------------------------------------------------------------------------------------------------------------------------

|(C) | Includes restructuring of $569 for fiscal year 2011. Includes restructuring of $163 for fiscal year 2010. Includes restructuring and voluntary retirement charges of
$426 for fiscal year 2009.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(D) | Includes the gains from the receipt of escrow proceeds of $838 during fiscal years 2009 related to the sale of an investment in another company during fiscal year 2007.
Includes interest income of $711, $633, and $2,564 in fiscal years 2011, 2010, and 2009, respectively.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(E) | Includes goodwill and net intangible assets from acquisitions of $1,849 and $35,503, respectively, at July 31, 2011, and $1,849 and $37,861, respectively, at
July 31, 2010.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(F) | Includes cash equivalents and marketable securities of $135,069, $134,219, and $131,084 as of July 31, 2011, 2010, and 2009, respectively.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------



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ANALOGIC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)



Information regarding geographic areas for fiscal years 2011, 2010, and 2009 are as
follows:



|           |  |                                            |  |              |         |  |       |   |        |         |  |   |             |  |  |       |        |  |       |   |         |  |  |   |         | 
|---------- |  | ------------------------------------------ |  | ------------ | ------- |  | ----- | - | ------ | ------- |  | - | ----------- |  |  | ----- | ------ |  | ----- | - | ------- |  |  | - | ------- | 
|FiscalYear |  |                                            |  | UnitedStates |         |  | Japan |   |        | Germany |  |   | Netherlands |  |  | Other |        |  | Total |  
|2011       |  | Net revenue from external customers        |  | $            | 161,720 |  |       | $ | 76,429 |         |  | $ | 56,330      |  |  | $     | 51,600 |  |       | $ | 127,516 |  |  | $ | 473,595 | 
|           |  | Long-lived assets of continuing operations |  |              | 42,212  |  |       |   |        |         |  |   |             |  |  |       |        |  |       |   | 42,539  |  |  |   | 84,751  | 
|2010       |  | Net revenue from external customers        |  | $            | 139,474 |  |       | $ | 72,545 |         |  | $ | 49,358      |  |  | $     | 50,011 |  |       | $ | 103,425 |  |  | $ | 414,813 | 
|           |  | Long-lived assets of continuing operations |  |              | 37,251  |  |       |   |       |         |  |   |            |  |  |       |       |  |       |   | 35,375  |  |  |   | 72,626  | 
|2009       |  | Net revenue from external customers        |  | $            | 146,083 |  |       | $ | 67,984 |         |  | $ | 46,497      |  |  | $     | 44,653 |  |       | $ | 81,643  |  |  | $ | 386,860 | 
|           |  | Long-lived assets of continuing operations |  |              | 39,600  |  |       |   |       |         |  |   |            |  |  |       |       |  |       |   | 39,267  |  |  |   | 78,867  | 

Revenues are attributed to countries based on the location of the Companys customers.

Other long-lived assets are primarily in Denmark, China, and Canada.

19. Common stock repurchases:

On December 9, 2010,
the Company announced that its Board of Directors authorized the repurchase of up to $30,000 of the Companys common stock. The repurchase program will be funded using the Companys available cash. During fiscal year 2011, the Company
repurchased and retired 300,289 shares of Common Stock under this repurchase program for $15,187 at an average purchase price of $50.57 per share. Included in the $15,187 paid for the common stock under this program was $9 of commissions and fees to
the Companys broker.

On October 13, 2008, the Company announced that, on the same date, its Board had authorized
the repurchase of up to $25,000 of the Companys common stock. The Company completed the repurchase program, which was funded using the Companys available cash, in the second quarter of fiscal year 2009. During fiscal year 2009, the
Company repurchased 736,694 shares of common stock under this repurchase program for $25,022 at an average purchase price per share of $33.97. Included in the $25,022 paid for the common stock under this program was $22 of commissions and fees to
the Companys broker.

20. Related party transactions:

At July 31, 2011, the Company had a net advance payments and deferred revenue balance of $474 from its China-based affiliate. At
July 31, 2010, the Company had a net advance payments and deferred revenue balance of $954 from its China-based affiliate. Sales to this China-based affiliate for fiscal years 2011, 2010, and 2009 were approximately $2,808, $1,289, and $1,915,
respectively. On July 25, 2011, the Company entered into an agreement, within an expected closing date in the first quarter of the fiscal year ending July 31, 2012, to sell its remaining interest of 25% in its China-based affiliate for
$2,500. The book value of the interest in the China-based affiliate was $0, and the Company expects to record a gain of $2,500.

In April 2010, the Company invested $1,900 in a start-up company with proprietary technology expected to be utilized in the
Companys Ultrasound segment. The Company has received $2,438 and $438 of engineering services from this start-up Company during fiscal years 2011 and 2010, respectively.

21. Subsequent events:

On September 20, 2011, the
Company announced that its Board, on September 15, 2011, declared a dividend of $0.10 per common share payable on October 18, 2011 to stockholders of record on October 5, 2011.



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ANALOGIC CORPORATION

SCHEDULE IIVALUATION AND QUALIFYING ACCOUNTS

(In thousands)



|                                |  |                              |     |  |                            |   |     |            |  |   |                        |   |  |  |     | 
|------------------------------- |  | ---------------------------- | --- |  | -------------------------- | - | --- | ---------- |  | - | ---------------------- | - |  |  | --- | 
|Description                     |  | Balance atBeginningof Period |     |  | Chargedto CostsandExpenses |   |     | Deductions |  |   | Balanceat End ofPeriod |  
|Allowance for doubtful accounts |  |                              |     |  |                            |   |     |            |  |   |                        |   |  |  |     | 
|Year ended July 31, 2011        |  | $                            | 616 |  |                            | $ | 509 |            |  | $ | (526                   | ) |  |  | 599 | 
|Year ended July 31, 2010        |  |                              | 728 |  |                            |   | 587 |            |  |   | (699                   | ) |  |  | 616 | 
|Year ended July 31, 2009        |  |                              | 998 |  |                            |   | 427 |            |  |   | (697                   | ) |  |  | 728 | 



|                                                        |  |                              |       |  |                            |   |       |            |  |   |                        |   |  |   |       | 
|------------------------------------------------------- |  | ---------------------------- | ----- |  | -------------------------- | - | ----- | ---------- |  | - | ---------------------- | - |  | - | ----- | 
|Description                                             |  | Balance atBeginningof Period |       |  | Chargedto CostsandExpenses |   |       | Deductions |  |   | Balanceat End ofPeriod |  
|Year ended July 31, 2011 income tax valuation allowance |  | $                            | 4,890 |  |                            | $ | 506   |            |  | $ | (229                   | ) |  | $ | 5,167 | 
|Year ended July 31, 2010 income tax valuation allowance |  |                              | 4,109 |  |                            |   | 781   |            |  |   |                       |   |  | $ | 4,890 | 
|Year ended July 31, 2009 income tax valuation allowance |  |                              | 4,647 |  |                            |   | 1,282 |            |  |   | (1,820                 | ) |  | $ | 4,109 | 

Changes in valuation allowance represents changes in Federal, state and foreign tax attributes for which
the Company believes it is more likely than not that they will not be able to utilize.



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INDEX TO EXHIBITS



|  |  |      |  |                                                                                                                                                                                                                                                                                                                                   |  |                                                                                                                          
|- |  | ---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------
|  |  |      |  | Title                                                                                                                                                                                                                                                                                                                             |  | Incorporated by Reference to                                                                                             
|  |  | 2.1  |  | Shares Purchase Agreement, dated as of January 30, 2008, between Analogic Corporation and Chonqing Anke Medical Equipment Co.                                                                                                                                                                                                     |  | Exhibit 2.1 to the Companys Current Report on Form 8-K filed on February 5, 2008                                        
|  |  |      | 
|  |  | 2.2  |  | Termination Agreement, dated as of January 30, 2008, between Analogic Corporation and Shenzhen Anke High-Tech Company Limited                                                                                                                                                                                                     |  | Exhibit 2.2 to the Companys Current Report on Form 8-K filed on February 5, 2008                                        
|  |  |      | 
|  |  | 2.3  |  | Agreement and Plan of Merger, dated as of March 5, 2008, by and among Analogic Corporation, Canton Merger Corporation, Copley Controls Corporation (Copley), the
Principal Shareholders of Copley named therein, the Additional Shareholders of Copley named therein and Matthew Lorber, as the Securityholders Representative |  | Exhibit 2.1 to the Companys Current Report on Form 8-K filed on March 6, 2008                                           
|  |  |      | 
|  |  | 2.4  |  | Purchase and Sale Agreement, dated as of October 14, 2010, by and among Analogic Corporation, Anadventure II Corporation, and Sigma Phi Alpha Corporation                                                                                                                                                                         |  | Exhibit 2.1 to the Companys Current Report on Form 8-k filed on October 14, 2010                                        
|  |  |      | 
|  |  | 3.1  |  | Restated Articles of Organization, as amended                                                                                                                                                                                                                                                                                     |  | Exhibit 3.1 to the Companys Current Report on Form 8-K filed on January 30, 2009                                        
|  |  |      | 
|  |  | 3.2  |  | By-laws, as amended                                                                                                                                                                                                                                                                                                               |  | Exhibit 3.1 to the Companys Current Report on Form 8-K filed on February 3, 2010                                        
|  |  |      | 
|* |  | 10.1 |  | Form of Indemnity Agreement                                                                                                                                                                                                                                                                                                       |  | Exhibit 10.19 to the Companys Annual Report on Form 10-K for the fiscal year ended July 31, 1987                        
|  |  |      | 
|* |  | 10.2 |  | Form of Indemnity Agreement for Directors and Executive Officers of Analogic Corporation                                                                                                                                                                                                                                          |  | Exhibit 10.1 to the Companys Current Report on Form 8-K filed on October 9, 2007                                        
|  |  |      | 
|* |  | 10.3 |  | Key Employee Stock Bonus Plan dated March 14, 1983, as amended on January 27, 1988                                                                                                                                                                                                                                                |  | Exhibit 10.1 to the Companys Quarterly Report on Form 10-Q for the three months ended January 31, 2006                  
|  |  |      | 
|* |  | 10.4 |  | Form of Restricted Stock Grant for Key Employee Stock Bonus Plan dated March 14, 1983, as amended on January 27, 1988                                                                                                                                                                                                             |  | Exhibit 10.23 to the Companys Annual Report on Form 10-K for the fiscal year ended July 31, 2007                        
|  |  |      | 
|* |  | 10.5 |  | Employee Qualified Stock Purchase Plan dated June 10, 1986, as amended October 9, 1997 and October 15, 2002                                                                                                                                                                                                                       |  | Exhibit 10.1 to the Companys Post-Effective Amendment No. 2 to Registration Statement on Form S-8 filed on July 24, 2003
|  |  |      | 
|* |  | 10.6 |  | Key Employee Incentive Stock Option Plan dated June 11, 1993, as amended October 12, 2000, November 16, 2001, and September 20, 2006                                                                                                                                                                                              |  | Exhibit 10.7 to the Companys Annual Report on Form 10-K for the fiscal year ended July 31, 2006                         



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|  |  |       |  |                                                                                                                                                                           |  |                                                                                                                                                      
|- |  | ----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------
|  |  |       |  | Title                                                                                                                                                                     |  | Incorporated by Reference to                                                                                                                         
|* |  | 10.7  |  | 1997 Non-Qualified Stock Option Plan for Non-Employee Directors dated January 31, 1997, as amended December 8, 2003 and September 20, 2006                                |  | Exhibit 10.8 to the Companys Annual Report on Form 10-K for the fiscal year ended July 31, 2006                                                     
|  |  |       | 
|* |  | 10.8  |  | Form of Stock Option Grant for 1997 Non-Qualified Stock Option Plan for Non-Employee Directors dated January 31, 1997, as amended December 8, 2003 and September 20,
2006 |  | Exhibit 10.29 to the Companys Annual Report on Form 10-K for the fiscal year ended July 31, 2004                                                    
|  |  |       | 
|* |  | 10.9  |  | Key Employee Incentive Stock Option Plan dated June 11, 1998, as amended October 12, 2000, November 16, 2001, and September 20, 2006                                      |  | Exhibit 10.9 to the Companys Annual Report on Form 10-K for the fiscal year ended July 31, 2006                                                     
|  |  |       | 
|* |  | 10.10 |  | Form of Stock Options Grant for Key Employee Incentive Stock Option Plan dated June 11, 1998, as amended October 12, 2000, November 16, 2001, and September 20, 2006      |  | Exhibit 10.30 to the Companys Annual Report on Form 10-K for the fiscal year ended July 31, 2004                                                    
|  |  |       | 
|* |  | 10.11 |  | Key Employee Stock Bonus Plan dated October 12, 2000, as amended March 11, 2003                                                                                           |  | Appendix A to the Companys Definitive Proxy Statement dated December 15, 2003 for the Companys Annual Meeting of Stockholders held January 16, 2004
|  |  |       | 
|* |  | 10.12 |  | Form of Restricted Stock Grant for Key Employee Stock Bonus Plan dated October 12, 2000, as amended March 11, 2003                                                        |  | Exhibit 10.31 to the Companys Annual Report on Form 10-K for the fiscal year ended July 31, 2004                                                    
|  |  |       | 
|* |  | 10.13 |  | 2007 Stock Option Plan                                                                                                                                                    |  | Exhibit 10.1 to the Companys Current Report on Form 8-K filed on February 2, 2007                                                                   
|  |  |       | 
|* |  | 10.14 |  | Form of Stock Option Award Agreement for 2007 Stock Option Plan                                                                                                           |  | Exhibit 10.3 to the Companys Current Report on Form 8-K filed on February 2, 2007                                                                   
|  |  |       | 
|* |  | 10.15 |  | 2007 Restricted Stock Plan                                                                                                                                                |  | Exhibit 10.2 to the Companys Current Report on Form 8-K filed on February 2, 2007                                                                   
|  |  |       | 
|* |  | 10.16 |  | Form of Restricted Stock Award Agreement for 2007 Restricted Stock Plan used for awards granted prior to October 14, 2009                                                 |  | Exhibit 10.4 to the Companys Current Report on Form 8-K filed on February 2, 2007                                                                   
|  |  |       | 
|* |  | 10.17 |  | Form of Restricted Stock Award Agreement for 2007 Restricted Stock Plan used for awards granted on October 14, 2009                                                       |  | Exhibit 10.17 to the Companys Annual Report on Form 10-K for the fiscal year ended July 31, 2010                                                    
|  |  |       | 
|* |  | 10.18 |  | Analogic Corporation 2009 Stock Incentive Plan                                                                                                                            |  | Exhibit 10.1 to the Companys Current Report on Form 8-K filed on February 3, 2010                                                                   
|  |  |       | 
|* |  | 10.19 |  | Form of Performance-Based Restricted Stock Unit Award Agreement for the Analogic Corporation 2009 Stock Incentive Plan                                                    |  | Exhibit 10.2 to the Companys Current Report on Form 8-K filed on February 3, 2010                                                                   
|  |  |       | 
|* |  | 10.20 |  | Form of Time-Based Restricted Stock Unit Agreement for 2009 Stock Incentive Plan                                                                                          |  | Exhibit 10.3 to the Companys Quarterly Report on Form 10-Q for the six months ended January 31, 2010                                                



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|  |  |       |  |                                                                                                                                                        |  |                                                                                                        
|- |  | ----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------ |  | -------------------------------------------------------------------------------------------------------
|  |  |       |  | Title                                                                                                                                                  |  | Incorporated by Reference to                                                                           
|* |  | 10.21 |  | Form of Nonstatutory Stock Option Agreement for 2009 Stock Incentive Plan                                                                              |  | Exhibit 10.4 to the Companys Quarterly Report on Form 10-Q for the six months ended January 31, 2010  
|  |  |       | 
|* |  | 10.22 |  | Non-Employee Director Stock Plan                                                                                                                       |  | Exhibit 10.1 to the Companys Current Report on Form 8-K filed on February 1, 2008                     
|  |  |       | 
|* |  | 10.23 |  | Nonqualified Deferred Compensation Plan                                                                                                                |  | Exhibit 10.1 to the Companys Current Report on Form 8-K filed on August 14, 2008                      
|  |  |       | 
|* |  | 10.24 |  | Analogic 401(k) Plan (January 1, 2007 Restatement)                                                                                                     |  | Exhibit 10.22 to the Companys Annual Report on Form 10-K for the fiscal year ended July 31, 2007      
|  |  |       | 
|* |  | 10.25 |  | Form of Notice to Executive Officers (who are Business Unit heads) regarding the Analogic Corporation Annual Incentive Plan for Fiscal Year 2011       |  | Exhibit 10.1 to the Companys Quarterly Report on Form 10-Q for the three months ended January 31, 2011
|  |  |       | 
|* |  | 10.26 |  | Form of Notice to Executive Officers (at Vice President or higher level) regarding the Analogic Corporation Annual Incentive Plan for Fiscal Year 2011 |  | Exhibit 10.1 to the Companys Quarterly Report on Form 10-Q for the three months ended October 31, 2010
|  |  |       | 
|* |  | 10.27 |  | Form of Notice to Executive Officers (at Vice President or higher level) regarding the Analogic Corporation Annual Incentive Plan for Fiscal Year 2010 |  | Exhibit 10.1 to the Companys Quarterly Report on Form 10-Q for the three months ended October 31, 2009
|  |  |       | 
|* |  | 10.28 |  | Form of Notice to Executive Officers (who are Business Unit heads) regarding the Analogic Corporation Annual Incentive Plan for Fiscal Year 2010       |  | Exhibit 10.2 to the Companys Quarterly Report on Form 10-Q for the three months ended October 31, 2009
|  |  |       | 
|* |  | 10.29 |  | Letter Agreement between Analogic Corporation and Mervat Faltas, dated March 31, 2010 and accepted and agreed to by Ms. Faltas on April 29, 2010       |  | Exhibit 10.2 to the Companys Quarterly Report on Form 10-Q for the three months ended January 31, 2011
|  |  |       | 
|* |  | 10.30 |  | Letter Agreement between Analogic Corporation and James Green, dated April 20, 2007 and accepted and agreed to by Mr. Green on May 1, 2007             |  | Exhibit 10.1 to the Companys Current Report on Form 8-K filed on May 7, 2007                          
|  |  |       | 
|* |  | 10.31 |  | Amendment, dated December 24, 2008, to the Letter Agreement between Analogic Corporation and James Green, dated April 20, 2007                         |  | Exhibit 10.2 to the Companys Quarterly Report on Form 10-Q for the three months ended January 31, 2009
|  |  |       | 
|* |  | 10.32 |  | Letter Agreement, dated as of November 23, 2007, between Analogic Corporation and Bernard M. Gordon                                                    |  | Exhibit 10.1 to the Companys Current Report on Form 8-K filed on November 29, 2007                    
|  |  |       | 
|* |  | 10.33 |  | Letter Agreement between Analogic Corporation and John J. Fry, dated October 29, 2007 and accepted and agreed to by Mr. Fry on October 30, 2007        |  | Exhibit 10.3 to the Companys Quarterly Report on Form 10-Q for the three months ended October 31, 2007



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|  |  |       |  |                                                                                                                                                   |  |                                                                                                                                                      
|- |  | ----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------
|  |  |       |  | Title                                                                                                                                             |  | Incorporated by Reference to                                                                                                                         
|* |  | 10.34 |  | Amendment, dated December 24, 2008, to Letter Agreement between Analogic Corporation and John J. Fry, dated October 29, 2007                      |  | Exhibit 10.3 to the Companys Quarterly Report on Form 10-Q for the three months ended January 31, 2009                                              
|  |  |       | 
|* |  | 10.35 |  | Form of Change of Control Agreement for Certain Executive Officers of Analogic Corporation                                                        |  | Exhibit 10.1 to the Companys Current Report on Form 8-K filed on May 24, 2007                                                                       
|  |  |       | 
|* |  | 10.36 |  | Incumbent Director Resignation Policy                                                                                                             |  | Appendix C to the Companys Definitive Proxy Statement dated November 28, 2008 for the Companys Annual Meeting of Stockholders held January 26, 2009
|  |  |       | 
|* |  | 10.37 |  | Severance Plan for Management Employees, as Amended and Restated, effective as of December 31, 2008                                               |  | Exhibit 10.4 to the Companys Quarterly Report on Form 10-Q for the three months ended January 31, 2009                                              
|  |  |       | 
|* |  | 10.38 |  | Employment Agreement, dated June 8, 2009, between Analogic Corporation and Michael L. Levitz                                                      |  | Exhibit 10.2 to the Companys Current Report on Form 8-K filed on June 12, 2009                                                                      
|  |  |       | 
|  |  | 10.39 |  | Stock Purchase Agreement dated as of November 1, 2005, between Analogic Corporation and Emageon Inc.                                              |  | Exhibit 2.1 to the Companys Current Report on Form 8-K filed on November 4, 2005                                                                    
|  |  |       | 
|  |  | 21    |  | List of Subsidiaries                                                                                                                              |  |                                                                                                                                                      
|  |  |       | 
|  |  | 23    |  | Consent of PricewaterhouseCoopers LLP                                                                                                             |  |                                                                                                                                                      
|  |  |       | 
|  |  | 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, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |  |                                                                                                                                                      
|  |  |       | 
|  |  | 32.2  |  | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |  |                                                                                                                                                      



|* | Management contract or compensatory plan or arrangement
|- | -------------------------------------------------------



93