UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 25, 2006

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: 0-18281

Hologic, Inc.

(Exact name of registrant as specified in its charter)

Delaware	04-2902449
(State of incorporation)	(I.R.S. Employer Identification No.)

35 Crosby Drive, Bedford, Massachusetts 01730

(Address of principal executive offices) (Zip Code)

(781) 999-7300

(Registrant’s telephone number, including area code)

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  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  x                        Accelerated filer  ¨                        Non-accelerated filer  ¨

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

As of May 1, 2006, 45,591,289 shares of the registrant’s Common Stock, $.01 par value, were outstanding.

HOLOGIC, INC. AND SUBSIDIARIES

INDEX

			Page
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements
		Consolidated Balance Sheets March 25, 2006 (unaudited) and September 24, 2005	3
		Consolidated Statements of Income Three Months and Six Months Ended March 25, 2006 and March 26, 2005 (unaudited)	4
		Consolidated Statements of Cash Flows Six Months Ended March 25, 2006 and March 26, 2005 (unaudited)	5
		Notes to Consolidated Financial Statements (unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		27
Item 4.	Controls and Procedures		28
PART II - OTHER INFORMATION			29
Item 1.	Legal Proceedings		29
Item 1A.	Risk Factors		29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		40
Item 4.	Submission of Matters to a Vote of Security Holders		40
Item 5.	Other Information		40
Item 6.	Exhibits		41
SIGNATURES			41

2

HOLOGIC, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except per share data)

ASSETS

	March 25, 2006			September 24, 2005
CURRENT ASSETS:
Cash and cash equivalents	$	108,285		$	113,994
Accounts receivable, less reserves of $2,458 and $2,592, respectively		70,771			57,742
Inventories		60,866			44,520
Prepaid expenses and other current assets		16,150			12,119
Total current assets		256,072			228,375
PROPERTY AND EQUIPMENT, at cost:
Land		1,500			1,500
Buildings and improvements		14,539			14,336
Equipment and software		47,475			43,282
Furniture and fixtures		3,896			3,805
Leasehold improvements		2,872			2,788
		70,282			65,711
Less: Accumulated depreciation and amortization		35,662			32,382
		34,620			33,329
OTHER ASSETS:
Patented technology, net of accumulated amortization of $7,069 and $6,954, respectively		531			646
Developed technology and know-how, net of accumulated amortization of $5,976 and $4,592, respectively		26,350			4,516
Customer lists, net of accumulated amortization of $329		5,271			—
Goodwill		6,285			6,285
Deferred tax assets, net		639			—
Other assets, net		3,213			6,688
Total assets	$	332,981		$	279,839
LIABILITIES AND STOCKHOLDERS’ EQUITY
	March 25, 2006			September 24, 2005
CURRENT LIABILITIES:
Accounts payable	$	20,102		$	14,163
Accrued expenses		26,977			25,237
Current portion of deferred revenue		18,354			16,360
Total current liabilities		65,433			55,760
Deferred income tax liabilities		—			1,471
Deferred revenue, net of current portion		5,262			4,774
Total long term liabilities		5,262			6,245
Contingencies (Note 9)
STOCKHOLDERS’ EQUITY:
Preferred stock, $.01 par value- Authorized – 1,623 shares Issued – 0 shares		—			—
Common stock, $.01 par value- Authorized - 90,000 shares Issued – 45,564 and 44,295 shares, respectively		456			443
Capital in excess of par value		200,237			172,642
Retained earnings		63,332			46,452
Accumulated other comprehensive loss		(1,275	)		(1,239	)
Treasury stock, at cost - 90 shares		(464	)		(464	)
Total stockholders’ equity		262,286			217,834
Total liabilities and stockholders’ equity	$	332,981		$	279,839

See accompanying notes.

3

HOLOGIC, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per share data)

	Three Months Ended					Six Months Ended
	March 25, 2006		March 26, 2005			March 25, 2006		March 26, 2005
Revenues:
Product sales	$	83,270	$	54,924		$	155,489	$	107,248
Service and other revenue		17,715		14,313			33,452		28,165
		100,985		69,237			188,941		135,413
Costs and Expenses (1):
Cost of product sales		39,453		28,703			74,106		56,031
Cost of service and other revenue		18,411		13,761			34,731		28,401
Research and development		6,787		4,842			12,758		9,192
Selling and marketing		11,073		7,299			22,216		16,547
General and administrative		8,869		7,451			16,732		13,471
Charge for in-process research and development		—		—			4,200		—
		84,593		62,056			164,743		123,642
Income from operations		16,392		7,181			24,198		11,771
Interest income		978		464			2,273		722
Interest and other income (expense), net		44		(91	)		9		(71	)
Income before provision for income taxes		17,414		7,554			26,480		12,422
Provision for income taxes		6,250		1,506			9,600		1,800
Net income	$	11,164	$	6,048		$	16,880	$	10,622
Net income per common and common equivalent share:
Basic	$	0.25	$	0.14		$	0.38	$	0.25
Diluted	$	0.24	$	0.13		$	0.36	$	0.24
Weighted average number of common shares outstanding:
Basic		45,189		42,258			44,770		41,776
Diluted		47,345		44,882			47,073		44,202
____________ (1) Stock-based Compensation included in Costs and Expenses:
Cost of revenues	$	98	$	—		$	184	$	—
Research and development		97		—			193		—
Selling and marketing		76		—			148		—
General and administrative		467		—			880		—
	$	738	$	—		$	1,405	$	—

See accompanying notes.

4

HOLOGIC, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	Six Months Ended
	March 25, 2006			March 26, 2005
OPERATING ACTIVITIES:
Net income	$	16,880		$	10,622
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		3,432			3,132
Amortization		1,829			585
Noncash interest expense		—			72
Increase in deferred tax asset related to exercise of non-qualified stock options		(16,639	)		—
Charge for in-process research and development		4,200			—
Compensation expense related to issuance of stock options		1,405			—
Deferred income taxes		(1,471	)		(815	)
Loss on disposal of property and equipment		99			584
Changes in assets and liabilities-
Accounts receivable		(13,081	)		(4,064	)
Inventories		(16,362	)		3,197
Prepaid expenses and other current assets		(4,394	)		285
Accounts payable		5,940			2,366
Accrued expenses		18,747			3,769
Deferred revenue		2,494			3,396
Net cash provided by operating activities		3,079			23,129
INVESTING ACTIVITIES:
Net cash paid for acquisition of intangible assets		(27,594	)		—
Purchase of property and equipment		(4,816	)		(4,727	)
Increase in other assets		(2,588	)		(1,038	)
Net cash used in investing activities		(34,998	)		(5,765	)
FINANCING ACTIVITIES:
Repayment of note payable		—			(239	)
Tax benefit related to exercise of non-qualified stock options		16,639			—
Net proceeds from sale of common stock pursuant to stock plans		9,616			10,014
Net cash provided by financing activities		26,255			9,775
EFFECT OF EXCHANGE RATE CHANGES ON CASH		(45	)		217
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(5,709	)		27,356
CASH AND CASH EQUIVALENTS, beginning of period		113,994			68,335
CASH AND CASH EQUIVALENTS, end of period		108,285		$	95,691
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for income taxes	$	108		$	241
Cash paid during the period for interest	$	59		$	103
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITIES:
Exchange of note receivable for intangible assets	$	5,424		$	—

See accompanying notes.

5

HOLOGIC, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(In thousands, except per share data)

(1) Basis of Presentation

The consolidated financial statements of Hologic, Inc. (the Company) presented herein have been prepared pursuant to the rules of the Securities and Exchange Commission for quarterly reports on Form 10-Q and do not include all of the information and note disclosures required by generally accepted accounting principles. These statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended September 24, 2005, included in the Company’s Form 10-K as filed with the Securities and Exchange Commission on December 6, 2005.

The balance sheet at September 24, 2005 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The consolidated balance sheet as of March 25, 2006, the consolidated statements of income for the three and six months ended March 25, 2006 and March 26, 2005 and the consolidated statements of cash flows for the six months ended March 25, 2006 and March 26, 2005, are unaudited but, in the opinion of management, include all adjustments (consisting of normal, recurring adjustments) necessary for a fair presentation of results for these interim periods.

The results of operations for the three months and six months ended March 25, 2006 and March 26, 2005 are not necessarily indicative of the results to be expected for the entire fiscal year ending September 30, 2006. Certain prior-period amounts have been reclassified to conform with the current-period presentation.

On November 30, 2005, the Company effected a two-for-one stock split in the form of a stock dividend. The stock split has been retroactively reflected in the accompanying consolidated financial statements and notes for all periods presented.

(2) Significant Estimates and Assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make significant estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates and assumptions by management affect the Company’s revenue recognition, allowance for doubtful accounts, deferred tax assets, certain accrued expenses, amortization periods, stock-based compensation and impairment of goodwill, intangible and long-lived assets.

Although the Company regularly assesses these estimates, actual results could differ materially from these estimates. Changes in estimates are recorded in the period in which they become known. The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Actual results could differ from management’s estimates if past experience or other assumptions do not turn out to be substantially accurate.

(3) Acquisition of Intangible Assets

On September 29, 2005, pursuant to an Asset Purchase Agreement between Hologic, Inc. (Hologic) and Fischer Imaging Corporation (Fischer) (the Purchase Agreement), dated June 22, 2005, Hologic acquired the intellectual property and customer lists relating to Fischer’s mammography business and products for $26.9 million in cash and cancellation of the principal and interest outstanding under a $5.0 million secured loan previously provided by Hologic to Fischer.

6

The aggregate purchase price for the Fischer intellectual property and customer lists was approximately $33.0 million, which includes approximately $1.0 million related to direct acquisition costs. In accordance with Emerging Issues Task Force Issue No. 98-3, Determining Whether a Non-monetary Transaction Involved Receipt of Productive Assets or of a Business, the Company determined the acquisition does not qualify as an acquisition of a business and in accordance with SFAS No. 141 and SFAS No. 142, the purchase price has been allocated to the acquired assets of Fischer based on their fair value.

As part of the purchase price allocation, all intangible assets that are a part of the acquisition were identified and valued. It was determined that technology assets and customer lists had separately identifiable values. As a result of this identification and valuation process, the Company allocated approximately $4.2 million of the purchase price to in-process research and development projects related to Fischer’s digital mammography product. This allocation represented the estimated fair value assuming these projects were completed based on risk-adjusted cash flows related to the incomplete research and development projects. At the date of acquisition, the development of these projects had not yet reached technological feasibility, and the research and development in progress had no alternative future use. The Company does not intend to complete these projects. Accordingly, these costs were expensed as of the acquisition date.

In addition, the Company allocated approximately $23.2 million and $5.6 million to developed technology and customer lists, respectively through the application of the income approach to determine the fair value of the acquired assets. Developed technology represents patented and unpatented technology and know-how related to the Fischer digital mammography and breast biopsy systems. Developed technology is expected to be amortized over a period of 12.5 years. Customer lists represent established relationships with customers, which provides a ready channel for the sale of additional products and services. Customer lists are expected to be amortized over a period of 8.5 years.

The aggregate purchase price of approximately $33 million including acquisition costs was allocated as follows:

Customer lists	$	5,600
Developed technology and know-how		23,218
In-process research and development		4,200
	$	33,018

The Company considered whether any contingencies were acquired, as the price paid was more than the fair market value of the intangible assets and determined none were acquired.

(4) Inventories

Inventories are stated at the lower of cost (first-in, first-out) or market and consist of the following:

	March 25, 2006		September 24, 2005
Raw materials and work-in-process	$	42,654	$	34,714
Finished goods		18,212		9,806
	$	60,866	$	44,520

Work-in-process and finished goods inventories consist of material, labor and manufacturing overhead.

7

(5) Net Income Per Share

A reconciliation of basic and diluted share amounts are as follows:

	Three Months Ended		Six Months Ended
	March 25, 2006	March 26, 2005	March 25, 2006	March 26, 2005
Basic weighted average common shares outstanding	45,189	42,258	44,770	41,776
Weighted average common equivalent shares	2,156	2,624	2,303	2,426
Diluted weighted average common shares outstanding	47,345	44,882	47,073	44,202

Diluted weighted average shares outstanding do not include options outstanding to purchase 149 and 262 common-equivalent shares for the three and six months ended March 25, 2006, respectively, and 120 and 256 common-equivalent shares for the three and six months ended March 26, 2005, respectively, as their effect would have been antidilutive.

(6) Stock Based Compensation

On December 16, 2004 the FASB issued SFAS Statement No. 123 (R) (SFAS 123(R)), Share-Based Payment, which is a revision of SFAS Statement No. 123 (SFAS 123), Accounting for Stock-Based Compensation. SFAS 123(R) supersedes APB Opinion No. 25, (Opinion 25), Accounting for Stock Issued to Employees, and amends SFAS No. 95, Statement of Cash Flows. Generally, the approach on SFAS 123(R) is similar to the approach described in SFAS 123. However, SFAS 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative.

SFAS 123(R) must be adopted for fiscal years starting after June 15, 2005. As a result, the Company adopted SFAS 123(R) starting in its fiscal first quarter of 2006, which began on September 25, 2005.

As permitted by SFAS 123, the Company historically accounted for share-based payments to employees using Opinion 25’s intrinsic value method and, as such, generally recognized no compensation cost for employee stock options. The Company has adopted the “modified prospective” method alternative outlined in SFAS 123(R). A “modified prospective” method is one in which compensation cost is recognized beginning with the effective date (a) based on the requirements of SFAS 123(R) for all share-based payments granted after the effective date and (b) based on the requirements of SFAS 123 for all awards granted to employees prior to the effective date of SFAS 123(R) that remain unvested on the effective date. As a result, the Company is amortizing the unamortized stock-based compensation expense related to unvested option grants issued prior to the adoption of SFAS 123(R), whose fair value was calculated utilizing a Black-Scholes Option Pricing Model. In addition, SFAS 123(R) requires companies to utilize an estimated forfeiture rate when calculating the expense for the period, whereas, SFAS 123 permitted companies to record forfeitures based on actual forfeitures, which was the Company’s historical policy under SFAS 123. As a result, the Company has applied an estimated forfeiture rate of 9.7% in the first quarter and 10.6% in the second quarter of fiscal 2006 in determining the expense recorded in the Company’s consolidated statement of income.

8

As a result of the adoption of SFAS 123(R), the Company has recorded stock-based compensation expense as follows:

	Three Months Ended				Six Months Ended
	March 25, 2006		March 26, 2005		March 25, 2006		March 26, 2005
Cost of revenues	$	98	$	—	$	184	$	—
Research and development		97		—		193		—
Selling and marketing		76		—		148		—
General and administrative		467		—		880		—
	$	738	$	—	$	1,405	$	—

The compensation expense reduced both basic and diluted earnings per share by $0.01 for the three months ended March 25, 2006 and reduced both basic and diluted earnings per share by $0.02 for the six months ended March 25, 2006. These results reflect stock compensation expense of $738 and related tax benefit of $261 for the three months ended March 25, 2006. These results reflect stock compensation expense of $1,405 and related tax benefit of $509 for the six months ended March 25, 2006. No stock-based compensation expense was capitalized as part of inventory during the six months ended March 25, 2006. In accordance with the modified-prospective transition method of SFAS 123(R), results for prior periods have not been restated. As of March 25, 2006, there was $9.5 million of unrecognized compensation expense related to non-vested market-based share awards that is expected to be recognized over a weighted-average period of 2.6 years.

Prior to adopting SFAS 123(R), the Company accounted for stock-based compensation under APB 25. The following table illustrates the effect on net income and earnings per share if the fair value based method had been applied to the year-ago period.

	Three Months Ended			Six Months Ended
	March 26, 2005			March 26, 2005
Net income as reported	$	6,048		$	10,622
Stock-based employee compensation determined under the fair value based method, net of related tax effects		(2,842	)		(5,288	)
Net income – pro forma	$	3,206		$	5,334
Income per common equivalent share:
Basic – as reported	$	0.14		$	0.25
Basic – pro forma	$	0.08		$	0.13
Diluted – as reported	$	0.13		$	0.24
Diluted – pro forma	$	0.07		$	0.12

Effective with the adoption of SFAS 123(R), the Company has elected to use a bi-nomial model to determine the weighted average fair value of options, rather than the Black-Scholes model. The Company considered a number of factors to determine the fair value of options including the advice of an outside valuation advisor and the advisor’s model.

9

The Company had used the Black-Scholes option pricing model to determine the weighted average fair value of options prior to adopting SFAS 123(R). The weighted average fair value of options granted during the three and six months ended March 25, 2006, under the binomial valuation method, were $19.60 and $17.26, respectively. The weighted average fair value of options granted during the three and six months ended March 26, 2005, under the Black-Scholes valuation method, were $7.97 and $6.07, respectively. The fair value of options at the date of grant and the weighted-average assumptions utilized to determine such values are indicated in the following table:

	Three Months Ended				Six Months Ended
	March 25, 2006		March 26, 2005		March 25, 2006		March 26, 2005
Risk – free interest rate	4.6	%	3.7	%	4.5	%	3.5	%
Expected volatility	55	%	60	%	55	%	65	%
Expected life (in years)	4.6 years		4.0 years		4.7 years		4.0 years
Dividend yield	—		—		—		—

The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of the stock options. Expected volatility is based on an average of the implied volatility, the volatility for the most recent period commensurate with the expected option life and the historical volatility over a period commensurate with the contractual term of the option. The Company estimated the expected life of stock options and stock option forfeitures based on historical experience.

The assumptions used to calculate the SFAS No. 148 pro forma disclosure for shares purchased under the Employee Stock Purchase (ESP) Plan under the Black-Scholes method were as follows:

	Three Months Ended		Six Months Ended
	March 26, 2005		March 26, 2005
Risk-free interest rates	2.52	%	2.11	%
Expected dividend yield	—		—
Expected volatility	42	%	39	%
Term	0.5 years		0.5 years

On February 28, 2005, the Board of Directors voted to discontinue the ESP Plan effective July 1, 2005.

The following table summarizes all stock option activity under all of the plans for the six months in the period ended March 25, 2006 (in thousands, except per share and weighted-average data):

	Number of Shares		Per Share Exercise Price		Weighted- Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at September 24, 2005	4,706		$	1.97 - $26.44	$	7.58
Granted	528		$	26.38 -$53.67	$	37.03
Terminated	(43	)	$	2.50 - $35.56	$	8.35
Exercised	(1,268	)	$	1.97 - $27.73	$	7.54
Outstanding at March 25, 2006	3,923		$	1.97 - $53.67	$	11.55	6.8	$	169,892
Exercisable at March 25, 2006	2,303		$	1.97 - $53.67	$	7.56	5.8	$	109,006
Vested and expected to vest at March 25, 2006(1)	3,647		$	1.97 - $53.67	$	6.51		$	161,413
Available for grant at March 25, 2006	531

(1) This represents the number of vested options as of March 25, 2006 plus the number of unvested options expected to vest as of March 25, 2006 based on the unvested outstanding options at March 25, 2006 adjusted for the estimated forfeiture rate of 10.6%.

10

The range of exercise prices for options outstanding and exercisable as of March 25, 2006 are as follows:

Options Outstanding							Options Exercisable
Range of Exercise Price			Options Outstanding	Weighted-Average Remaining Contractual Life (Years)	Weighted-Average Exercise Price		Options Exercisable	Weighted-Average Exercise Price
$1.97	$	2.89	238	4.93	$	2.57	238	$	2.57
$2.94	$	3.84	176	5.49		3.53	132		3.43
$3.88	$	5.50	904	6.10		4.89	656		4.94
$5.75	$	7.13	953	7.50		7.02	391		7.00
$7.15	$	13.31	892	5.05		9.88	764		9.81
$13.60	$	19.91	132	9.00		17.69	18		14.11
$20.48	$	29.49	329	9.55		26.38	94		24.08
$30.92	$	43.02	98	9.73		36.39	10		35.68
$47.83	$	53.67	199	9.93		48.07	—		—
$1.97	$	53.67	3,921	6.78	$	11.55	2,303	$	7.56

(7) Comprehensive Income

The Company’s only item of other comprehensive income relates to foreign currency translation adjustments, and is presented separately on the balance sheet as required.

A reconciliation of comprehensive income is as follows:

	Three Months Ended					Six Months Ended
	March 25, 2006		March 26, 2005			March 25, 2006			March 26, 2005
Net income as reported	$	11,164	$	6,048		$	16,880		$	10,622
Foreign currency translation adjustment		30		(138	)		(36	)		125
Comprehensive income	$	11,194	$	5,910		$	16,844		$	10,747

11

(8) Business Segments and Geographic Information

Beginning in fiscal 2006, the Company combined its previously reported mammography and digital detector operating segments, to better reflect how the Company views its operations and manages its business. In fiscal 2006, the primary function of the digital detector business is to support the Company’s mammography product line.

The Company now reports its business as three segments: mammography, osteoporosis assessment and other. The Company’s other business segment includes its mini C-arm, extremity MRI, conventional general radiography service and digital general radiography systems businesses. Identifiable assets for the three principal operating segments consist of inventories, intangible assets, and property and equipment. The Company has presented all other identifiable assets as corporate assets. Intersegment sales and transfers are not significant. Prior periods have been restated to conform to this presentation. Segment information for the three months and six months ended March 25, 2006 and March 26, 2005 is as follows:

	Three Months Ended				Six Months Ended
	March 25, 2006		March 26, 2005		March 25, 2006		March 26, 2005
Total revenues– Mammography	$	72,980	$	44,623	$	135,760	$	86,722
Osteoporosis Assessment		21,399		18,971		41,419		36,133
Other		6,606		5,643		11,762		12,558
	$	100,985	$	69,237	$	188,941	$	135,413
Operating income– Mammography	$	13,268	$	3,605	$	18,257	$	5,442
Osteoporosis Assessment		2,855		2,798		5,860		4,431
Other		269		778		81		1,898
	$	16,392	$	7,181	$	24,198	$	11,771
Depreciation and amortization– Mammography	$	1,915	$	1,128	$	3,795	$	2,222
Osteoporosis Assessment		693		595		1,332		1,293
Other		74		92		134		202
	$	2,682	$	1,815	$	5,261	$	3,717
Capital expenditures– Mammography	$	1,022	$	1,080	$	2,777	$	2,846
Osteoporosis Assessment		470		499		1,940		1,881
Other		—		—		—		—
	$	1,492	$	1,579	$	4,717	$	4,727
	March 25, 2006		September 24, 2005
Identifiable assets– Mammography	$	101,385	$	64,414
Osteoporosis Assessment		10,490		9,278
Other		15,049		8,801
Corporate		206,057		197,346
	$	332,981	$	279,839

Export sales from the United States to unaffiliated customers, primarily in Europe, Asia and Latin America during the three months and six months March 25, 2006 totaled approximately $29,104 and $53,150, respectively, and for the three and six months ended March 26, 2005 totaled approximately $21,603 and $39,585, respectively.

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Transfers between the Company and its European subsidiaries are generally recorded at amounts similar to the prices paid by unaffiliated foreign dealers. All intercompany profit is eliminated in consolidation.

Export product sales as a percentage of total product sales are as follows:

	Three Months Ended				Six Months Ended
	March 25, 2006		March 26, 2005		March 25, 2006		March 26, 2005
Europe	20	%	23	%	19	%	22	%
Asia	10		13		9		11
All others	5		3		6		4
	35	%	39	%	34	%	37	%

(9) Litigation and Other Matters

In March 2005, the Company was served with a Complaint filed on November 12, 2004 by Oleg Sokolov with the United States District Court for the District of Connecticut alleging that the Company’s HTC^™ grid infringes U.S. Patent Number 5,970,118. The plaintiff is seeking to preliminarily and permanently enjoin the Company from infringing the patent, as well as damages resulting from the alleged infringement, treble damages and reasonable attorney fees, and such other and further relief as may be available. On April 25, 2005, the Company filed an Answer and Counterclaims in response to the Complaint in which the Company denied the plaintiff’s allegations and, among other things, sought declaratory relief with respect to the patent claims and damages, as well as other relief. The Company does not believe that it infringes any valid or enforceable patents of the plaintiff and intends to vigorously defend its interests. As such, no amounts have been accrued related to this matter as of March 25, 2006.

The Company is the subject of a non-public FTC investigation to determine whether the Company’s recent acquisition of certain assets owned by Fischer Imaging Corporation may be anticompetitive and in violation of Section 7 of the Clayton Act or Section 5 of the Federal Trade Commission Act. The Company is in the process of responding to the FTC requests. The Company cannot predict the outcome or effect, if any, that this investigation will have on the Company’s business.

In the ordinary course of business, the Company is party to various types of litigation. The Company believes that all other litigation currently pending or threatened will not reasonably be likely to have a material effect on the Company’s financial condition or results of operations.

(10) Income Taxes

The Company’s effective tax rates for the three months ended March 25, 2006 and March 26, 2005 were 36% and 20%, respectively, and for the six months ended March 25, 2006 and March 26, 2005 were 36% and 14%, respectively, which were lower than the Company’s statutory federal and state rate of 40.0%. For the three and six months ended March 25, 2006, the lower effective rate was due to certain permanent tax differences. The Company’s effective income tax rate for the three and six months ended March 26, 2005 was lower than the statutory rate primarily due to the utilization of previously unrecognized net operating losses. The Company currently expects to realize recorded deferred tax assets as of March 25, 2006 of approximately $12.3 million. Management’s conclusion that such assets will be recovered is based upon its expectation that future earnings of the Company combined with tax planning strategies available to the Company will provide sufficient taxable income to realize recorded tax assets. Such tax strategies include estimates and involve judgment. While the realization of the Company’s net recorded deferred tax assets cannot be assured, to the extent that future taxable income against which these tax assets may be applied is not

13

sufficient, some or all of the Company’s net recorded deferred tax assets would not be realizable. The Company’s net deferred tax asset increased $7.8 million in the current six month period primarily due to the benefit from the exercise of non-qualified stock options.

(11) Product Warranties

The Company typically offers a one-year warranty for all of its products. The Company provides for the estimated cost of product warranties at the time product revenue is recognized. Factors that affect the Company’s warranty reserves include the number of units sold, historical and anticipated rates of warranty repairs and the cost per repair. The Company periodically assesses the adequacy of the warranty reserve and adjusts the amount as necessary.

Product warranty activity for the six months ended March 25, 2006 and March 26, 2005 is as follows:

	Balance at Beginning of Period		Accruals for warranties issued during the period		Write- Offs/Payments			Balance at End of Period
Six Months Ended:
March 25, 2006	$	6,674	$	3,014	$	(1,573	)	$	8,115
March 26, 2005	$	4,528		3,821	$	(1,978	)	$	6,371

(12) Related Party Transactions

In fiscal 2000 and 2001, the Company loaned an officer an aggregate of $500, which is required to be repaid quarterly through April 2006. In the event of a change in control, as defined, the amounts outstanding will be forgiven. The note is unsecured and bears interest at 7% per annum.

In December 2002, the Compensation Committee of the Board of Directors approved a special bonus program to provide the officer with the funds necessary to pay the quarterly installments due under the loan. Under the special bonus program, for so long as the officer remains an officer of the Company and there are amounts remaining to be repaid under the loan, the Company will pay the officer a special quarterly bonus equal to the amount due under the loan, including interest due, plus an additional payment equal to the taxes due as a result of the special bonus and such additional payment, such that the net-after-tax special quarterly bonus to be received by the officer will equal the principal and interest then due under the loan. During the six months ended March 25, 2006 and March 26, 2005 the Company recognized $75 and $159, respectively, in bonus expense in connection with this program. As of January 1, 2006, the full amount of the loan had been repaid, and no further amounts will be paid to the officer under this special bonus program.

In May 2006, the Company entered into retention and severance agreements with certain executives that provide for retention payments in cash totaling $3 million if these executives remain employed with the Company through December 31, 2008 (“Retention Date”). The Company has determined that it is probable that these amounts will be paid and therefore, is accruing these amounts ratably through the Retention Date. In addition, in connection with the retention and severance agreements, these executives were awarded 53,903 restricted stock units with an aggregate value of $2.5 million. These restricted stock units cliff vest on the Retention Date. These shares will be excluded from the computation of basic earnings per share until the shares vest because the employee is not entitled to the rewards of stock ownership. The Company will record the $2.5 million as deferred stock based compensation, which will be amortized over the vesting period. The retention and severance agreements also provide these executives with certain cash payments and continuation of benefits, as defined, in the event of termination without cause.

In May 2006, the Company also entered into severance agreements with certain other key officers that provide for certain cash payments and continuation of benefits, as defined, in the event of termination without cause.

(13) Goodwill and Intangible Assets

Consistent with prior years, the Company conducted its annual impairment test of goodwill during the second quarter of fiscal 2006. The Company considered a number of factors, including an independent valuation, from prior years, to conduct this test. The valuation was based upon expected future discounted operating cash flows of the mammography reporting unit as well as analysis of recent sales or offerings of similar companies. The timing and size of impairment charges involve the application of management’s judgment and could significantly affect the Company’s operating results. The Company determined that it met all of the criteria under SFAS No. 142 to carry-forward the prior year determination of reporting unit fair value and based on the applicable valuation determined that no impairment exists.

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Goodwill by reporting segment consists of the following:

Reporting Segment	Balance as of March 25, 2006		Balance as of September 24, 2005
Mammography	$	6,285	$	6,285

Intangible assets consist of the following:

			As of March 25, 2006				As of September 24, 2005
Reporting Segment	Description	Estimated Useful Life	Gross Carrying Value		Accumulated Amortization		Gross Carrying Value		Accumulated Amortization
Osteoporosis Assessment	Patents	1-20 years	$	4,952	$	4,583	$	4,952	$	4,516
Mammography	Developed Technology	10-12.5 years		32,326		5,976		9,108		4,592
	Customer Lists	8.5 years		5,600		329		—		—
	Patents	5 years		648		486		648		438
Other	Patents	4 years		2,000		2,000		2,000		2,000

The estimated remaining amortization expense for each of the five succeeding fiscal years:

Remaining through September 30, 2006	$	1,820
September 29, 2007		3,615
September 27, 2008		3,559
September 26, 2009		3,458
September 25, 2010		3,404
Thereafter		16,294

(14) Subsequent Events

On April 17, 2006, the Company entered into a definitive agreement to acquire Suros Surgical Systems, Inc. The purchase price for the transaction will be $240 million (subject to adjustment), plus a two-year earn out. The closing consideration will consist of $132 million in cash and an additional $108 million payable, at the election of Hologic, in cash, shares of Hologic Common Stock or a combination thereof. The price per share will be equal to the ten-day trading average of the closing price per share of Hologic Common Stock for the period ending two trading days prior to the closing date. The earn-out will be payable in two annual cash installments equal to the incremental revenue growth in Suros Surgical’s business in the two years following the closing. This transaction is subject to customary closing conditions, including Suros Surgical stockholder approval and the expiration or termination of the waiting period under the Hart-Scott Rodino Antitrust Improvements Act.

On April 24, 2006, the Company entered into a definitive agreement to acquire R2 Technology, Inc. The purchase price for the transaction will be $220 million (subject to adjustment) payable in shares of Hologic Common Stock. The price per share will be equal to the ten-trading day average of the closing price per share of Hologic Common Stock for the period ending two trading days prior to the closing date. This transaction is subject to a fairness hearing before the Commissioner of the California Department of Corporations, and to customary closing conditions, including R2 stockholder approval and the expiration or termination of the waiting period under the Hart-Scott Rodino Antitrust Improvements Act.

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On May 2, 2006, the Company acquired AEG Elektrofotografie GmbH and its group of related companies for a purchase price of EUR 21 million (subject to adjustment), excluding acquisition costs, plus a one-year earn-out of EUR 1.7 million. The purchase price consists of EUR 16,297,650 in cash and an additional 109,720 shares of Hologic Common Stock. The cash payment includes an escrow amount of EUR 2.8 million related to certain items and will be fully released 24 months after the closing date absent any asserted claims. The earn-out will be payable in cash if AEG Elektrofotografie calendar year 2006 EBITDA exceeds a pre-set amount. Goodwill will be increased by the amount of the additional consideration, if any, when it becomes due and payable. The Company is not required to make any further earn-out payments. This transaction will be accounted for using the purchase method of accounting and, accordingly, results of operation for AEG will be included in the Company’s consolidated financial statements from the date of acquisition. The Company has not yet completed the allocation of the purchase price, as appraisals associated with the valuation are not yet complete.

The Company has existing relationships with these parties as suppliers of inventory items. The supply agreements were entered into in prior years at arm’s length terms and conditions. No minimum purchase requirements exist and the pricing was consistent with other vendor agreements.

PART I - FINANCIAL INFORMATION (Continued)

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

HOLOGIC, INC. AND SUBSIDIARIES

CAUTIONARY STATEMENT

This report contains forward-looking information that involves risks and uncertainties, including statements regarding our plans, objectives, expectations and intentions. Such statements include, without limitation, statements regarding various estimates we have made in preparing our financial statements, statements regarding expected future trends relating to our results of operations and the sufficiency of our capital resources. These forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those anticipated. Factors that could cause actual results to materially differ include, without limitation, the Risk Factors set forth in Part II – Item 1A of this report. We caution readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date of this report. Except as otherwise required by law, we expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in our expectations or any change in events, conditions or circumstances on which any such statement is based.

CRITICAL ACCOUNTING POLICIES

The discussion and analysis of our financial condition and results of operations are based upon our interim consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to customer programs and incentives, product returns, bad debts, inventories, investments, intangible assets, income taxes, warranty obligations, restructuring and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

The critical accounting estimates used in the preparation of our financial statements that we believe affect our more significant judgments and estimates used in the preparation of our consolidated financial statements presented in this report are described in Management’s Discussion and Analysis of Financial Condition and Results

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of Operations and in the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended September 24, 2005. Except as set forth below, there have been no material changes to the critical accounting policies.

On December 16, 2004 the FASB issued SFAS Statement No. 123(R) (SFAS 123(R)), Share-Based Payment, which is a revision of SFAS Statement No. 123 (SFAS 123), Accounting for Stock-Based Compensation. SFAS 123(R) supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and amends SFAS No. 95, Statement of Cash Flows. Generally, the approach on SFAS 123(R) is similar to the approach described in SFAS 123. However, SFAS 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative.

SFAS 123(R) must be adopted for fiscal years starting after June 15, 2005. As a result, we have adopted SFAS 123(R) starting in our fiscal first quarter of 2006, which began on September 25, 2005.

As permitted by SFAS 123, we historically accounted for share-based payments to employees using Opinion 25’s intrinsic value method and, as such, generally recognized no compensation cost for employee stock options. We have adopted the “modified prospective” method alternative outlined in SFAS 123(R). A “modified prospective” method is one in which compensation cost is recognized beginning with the effective date (a) based on the requirements of SFAS 123(R) for all share-based payments granted after the effective date and (b) based on the requirements of SFAS 123 for all awards granted to employees prior to the effective date of SFAS 123(R) that remain unvested on the effective date. As a result, we are amortizing the unamortized stock-based compensation expense related to unvested option grants issued prior to the adoption of SFAS 123(R), whose fair value was calculated utilizing a Black-Scholes Option Pricing Model. For options granted after our adoption of SFAS 123(R), we have elected to use a bi-nomial model to determine the weighted average fair value of options, rather than the Black-Scholes model, which we had previously used. In addition, SFAS 123(R) requires companies to utilize an estimated forfeiture rate when calculating the expense for the period, whereas, SFAS 123 permitted companies to record forfeitures based on actual forfeitures, which was our historical policy under SFAS 123. As a result, we have applied an estimated forfeiture rate of 9.7% in the first quarter and 10.6% in the second quarter of fiscal 2006 in determining the expense recorded in our consolidated statement of income. For further information regarding the assumptions we used in determining our stock-based compensation expense, see Note 6 to our financial statements.

During the six months ended March 25, 2006, we have recorded $1.4 million of stock-based compensation expense as a result of the adoption of SFAS 123(R). The stock-based compensation expense included $184,000 in cost of revenues, $193,000 in research and development, $148,000 in selling and marketing and $880,000 in general and administrative expense for the six months ended March 25, 2006. The compensation expense reduced both basic and diluted earnings per share by $0.02. In accordance with the modified-prospective transition method of SFAS 123(R), results for prior periods have not been restated. As of March 25, 2006, there was $9.5 million of unrecognized compensation expense related to non-vested market-based share awards that is expected to be recognized over a weighted-average period of 2.6 years.

On September 29, 2005, pursuant to an Asset Purchase Agreement between Hologic, Inc. (Hologic) and Fischer Imaging Corporation (Fischer) (the Purchase Agreement), dated June 22, 2005, Hologic acquired intellectual property and customer lists relating to Fischer’s mammography business and products for $26.9 million in cash and cancellation of the principal and interest outstanding under the $5.0 million secured loan previously provided by Hologic to Fischer. The aggregate purchase price for the Fischer intellectual property was approximately $33.0 million, which includes approximately $1.0 million related to acquisition fees and expenses.

As part of the purchase price allocation, all intangible assets that are a part of the acquisition were identified and valued. It was determined that technology assets and customer lists had separately identifiable values. As a result of this identification and valuation process, we allocated approximately $4.2 million of the purchase price to in-process research and development projects related to Fischer’s digital mammography product. This allocation represented the estimated fair value assuming these projects were completed based on risk-adjusted cash flows

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related to the incomplete research and development projects. At the date of acquisition, the development of these projects had not yet reached technological feasibility, and the research and development in progress had no alternative future use. We do not intend to complete these projects. Accordingly, these costs were expensed as of the acquisition date.

In addition, we allocated approximately $23.2 million and $5.6 million to developed technology and customer lists, respectively. Developed technology represents patented and unpatented technology and know-how related to the Fischer digital mammography and breast biopsy systems. Developed technology is expected to be amortized over a period of 12.5 years. Customer lists represent established relationships with customers, which provides a ready channel for the sale of additional products and services. Customer lists are expected to be amortized over a period of 8.5 years.

Actual results may differ from these estimates under different assumptions or conditions. Any differences may have a material impact on our financial condition and results of operations. For a discussion of how these and other factors may affect our business, see “Part II – Item 1A – Risk Factors” and the “Cautionary Statement” above.

OVERVIEW

We are engaged in the development, manufacture and distribution of proprietary X-ray, digital X-ray and other medical imaging systems. Our businesses are reported as three segments: mammography; osteoporosis assessment and other.

Our mammography products include a broad product line of breast imaging and related products, including film-based and digital mammography systems and breast biopsy systems. Beginning in 2006, we have combined our digital detector business with our mammography operating segment to better reflect how we view our operations and manage our business. Our digital detector products are a digital component for our digital mammography equipment and, to a much lesser extent, are a digital component for original equipment manufacturers to incorporate into their own equipment. Our osteoporosis assessment products primarily consist of dual-energy X-ray bone densitometry systems and, to a lesser extent, an ultrasound-based osteoporosis assessment product. Bone densitometry is the precise measurement of bone density to assist in the diagnosis and monitoring of osteoporosis and other metabolic bone diseases that can lead to debilitating bone fractures. Our other business segment includes our mini C-arm, extremity MRI, conventional general radiography service and digital general radiography systems businesses. Our mini C-arm products are low intensity, fluoroscopic systems used primarily for image guidance of minimally invasive surgical procedures on a patient’s extremities. In January 2002, we closed the manufacturing facility for the conventional general radiography products; however, we continue to service and support most of these product lines. We have decided to phase out our digital general radiography systems and to focus on supplying our digital detectors to other original equipment manufacturers. In the current six month period, we began the ramp-up of sales and marketing activities including our initial sales of a line of third party extremity MRI systems of $1.0 million.

RECENT DEVELOPMENTS

On April 17, 2006, Hologic entered into a definitive agreement to acquire Suros Surgical Systems, Inc. (“Suros”), a leading innovator in the field of devices used for minimally invasive biopsy and tissue excision. The transaction is structured as a merger of a Hologic acquisition subsidiary into Suros, whereby Suros will become a wholly owned subsidiary of Hologic. The purchase price for the transaction is $240 million (subject to adjustment), plus a two-year earn out. The closing consideration will consist of $132 million in cash and an additional $108 million payable, at the election of Hologic, in cash, shares of Hologic Common Stock or a combination thereof. The price per share of any shares of Hologic Common Stock issued in this transaction will be equal to the ten-trading day average of the closing price per share of Hologic Common Stock for the period ending two trading days prior to the closing date. The earn-out will be payable in two annual cash installments based upon the incremental revenue growth in Suros’ business in the two years following the closing. This transaction is subject to customary closing conditions, including approval of Suros’ stockholders and the expiration or termination of the waiting period under the Hart-Scott Rodino Antitrust Improvements Act.

On April 24, 2006, Hologic entered into a definitive agreement to acquire R2 Technology, Inc. (“R2”), a global expert in the field of computer-aided detection (CAD). The transaction is structured as a merger of a Hologic acquisition subsidiary into R2, whereby R2 will become a wholly owned subsidiary of Hologic. The purchase price for the transaction is $220 million (subject to adjustment) payable in shares of Hologic Common Stock. The price per share of Hologic Common Stock will be equal to the ten-trading day average of the closing price per share of Hologic Common Stock for the period ending two trading days prior to the closing date. This transaction is subject to a fairness hearing before the Commissioner of the California Department of Corporations and customary closing conditions, including the approval of R2’s stockholders and the expiration or termination of the waiting period under the Hart-Scott Rodino Antitrust Improvements Act.

On May 2, 2006, Hologic acquired AEG Elektrofotografie GMGH (“AEG”), a private company headquartered in Warstein, Germany, for a purchase price of EUR 21 million (subject to adjustment), plus a one-year earn-out of EUR 1.7 million if AEG’s EBITDA for calendar year 2006 exceeds a target amount. The purchase price consists of EUR 16,297,650 in cash and additional 109,720 shares of Hologic Common Stock. AEG is a leading manufacturer of photoconductor materials, and has been Hologic’s sole supplier of amorphous selenium photoconductor coatings employed in Hologic’s full-field digital mammography detectors. AEG also develops, manufactures and sells photoconductor materials for use in a variety of electro photographic applications, including copying and printing. The acquisition is expected to facilitate manufacturing efficiencies and accelerate research and development of new detector products.

RESULTS OF OPERATIONS

All dollar amounts in tables are presented in thousands.

Product Sales.

	Three Months Ended												Six Months Ended
	March 25, 2006				March 26, 2005								March 25, 2006				March 26, 2005
			% of Total				% of Total		Change						% of Total				% of Total		Change
	Amount		Revenue		Amount		Revenue		Amount		%		Amount		Revenue		Amount		Revenue		Amount			%
Product Sales
Mammography	$	63,020	62	%	$	37,598	54	%	$	25,422	68	%	$	117,326	62	%	$	72,609	53	%	$	44,717		62	%
Osteoporosis Assessment	$	16,185	16	%	$	14,342	21	%	$	1,843	13	%	$	31,195	16	%	$	27,088	20	%	$	4,107		15	%
Other	$	4,065	4	%	$	2,984	4	%	$	1,081	36	%	$	6,968	4	%	$	7,551	6	%	$	(583	)	(8	)%
	$	83,270	82	%	$	54,924	79	%	$	28,346	52	%	$	155,489	82	%	$	107,248	79	%	$	48,241		45	%

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In the current three and six month periods, our product sales increased 52% and 45%, respectively, compared to the corresponding periods in the prior year, primarily due to an increase in revenues from our mammography products, and to a lesser extent an increase in osteoporosis assessment sales and, in the current quarter, an increase in our other product sales due to the initial sales of a new line of third party extremity MRI systems of $1.0 million. Partially offsetting these increases in the current six month period was a slight decrease in our other segment product sales, primarily attributable to our continued phasing out of our general radiography systems business.

Mammography product sales increased 68% in the current quarter compared to the corresponding period in the prior year, primarily due to a $19.9 million increase in worldwide digital mammography system sales and, to a lesser extent, a $6.7 million increase in worldwide Multicare stereotactic table sales, partially offset by a $1.1 million decrease in worldwide analog mammography sales. The increase in our digital mammography product sales was primarily attributable to an increase in the number of Selenia systems sold. In the current quarter we sold 111 digital mammography systems compared to 55 systems in the second quarter of fiscal 2005. We attribute the increase in digital mammography system sales primarily to the growing acceptance of our Selenia mammography system and of digital mammography in general. The increase in sales of our Multicare stereotactic tables, worldwide, was primarily attributable to an increase in the number of systems sold in the current quarter as compared to the second quarter of fiscal 2005. The decrease in sales of our analog mammography systems was primarily due to a decrease in the number of systems sold primarily in the United States. We believe that this decrease in analog system sales was primarily attributable to the shift in product sales to digital systems.

For the current six month period, mammography product sales increased 62% compared to the corresponding period in the prior year, primarily due to a $35.7 million increase in worldwide digital mammography systems sales, and an $11.6 million increase in worldwide Multicare stereotactic table sales, partially offset by a $2.9 million decrease in worldwide analog mammography sales. The increase in our digital mammography product sales was primarily attributable to an increase in the number of Selenia systems sold, primarily in the United States. In the current six month period, we sold 208 digital mammography systems compared to 104 systems in the first six months of fiscal 2005. We attribute the increase in digital mammography system sales primarily to the growing acceptance of our Selenia mammography system and of digital mammography in general. The increase in sales of our Multicare stereotactic tables, worldwide, was primarily attributable to an increase in the number of systems sold in the current six month period compared to the first six months of fiscal 2005. The decrease in sales of our analog mammography systems was due to a decrease in the number of systems sold primarily in the United States and Europe.

Osteoporosis assessment product sales increased 13% in the current quarter compared to the second quarter of fiscal 2005, primarily attributable to a $1.2 million increase in product sales in the United States and a $595,000 increase in product sales internationally. The total number of our dual-energy X-ray bone densitometry systems sold in the United States and internationally increased in the current quarter as compared to the second quarter of fiscal 2005. For the current six month period, osteoporosis assessment product sales increased 15% compared to the corresponding period in the prior year, primarily due to a $2.9 million increase in product sales in the United States and a $1.2 million increase in product sales internationally. These increases in sales in the United States were primarily attributable to growing interest in our lower priced bone densitometry systems sold into the primary care market through our direct sales force, and internationally to an increase in the number of our lower priced Explorer bone densitometry systems sold.

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Other product sales increased 36% in the current quarter compared to the corresponding period in the prior year. This increase was primarily attributable to our initial sales of $1.0 million of a new line of third party extremity MRI systems. In the current six month period, other product sales decreased 8% compared to the corresponding period in the prior year. This decrease was primarily due to a $1.9 million decrease in worldwide digital general radiography product sales, reflecting our decision to phase out this business. As a result of this decision, we expect our product sales for our digital general radiography systems to be negligible going forward. Partially offsetting this decrease was the initial sales of the third party extremity MRI systems.

In the first six months of fiscal 2006, approximately 66% of product sales were generated in the United States, 19% in Europe, 9% in Asia, and 6% in other international markets. In the first six months of fiscal 2005, approximately 63% of product sales were generated in the United States, 22% in Europe, 11% in Asia, and 4% in other international markets.

Service and Other Revenue.

	Three Months Ended												Six Months Ended
	March 25, 2006				March 26, 2005								March 25, 2006				March 26, 2005
			% of Total				% of Total		Change						% of Total				% of Total		Change
	Amount		Revenue		Amount		Revenue		Amount		%		Amount		Revenue		Amount		Revenue		Amount		%
Service and Other Revenue	$	17,715	18	%	$	14,313	21	%	$	3,402	24	%	$	33,452	18	%	$	28,165	21	%	$	5,287	19	%

Service and other revenue is primarily comprised of revenue generated from our field service organization to provide ongoing service, installation and repair of our products. Service and other revenue increased 24% in the current quarter and 19% in the current six month period compared to the corresponding periods of the prior year. The increases in service and other revenue in the current three and six month periods were primarily due to increases in service contract revenues and installation revenues. We believe that these increases reflect the continued growth in our installed base of systems and detectors.

Costs of Product Sales.

	Three Months Ended												Six Months Ended
	March 25, 2006				March 26, 2005								March 25, 2006				March 26, 2005
			% of Product				% of Product		Change						% of Product				% of Product		Change
	Amount		Sales		Amount		Sales		Amount		%		Amount		Sales		Amount		Sales		Amount		%
Cost of Product Sales	$	39,453	47	%	$	28,703	52	%	$	10,750	37	%	$	74,106	48	%	$	56,031	52	%	$	18,075	32	%

The cost of product sales increased 37% in the current quarter and 32% in the current six month period compared to the corresponding periods in the prior year primarily due to the increased product sales discussed above.

The cost of product sales decreased as a percentage of product sales to 47% in the current quarter of fiscal 2006 from 52% in the second quarter of fiscal 2005 and to 48% in the current six month period from 52% in the first six months of fiscal 2005. These costs decreased as a percentage of product sales primarily due to increased revenues and improved profitability associated with the shift in mammography product sales to Selenia, our full field

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digital mammography systems. Selenia systems have significantly higher selling prices, more than offsetting the higher costs of the product, when compared to analog mammography. In addition, higher Selenia sales combined with the increase in revenues for Multicare stereotactic tables, bone densitometers and digital detectors resulted in an improved absorption of fixed manufacturing costs. This improvement was partially offset by a shift in sales to lower margin bone densitometry systems, sold both internationally and into the primary care market in the United States.

Costs of Service and Other Revenue.

	Three Months Ended												Six Months Ended
	March 25, 2006				March 26, 2005								March 25, 2006				March 26, 2005
			% of Service				% of Service		Change						% of Service				% of Service		Change
	Amount		Revenue		Amount		Revenue		Amount		%		Amount		Revenue		Amount		Revenue		Amount		%
Cost of Service and Other Revenue	$	18,411	104	%	$	13,761	96	%	$	4,650	34	%	$	34,731	104	%	$	28,401	101	%	$	6,330	22	%

Cost of service and other revenue increased in absolute dollars primarily related to additional personnel and other costs to expand our service capabilities, especially in the United States to support our growing installed base of products. We expect our costs of service and other revenue to remain relatively high as a percentage of service and other revenue, reflecting our need to employ the required personnel for warranty, non-warranty and installation activities to service our growing installed base of products. We also expect a continued increase in customers entering into service agreements in connection with our transition to digital mammography and direct service coverage.

Operating Expenses.

	Three Months Ended												Six Months Ended
	March 25, 2006				March 26, 2005								March 25, 2006				March 26, 2005
			% of Total				% of Total		Change						% of Total				% of Total		Change
	Amount		Revenue		Amount		Revenue		Amount		%		Amount		Revenue		Amount		Revenue		Amount		%
Operating Expenses
Research and Development	$	6,787	6	%	$	4,842	7	%	$	1,945	40	%	$	12,758	7	%	$	9,192	7	%	$	3,566	39	%
Selling and Marketing	$	11,073	11	%	$	7,299	10	%	$	3,774	52	%	$	22,216	11	%	$	16,547	12	%	$	5,669	34	%
General and Administrative	$	8,869	9	%	$	7,451	11	%	$	1,418	19	%	$	16,732	9	%	$	13,471	10	%	$	3,261	24	%
Charge for In-Process R&D	$	—	—	%	$	—	—	%	$	—	—	%	$	4,200	2	%	$	—	—	%	$	4,200	—	%
	$	26,729	26	%	$	19,592	28	%	$	7,137	36	%	$	55,906	29	%	$	39,210	29	%	$	16,696	43	%

Research and Development Expenses. Research and development expenses increased 40% and 39%, respectively, in the current three and six month periods as compared to the corresponding periods in the prior year primarily due to an increase of $1.9 million in the current quarter and $3.6 million in the current six month periods in mammography related expenses including our tomosynthesis development project and, to a lesser extent, amortization of the acquired Fischer Imaging developed technology of $464,000 in the current quarter and $929,000 in the current six month period. We expect total research and development expenses to continue to increase as we accelerate our development efforts of tomosynthesis technology for mammography and continue to amortize the Fischer Imaging developed technology.

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Selling and Marketing Expenses. Selling and marketing expenses increased by 52% and 34%, respectively, in the current three and six month periods as compared to the corresponding periods in the prior year, primarily due to the increased level of revenues. In the current quarter, the increase was primarily due to an increase of $1.1 million of increased commissions to our direct sales force due to the increased product sales in direct territories, an increase of approximately $1.1 million of salaries, benefits and travel expenses from an increase in our direct sales force and an increase of approximately $700,000 of international distributor commissions due to increased product sales through these channels. In the first six months of fiscal 2006, these increases were primarily due to an increase of $1.5 million of increased commissions to our direct sales force due to the increased product sales in direct territories, $1.4 million of salaries, benefits and travel expenses from an increase in our direct sales force and $1.1 million of international distributor commissions due to increased product sales through these channels.

General and Administrative Expenses. General and administrative expenses increased 19% and 24%, respectively, in the current three and six months compared to the corresponding periods in the prior year. In the current quarter, compensation and related expenses increased approximately $754,000 including $467,000 of stock-based compensation under newly adopted SFAS 123(R) and increased legal fees of $503,000. In the first six months of fiscal 2006, compensation and related expenses increased approximately $1.5 million including $880,000 of stock-based compensation and increased legal expenses of $1.0 million due to the ongoing FTC investigation and the Sokolov litigation.

Charge for In-Process Research and Development Expenses. The $4.2 million charge for in-process research and development was in connection with our acquisition of Fischer Imaging’s intellectual property relating to its digital mammography product on September 29, 2005.

Interest Income.

	Three Months Ended								Six Months Ended
	March 25, 2006		March 26, 2005		Change				March 25, 2006		March 26, 2005		Change
	Amount		Amount		Amount		%		Amount		Amount		Amount		%
Interest Income	$	978	$	464	$	514	111	%	$	2,273	$	722	$	1,551	215	%

Interest income increased 111% and 215%, respectively, in the current three and six month periods compared to the corresponding periods in the prior year primarily due to higher investment balances and an increase in the interest rate earned in the first three and six month periods of fiscal 2006 compared to last year.

Interest Expense and Other Income (Expense) net.

	Three Months Ended									Six Months Ended
	March 25, 2006		March 26, 2005			Change				March 25, 2006		March 26, 2005			Change
	Amount		Amount			Amount		%		Amount		Amount			Amount		%
Interest Expense and Other Income (Expense), net	$	44	$	(91	)	$	135	148	%	$	9	$	(71	)	$	80	113	%

In the current three and six month periods, interest and other income (expense) primarily consisted of reimbursement for damage to an item of our inventory partially offset by foreign currency transaction losses. In the second quarter of fiscal 2005, this expense primarily consisted of interest costs on the Wells Fargo Foothill, Inc. note

22

payable, which was repaid in fiscal 2005. For the first six months of fiscal 2005, this expense included interest costs on the Wells Fargo Foothill note payable partially offset by foreign currency transaction gains. To the extent that foreign currency exchange rates fluctuate in the future, we may be exposed to continued financial risk. Although we have established a borrowing line of credit denominated in the foreign currency, the euro, in which our subsidiaries currently conduct business to minimize this risk, we cannot assure that we will be successful or can fully hedge our outstanding exposure.

Provision for Income Taxes.

	Three Months Ended								Six Months Ended
	March 25, 2006		March 26, 2005		Change				March 25, 2006		March 26, 2005		Change
	Amount		Amount		Amount		%		Amount		Amount		Amount		%
Provision for Income Taxes	$	6,250	$	1,506	$	4,744	315	%	$	9,600	$	1,800	$	7,800	433	%

We account for income taxes under SFAS No. 109, Accounting for Income Taxes. This statement requires that we recognize a current tax liability or asset for current taxes payable or refundable and a deferred tax liability or asset for the estimated future tax effects of temporary differences and carryforwards to the extent they are realizable. We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized. While we have considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance, in the event we were to determine that we would be able to realize our deferred tax assets in the future in excess of the net recorded amount, an adjustment to the deferred tax asset would increase income in the period such determination was made. Likewise, should we determine that we would not be able to realize all or part of our net deferred tax asset in the future, an adjustment to the deferred tax asset would be charged to income in the period such determination was made. In the current three and six month periods, our effective tax rate was 36% of pre-tax earnings. This rate is higher than the effective tax rate of 20% and 14%, respectively, in the comparable three and six month periods of fiscal 2005 due to the realization of our previously unbenefited deferred tax assets in the fourth quarter of fiscal 2005. We expect a more normalized effective tax rate of approximately 36% in fiscal 2006. In the current three and six month periods, our net deferred tax asset increased by approximately $5.1 million and $7.8 million, respectively, primarily due to the benefit from the exercise of non-qualified stock options which are recorded as an increase to capital in excess of par value and not the Statement of Income.

Segment Results of Operations

Beginning in fiscal 2006, we combined our previously reported mammography and digital detector operating segments, to better reflect how we view our operations and manage our business. In fiscal 2006, the primary function of the digital detector business is to support our mammography product line.

We now report our business as three segments: mammography, osteoporosis assessment and other. Prior periods have been restated to conform to this presentation. The accounting policies of the segments are the same as those described in the footnotes to the accompanying consolidated financial statements included in our 2005 Annual Report on Form 10-K. We measure segment performance based on total revenues and operating income or loss. Revenues from product sales of each of these segments are described in further detail above. The discussion that follows is a summary analysis of total revenues and the primary changes in operating income or loss by segment.

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Mammography.
	Three Months Ended												Six Months Ended
	March 25, 2006				March 26, 2005								March 25, 2006				March 26, 2005
			% of Total				% of Total								% of Total				% of Total
			Segment				Segment		Change						Segment				Segment		Change
	Amount		Revenue		Amount		Revenue		Amount		%		Amount		Revenue		Amount		Revenue		Amount		%
Total Revenues	$	72,980	100	%	$	44,623	100	%	$	28,357	64	%	$	135,760	100	%	$	86,722	100	%	$	49,038	57	%
Operating Income	$	13,268	18	%	$	3,605	8	%	$	9,663	268	%	$	18,257	13	%	$	5,442	6	%	$	12,815	235	%

Mammography revenues increased primarily due to the increase in product sales of $25.4 million and $44.7 million, respectively, in the current three and six month periods compared to the prior year as discussed above and an increase in service revenues of $2.9 million and $4.3 million, respectively, in the current three and six month periods related to the increased number of systems in our installed base. Operating income for this business segment increased primarily due to the increased revenues. Our gross margin in this business segment was 44% and 43%, respectively, in the current three and six month periods compared to 37% in the corresponding periods of the prior year. In the current three and six month periods our gross margins improved from the increase in product revenues of our more profitable Selenia systems versus our analog mammography systems and from an increase in the number of Multicare stereotactic tables allowing the greater absorption of manufacturing costs. This improvement in the gross margins was offset by an increase in service related costs. In general, we expect improved gross margins in fiscal 2006 from the shift in product revenues to our more profitable Selenia full field digital mammography systems from our analog mammography systems. Operating expenses for this business segment increased 41% and 52% in the current three and six month periods, respectively, primarily due to increased research and development expenses, related to our tomosynthesis project, intangible asset amortization related to our acquisition of Fischer Imaging’s intellectual property of $629,000 and $1.3 million, respectively, and stock-based compensation charges under newly adopted SFAS 123(R) of $490,000 and $933,000, respectively. In the current six month period, the increase also included the $4.2 million charge for in-process research and development related to our acquisition of Fischer Imaging’s intellectual property.

Osteoporosis Assessment.

	Three Months Ended												Six Months Ended
	March 25, 2006				March 26, 2005								March 25, 2006				March 26, 2005
			% of Total				% of Total								% of Total				% of Total
			Segment				Segment		Change						Segment				Segment		Change
	Amount		Revenue		Amount		Revenue		Amount		%		Amount		Revenue		Amount		Revenue		Amount		%
Total Revenues	$	21,399	100	%	$	18,971	100	%	$	2,428	13	%	$	41,419	100	%	$	36,133	100	%	$	5,286	15	%
Operating Income	$	2,855	13	%	$	2,798	15	%	$	57	2	%	$	5,860	14	%	$	4,431	12	%	$	1,429	32	%

Osteoporosis assessment revenues increased in the current quarter compared to the corresponding period in the prior year primarily due to the $1.8 million increase in product sales discussed above and a $585,000 increase in service revenues related to the increased number of systems in our installed base. In the current six month period, these revenues increased, as compared to the corresponding period in the prior year, primarily due to the $4.1 million increase in product sales and a $1.2 million increase in service related revenues related to the increased number of systems in our installed base. Operating income for osteoporosis assessment increased for the current three and six month periods primarily from the increased gross profit from the increase in product sales partially offset by an increase in operating expenses including $210,000 and $403,000, respectively, of stock-based compensation under newly adopted SFAS 123(R). Our gross margin in this business segment was 44% and 45%, respectively, in the current three and six month periods compared to 44% and 42%, respectively, in the

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corresponding periods of the prior year. The increase in osteoporosis assessment gross margins in the current six month period was primarily attributable to the increase in revenues and related improved absorption of manufacturing costs.

Other.

	Three Months Ended													Six Months Ended
	March 25, 2006				March 26, 2005									March 25, 2006				March 26, 2005
			% of Total				% of Total									% of Total				% of Total
			Segment				Segment		Change							Segment				Segment		Change
	Amount		Revenue		Amount		Revenue		Amount			%		Amount		Revenue		Amount		Revenue		Amount			%
Total Revenues	$	6,606	100	%	$	5,643	100	%	$	963		17	%	$	11,762	100	%	$	12,558	100	%	$	(796	)	(6	)%
Operating Income (Loss)	$	269	4	%	$	778	14	%	$	(509	)	(65	)%	$	81	1	%	$	1,898	15	%	$	(1,817	)	(96	)%

Revenues for this business segment, which includes the mini C-arm business, domestic distribution of a third party extremity MRI system, the digital general radiography business and the conventional general radiography service business, increased in the current quarter compared to the comparable period of the prior year primarily due to our initial sales of $1.0 million of the new line of third party extremity MRI systems. In the current six month period, these revenues decreased due to a $1.9 million decrease in digital general radiography systems sold worldwide, as a result of our phase-out of that business partially offset by the initial extremity MRI system sales. The decrease in operating income was primarily due to our phase-out of the digital general radiography systems business and from the ramp-up of sales and marketing expenses for a new line of third party extremity MRI systems.

Liquidity and Capital Resources

At March 25, 2006 we had approximately $190.6 million of working capital. At that date our cash and cash equivalents totaled $108.3 million. Our cash and cash equivalents balance decreased approximately $5.7 million during the first six months of fiscal 2006 primarily due to the use of cash to acquire the mammography intellectual property of Fischer Imaging and for purchases of property and equipment partially offset by cash provided by financing and operating activities.

Our cash provided by operating activities was $3.1 million, which included net income of $16.9 million for the first six months of fiscal 2006 increased by non-cash charges for depreciation and amortization of an aggregate of $5.3 million, the acquired in-process research and development charge of $4.2 million related to the Fischer Imaging acquisition partially offset by the $16.6 million tax benefit related to the exercise of non-qualified stock options. Cash used by operations due to changes in our current assets and liabilities included an increase in accounts receivable of $13.1 million, and an increase in inventory of $16.4 million. These uses of cash were partially offset by an increase in accrued expenses of $18.7 million and an increase in accounts payable of $5.9 million. The increase in accounts receivable was primarily due to increased revenues in the current quarter. The increase in inventory was to fulfill certain purchase commitments in connection with the distribution of a third party extremity MRI system and to support the increased sales volume, especially for digital mammography. The increase in accrued expenses is primarily due to the benefit from the exercise of non-qualified stock options which are recorded as an increase to capital in excess of par value and not the Statement of Income. The increase in accounts payable was primarily due to the timing of payments and increased purchases to support our increasing revenues, especially in digital mammography.

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In the first six months of fiscal 2006, we used approximately $35.0 million of cash in investing activities. This use of cash was primarily attributable to the use of $27.6 million to acquire the Fischer Imaging intellectual property and, to a lesser extent, the use of $4.8 million for purchases of property and equipment, which consisted primarily of manufacturing equipment, research and development test equipment, demonstration equipment and computer hardware.

In the first six months of fiscal 2006, financing activities provided us with $26.3 million of cash from the tax benefit related to the exercise of non-qualified stock options of $16.6 million and $9.6 million of cash from the exercise of stock options.

We maintain an unsecured line of credit with a European bank for the equivalent of $3.0 million, which bears interest at the Europe Interbank Offered Rate (2.64% at March 25, 2006) plus 1.5%. The borrowings under this line are primarily used by our European subsidiaries to settle intercompany sales and are denominated in the respective local currencies of its European subsidiaries. The line of credit may be canceled by the bank with 30 days notice. At March 25, 2006 and September 24, 2005, there were no outstanding borrowings under this line.

On April 17, 2006, Hologic entered into a definitive agreement to acquire Suros Surgical Systems, Inc. (“Suros”), a leading innovator in the field of devices used for minimally invasive biopsy and tissue excision. The transaction is structured as a merger of a Hologic acquisition subsidiary into Suros, whereby Suros will become a wholly owned subsidiary of Hologic. The purchase price for the transaction is $240 million (subject to adjustment), plus a two-year earn out. The closing consideration will consist of $132 million in cash and an additional $108 million payable, at the election of Hologic, in cash, shares of Hologic Common Stock or a combination thereof. The price per share of any shares of Hologic Common Stock issued in this transaction will be equal to the ten-trading day average of the closing price per share of Hologic Common Stock for the period ending two trading days prior to the closing date. The earn-out will be payable in two annual cash installments based upon the incremental revenue growth in Suros’ business in the two years following the closing. This transaction is subject to customary closing conditions, including approval of Suros’ stockholders and the expiration or termination of the waiting period under the Hart-Scott Rodino Antitrust Improvements Act.

On April 24, 2006, Hologic entered into a definitive agreement to acquire R2 Technology, Inc. (“R2”), a global expert in the field of computer-aided detection (CAD). The transaction is structured as a merger of a Hologic acquisition subsidiary into R2, whereby R2 will become a wholly owned subsidiary of Hologic. The purchase price for the transaction is $220 million (subject to adjustment) payable in shares of Hologic Common Stock. The price per share of Hologic Common Stock will be equal to the ten-trading day average of the closing price per share of Hologic Common Stock for the period ending two trading days prior to the closing date. This transaction is subject to a fairness hearing before the Commissioner of the California Department of Corporations and customary closing conditions, including the approval of R2’s stockholders and the expiration or termination of the waiting period under the Hart-Scott Rodino Antitrust Improvements Act.

On May 2, 2006, Hologic acquired AEG Elektrofotografie GMGH (“AEG”), a private company headquartered in Warstein, Germany, for a purchase price of EUR 21 million (subject to adjustment), plus a one-year earn-out of EUR 1.7 million if AEG’s EBITDA for calendar year 2006 exceeds a target amount. The purchase price consists of EUR 16,297,650 in cash and additional 109,720 shares of Hologic Common Stock. AEG is a leading manufacturer of photoconductor materials, and has been Hologic’s sole supplier of amorphous selenium photoconductor coatings employed in Hologic’s full-field digital mammography detectors. AEG also develops, manufactures and sells photoconductor materials for use in a variety of electro photographic applications, including copying and printing. The acquisition is expected to facilitate manufacturing efficiencies and accelerate research and development of new detector products.

In September 2002, we completed a sale/leaseback transaction for our headquarters and manufacturing facility located in Bedford, Massachusetts and our Lorad manufacturing facility in Danbury, Connecticut. The transaction resulted in net proceeds to us of $31.4 million. The lease for these facilities, including the associated land, has a term of 20 years, with four five-year renewal terms, which we may exercise at our option. The basic rent for the facilities is $3.2 million per year, which is subject to adjustment for increases in the consumer price index. The aggregate total minimum lease payments during the initial 20-year term are $62.9 million. In addition, we are required to maintain the facilities during the term of the lease and to pay all taxes, insurance, utilities and other costs associated with those facilities. Under the lease, we make customary representations and warranties and agree to certain financial covenants and indemnities. In the event we default on the lease, the landlord may terminate the lease, accelerate payments and collect liquidated damages. We were in compliance with all covenants as of March 25, 2006.

In March 2005, the Company was served with a Complaint filed on November 12, 2004 by Oleg Sokolov with the United States District Court for the District of Connecticut alleging that the Company’s HTC^™ grid

26

infringes U.S. Patent Number 5,970,118. The plaintiff is seeking to preliminarily and permanently enjoin the Company from infringing the patent, as well as damages resulting from the alleged infringement, treble damages and reasonable attorney fees, and such other and further relief as may be available. On April 25, 2005, the Company filed an Answer and Counterclaims in response to the Complaint in which the Company denied the plaintiff’s allegations and, among other things, sought declaratory relief with respect to the patent claims and damages, as well as other relief. The Company does not believe that it infringes any valid or enforceable patents of the plaintiff and intends to vigorously defend its interests. As such, no amounts have been accrued related to this matter as of March 25, 2006.

We are the subject of an FTC non-public investigation to determine whether our recent acquisition of certain assets owned by Fischer Imaging Corporation may be anticompetitive and in violation of Section 7 of the Clayton Act or Section 5 of the Federal Trade Commission Act. We are in the process of responding to FTC requests regarding this investigation. We cannot predict the outcome or the effect, if any, of this investigation on our business.

The following table summarizes our contractual obligations and commitments as of March 25, 2006:

	Payments Due by Period
	(in thousands)
Contractual Obligations	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Operating Leases	$	57,959	$	4,722	$	8,417	$	7,736	$	37,084
Purchase Obligations (1)		36,748		11,096		25,652		—		—
Total Contractual Obligations	$	94,707	$	15,818	$	34,069	$	7,736	$	37,084

(1) The purchase obligations primarily relate to an exclusive distribution and service agreement in the United States under which we will sell and service a line of extremity MRI systems. Pursuant to the terms of this contract, we have certain minimum inventory purchase obligations for the initial term and are subject to renegotiation after the first eighteen month period in the event of any unforeseen changes in the market dynamics.

The expected timing of payment and amounts of the obligations discussed above are estimated based on current information.

Except as set forth above, we do not have any other significant capital commitments. We are considering various options to fund the cash portion of the purchase price for the acquisition of Suros and our ongoing capital requirements following that acquisition, including debt, convertible debt and equity. As disclosed in “Part II —Item 1A— Risk Factors – Risk Factors Relating to Acquisitions we cannot assure that such financing will be available on favorable terms, if at all. We are also working on several projects, with an emphasis on digital mammography that will require significant investments of time and resources. Subject to the risk factors set forth in Item 1A of this report, our ability to obtain the financing for the cash portion of the purchase price for our acquisition of Suros, and the general disclaimers set forth in our Special Note Regarding Forward-Looking Statements at the outset of this Report, we believe that we have sufficient funds in order to fund our expected operations over the next twelve months.

Item 3. Quantitative and Qualitative Disclosure About Market Risk.

Financial Instruments, Other Financial Instruments, and Derivative Commodity Instruments. SFAS No. 107, Disclosure of Fair Value of Financial Instruments, requires disclosure about fair value of financial instruments. Financial instruments consist of cash equivalents, short and long-term investments, accounts receivable, accounts payable and debt obligations. The fair value of these financial instruments approximates their carrying amount.

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Primary Market Risk Exposures. Our primary market risk exposures are in the areas of interest rate risk and foreign currency exchange rate risk. We incur interest expense on loans made under a European line of credit that accrues interest at the Europe Interbank Offered Rate plus 1.50%. At March 25, 2006, there were no amounts outstanding under the line of credit.

Foreign Currency Exchange Risk. Internationally, we currently operate in Belgium and France. Our international business is subject to risks, including, but not limited to: unique economic conditions, changes in political climate, differing tax structures, other regulations and restrictions, and foreign exchange rate volatility. Accordingly, our future results could be materially adversely impacted by changes in these or other factors.

Substantially all of our sales outside the United States are conducted in U.S. dollar denominated transactions. We operate two European subsidiaries which incur expenses denominated in local currencies. However, we believe that these operating expenses will not have a material adverse effect on our business, results of operations or financial condition.

Item 4. Controls and Procedures.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Securities Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As of March 25, 2006, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective in enabling us to record, process, summarize and report information required to be included in our periodic SEC filings within the required time period.

There have been no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

HOLOGIC, INC. AND SUBSIDIARIES

Item 1. Legal Proceedings.

No material developments.

Item 1A. Risk Factors

This report contains forward-looking statements that involve risks and uncertainties, such as statements of our objectives, expectations and intentions. The cautionary statements made in this report should be read as applicable to all forward-looking statements wherever they appear in this report. Our actual results could differ materially from those discussed herein. Factors that could cause or contribute to such differences include those discussed below, as well as those discussed elsewhere in this report.

Risk Factors Relating to Acquisitions

The required regulatory approvals may not be obtained or may contain materially burdensome conditions.

Completion of the acquisitions of each of Suros and R2 is conditioned upon the receipt of governmental approvals, including the termination or expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, which has not yet been obtained and may not be obtained prior to the date of the Suros or R2 stockholder meeting, as the case may be, or at all. Although the parties have agreed in their respective acquisition agreements to use their commercially reasonable efforts to obtain the requisite governmental approvals, there can be no assurance that these approvals will be obtained. In addition, the governmental entities from which these approvals are required may impose conditions on the completion of the applicable acquisition or require changes to the terms of the acquisition, which conditions could have the effect of jeopardizing or delaying completion of the applicable acquisition or reducing the anticipated benefits of the acquisition.

The acquisitions of each of Suros and R2 are subject to conditions to closing that could result in the acquisition being delayed or not completed, which could negatively impact Hologic’s business and result in additional costs to complete the transaction.

The acquisitions of each of Suros and R2 are subject to conditions to closing as set forth in the applicable merger agreement. The acquisition of R2 includes the requirement that Hologic use commercially reasonable efforts to obtain approval from the Commissioner of the California Department of Corporation of the fairness of the terms and conditions of that merger and the issuance of the shares of Hologic common stock to be issued in that transaction. If the fairness approval is not granted, Hologic has agreed to file a registration statement on Form S-4 with the SEC to register the shares to be issued in the merger. Similarly, in the acquisition of Suros, Hologic has agreed to file a registration statement on Form S-4 to register the shares of Hologic common stock, if Hologic determines the merger shares to be issued in that transaction cannot be issued pursuant to Regulation D. In the acquisition of each of Suros and R2, Hologic has also agreed to obtain stockholder approval if the issuance of a number of merger shares in the applicable transaction would require Hologic’s stockholders to approve the applicable merger agreement and the transactions contemplated thereby under applicable law or the rules of the Nasdaq National Market. If any of the conditions to the acquisition of Suros or R2 are not satisfied and, where waiver is permissible, not waived, the applicable acquisition will not be consummated. Failure to consummate the acquisition could negatively impact Hologic’s stock price and future business and operations. Any delay in the consummation of the merger or any uncertainty about the consummation of the acquisition may increase transaction costs associated with the acquisition, adversely affect the future businesses, results of operations of Hologic or the combined companies.

29

The failure to successfully integrate the acquired businesses and operations in the expected time frame may adversely affect the combined companies future results.

Hologic believes that the acquisitions of Suros, R2 and AEG will result in certain benefits, including certain cost synergies, product innovations, and operational efficiencies. However, to realize these anticipated benefits, the businesses of Suros, R2 and AEG must be successfully integrated into Hologic. The integration of these acquisitions will be complex and time-consuming. The success of these acquisitions will depend on Hologic’s ability to realize these anticipated benefits from combining the businesses of Hologic and each of Suros, R2 and AEG. Hologic may fail to realize the anticipated benefits of these acquisitions for a variety of reasons, including the following:

• failure to successfully manage relationships with customers, distributors and suppliers;

• failure of customers to accept new products;

• failure to effectively coordinate sales and marketing efforts;

• failure to combine product offerings and product lines quickly and effectively;

• potential difficulties and risks related to operating the acquired businesses and manufacturing operations in international locations;

• potential difficulties integrating financial reporting systems;

• changes in legislative, regulatory or tax as well as other economic, business or other competitive factors which adversely affect the businesses; and

• the loss of key employees.

Hologic expects to incur significant costs to integrate the operations of each of Suros, R2 and AEG.

Hologic expects to incur significant costs following the completion of the acquisition of each of Suros, R2 and AEG as it integrates those businesses into those of Hologic, including integrating personnel, customers, and strategic partners of each company and implementing consistent standards, policies, and procedures. Although Hologic expects that the realization of efficiencies related to the integration of the businesses may offset incremental integration costs over time, Hologic can provide no assurance that this net benefit will be achieved in the near term, or at all.

Hologic expects to incur substantial transaction costs in connection with its acquisitions.

Hologic has incurred and will incur additional substantial expenses related to its acquisitions whether or not the acquisitions are completed. These costs include fees for financial advisors, attorneys and accountants, filing fees and financial printing costs. In addition, Hologic has agreed to pay a portion of the transactional expenses incurred by each of Suros and R2. Transaction costs incurred in excess of agreed upon amounts will be deducted from the aggregate merger consideration available for distribution to eligible security holders of Suros or R2, as the case may be.

Uncertainty regarding the acquisitions and the effects of the acquisitions could adversely affect each company’s relationships with its customers, suppliers, and strategic partners.

In response to the announcement of Hologic’s acquisitions with each of Suros, R2 and AEG, customers, suppliers and strategic partners of Hologic, Suros, R2 or AEG may delay or defer decisions, or otherwise alter their relationships with Hologic, Suros, R2 or AEG, which could have an adverse effect on the business of that company, whether or not the applicable acquisition is completed.

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The market price of Hologic common stock may decline as a result of the acquisitions.

The market price of Hologic common stock may decline as a result of its proposed and completed acquisitions for a number of reasons, including if:

• the perceived benefits anticipated by Hologic of a proposed acquisition are not consistent with the those perceived by financial or industry analysts or by investors;

• the integration of Suros, R2 or AEG with Hologic is not completed in a timely and efficient manner;

• the combined companies do not achieve the expected benefits of the acquisitions as rapidly or to the extent anticipated by financial or industry analysts or by investors;

• the effect of the acquisitions on the combined companies financial results is not consistent with the expectations of financial or industry analysts or of investors; or

• significant stockholders of Hologic, Suros, R2 or AEG decide to dispose of their shares of Hologic common stock following completion of the acquisitions.

Failure to complete the acquisition could negatively impact Hologic and its stockholders.

If the acquisition of Suros or R2 is not completed for any reason, Hologic and its stockholders will be subject to a number of material risks, including:

• litigation between Hologic and Suros or R2, as the case may be, may occur;

• the market price of Hologic common stock may decline to the extent that the current market price of such shares reflects a market assumption that the applicable acquisition will be completed;

• costs related to the acquisition, such as legal and accounting fees, must be paid even if the acquisition is not completed;

• benefits that Hologic expects to realize from the acquisition would not be realized; and

• the diversion of management attention from the day-to-day businesses of the companies, and the unavoidable disruption to their respective employees and customers during the period before completion of the acquisition may make it difficult for Hologic to regain its financial and market positions if the acquisition does not occur.

In addition, as the applicable acquisition becomes more imminent, Hologic and each of Suros and R2 may begin to make planning and operational decisions on the basis that the acquisition between the applicable companies will be completed. These planning and operational decisions may have been different had Hologic and each of Suros and R2 not entered into acquisition agreements. These decisions might materially change expected revenue, operating expenses, earnings and cash flow achieved by the combined companies.

A significant decrease in the price per share of Hologic’s common stock prior to the closing of one or more of its proposed acquisitions would most likely result in further dilution than anticipated to Hologic’s stockholders.

Hologic may issue additional shares in connection with its acquisitions, including in connection with the proposed acquisition of Suros and R2, which would dilute the holders of Hologic common stock. The price per share of any shares of Hologic common stock to be issued in acquisition of Suros or R2 is based upon the ten-trading day average of the closing price per share of Hologic common stock for the period ending two trading days prior to the closing date of the acquisition. A significant decrease in the

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per share price of Hologic common stock between the date of applicable acquisition agreement and the closing of the transaction would result in an increase in the number of shares that Hologic would have to issue in the transaction and would most likely result in further dilution than anticipated to Hologic stockholders, and could require stockholder approval under applicable law or the rules of the Nasdaq National Market.

Incurring additional debt or issuance of additional securities to finance its merger with Suros may be dilutive to its stockholders, or an inability to incur such debt may result in a breach of the merger agreement.

Hologic expects to incur additional debt or issue additional securities to finance a part of the cash portion of the merger with Suros and Hologic cannot assure that it will be able to obtain such financing on a timely basis or on favorable terms, if at all. Additional equity or debt financing may negatively affect Hologic’s results of operations or be more dilutive to its stockholders than anticipated. Hologic’s failure to obtain adequate financing on a timely basis could result in a breach of its obligations under the Suros merger agreement.

Hologic’s business may be harmed by acquisitions it has completed and may complete in the future.

Hologic has acquired related businesses, technologies, product lines, and products and may, as part of its business strategy, pursue additional acquisitions of companies or businesses in the future. Hologic’s identification of suitable acquisition candidates involves risks inherent in assessing the values, strengths, weaknesses, risks and profitability of acquisition candidates, including the effects of the possible acquisition on Hologic’s business, diversion of Hologic’s management’s attention and risks associated with unanticipated problems or latent liabilities. In fiscal 2004, Hologic incurred approximately $740,000 of professional fees, which were expensed, in connection with the analysis and negotiation of a potential acquisition that Hologic decided not to complete. If Hologic is successful in pursuing future acquisitions, it will be required to expend significant funds, incur additional debt or issue additional securities, which may negatively affect Hologic’s results of operations and be dilutive to its stockholders. If Hologic spends significant funds or incurs additional debt, Hologic’s ability to obtain financing for working capital or other purposes could decline, and Hologic may be more vulnerable to economic downturns and competitive pressures. Hologic cannot guarantee that it will be able to finance additional acquisitions or that it will realize any anticipated benefits from acquisitions that it completes. Should Hologic acquire another business, the process of integrating acquired operations into its existing operations may result in unforeseen operating difficulties and may require significant financial resources that would otherwise be available for the ongoing development or expansion of Hologic’s existing business.

Risks Relating to Hologic’s Business

References to “we” and “our” in this section refer to Hologic and its consolidated subsidiaries.

The markets for our direct radiography products are in the early stage of development.

In 1998, our subsidiary, Direct Radiography Corp., was the first company to introduce direct-to-digital x-ray imaging products in the United States. The markets for these products are relatively new. There is a significant installed base of conventional x-ray imaging products in hospitals and radiological practices. The use of our direct-to-digital x-ray imaging products, including digital mammography products, in many cases would require these potential customers to either modify or replace their existing x-ray imaging equipment. Moreover, we believe that a major factor in the market’s acceptance of direct-to-digital x-ray technology is the trend toward transition by the healthcare industry from conventional film archiving systems to hospital Picture Archiving and Communications Systems, known as PACS, to store x-ray images electronically. Because the benefits of our direct-to-digital technology may not be fully realized by customers until they install a PACS platform, a large potential market for these products may not develop until PACS environments are more widely used. Because of the early stage of the markets for these products, it is likely that our evaluation of the potential markets for these products will materially vary with time. We cannot assure that the markets for our direct radiography products will continue to develop.

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If we fail to achieve and maintain the high manufacturing standards that our direct radiography products require, we will not be successful in developing and marketing those products.

The manufacture of our direct radiography detectors is highly complex and requires precise high quality manufacturing that is difficult to achieve. We have in the past and may in the future experience difficulties in manufacturing these detectors in commercial quantities, primarily related to delays and difficulties in obtaining critical components for these detectors that meet our high manufacturing standards. Our initial difficulties have led to increased delivery lead-times and increased costs of manufacturing these products. Our failure, including the failure of our contract manufacturers, to achieve and maintain the required high manufacturing standards could result in further delays or failures in product testing or delivery, cost overruns, product recalls or withdrawals, or other problems that could harm our business and prospects.

Our success depends on new product development.

We have a continuing research and development program designed to develop new products and to enhance and improve our products. We are expending significant resources on the development of digital x-ray imaging products, including the development of a digital mammography product to perform breast tomosynthesis, a 3-dimenstional imaging technique. The successful development of our products and product enhancements are subject to numerous risks, both known and unknown, including:

• unanticipated delays;

• access to capital;

• budget overruns;

• technical problems; and

• other difficulties that could result in the abandonment or substantial change in the design, development and commercialization of these new products, including, for example, changes requested by the FDA in connection with pre-market approval applications for our products or 510(k) notification.

Given the uncertainties inherent with product development and introduction, we cannot assure that any of our product development efforts will be successful on a timely basis or within budget, if at all. Our failure to develop new products and product enhancements on a timely basis or within budget could harm our business and prospects.

Our business could be harmed if our products contain undetected errors or defects or do not meet customer specifications.

We are continuously developing new products and improving our existing products. Newly introduced products can contain undetected errors or defects. In addition, these products may not meet their performance specifications under all conditions or for all applications. If, despite our internal testing and testing by our customers, any of our products contains errors or defects or any of our products fails to meet customer specifications, then we may be required to enhance or improve those products or technologies. We may not be able to do so on a timely basis, if at all, and may only be able to do so at considerable expense. In addition, any significant reliability problems could result in adverse customer reaction, negative publicity or legal claims and could harm our business and prospects.

Our reliance on one or only a limited number of suppliers for some key components or subassemblies for our products could harm our business and prospects.

We rely on one or only a limited number of suppliers for some key components or subassemblies for our products. In particular we have a limited number of suppliers for the panel for our direct radiography products. In addition, we have only limited sources of supply for some key components used in our mini C-arm systems.

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Obtaining alternative sources of supply of these components could involve significant delays and other costs, and may not be available to us on reasonable terms, if at all. The failure of a component supplier or contract assembler to provide acceptable quality and timely components or assembly service at an acceptable price, or an interruption of supplies from such a supplier could harm our business and prospects. Any disruption of supplies of key components could delay or reduce shipments, which could result in lost or deferred sales.

Sales of our products may fluctuate if our sales force is unable to successfully market and sell a broader product offering.

We historically have sold and serviced a majority of our mammography systems in the United States primarily through a network of independent distributors and to a lesser extent, through our direct sales force. During fiscal 2003, we expanded our direct sales and service efforts for mammography into territories that were previously covered by independent distributors, and have since continued to further expand our direct sales and service coverage in the United States. We have also expanded the product offerings sold by our direct sales force to include our entire product line. The transition to a direct sales and service force with a more diversified product offering could adversely affect our relationships with our end-user customers and sales of our products, if we are unable to manage the transition effectively or our direct sales force is otherwise unable to successfully market and sell a broader product offering.

If we are unable to satisfy our financial covenants under our long-term leases for our headquarters and Lorad facilities, the rent due under those leases may be accelerated and we could be required to pay liquidated damages.

Our long-term leases contain financial and other covenants. If we do not comply with our covenants under our long-term leases, the remaining rent payable under those leases could be accelerated and we could be required to pay liquidated damages. Our failure to meet any of our covenants under our long-term leases could significantly harm our liquidity and financial position.

We may not be able to compete successfully.

A number of companies have developed, or are expected to develop, products that compete or will compete with our products. Many of these competitors offer a range of products in areas other than those in which we compete, which may make such competitors more attractive to hospitals, radiology clients, general purchasing organizations and other potential customers. In addition, many of our competitors and potential competitors are larger and have greater financial resources than we do and offer a range of products broader than our products. Some of the companies with which we now compete or may compete in the future have or may have more extensive research, marketing and manufacturing capabilities and significantly greater technical and personnel resources than we do, and may be better positioned to continue to improve their technology in order to compete in an evolving industry. Our failure to compete successfully could harm our business and prospects.

Our mammography systems compete with products offered by GE, Siemens, PlanMed, Giotto, Toshiba and Agfa. Our minimally invasive breast biopsy systems compete with products offered by GE, Siemens, Philips, PlanMed, Giotto and with conventional surgical biopsy procedures. Our mini C-arm products compete directly with mini C-arms manufactured and sold by a limited number of companies including GE. We also compete indirectly with manufacturers of conventional C-arm image intensifiers including Philips, Siemens and GE.

The primary competitor for our osteoporosis assessment products is General Electric Medical Systems (GE). Our direct-to-digital imaging products compete with traditional x-ray systems as well as indirect conversion systems, such as computed radiography systems, which are less expensive than our products, and other direct-to-digital systems. The larger competitors in these markets include GE, Siemens, Kodak, Canon, Philips, SwissRay, Fuji and Varian.

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Our success depends upon our ability to adapt to rapid changes in technology and customer requirements.

The market for our products has been characterized by rapid technological change, frequent product introductions and evolving customer requirements. We believe that these trends will continue into the foreseeable future. Our success will depend, in part, upon our ability to enhance our existing products, successfully develop new products that meet increasing customer requirements and gain market acceptance. If we fail to do so our products may be rendered obsolete or uncompetitive by new industry standards or changing technology.

We may incur significant additional and unforeseen expenses and costs to defend or pursue litigation, investigations or other inquiries in connection with acquisitions that we complete.

We may become subject to litigation, investigations or inquiries in connection with acquisitions that we complete, which may cause us to incur significant additional and unforeseen costs to defend or pursue litigation or investigations or other inquiries relating to the acquisition. We are subject to a non-public Federal Trade Commission investigation to determine whether our recent acquisition of certain assets owned by Fischer Imaging Corporation may be anticompetitive and in violation of Section 7 of the Clayton Act or Section 5 of the Federal Trade Commission Act. We are in the process of responding to the FTC request. We cannot predict the outcome or effect, if any, that this investigation will have on our business.

Our failure to manage current or future alliances or joint ventures effectively may harm our business and prospects.

We have entered into strategic alliances with Siemens and Esaote. We are also exploring other potential alliances, joint ventures or other business relationships. Siemens and Esaote compete with us in some of our business segments, and are competitors or potential competitors to some of our customers or potential customers. Our alliance with Siemens, Esaote or any other person could enhance their business to our detriment or make it more difficult for us to enter into advantageous business transactions or relationships with others. Moreover, we may not be able to:

• identify appropriate candidates for alliances or joint ventures;

• assure that any alliance or joint venture candidate will provide us with the support anticipated;

• successfully negotiate an alliance or joint venture on terms that are advantageous to us; or

• successfully manage any alliance or joint venture.

Furthermore, any alliance or joint venture may divert management time and resources. Our entering into a disadvantageous alliance or joint venture or failure to manage an alliance or joint venture effectively could harm our business and prospects.

The uncertainty of healthcare reform could harm our business and prospects.

Recent years, the healthcare industry has undergone significant change driven by various efforts to reduce costs, including efforts at national healthcare reform, trends toward managed care, cuts in Medicare, consolidation of healthcare distribution companies and collective purchasing arrangements by office-based healthcare practitioners. Healthcare reform proposals and medical cost containment measures in the United States and in many foreign countries could:

• limit the use of our products;

• reduce reimbursement available for such use; or

• adversely affect the use of new therapies for which our products may be targeted.

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These reforms or cost containment measures, including the uncertainty in the medical community regarding their nature and effect, could harm our business and prospects and make it difficult for us to raise additional capital on advantageous terms, if at all.

We depend on third party reimbursement to our customers for market acceptance of our products. Failure of third party payors to provide appropriate levels of reimbursement for use of our products could harm our business and prospects.

Sales of medical products largely depend on the reimbursement of patients’ medical expenses by government healthcare programs and private health insurers. The costs of our products are substantial, and market acceptance of our products depends upon our customers’ ability to obtain appropriate levels of reimbursement from third-party payors for use of our products. In the United States, the Centers for Medicare & Medicaid Services, known as CMS, establishes guidelines for the reimbursement of healthcare providers treating Medicare and Medicaid patients. Under current CMS guidelines, varying reimbursement levels have been established for bone density assessment, mammography and other imaging and diagnostic procedures performed by our products. The actual reimbursement amounts are determined by individual state Medicare carriers and, for non-Medicare and Medicaid patients, private insurance carriers. There are often delays between the reimbursement approvals by CMS and by a state Medicare carrier and private insurance carriers. Moreover, states as well as private insurance carriers may choose not to follow the CMS reimbursement guidelines. The use of our products outside the United States is similarly affected by reimbursement policies adopted by foreign regulatory and insurance carriers. A reduction or other adverse change in reimbursement policies for the use of our products could harm our business and prospects.

The future growth of our bone densitometry business depends in large part on the continued development and more widespread acceptance of complementary therapies as well as our ability to expand into the primary care market.

Our bone densitometers and related products are used to assist physicians in diagnosing patients at risk for osteoporosis and other bone disorders, and to monitor the effectiveness of therapies to treat these disorders. As a result, the future growth of the market for these products and of this business will in large part be dependent upon the development and more widespread acceptance of drug therapies to prevent and to treat osteoporosis, and in addition, our ability to expand into the primary care market. Over the last several years, the FDA has approved a number of drug therapies to treat osteoporosis. We also understand that a number of other drug therapies are under development. While sales of our bone densitometry products have benefited from the increased availability and use of these therapies, most patients who are at risk for osteoporosis continue to go untreated. We cannot assure that any therapies under development or in clinical trials will prove to be effective, obtain regulatory approval, or that any approved therapy will gain wide spread acceptance, or that we will be able to expand into the primary care market. Even if these therapies gain widespread acceptance, we cannot assure that this acceptance will increase the sales of our products.

Reductions in revenues could harm our operating results because a high percentage of our operating expenses is relatively fixed.

A high percentage of our operating expenses is relatively fixed. We likely will not be able to reduce spending to compensate for adverse fluctuations in revenues. As a result, shortfalls in revenues are likely to harm our operating results.

Our results of operations are subject to significant quarterly variation and seasonal fluctuation.

Our results of operations have been and may continue to be subject to significant quarterly variation. The results for a particular quarter may vary due to a number of factors, including:

• the overall state of healthcare and cost containment efforts;

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• the development status and demand for drug therapies to treat osteoporosis;

• the development status and demand for our direct-to-digital imaging products;

• economic conditions in our markets;

• foreign exchange rates;

• the timing of orders;

• the timing of expenditures in anticipation of future sales;

• the mix of products sold by us;

• the introduction of new products and product enhancements by us or our competitors; and

• pricing and other competitive conditions.

Customers may also cancel or reschedule shipments. Production difficulties could also delay shipments. Any of these factors also could harm our business and prospects.

Our delay or inability to obtain any necessary United States or foreign regulatory clearances or approvals for our products could harm our business and prospects.

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

Fluctuations in the exchange rates of European currencies and the other foreign currencies in which we conduct our business, in relation to the U.S. dollar, have harmed and could continue to harm our business and prospects.

Foreign sales accounted for approximately 33% of our product sales in fiscal 2005, 39% of our product sales in fiscal 2004 and 32% of product sales in fiscal 2003. We maintain a sales and service office in Belgium and a support office in France. The expenses and sales of these offices are denominated in local currencies. We anticipate that foreign sales and sales denominated in foreign currencies will continue to account for a significant portion of our total sales. Fluctuations in the value of local currencies have caused, and are likely to continue to cause, amounts translated into U.S. dollars to fluctuate in comparison with previous periods. We have hedged our foreign currency exposure by borrowing funds in local European currencies to pay the expenses of our foreign offices. There is a risk that these hedging activities will not be successful in mitigating our foreign exchange risk exposure.

We conduct our business worldwide, which exposes us to a number of difficulties in coordinating our international activities and dealing with multiple regulatory environments.

We sell our products to customers throughout the world. Our worldwide business may be harmed by:

• difficulties in staffing and managing operations in multiple locations;

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• greater difficulties in trade accounts receivable collection;

• possible adverse tax consequences;

• governmental currency controls;

• changes in various regulatory requirements;

• political and economic changes and disruptions;

• export/import controls; and

• tariff regulations.

Our business could be harmed if we are unable to protect our proprietary technology.

We rely primarily on a combination of trade secrets, patents, copyright and trademark laws and confidentiality procedures to protect our technology. Despite these precautions, unauthorized third parties may infringe, copy or reverse engineer portions of our technology. We do not know if current or future patent applications will be issued with the scope of the claims sought, if at all, or whether any patents issued will be challenged or invalidated. In addition, we have obtained or applied for corresponding patents and patent applications in several foreign countries for some of our patents and patent applications. There is a risk that these patent applications will not be granted or that the patent or patent application will not provide significant protection for our products and technology. Our competitors may independently develop similar technology that our patents do not cover. In addition, because patent applications in the United States are not publicly disclosed until the patent is issued, applications may have been filed which relate to our technology. Moreover, there is a risk that foreign intellectual property laws will not protect our intellectual property rights to the same extent as United States intellectual property laws. In the absence of significant patent protection, we may be vulnerable to competitors who attempt to copy our products, processes or technology.

Our business could be harmed if we infringe upon the intellectual property rights of others.

There has been substantial litigation regarding patent and other intellectual property rights in the medical device and related industries. We are and have been engaged, and may be in the future, notified that we may be infringing intellectual property rights possessed by third parties. In connection with such litigation or if any claims are asserted against our intellectual property rights, we may seek to enter into royalty or licensing arrangements. There is a risk in these situations that no license will be available or that a license will not be available on reasonable terms. Alternatively, we may decide to litigate such claims or to design around the patented technology. These actions could be costly and would divert the efforts and attention of our management and technical personnel. As a result, any infringement claims by third parties or claims for indemnification by customers resulting from infringement claims, whether or not proven to be true, may harm our business and prospects.

Our future success will depend on the continued services of our key personnel.

The loss of any of our key personnel, particularly our key research and development personnel, could harm our business and prospects. Our success will also depend upon our ability to attract and retain other qualified managerial and technical personnel. Competition for such personnel, particularly software engineers and other technical personnel, is intense. We may not be able to attract and retain personnel necessary for the development of our business. We do not have any key man life insurance for any of our officers or other key personnel.

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We are exposed to potential risks and we will continue to incur increased costs as a result of the internal control testing and evaluation process mandated by Section 404 of the Sarbanes-Oxley Act of 2002.

We assessed the effectiveness of our internal control over financial reporting as of September 24, 2005 and assessed all deficiencies on both an individual basis and in combination to determine if, when aggregated, they constitute more than an inconsequential deficiency. As a result of this evaluation, no significant deficiencies or material weaknesses were identified. Although we have completed the documentation and testing of the effectiveness of our internal control over financial reporting for fiscal 2005, as required by Section 404 of the Sarbanes-Oxley Act of 2002, we expect to continue to incur costs, including increased accounting fees and increased staffing levels, in order to maintain compliance with that section of the Sarbanes-Oxley Act. We continue to monitor controls for any additional weaknesses or deficiencies. No evaluation can provide complete assurance that our internal controls will detect or uncover all failures of persons within our company to disclose material information otherwise required to be reported. The effectiveness of our controls and procedures could also be limited by simple errors or faulty judgments. In addition, if we continue to expand globally, the challenges involved in implementing appropriate internal controls will increase and will require that we continue to improve our internal controls.

In the future, if we fail to complete the Sarbanes-Oxley 404 evaluation in a timely manner, or if our independent registered public accounting firm cannot attest in a timely manner to our evaluation, we could be subject to regulatory scrutiny and a loss of public confidence in our internal controls. In addition, any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to meet our reporting obligations.

Current and future acquisitions of companies, some of which may have operations outside the United States, may provide us with challenges in implementing the required processes, procedures and controls in our acquired operations. Acquired companies may not have disclosure controls and procedures or internal control over financial reporting that are as thorough or effective as those required by securities law in the United States. Although we intend to devote substantial time and incur substantial costs, as necessary, to ensure ongoing compliance, we cannot be certain that we will be successful in complying with Section 404.

There is a risk that our insurance will not be sufficient to protect us from product liability or other claims, or that in the future liability insurance will not be available to us at a reasonable cost, if at all.

Our business involves the risk of product liability and other claims inherent to the medical device business. We maintain product liability insurance subject to deductibles and exclusions. There is a risk that our insurance will not be sufficient to protect us from product and other liability claims, or that product liability insurance will not be available to us at a reasonable cost, if at all. An under-insured or uninsured claim could harm our operating results or financial condition.

We use hazardous materials and products.

Our research and development involves the controlled use of hazardous materials, such as toxic and carcinogenic chemicals and various radioactive compounds. Although we believe that our safety procedures for handling and disposing of such materials comply with the standards prescribed by federal, state and local regulations, we cannot completely eliminate the risk of accidental contamination or injury from these materials. In the event of this type of accident, we could be held liable for any resulting damages, and any such liability could be extensive. We are also subject to substantial regulation relating to occupational health and safety, environmental protection, hazardous substance control, and waste management and disposal. The failure to comply with such regulations could subject us to, among other things, fines and criminal liability.

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Provisions in our Certificate of Incorporation and By-laws and our stockholder rights plan may have the effect of discouraging advantageous offers for our business or common stock and limit the price that investors might be willing to pay in the future for shares of our common stock.

Our Certificate of Incorporation, By-laws and the provisions of Delaware corporate law include provisions that may have the effect of discouraging or preventing a change in control. In addition, we have a stockholder rights plan that may have the effect of discouraging or preventing a change in control. These provisions could limit the price that our stockholders might receive in the future for shares of our common stock.

Our stock price is volatile.

The market price of our common stock has been, and may continue to be, highly volatile. We believe that a variety of factors could cause the price of our common stock to fluctuate, perhaps substantially, including:

• announcements and rumors of developments related to our business, including proposed and completed acquisitions, or the industry in which we compete;

• quarterly fluctuations in our actual or anticipated operating results and order levels;

• general conditions in the worldwide economy;

• announcements of technological innovations;

• new products or product enhancements by us or our competitors;

• developments in patents or other intellectual property rights and litigation; and

• developments in our relationships with our customers and suppliers.

In addition, in recent years the stock market in general and the markets for shares of small capitalization and “high-tech” companies in particular, have experienced extreme price fluctuations which have often been unrelated to the operating performance of affected companies. Any such fluctuations in the future could adversely affect the market price of our common stock, and the market price of our common stock may decline.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On May 2, 2006, the Company completed the acquisition of AEG Elektrofotografie GmbH, together with certain related companies (“AEG”) pursuant to a Share Purchase Agreement (the “Purchase Agreement”) between Hologic and certain equity holders of AEG (each a “Seller” and collectively, the “Sellers”). The aggregate purchase price paid by Hologic to the Sellers pursuant to the Purchase Agreement was EUR 21 million subject to adjustment, plus a one-year earn out of EUR 1.7 million which will be payable in cash if AEG calendar year 2006 EBITDA exceeds an established amount. The purchase price consisted of EUR 16,297,650 in cash and 109,720 shares of Hologic Common Stock. The issuance of the 109,720 shares of Common Stock issued to certain of the Sellers in connection with the Acquisition was exempt from registration pursuant to Regulation S of the Securities Act of 1933, as amended.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Submission of Matters to a Vote of Security Holders.

The Company held its Annual Meeting of Stockholders on February 28, 2006. At the meeting, a total of 43,451,057 shares or 97% of the Common Stock issued and outstanding as of the record date, were represented in person or by proxy. Set forth below is a brief description of each matter voted upon at the meetings and the voting results with respect to each matter.

1. A proposal to elect the following seven persons to serve as members of the Company’s Board of Directors for the ensuing year and until their successors are duly elected:

Name	For	Withheld	Abstain
John W. Cumming	23,112,375	20,338,682	0
Irwin Jacobs	37,455,713	5,995,344	0
Glenn P. Muir	19,865,076	23,585,981	0
Arthur G. Lerner	39,504,641	3,946,416	0
Nancy L. Leaming	37,277,421	6,173,636	0
Jay A. Stein	21,565,655	21,885,402	0
David R. LaVance, Jr.	39,504,241	3,946,816	0
Lawrence M. Levy	15,770,873	27,680,184	0

2. A proposal to approve the Company’s Second Amended and Restated 1999 Equity Incentive Plan.

For:	Against:	Abstain:	Broker Non-Votes:
24,340,704	12,740,228	1,281,023	5,083,756

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Item 5. Other Information.

On May 3, 2006, the Compensation Committee of the Board of Directors of the Company (the “Compensation Committee”) approved (i) retention and severance agreements (“Retention and Severance Agreements”) for each of John W. Cumming, Chief Executive Officer, Robert A. Cascella, President, and Glenn P. Muir, Chief Financial Officer (the “Named Executives”), (ii) severance agreements (the “Severance Agreements”) for each of Peter Soltani, Vice President, Digital Detectors, Robert Lavallee, Senior Vice President and Chief Accounting Officer, and David Brady, Senior Vice President of Human Resources, and (iii) amended and restated change of control agreements (the “Change of Control Agreements”) for each of the Named Executives and Dr. Jay A. Stein, Chief Technical Officer.

Retention and Severance Agreements. Pursuant to the terms of the Retention and Severance Agreements, the Named Executives are entitled to retention payments, consisting of a cash bonus, subject to applicable tax withholding, and a number of restricted stock units having a value of a specified amount on May 3, 2006, the effective date of the award, payable, in case of Mr. Cumming if he remains employed as Chief Executive Officer of the Company or its successor through December 31, 2008 (the “Retention Date”), and, in the case of each of Mr. Muir and Mr. Cascella, if such officer remains employed by the Company or its successor on the Retention Date. Each restricted stock unit entitles the Named Executive to one share of common stock of the Company on the Retention Date. The cash bonus payable on the Retention Date and the number restricted stock units awarded to each of the Named Executives pursuant to their applicable Retention and Severance Agreement is as follows:

Name of Executive	Cash Bonus	Restricted Stock Units
John W. Cumming	$1,500,000	32,342 (having a value of $1,500,000 on May 3, 2006)
Robert A. Cascella	$1,000,000	10,781 (having a value of $500,000 on May 3, 2006)
Glenn P. Muir	$500,000	10,781 (having a value of $500,000 on May 3, 2006)

In addition to the retention payments, if the Named Executive is terminated from the Company without cause or resigns for good reason, then the Company shall pay the Named Executive (i) a lump sum cash payment equal to his accrued compensation through the termination date, which includes base salary, reimbursement for reasonable and necessary business expenses and vacation pay, (ii) his pro rata bonus as determined in accordance with the Retention and Severance Agreement through the termination date, and (iii) a severance payment equal to the Named Executive’s base salary and bonus amount for the period of one year from the termination date, such payments to be made in accordance with normal payroll practices and subject to applicable tax withholding and certain modifications that may be made as set forth in the applicable Retention and Severance Agreement. The Company has also agreed to continue to provide the Named Executive with medical and dental benefits on the same terms and conditions provided to other executives of the Company for a period of one year from the termination date. In the event any payments and benefits provided under the Retention and Severance Agreement are subject to excise taxes under Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), then the payment shall be reduced so that no payment to be made or benefit to be provided to the Named Executive shall be subject to the excise tax. The severance pay and benefits provided to the Named Executive are in lieu of any other severance or termination pay to which the Named Executive may be entitled to under any Company severance or termination plan, program, practice or arrangement. In the event that the Named Executive is a party to a change of control agreement with the Company and such agreement results in the payment of benefits to the Named Executive as the result of a change of control, then the Named Executive will not receive any compensation under the Retention and Severance Agreement other than the retention payments, if and when earned. The Retention and Severance Agreement for each of the Named Executives is filed with this Quarterly Report on Form 10-Q as Exhibits 10.4, 10.5 and 10.6 and are incorporated by reference herein.

Severance Agreements. The Severance Agreements with each of Mr. Soltani, Mr. Lavallee and Mr. Brady (each, an “Executive”) provide that if the Executive is terminated from the Company without cause or resigns for good reason, then the Company shall pay the Executive (i) a lump sum cash payment equal to his accrued compensation through the termination date, which includes base salary, reimbursement for reasonable and necessary business expenses and vacation pay, (ii) his pro rata bonus as determined in accordance with the Retention and Severance Agreement through the termination date, and (iii) a severance payment equal to the Executive’s base salary and bonus amount for the period of one year from the termination date, such payments to be made in accordance with normal payroll practices and subject to applicable tax withholding and certain modifications that may be made as set forth in the applicable Retention and Severance Agreements. The Company has also agreed to continue to provide the Executive with medical and dental benefits on the same terms and conditions provided to other executives of the Company for a period of one year from the termination date. In the event any payments or benefits provided under the Severance Agreements are subject to excise taxes under Section 280G of the Code, then payments shall be reduced so that no payment to be made or benefit to be provided to the Executive shall be subject to the excise tax. The severance pay and benefits provided to the Executive are in lieu of any other severance or termination pay to which the Named Executive may be entitled to under any Company severance or termination plan, program, practice or arrangement. In the event that the Executive is a party to a change of control agreement with the Company and such agreement results in the payment of benefits to the Executive as the result of a change of control, then the Executive will not receive any compensation under the Severance Agreement. The form of Severance Agreement for each of the Executives is filed with this Quarterly Report on Form 10-Q as Exhibit 10.7 and is incorporated by reference herein.

Change of Control Agreements. The Change of Control Agreements for each of the Named Executives and Jay A. Stein, Chief Technical Officer, were amended to comply with the new deferred compensation rules under Section 409A of the Code and to clarify that benefits under the Retention and Severance Agreements described above are not included in the calculation for any change of control payment due under the Change of Control Agreements. The form of the Change of Control Agreement, as amended, for each of Mr. Cumming, Mr. Cascella, Dr. Stein and Mr. Muir is filed with this Quarterly Report on Form 10-Q as Exhibit 10.8 and is incorporated by reference herein.

Item 6. Exhibits

(a) Exhibits:

Exhibit Number	Reference
2.1* Agreement and Plan of Merger dated April 17, 2006, by and among Hologic, Inc., Swordfish Acquisition Corp. and Suros Surgical Systems, Inc.	filed herewith
2.2* Agreement and Plan of Merger dated April 24, 2006, by and among Hologic, Inc., Hydrogen Acquisition, Inc. and R2 Technology, Inc.	filed herewith
2.3* Share Purchase Agreement dated May 2, 2006, by and among Hologic and the Sellers identified therein.	filed herewith
4.1 Form of Lock-Up Agreement entered into by and among Hologic, Inc., and certain holders of shares of Hologic, Inc. Common Stock received pursuant to the Share Purchase Agreement dated May 2, 2006, by and among Hologic, and the Sellers identified therein.	filed herewith
10.1 Voting Agreement and Waiver dated April 17, 2006, by and among Hologic, Inc., and certain holders of capital stock of Suros Surgical Systems, Inc.	filed herewith
10.2 Voting Agreement and Waiver dated April 24, 2006, by and among Hologic, Inc., and certain holders of shares of capital stock of R2 Technology, Inc.	filed herewith
10.3** Hologic, Inc. Second Amended and Restated 1999 Equity Incentive Plan.	filed herewith
10.4** Retention and Severance Agreement dated May 3, 2006, by and between Hologic, Inc. and John W. Cumming.	filed herewith
10.5** Retention and Severance Agreement dated May 3, 2006, by and between Hologic, Inc. and Robert A. Cascella.	filed herewith
10.6** Retention and Severance Agreement dated May 3, 2006, by and between Hologic, Inc. and Glenn P. Muir.	filed herewith
10.7** Form of Severance Agreement for certain officers, including list of persons to whom provided.	filed herewith
10.8** Form of Amended and Restated Change of Control Agreement, including list of persons to whom provided.	filed herewith
10.9** Form of Restricted Stock Unit Award for executive officers.	filed herewith
10.10** Summary of Supplemental Executive Retirement Plan.	filed herewith
31.1 Certification of Hologic’s CEO pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	filed herewith
31.2 Certification of Hologic’s CFO pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	filed herewith
32.1 Certification of Hologic’s CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	filed herewith
32.2 Certification of Hologic’s CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	filed herewith

* Certain of the exhibits and schedules to this agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Hologic agrees to furnish supplementally to the SEC, upon request, a copy of any omitted exhibit or schedule provided however that Hologic may request confidential treatment pursuant to Rule 24-2 of the Exchange Act for any schedule or exhibit so furnished.

** Management compensation plan or arrangement.

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HOLOGIC, INC. AND SUBSIDIARIES

SIGNATURES

Pursuant to the requirements 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.

	Hologic, Inc.
	(Registrant)
May 4, 2006	/s/ John W. Cumming
Date	John W. Cumming
	Chairman and Chief Executive Officer
May 4, 2006	/s/ Glenn P. Muir
Date	Glenn P. Muir
	Executive Vice President, Finance and Treasurer
	(Principal Financial Officer)

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