<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED JANUARY 31, 1995
OR
[_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM.......... TO...................................
COMMISSION FILE NUMBER 0-13200
ASTRO-MED, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
RHODE ISLAND 05-0318215
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
600 EAST GREENWICH AVENUE, 02893
WEST WARWICK, RHODE ISLAND (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (401) 828-4000
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH
REGISTERED
None None
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, $.05 PAR VALUE
(TITLE OF CLASS)
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
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 [_]
State the aggregate market value of the voting stock held by non-affiliates of
the registrant as of March 13, 1995. Common Stock, $.05 Par Value: $41,035,395
Indicate the number of shares outstanding (excluding treasury shares) of each of
the issuer's classes of common stock as of March 13, 1995. Common Stock, $.05
Par Value: 5,040,953 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company's definitive proxy statement for the 1995 annual
meeting of shareholders are incorporated by reference into Part III.
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9
<PAGE>
ASTRO-MED, INC.
FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
PART I
Item 1. Business....................................................... 11
Item 2. Properties..................................................... 13
Item 3. Legal Proceedings.............................................. 13
Item 4. Submission of Matters to a Vote of Security Holders............ 13
PART II
Market for the Registrant's Common Stock and Related
Item 5. Stockholder Matters............................................ 13
Item 6. Selected Financial Data........................................ 14
Management's Discussion and Analysis of Financial Condition and
Item 7. Results of Operations.......................................... 14
Item 8. Financial Statements and Supplementary Data.................... 16
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.......................................... 16
PART III
Item 10. Directors and Executive Officers of the Registrant............. 16
Item 11. Executive Compensation......................................... 17
Item 12. Security Ownership of Certain Beneficial Owners and Management. 17
Item 13. Certain Relationships and Related Transactions................. 17
PART IV
Exhibits, Financial Statement Schedules and Reports on Form 8-
Item 14. K.............................................................. 18
</TABLE>
10
<PAGE>
ASTRO-MED, INC.
PART I
ITEM 1. BUSINESS
GENERAL
Astro-Med, Inc., which was incorporated in Rhode Island in January 1969,
operates in the one industry segment described below. There was no significant
change in the nature of the Company's business during the year ended January
31, 1995 (herein referred to as "fiscal 1995").
NARRATIVE DESCRIPTION OF BUSINESS
PRODUCTS
The Company develops, designs, manufactures and sells a comprehensive line
of specialty data printers and related electronic systems, computer software,
and printer consumables. Among the specialty printers are the MT series, which
includes the MT95K2 and the MT-95000, and the Dash series, which includes the
DASH 10 introduced in fiscal 1995 and four other machines.
The MT series and the Dash series are generally referred to as "data
recorders" and are used to capture, process, analyze and record data related
to engineering, scientific, industrial and medical tests.
The Company's products also include a broad line of label printers for the
emerging product identification market, often referred to as the bar code
market. Included are the SUNDANCE, a four-color thermal transfer printer, the
TOP HAND 2 and the RANGE BOSS, all introduced in fiscal 1995. Several
application software packages include "Color QuickLabel for Windows"
introduced in fiscal 1995.
The Company's label printer product line also includes a broad variety of
printer consumables, including thermal transfer ribbons, labels, and tags. The
Company produces such products using its own custom designed production
equipment and, as with all products, sells them to customers throughout the
world.
Other specialty printers manufactured by the Company include the Tough
Writer, a ruggedized computer printer used in applications where the
environment is harsh, and the AG-1280, a scientific computer printer.
The Company serves the neurophysiological market through its Grass
Instrument subsidiary, acquired in August 1994. The neurophysiological market
includes universities, pharmaceutical companies, hospitals and sleep study
clinics. Grass products include a broad line of data recording systems,
including the Model 7, Model 8 Plus and the Model 9. Also offered is a broad
line of response stimulators, electrodes, transducers and consumables,
including chart paper. In fiscal 1995, the Company developed an important
computer analysis software package called PolyVIEW. PolyVIEW is designed to
analyze and interpret data gathered by certain Grass data systems.
TECHNOLOGY
Since its inception, the Company has concentrated its research and
development toward various methods to acquire, process, store and print data
so that the data can be analyzed, manipulated or affixed to a product.
In recent years, the Company has developed and refined its digital printing
and signal processing systems. As its technology has become more advanced and
comprehensive, the Company has been able to enter an increasingly wide range
of markets.
PATENTS AND COPYRIGHTS
The Company holds a number of product patents in the United States and in
foreign countries. It has filed applications for other patents that are
pending. In April 1988, the Company was granted Patent No. 4,739,344 covering
28 claims related to the MT-9500 as well as the newer MT-95000, MT-96000 and
11
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MT95K2. The Company considers its patents to be important but does not believe
that its business is materially dependent on them. The Company copyrights its
extensive software and registers its trademarks.
MANUFACTURING AND SUPPLIES
The Company designs its products and manufactures many of their component
parts. The balance of the parts are produced by suppliers to the Company's
specifications. Raw materials required for the manufacture of products,
including parts produced to the Company's specifications, are generally
available from numerous suppliers.
PRODUCT DEVELOPMENT
The Company has maintained a growing program of product research and
development since its inception. During fiscal 1993, 1994 and 1995, the
Company incurred costs of $2,098,983, $2,282,114 and $2,542,940, respectively,
on Company-sponsored product development. Costs alone are not a totally
accurate measure of research and development activities, however. The Company
is committed to product development as a vital factor in its growth and
expects to increase its research and development efforts again in the new
year.
MARKETING AND COMPETITION
The Company competes in varied markets throughout the world for all of its
products on the basis of proprietary technology, product reputation, delivery
and technical assistance to customers.
Most of the Company's products are sold to customers in North America and
selected European countries by a salaried field sales force. Certain products,
primarily those for the product identification market, are also sold through a
network of dealers which the Company began to set up in fiscal 1994. Export
sales are bolstered by wholly-owned entities formed between fiscal 1988 and
1994 in England, France, Germany, Italy and Canada. Other export sales are
made through authorized distributors or agents located in approximately thirty
countries. No single customer accounted for 10% of the Company's net sales in
any of the last three fiscal years.
During the last fiscal year, the Company's products were sold to
approximately 4,500 customers. The Company estimates that its products account
for approximately 20% of the original equipment market sales for high speed
printers/recorders, and that its share of sales to the end user market is
approximately 35%.
The Company's product promotion includes full-color advertising campaigns in
many leading trade magazines, exhibitions at trade shows, special mailings,
and publicity and public relations activities.
EXPORT SALES
Astro-Med International, Inc., a subsidiary of the Company, participates in
all export sales. The subsidiary is a Foreign Sales Corporation and qualifies
for certain tax benefits provided as an incentive for exports.
In fiscal 1993, 1994 and 1995, net sales to customers in various geographic
areas outside the U.S.A., primarily in Canada and Western Europe, amounted to
$7,896,663, $6,988,747 and $9,849,933, respectively. The Company's profit
margins on export sales approximate those on domestic sales. The Company's
management does not believe that its export sales involve materially greater
risks than its domestic sales.
ORDER BACKLOG
The backlog regularly fluctuates. The amount at any particular date is
comprised primarily of orders from OEM customers. For the past several years,
the Company has been developing and introducing new products aimed at end user
customers rather than OEM customers. Manufacturing is geared to forecasted
demands. Accordingly, the amount of order backlog does not indicate future
sales trends and the Company does not normally carry any material backlog.
OTHER INFORMATION
The Company's business is not seasonal in nature.
12
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Most of the Company's products are warranted for periods ranging from 45 days
to one year against defects in materials or workmanship. Warranty expenses have
averaged approximately $190,000 a year for the Company's last three fiscal
years.
As of March 13, 1995, the Company employed approximately 390 persons. The
Company is generally able to satisfy its employment requirements. No employees
are represented by a union. The Company believes that employee relations are
excellent.
ITEM 2. PROPERTIES
The following table sets forth information regarding the Company's principal
properties, all of which are included in the consolidated balance sheet
appearing elsewhere in this report.
<TABLE>
<CAPTION>
LOCATION APPROXIMATE SQUARE FOOTAGE PRINCIPAL USE
-------- -------------------------- -------------
<S> <C> <C>
West Warwick, RI 116,000 Corporate headquarters,
research and development,
manufacturing
Braintree, MA 91,000 Manufacturing
Slough, England 1,700 Sales and service
</TABLE>
The Company believes its facilities are well maintained, in good operating
condition and generally adequate to meet its needs for the foreseeable future.
ITEM 3. LEGAL PROCEEDINGS
There are no pending or threatened legal proceedings against the Company
believed to be material to the financial position or results of operations of
the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's security holders,
through solicitation of proxies or otherwise, during the last quarter of the
period covered by this report.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
The Company's common stock trades in the NASDAQ National Market System under
the symbol ALOT. The following table sets forth dividend data and the range of
high and low closing prices, as furnished by NASDAQ, for the periods indicated.
<TABLE>
<CAPTION>
DIVIDENDS
YEARS ENDED JANUARY 31, HIGH LOW PER SHARE
----------------------- ------ ------ ---------
<S> <C> <C> <C>
1994:
First Quarter.................................... 15 1/4 12 1/2 $.03
Second Quarter................................... 14 3/4 12 1/4 .03
Third Quarter.................................... 13 1/8 10 .03
Fourth Quarter................................... 12 9 1/2 .03
1995:
First Quarter.................................... 12 1/4 9 1/2 .03
Second Quarter................................... 10 1/2 8 1/2 .03
Third Quarter.................................... 11 1/2 8 1/4 .03
Fourth Quarter................................... 12 10 1/8 .03
</TABLE>
The Company had approximately 625 stockholders of record on March 13, 1995,
not including stockholders with shares held under beneficial ownership in
nominee name.
13
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ITEM 6. SELECTED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEARS ENDED JANUARY 31,
---------------------------------------
1991 1992 1993 1994 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Results of Operations:
Net Sales............................ $28,979 $29,787 $31,333 $32,268 $38,233
Net Income........................... 2,347 10,562 3,570 2,981 1,923
Earnings per Common Share............ .48 2.08 .69 .58 .38
Cash Dividends per Common Share...... .06 .11 .12 .12
Financial Condition:
Working Capital...................... $10,769 $20,755 $23,479 $24,895 $25,487
Total Assets......................... 24,415 35,743 37,492 39,955 42,177
Long-Term Debt, less Current Maturi-
ties................................ 1,458 999 647 296 244
</TABLE>
- - --------
(1) In the second quarter of fiscal 1992, the Company began a program of paying
quarterly cash dividends. No cash dividends on common stock had previously
been declared or paid during the fiscal years identified above.
(2) Earnings and cash dividends per common share amounts have been adjusted to
reflect a 3 for 2 stock split in the form of a 50% stock dividend paid May
18, 1992.
(3) Net income for fiscal 1992 includes $7,284,000, equal to $1.45 per share,
from settlement of litigation.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
The following table provides percentage comparisons of the components of net
income as presented in the consolidated statements of income included elsewhere
herein for the last three fiscal years.
<TABLE>
<CAPTION>
% OF NET SALES % INCREASE
--------------------------- -----------------------------------
YEARS ENDED JANUARY 31, 1993 1994 1995
--------------------------- COMPARED TO COMPARED TO COMPARED TO
1993 1994 1995 1992 1993 1994
------- ------- ------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net Sales............... 100% 100% 100% 5% 3% 18%
Gross Profit............ 53 51 43 6 0 0
Selling, General and Ad-
ministrative........... 31 30 30 13 0 18
Research and Develop-
ment................... 7 7 7 0 9 11
</TABLE>
The sales increase in the last fiscal year resulted from sales of new and
improved products, including bar code printer products and DASH IV and DASH 10
data recorders, plus six months of sales from Grass Instrument Co., a business
acquired by the Company on August 1, 1994. All geographic market sectors
yielded higher sales; exports rose to 26% of total sales from 22% in fiscal
1994. The sales increases in each of the two prior fiscal years were similarly
achieved principally through sales of new and improved recorders/printers and
bar code printer products.
Problems in the economies of most countries have had a negative effect on the
Company's sales in the past few years. Incoming orders for both domestic and
export shipments have remained below expectations. The Company expects little
significant near-term improvement in global economic conditions. However,
primarily as a result of planned new product introductions, the Company expects
that its sales will increase in fiscal 1996. The Company continues to develop
and ready new products for market in order to increase sales in general and to
benefit from future economic recovery as it takes place.
The Company's gross profit percentage declined in fiscal 1995 to 43% from the
50%, or more, levels of the preceding several years. The decline in fiscal 1995
was due in part to the inclusion of sales of Grass
14
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Instrument Co. which, in recent years, has experienced gross profit margins
below 30%. Further, since late fiscal 1994, there has been a modest increase in
sales of certain products to dealers and independent sales representatives who
receive a resale discount. The Company has begun a program of cost reduction
and has instituted selective price increases to improve gross profit margins
for Grass products.
Annual selling, general and administrative expenses in fiscal 1995 rose
significantly from fiscal 1994 as the Company enlarged its sales staff and
incurred substantial advertising and marketing expenses to introduce new
products, including the K3 Cath Lab System and the SUNDANCE four-color label
printer, neither of which was sold to customers in fiscal 1995. The Company
believes that investments made in the development of such new products will
produce increased revenues and income in future years beginning fiscal 1996.
Because the products and customers of Grass Instrument Co. are similar to
those of the Company, Grass products are now being sold by the Astro-Med sales
organization which has been enlarged by the absorption of several individuals
from Grass. Administrative activities of Grass have also been merged with the
corresponding activities of the Company to achieve maximum efficiency.
Annual selling, general and administrative expenses increased in fiscal 1993
principally as a result of planned expansions of marketing efforts. Both
payroll and travel related costs increased as direct selling, customer service
and related staff was enlarged. In addition, the Company's advertising program
was substantially broadened. All selling, general and administrative expenses
incurred in fiscal 1994 were held at levels relatively consistent with those
for fiscal 1993.
The Company's commitment to the development of new products is partly
illustrated by the substantial research and development expenses incurred and
reported each year. However, the totals reflect variable expenses such as the
costs of materials consumed and of owning and upgrading the most advanced
engineering equipment available. Because expenses such as these fluctuate
somewhat from year to year, annually increasing research and development
expenses are not fully visible.
In fiscal 1995, the Company's research and development expenses increased by
11% over fiscal 1994 as the Company increased overall product development
activities, concentrating especially on bar code printer products including the
SUNDANCE four-color label printer.
In fiscal 1995, interest and dividend income declined and interest expense
increased from the two preceding years because of a reduction in invested cash
and a short-term bank loan which existed for part of the year. Both events were
connected to the acquisition of Grass Instrument Co., for which there is no
continuing debt. Other income (expense), net has been affected from year to
year primarily by fluctuations in foreign currency exchange rates.
Fluctuations in effective income tax rates from year to year are explained in
Note 6 of Notes to Consolidated Financial Statements. As described in Note 1, a
new accounting standard required a fiscal 1994 change in accounting for income
taxes. Such change did not have a material effect on the financial position or
results of operations of the Company.
Inflation during recent years has not had a significant effect on the sales
or profitability of the Company. The effects of increased costs have generally
been offset through periodic price increases and improved manufacturing
efficiencies.
LIQUIDITY AND CAPITAL RESOURCES
During the past three fiscal years, the Company has financed its operations
with on hand and internally generated funds. In August 1994, the Company
borrowed $3,400,000 from a bank to complete the acquisition of Grass Instrument
Co. The entire amount was repaid prior to the end of fiscal 1995.
The Company's long-term debt was acquired several years ago to construct
facilities and to make major acquisitions of machinery and equipment.
Expenditures for property and equipment during the past three
15
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fiscal years have been made from on hand and internally generated funds. The
balance of the major portion of the Company's long-term debt was paid in full
during January 1995.
As evidenced by the foregoing comments, the Company is financially strong.
The current ratio was 5.7:1 at the end of fiscal 1995 and long-term debt was
less than 1% of stockholders' equity. The Company has no material commitments
for capital expenditures and has no reason to believe that capital resources
available to it will not meet the needs of its business, both on a short-term
and long-term basis.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements required under this item are submitted
as a separate section of this report on the pages indicated at Item 14(a)(1).
The supplementary data regarding quarterly results of operations is set forth
in the following table.
QUARTERLY FINANCIAL DATA (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
QUARTERS ENDED
------------------------------------------
MAY 1, JULY 31, OCTOBER 30, JANUARY 31,
1993 1993 1993 1994
--------- -------- ----------- -----------
<S> <C> <C> <C> <C>
Net Sales............................ $8,847 $7,653 $ 7,897 $ 7,871
Gross Profit......................... 4,598 3,753 3,906 4,159
Net Income........................... 902 505 703 871
Earnings Per Common Share............ .17 .10 .14 .17
<CAPTION>
APRIL 30, JULY 30, OCTOBER 29, JANUARY 31,
1994 1994 1994 1995
--------- -------- ----------- -----------
<S> <C> <C> <C> <C>
Net Sales............................ $6,551 $9,094 $11,221 $11,368
Gross Profit......................... 2,894 4,194 4,967 4,228
Net Income........................... (53) 905 892 179
Earnings Per Common Share............ (.01) .18 .18 .04
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The response to this item is incorporated by reference to the Company's
definitive proxy statement for the 1995 annual meeting of shareholders.
The following is a list of the names and ages of, and the positions and
offices presently held by, all executive officers of the Company. All officers
serve at the pleasure of the Board of Directors.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Albert W. Ondis.............. 69 Chairman, Chief Executive Officer and Director
Everett V. Pizzuti........... 59 President, Chief Operating Officer and Director
David M. Gaskill............. 49 Vice President--Research and Development
Eugene S. Libby.............. 55 Vice President and Treasurer, Chief Financial Officer
Gordon W. Bentley............ 48 Vice President--Manufacturing-Instruments
Elias G. Deeb................ 53 Vice President--Media Products
A. Eric Bartholomay.......... 46 Vice President--International Sales
Michele Ragosta, Jr. ........ 67 Controller
Fred E. Eckstein............. 47 Vice President--Medical Products
Richmond B. Woodward......... 63 Vice President--Grass Instrument Products
Jacques V. Hopkins........... 64 Secretary and Director
</TABLE>
16
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All of the persons named above have held the positions identified since
January 31, 1985, except as indicated.
Mr. Ondis was previously a Director, the Chief Executive Officer (President)
and the Chief Financial Officer (Treasurer) of the Company since 1969.
Mr. Pizzuti was previously a Vice President of the Company functioning as
Chief Operating Officer since 1971.
Mr. Gaskill previously had functioned as Vice President--Engineering of the
Company since 1974. He is a nephew of Mr. Ondis.
Mr. Libby, a Certified Public Accountant, was previously Vice President and
Controller of the Company since 1982. Since 1987, Mr. Libby has also been
Assistant Secretary of the Company.
Mr. Bentley has held the position identified since 1986. In 1983, he was
named Manager of Materiel after having been Purchasing Manager during the two
prior years.
Mr. Deeb has held the position identified since 1987. In 1985, he was named
General Manager--Media Products after having been Vice President and General
Manager since 1981 of a business sold by the Company in 1984.
Mr. Bartholomay has held the position identified since 1991. In 1988, he had
been named Manager of International Operations. He previously held various
sales and sales-related positions with Rhone-Poulenc Inc. beginning in the
United States in 1981. He transferred to France in 1985 and last held the
position of a Manager of Product and Market Development.
Mr. Ragosta has held the position identified since 1994. He previously held
various financial management positions with Hanson System, Inc. from 1991,
Ronci Mfg. Co. (1990-1991) and Klitzner Industries, Inc. (1979-1990).
Mr. Eckstein has held the position identified since 1994 after having been
self-employed from 1990 as a private management consultant focusing on
business/product planning and development. He previously was employed with PPG
Biomedical Systems/Honeywell from 1984 and last held the position of Director--
Product Management and Development.
Mr. Woodward has held the position identified since 1994. He previously
served Grass Instrument Co. from 1980 as a self-employed consultant focusing on
financial and business administration matters.
Mr. Hopkins has held the positions identified since 1969. He has been a
partner in the law firm of Hinckley, Allen & Snyder, general counsel to the
Company, since 1966.
ITEM 11. EXECUTIVE COMPENSATION
The response to this item is incorporated by reference to the Company's
definitive proxy statement for the 1995 annual meeting of shareholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The response to this item is incorporated by reference to the Company's
definitive proxy statement for the 1995 annual meeting of shareholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The response to this item is incorporated by reference to the Company's
definitive proxy statement for the 1995 annual meeting of shareholders.
17
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) Financial Statements:
The following consolidated financial statements of Astro-Med, Inc. and
subsidiaries are incorporated by reference in Item 8:
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants............................... 20
Consolidated Balance Sheets--January 31, 1994 and 1995................. 21
Consolidated Statements of Income--Years Ended January 31, 1993, 1994
and 1995.............................................................. 22
Consolidated Statements of Stockholders' Equity--
Years Ended January 31, 1993, 1994 and 1995........................... 23
Consolidated Statements of Cash Flows--
Years Ended January 31, 1993, 1994 and 1995........................... 24
Notes to Consolidated Financial Statements--January 31, 1995........... 25
(a)(2) Financial Statement Schedules:
Schedule II--Valuation and Qualifying Accounts and Reserves--
Years Ended January 31, 1993, 1994 and 1995........................... 32
</TABLE>
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable, and therefore
have been omitted.
(a)(3) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
-------
<C> <S> <C>
(3A) Articles of Incorporation of the Company and all amendments
thereto (filed as Exhibit No. 3A to the Company's report on
Form 10-Q for the quarter ended August 1, 1992 and by this
reference incorporated herein).
(3B) By-laws of the Company and all amendments thereto (filed as
Exhibit No. 3B to the Company's report on Form 10-Q for the
quarter ended July 30, 1988 and by this reference
incorporated herein).
(4) Specimen form of common stock certificate of the Company
(filed as Exhibit No. 4 to the Company's report on Form 10-K
for the year ended January 31, 1985 and by this reference
incorporated herein).
(24) Consent of Independent Public Accountants. See page 20.
</TABLE>
(b) Reports on Form 8-K:
No reports on Form 8-K were filed by the Company during the last quarter of
the period covered by this report.
18
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
ASTRO-MED, INC.
(Registrant)
/s/ Albert W. Ondis
By __________________________________
Date: April 6, 1995 (ALBERT W. ONDIS, CHAIRMAN)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATE INDICATED.
NAME TITLE DATE
/s/ Albert W. Ondis Chairman and April 6, 1995
- - ------------------------------------- Director (Principal
ALBERT W. ONDIS Executive Officer)
/s/ Everett V. Pizzuti President and April 6, 1995
- - ------------------------------------- Director (Principal
EVERETT V. PIZZUTI Operating Officer)
/s/ Eugene S. Libby Vice President and April 6, 1995
- - ------------------------------------- Treasurer
EUGENE S. LIBBY (Principal
Financial Officer)
/s/ Michele Ragosta, Jr. Controller April 6, 1995
- - ------------------------------------- (Principal
MICHELE RAGOSTA, JR. Accounting Officer)
/s/ Jacques V. Hopkins Secretary and April 6, 1995
- - ------------------------------------- Director
JACQUES V. HOPKINS
19
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EXHIBIT 24
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our report included in this Form 10-K, into the Company's previously filed
Registration Statements on Form S-8: File No. 2-81081 pertaining to the Astro-
Med, Inc. Employee Stock Purchase Plan, File No. 33-42993 pertaining to the
Astro-Med, Inc. 1980 Non-Qualified Stock Option Plan, File No. 33-43699
pertaining to the Astro-Med, Inc. 1982 Incentive Stock Option Plan and File No.
33-43700 pertaining to the Astro-Med, Inc. 1989 Incentive Stock Option Plan.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
April 6, 1995
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Astro-Med, Inc.:
We have audited the accompanying consolidated balance sheets of Astro-Med,
Inc. and subsidiaries as of January 31, 1994 and 1995, and the related
consolidated statements of income, stockholders' equity and cash flows for each
of the three years in the period ended January 31, 1995. These financial
statements and the schedule referred to below are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and the schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform our audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Astro-Med, Inc. and
subsidiaries as of January 31, 1994 and 1995, and the results of their
operations and their cash flows for each of the three years in the period ended
January 31, 1995, in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index at Item
14(a)(2) is presented for purposes of complying with the Securities and
Exchange Commission's rules and is not part of the basic financial statements.
This schedule has been subjected to the auditing procedures applied in the
audits of the basic financial statements and, in our opinion, fairly states in
all material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
March 17, 1995
20
<PAGE>
ASTRO-MED, INC.
CONSOLIDATED BALANCE SHEETS
AS OF JANUARY 31, 1994 AND 1995
<TABLE>
<CAPTION>
1994 1995
----------- -----------
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and Cash Equivalents (Note 1)................. $ 1,300,132 $ 1,107,191
Securities Available for Sale (Notes 1 and 2)...... 6,897,781
Marketable Securities (Note 1)..................... 14,203,960
Accounts Receivable, Less Reserve of $145,000 in
1994 and $157,000 in 1995......................... 5,741,207 7,828,393
Inventories (Note 3)............................... 7,178,974 12,893,544
Prepaid Expenses and Other Current Assets (Note 6). 1,149,042 2,196,317
----------- -----------
Total Current Assets............................. 29,573,315 30,923,226
PROPERTY, PLANT AND EQUIPMENT (Notes 1 and 7)
Land and Improvements.............................. 281,341 283,341
Buildings and Improvements......................... 6,264,611 6,605,222
Machinery and Equipment............................ 7,870,720 9,000,121
----------- -----------
14,416,672 15,888,684
Less Accumulated Depreciation...................... 6,194,438 7,254,555
----------- -----------
8,222,234 8,634,129
OTHER ASSETS
Excess of Cost over Net Assets Acquired (Note 1)... 1,082,534 1,047,613
Amounts Due from Officers.......................... 453,264 453,264
Other.............................................. 623,167 1,119,062
----------- -----------
2,158,965 2,619,939
----------- -----------
$39,954,514 $42,177,294
=========== ===========
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<S> <C> <C>
CURRENT LIABILITIES
Accounts Payable................................... $ 2,217,846 $ 2,850,382
Accrued Compensation............................... 665,380 1,015,956
Accrued Expenses................................... 826,276 802,321
Income Taxes....................................... 615,808 715,633
Current Maturities of Long-Term Debt (Note 4)...... 353,406 51,703
----------- -----------
Total Current Liabilities........................ 4,678,716 5,435,995
LONG-TERM DEBT, Less Current Maturities (Note 4)..... 295,775 244,072
EXCESS OF NET ASSETS ACQUIRED OVER COST (Note 1)..... 491,115
DEFERRED INCOME TAXES (Notes 1 and 6)................ 1,055,582 726,178
STOCKHOLDERS' EQUITY (Note 5)
Preferred Stock, $10 Par Value, Authorized 100,000
Shares, None Issued...............................
Common Stock, $.05 Par Value, Authorized 13,000,000
Shares, Issued 5,112,827 in 1994 and 5,118,268
in 1995.... 255,641 255,913
Additional Paid-in Capital......................... 5,365,546 5,515,632
Retained Earnings.................................. 29,036,722 30,355,938
Treasury Stock, at Cost, 84,566 Shares in 1994 and
77,566 Shares in 1995............................. (733,468) (672,755)
Cumulative Translation Adjustment (Note 1)......... (80,722)
Net Unrealized Gain (Loss) on Securities Available
for Sale (Note 2)................................. (94,072)
----------- -----------
33,924,441 35,279,934
----------- -----------
$39,954,514 $42,177,294
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
21
<PAGE>
ASTRO-MED, INC.
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED JANUARY 31, 1993, 1994 AND 1995
<TABLE>
<CAPTION>
1993 1994 1995
----------- ----------- -----------
<S> <C> <C> <C>
Net Sales............................... $31,333,322 $32,267,816 $38,233,312
Cost of Sales........................... 14,742,174 15,852,290 21,950,539
----------- ----------- -----------
Gross Profit............................ 16,591,148 16,415,526 16,282,773
Costs and Expenses:
Selling, General and Administrative... 9,793,357 9,821,338 11,575,712
Research and Development.............. 2,098,983 2,282,114 2,542,940
----------- ----------- -----------
11,892,340 12,103,452 14,118,652
----------- ----------- -----------
Operating Income........................ 4,698,808 4,312,074 2,164,121
Other Income (Expense):
Interest and Dividend Income.......... 684,415 719,647 572,345
Interest Expense...................... (64,674) (59,016) (159,952)
Other, Net............................ (58,283) (211,398) 193,975
----------- ----------- -----------
561,458 449,233 606,368
----------- ----------- -----------
Income before Income Taxes.............. 5,260,266 4,761,307 2,770,489
Provision for Income Taxes (Notes 1 and
6)..................................... 1,690,000 1,780,000 847,000
----------- ----------- -----------
Net Income.............................. $ 3,570,266 $ 2,981,307 $ 1,923,489
=========== =========== ===========
Earnings Per Common Share (Note 1)...... $.69 $.58 $.38
==== ==== ====
Weighted Average Number of Common and
Common Equivalent Shares Outstanding... 5,168,237 5,138,710 5,099,004
========= ========= =========
Dividends Declared Per Common Share..... $.11 $.12 $.12
==== ==== ====
</TABLE>
The accompanying notes are an integral part of these financial statements.
22
<PAGE>
ASTRO-MED, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED JANUARY 31, 1993, 1994 AND 1995
<TABLE>
<CAPTION>
NET
UNREALIZED
GAIN (LOSS)
ADDITIONAL CUMULATIVE ON SECURITIES
COMMON PAID-IN RETAINED TREASURY TRANSLATION AVAILABLE
STOCK CAPITAL EARNINGS STOCK ADJUSTMENT FOR SALE
-------- ---------- ----------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 31,
1992................... $166,514 $4,954,893 $23,631,700 $(594,885)
Net Income.............. 3,570,266
Shares Sold Under
Employee Stock Purchase
Plan................... 115 33,677
Exercise of Stock
Options, Including
Related Tax Benefits... 4,838 333,920 285,808
Shares Issued to
Employee Stock
Ownership Plan......... 47,499 14,403
Dividends Declared...... (539,970)
50% Stock Dividend...... 83,826 (85,043)
-------- ---------- ----------- ---------
Balance, January 31,
1993................... 255,293 5,284,946 26,661,996 (294,674)
Net Income.............. 2,981,307
Shares Sold Under
Employee Stock Purchase
Plan................... 188 41,142
Exercise of Stock
Options, Including
Related Tax Benefits... 160 11,482
Purchase of Stock for
Treasury............... (465,133)
Shares Issued to
Employee Stock
Ownership Plan......... 27,976 26,339
Dividends Declared...... (606,581)
-------- ---------- ----------- ---------
Balance, January 31,
1994................... 255,641 5,365,546 29,036,722 (733,468)
Net Income.............. 1,923,489
Shares Sold Under
Employee Stock Purchase
Plan................... 216 39,006
Exercise of Stock
Options, Including
Related Tax Benefits... 56 107,043
Shares Issued to
Employee Stock
Ownership Plan......... 4,037 60,713
Dividends Declared...... (604,273)
Cumulative Translation
Adjustment............. $(80,722)
Change in Net Unrealized
Gain (Loss) on
Securities Available
for Sale............... $(94,072)
-------- ---------- ----------- --------- -------- --------
Balance, January 31,
1995................... $255,913 $5,515,632 $30,355,938 $(672,755) $(80,722) $(94,072)
======== ========== =========== ========= ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
23
<PAGE>
ASTRO-MED, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED JANUARY 31, 1993, 1994 AND 1995
<TABLE>
<CAPTION>
1993 1994 1995
------------ ----------- ------------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net Income.......................... $ 3,570,266 $ 2,981,307 $ 1,923,489
Adjustments to Reconcile Net Income
to Net Cash Provided by Operating
Activities:
Depreciation and Amortization..... 938,365 1,043,222 1,038,951
Deferred Income Taxes............. 46,620 (104,142) (30,687)
Other............................. (64,861) 8,987 22,836
Changes in Assets and Liabilities:
Accounts Receivable............. 145,277 (78,194) (511,187)
Inventories..................... (852,248) (1,313,836) (2,236,033)
Other........................... (568,333) 103,884 (804,827)
Accounts Payable and Accrued
Expenses....................... (235,060) 688,026 (70,444)
Income Taxes.................... (1,163,614) 213,470 89,750
------------ ----------- ------------
Total Adjustments............. (1,753,854) 561,417 (2,501,641)
------------ ----------- ------------
Net Cash Provided (Used) by
Operating Activities............. 1,816,412 3,542,724 (578,152)
Cash Flows from Investing Activities:
Proceeds from Sales of Securities
Available for Sale................. 21,267,964
Purchases of Securities Available
for Sale........................... (14,055,857)
Proceeds from Sales of Investments.. 22,469,012 7,525,926
Purchases of Investments............ (22,136,297) (9,743,820) (518,731)
Additions to Property, Plant and
Equipment.......................... (1,746,932) (682,044) (1,265,012)
Payments Received on Amounts Due
from Officers...................... 72,024
Acquisition of New Business, Net of
Cash Acquired...................... (4,296,545)
------------ ----------- ------------
Net Cash Provided (Used) by
Investing Activities............. (1,342,193) (2,899,938) 1,131,819
Cash Flows from Financing Activities:
Proceeds from Short-Term Borrowing.. 3,400,000
Payments of Debt.................... (351,702) (351,703) (3,753,406)
Proceeds from Common Shares Issued
Under Employee Benefit Plans....... 360,143 107,287 211,071
Purchases of Treasury Stock......... (465,133)
Dividends Paid...................... (539,971) (606,581) (604,273)
------------ ----------- ------------
Net Cash Used by Financing
Activities....................... (531,530) (1,316,130) (746,608)
------------ ----------- ------------
Net Increase (Decrease) in Cash and
Cash Equivalents..................... (57,311) (673,344) (192,941)
Cash and Cash Equivalents, Beginning
of Year.............................. 2,030,787 1,973,476 1,300,132
------------ ----------- ------------
Cash and Cash Equivalents, End of
Year................................. $ 1,973,476 $ 1,300,132 $ 1,107,191
============ =========== ============
Supplemental Disclosures of Cash Flow
Information:
Cash Paid During the Year for:
Interest.......................... $ 66,494 $ 60,071 $ 146,455
Income Taxes...................... $ 3,296,593 $ 1,631,712 $ 1,340,608
Liabilities Assumed with Acquisition
of New Business.................... $ 1,039,676
</TABLE>
The accompanying notes are an integral part of these financial statements.
24
<PAGE>
ASTRO-MED, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 1995
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation: The consolidated financial statements include
the accounts of the Company and its subsidiaries. All material intercompany
accounts and transactions are eliminated in consolidation.
Cash and Cash Equivalents: Highly liquid investments with an original
maturity of three months or less at date of acquisition are considered to be
cash equivalents when purchased as part of the Company's cash management
activities. Similar investments with original maturities beyond three months
are classified as securities available for sale.
Securities Available for Sale: Effective February 1, 1994, the Company
adopted the provisions of Statement of Financial Accounting Standards No. 115
"Accounting for Certain Investments in Debt and Equity Securities." Previously,
the Company recorded investments purchased as part of its cash management
activities as marketable securities and carried such investments at amortized
cost, which approximated market value.
The new standard requires that securities available for sale be accounted for
at market value. Such value is determined based on quoted market prices. The
difference between cost and market value, net of related tax effects, is
recorded as a component of stockholders' equity. The impact of adopting the new
standard was not material to the Company's financial position or results of
operations.
Property, Plant and Equipment: Property, plant and equipment are stated at
cost. Depreciation is provided on the straight-line basis over the estimated
useful lives of the assets (land improvements--10 to 20 years; buildings and
improvements--10 to 45 years; machinery and equipment--3 to 15 years).
Amortization of Intangibles: Excess of cost over net assets acquired is
amortized on the straight-line method over forty years. Accumulated
amortization amounted to $314,284 and $349,205 as of January 31, 1994 and 1995,
respectively. Excess of net assets acquired over cost is amortized on the
straight-line method over five years. Accumulated amortization amounted to
$54,552 as of January 31, 1995. The shorter amortization period for the excess
of net assets acquired over cost reflects the more limited life of the assets
involved.
Foreign Currency: The Company translates foreign currency denominated assets
and liabilities into U.S. dollars at year end exchange rates, and income and
expenses are translated at average exchange rates during the year. Prior to
February 1, 1994, the Company used the U.S. dollar as the functional currency
for its international sales and service operations and included translation
gains and losses in income currently. Effective February 1, 1994, the Company
changed to using local foreign currencies as the functional currency. This
change generally resulted in cumulative translation adjustments being reflected
as a separate component of stockholders' equity. It did not materially affect
the consolidated financial statements. The reporting of transaction gains and
losses in income currently was not affected.
Income Taxes: Effective February 1, 1993, the Company adopted the provisions
of Statement of Financial Accounting Standards No. 109 "Accounting for Income
Taxes." Previously, the Company recorded income taxes in accordance with the
comprehensive income tax allocation method. That method recognized the tax
effects of income and expense transactions included in each year's statement of
income regardless of the year the transactions are reported for tax purposes.
The new standard utilizes a liability approach which requires that deferred
income taxes be determined based on estimated future tax effects of differences
between the tax and book bases of assets and liabilities
25
<PAGE>
ASTRO-MED, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
considering the provisions of enacted tax laws. The impact of adopting the new
standard was not material to the Company's financial position or results of
operations.
Earnings Per Common Share: Earnings per share are computed based on the
weighted average number of common shares and common share equivalents
outstanding during each period. Common share equivalents include certain stock
options under the treasury stock method. Fully diluted earnings per share have
not been separately presented since they are not materially different.
NOTE 2--SECURITIES AVAILABLE FOR SALE
As mentioned in Note 1, effective February 1, 1994, the Company adopted a new
accounting standard applicable to securities available for sale. As of January
31, 1995, such securities included corporate and governmental debt obligations
of $1,106,386 with contractual or anticipated maturities of one year or less
and $5,791,395 with contractual or anticipated maturities of more than one year
through six years. Actual maturities may differ as a result of sales or early
issuer redemptions.
The amortized cost of securities available for sale as of January 31, 1995
was $7,047,102. The difference between market value and the cost basis as of
that date was $149,321 ($94,072 net of tax), which represented gross unrealized
gains of $6,227 and gross unrealized losses of $155,548. The cost of securities
available for sale that were sold was based on specific identification in
determining realized gains or losses included in the accompanying consolidated
statement of income for fiscal 1995.
NOTE 3--INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or market
and include material, labor and manufacturing overhead. The components of
inventories were as follows:
<TABLE>
<CAPTION>
JANUARY 31,
----------------------
1994 1995
---------- -----------
<S> <C> <C>
Materials and Supplies............................. $4,886,000 $ 7,508,626
Work-in-Progress................................... 472,349 2,475,326
Finished Goods..................................... 1,820,625 2,909,592
---------- -----------
$7,178,974 $12,893,544
========== ===========
</TABLE>
NOTE 4--LONG-TERM DEBT
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
JANUARY 31,
-----------------
1994 1995
-------- --------
<S> <C> <C>
Capital Lease Obligations................................ $625,000 $275,000
Other.................................................... 24,181 20,775
-------- --------
649,181 295,775
Less Current Maturities.................................. 353,406 51,703
-------- --------
$295,775 $244,072
======== ========
</TABLE>
In February 1985, the Company obtained the $2,700,000 of proceeds from
industrial development revenue bonds issued by Rhode Island Industrial
Facilities Corporation. Quarterly principal installments of
26
<PAGE>
ASTRO-MED, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 4--LONG-TERM DEBT--(CONTINUED)
$75,000 to 1995 were due under terms of a capital lease obligation for real
estate and certain machinery and equipment. The final payment was made in
January 1995.
Other real estate and certain equipment are financed under a capital lease
obligation with the Rhode Island Port Authority and Economic Development
Corporation pursuant to an industrial development revenue bond financing
arrangement. Monthly principal installments of $4,167 plus interest at 7 1/2%
are due to 1999. The obligation contains an option to purchase the particular
real estate and machinery and equipment at any time for the amount necessary to
retire the bonds involved. It also contains certain restrictive covenants
including, among other things, minimum working capital and net worth
requirements, and a maximum debt to equity ratio.
The aggregate amounts of long-term debt as of January 31, 1995 scheduled to
mature in each of the succeeding five fiscal years are as follows: $51,703 in
fiscal 1996, 1997, 1998, 1999 and 2000.
NOTE 5--COMMON STOCK
The Company's Board of Directors has authorized the purchase of up to 100,000
shares of the Company's common stock on the open market. As purchased, such
shares will become treasury stock available for general corporate purposes.
The Company maintains the following benefit plans involving the Company's
common stock for eligible employees:
Stock Option Plans: Prior to January 31, 1993, the Company had two incentive
stock option plans and two non-qualified stock option plans under which options
may be granted to officers and key employees. As of January 31, 1993, one of
the incentive stock option plans and one of the non-qualified stock option
plans were no longer in effect. During fiscal 1994, a new incentive stock
option plan was approved by shareholders. Options for an aggregate of 550,000
shares may be granted under the remaining incentive stock option plans at an
option price of not less than fair market value at the date of grant. Options
for an aggregate of 150,000 shares may be granted under the remaining non-
qualified plan at an option price of not less than 50% of fair market value at
the date of grant. Summarized option data for all plans is as follows:
<TABLE>
<CAPTION>
NUMBER OPTION PRICE
OF SHARES PER SHARE
--------- -------------
<S> <C> <C>
Outstanding Options, January 31, 1992............... 469,350 $1.07-$11.25
Options Exercised................................... (234,550) $1.07-$11.25
Options Expired..................................... (375) $3.33
--------
Outstanding Options, January 31, 1993............... 234,425 $3.33-$11.25
Options Granted..................................... 42,000 $13-$14.30
Options Exercised................................... (3,200) $3.33-$5.50
--------
Outstanding Options, January 31, 1994............... 273,225 $3.33-$14.30
Options Granted..................................... 111,500 $10.25-$11.28
Options Exercised................................... (1,125) $3.33-$5.50
Options Expired..................................... (750) $11.25
--------
Outstanding Options, January 31, 1995............... 382,850 $3.33-$14.30
========
</TABLE>
Of the outstanding options at January 31, 1995, 303,750 were exercisable. At
January 31, 1995, options covering 139,250 shares under the remaining incentive
plans and 150,000 shares under the remaining non-qualified plan were available
for future grant.
27
<PAGE>
ASTRO-MED, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 5--COMMON STOCK--(CONTINUED)
Employee Stock Purchase Plan: The Company has an Employee Stock Purchase Plan
allowing eligible employees to purchase shares of common stock at a 10%
discount from fair market value on the date of purchase. A total of 180,000
shares was initially reserved for issuance under the Plan. Summarized Plan
activity is as follows:
<TABLE>
<CAPTION>
YEARS ENDED JANUARY 31,
-------------------------
1993 1994 1995
------- ------- -------
<S> <C> <C> <C>
Shares Reserved, Beginning........................ 124,154 121,646 117,878
Shares Purchased.................................. (2,508) (3,768) (4,316)
------- ------- -------
Shares Reserved, Ending........................... 121,646 117,878 113,562
======= ======= =======
</TABLE>
Employee Stock Ownership Plan: The Company has an Employee Stock Ownership
Plan providing retirement benefits to all eligible employees. Annual
contributions in amounts determined by the Company's Board of Directors are
invested by the Plan's Trustees in shares of common stock of the Company.
Contributions may be in cash or stock. The Company's contributions paid or
accrued amounted to $75,000 annually for fiscal 1993, 1994 and 1995,
respectively.
NOTE 6--INCOME TAXES
The components of the provision for income taxes were as follows:
<TABLE>
<CAPTION>
YEARS ENDED JANUARY 31,
--------------------------------
1993 1994 1995
---------- ---------- --------
<S> <C> <C> <C>
Current:
Federal.................................. $1,385,582 $1,527,029 $764,718
State.................................... 313,205 287,173 112,969
---------- ---------- --------
1,698,787 1,814,202 877,687
---------- ---------- --------
Deferred:
Federal.................................. (7,099) (28,371) (23,962)
State.................................... (1,688) (5,831) (6,725)
---------- ---------- --------
(8,787) (34,202) (30,687)
---------- ---------- --------
$1,690,000 $1,780,000 $847,000
========== ========== ========
</TABLE>
The provision for income taxes differs from the amount computed by applying
the statutory federal income tax rate (34%) to income before income taxes, due
to the following:
<TABLE>
<CAPTION>
YEARS ENDED JANUARY 31,
--------------------------------
1993 1994 1995
---------- ---------- --------
<S> <C> <C> <C>
Income Tax Provision at Statutory Rate.... $1,788,491 $1,618,844 $941,966
State Taxes, Net of Federal Income Tax
Benefits................................. 205,601 185,686 70,121
Foreign Income Tax Credit................. (366,335)
Nontaxable Interest Income................ (93,031)
Other, Net................................ 62,243 (24,530) (72,056)
---------- ---------- --------
$1,690,000 $1,780,000 $847,000
========== ========== ========
</TABLE>
28
<PAGE>
ASTRO-MED, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 6--INCOME TAXES--(CONTINUED)
The principal sources of deferred income taxes and the tax effect of each
were as follows:
<TABLE>
<CAPTION>
YEARS ENDED JANUARY 31,
----------------------------
1993 1994 1995
-------- -------- --------
<S> <C> <C> <C>
Tax Depreciation in Excess of Book Deprecia-
tion........................................ $ 42,185 $ 40,060 $ 15,146
Other, Net................................... (50,972) (74,262) (45,833)
-------- -------- --------
$ (8,787) $(34,202) $(30,687)
======== ======== ========
</TABLE>
Adoption of SFAS No. 109 as of February 1, 1993 did not have a significant
effect on income taxes. The tax effects of temporary differences and
carryforwards which gave rise to significant portions of deferred tax assets
and liabilities in the accompanying consolidated balance sheets were as
follows:
<TABLE>
<CAPTION>
JANUARY 31,
-----------------------
1994 1995
---------- -----------
<S> <C> <C>
Deferred Tax Assets:
Reserves and Accruals Not Yet Deducted for Tax
Purposes........................................ $ 442,753 $ 693,635
Unrealized Foreign Currency Losses............... 44,525 12,662
Net Operating Loss Carryforwards................. 642,525 1,156,466
Other............................................ 57,146 58,929
Valuation Allowance.............................. (642,525) (1,156,466)
---------- -----------
544,424 765,226
Deferred Tax Liabilities:
Accumulated Tax Depreciation in Excess of Book
Depreciation.................................... 1,055,582 726,178
Other............................................ 65,116 110,867
---------- -----------
1,120,698 837,045
---------- -----------
Net Deferred Tax Liabilities....................... $ 576,274 $ 71,819
========== ===========
</TABLE>
The total of deferred tax assets, net of other deferred tax liabilities, is
included in prepaid expenses and other current assets in the accompanying
consolidated balance sheets. The valuation allowance relates to net operating
loss carryforwards ($1,257,000 domestic and 1,372,000 foreign) expiring through
2007, the future tax benefits of which to be realized are uncertain because
they are limited to future annual taxable income of certain subsidiaries. Such
allowance, together with the related asset, increased by $320,566 during fiscal
1994.
NOTE 7--LEASES
There are both capital and operating lease commitments for the Company's
facilities and certain machinery and equipment. Following is an analysis of
assets which have been under capital leases. The January 31, 1995 amounts
include assets which will be removed from lease status and become owned
property in the near future. As previously mentioned in Note 4, the major
capital lease obligation involved was satisfied in January 1995.
<TABLE>
<CAPTION>
JANUARY 31,
---------------------
1994 1995
---------- ----------
<S> <C> <C>
Real Estate........................................... $6,034,219 $6,279,488
Machinery and Equipment............................... 613,355 613,355
---------- ----------
6,647,574 6,892,843
Less Accumulated Amortization......................... 2,134,097 2,380,254
---------- ----------
$4,513,477 $4,512,589
========== ==========
</TABLE>
29
<PAGE>
ASTRO-MED, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 7--LEASES--(CONTINUED)
Minimum lease payments under noncancellable leases at January 31, 1995 were
as follows:
<TABLE>
<CAPTION>
YEAR ENDING CAPITAL OPERATING
JANUARY 31, LEASE LEASES
----------- -------- ---------
<S> <C> <C>
1996..................................................... $ 67,812 $364,377
1997..................................................... 64,063 214,214
1998..................................................... 60,312 98,143
1999..................................................... 56,563 33,360
2000..................................................... 52,813 33,360
2001 and Thereafter...................................... 25,000 30,580
-------- --------
Net Minimum Lease Payments............................... 326,563 $774,034
========
Less Amount Representing Interest........................ 51,563
--------
Present Value of Net Minimum Lease Payments.............. $275,000
========
</TABLE>
Total rental expense for fiscal 1993, 1994 and 1995 was $364,829, $406,547
and $441,097, respectively.
NOTE 8--OPERATIONS
The Company's operations consist of the design, development, manufacture and
sale of specialty data printing systems and consumable printer supplies.
Business is conducted primarily in two major geographic areas: North America
and Europe. All manufacturing activities are conducted in the United States.
Sales and service activities outside North America are conducted primarily
through wholly-owned entities and, to a lesser extent, through authorized
distributors or agents. Transfer prices are intended to produce gross profit
margins commensurate with the sales and service effort associated with the
product sold. Certain information on a geographic basis for fiscal 1994 and
1995 is set forth below.
<TABLE>
<CAPTION>
FISCAL 1994 NORTH AMERICA EUROPE ELIMINATIONS CONSOLIDATED
- - ----------- ------------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Net Sales to Unaffiliated
Customers................ $27,825,362 $ 4,442,454 $32,267,816
Transfers between Geo-
graphic Areas............ 2,919,611 $(2,919,611)
----------- ----------- ----------- -----------
$30,744,973 $ 4,442,454 $(2,919,611) $32,267,816
=========== =========== =========== ===========
Operating Income.......... $ 4,851,438 $ (541,442) $ 2,078 $ 4,312,074
=========== =========== =========== ===========
Identifiable Assets....... $37,167,917 $2,786,597 $39,954,514
=========== =========== ===========
<CAPTION>
FISCAL 1995
- - -----------
<S> <C> <C> <C> <C>
Net Sales to Unaffiliated
Customers................ $33,288,364 $4,944,948 $38,233,312
Transfers between Geo-
graphic Areas............ 3,529,805 $(3,529,805)
----------- ----------- ----------- -----------
$36,818,169 $4,944,948 $(3,529,805) $38,233,312
=========== =========== =========== ===========
Operating Income.......... $ 2,132,219 $ 168,895 $ (136,993) $ 2,164,121
=========== =========== =========== ===========
Identifiable Assets....... $38,861,677 $ 3,315,617 $42,177,294
=========== =========== ===========
</TABLE>
North America sales as shown above include export sales of $2,546,293 in
fiscal 1994 and $4,904,985 in fiscal 1995. Net export sales for fiscal 1993,
including Europe, amounted to $7,896,663.
No single customer accounted for 10% of net sales in fiscal 1993, 1994 or
1995.
30
<PAGE>
ASTRO-MED, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)
NOTE 9--PROFIT-SHARING PLAN
Along with the Employee Stock Ownership Plan described in Note 5, the Company
has a non-contributory Profit-Sharing Plan which provides retirement benefits
to all eligible employees. In addition, the Plan allows participants to defer a
portion of their cash compensation and contribute such deferral to the Plan
through payroll deductions. The Company makes matching contributions up to
specified levels. The deferrals are made within the limits prescribed by
Section 401(k) of the Internal Revenue Code. The Company's subsidiary, Grass
Instrument Co. (see Note 10) also has a non-contributory profit sharing plan.
All contributions are deposited into trust funds. It is the policy of the
Company to fund any contributions accrued. The Company's annual contribution
amounts are determined by the Board of Directors. The Company's contributions
paid or accrued amounted to $125,000 for fiscal 1993 and $135,000 for fiscal
1994 and 1995, respectively.
NOTE 10--ACQUISITION
On August 1, 1994, the Company acquired Grass Instrument Co., a privately
held corporation ("Grass"), and Cannon Manufacturing Company, a privately held
corporation ("Cannon") affiliated with Grass by common ownership. Following a
merger, the combined businesses of Grass and Cannon continue as a wholly-owned
subsidiary of the Company under the name "Grass Instrument Co."
The total consideration paid to the stockholders of Grass and Cannon was
approximately $10,277,000, of which approximately $4,989,000 was paid by Grass
and Cannon from their available funds to repurchase shares from stockholders
prior to the merger and approximately $5,288,000 was paid by the Company. The
Company used approximately $1,888,000 of funds on hand and borrowed $3,400,000
on a short-term basis from a bank. The Company repaid the bank loan prior to
January 31, 1995. Of the $5,288,000 paid by the Company, $500,000 was placed in
escrow for one year to secure claims which may arise from breaches, if any, of
representations and warranties of Grass, Cannon or certain of their former
stockholders. The purchase price for Grass and Cannon was determined by
negotiation.
Grass designs, manufactures and sells neurophysiological instrumentation,
which comprised an expansion of the Company's existing line of products. The
acquisition was accounted for using the purchase method of accounting, and the
results of operations of the acquired business are included in the Company's
consolidated results beginning with the date of the acquisition. Estimates used
to determine an excess of the fair value of assets acquired over cost are
subject to adjustment.
On an unaudited proforma basis, assuming Grass and Cannon had been acquired
on February 1, 1993, the Company's consolidated net sales would have been
$42,265,553 for fiscal 1994 and $43,067,095 for fiscal 1995. The proforma
effect on net income and earnings per share is not material. The proforma
results are not necessarily indicative of future operations or the actual
results that would have occurred had the acquisition been made at the beginning
of fiscal 1994.
31
<PAGE>
ASTRO-MED, INC.
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<TABLE>
<CAPTION>
BALANCE AT PROVISION BALANCE
BEGINNING CHARGED TO AT END
DESCRIPTION OF PERIOD OPERATIONS DEDUCTIONS(2) OF PERIOD
----------- ---------- ---------- ------------- ---------
<S> <C> <C> <C> <C>
Allowance for Doubtful Ac-
counts(1):
Year Ended January 31,
1993........................ $145,000 $ 53,745 $53,745 $145,000
1994........................ 145,000 45,433 45,433 145,000
1995........................ 145,000 103,670 91,670 157,000
</TABLE>
- - --------
(1) The allowance for doubtful accounts has been netted against accounts
receivable as of the respective balance sheet dates.
(2) Uncollectible accounts written off, net of recoveries.
32
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AUDITED
CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1995
<PERIOD-START> FEB-01-1994
<PERIOD-END> JAN-31-1995
<CASH> 1,107,191
<SECURITIES> 6,897,781
<RECEIVABLES> 7,985,393
<ALLOWANCES> 157,000
<INVENTORY> 12,893,544
<CURRENT-ASSETS> 30,923,226
<PP&E> 15,888,684
<DEPRECIATION> 7,254,555
<TOTAL-ASSETS> 42,177,294
<CURRENT-LIABILITIES> 5,435,995
<BONDS> 244,072
<COMMON> 255,913
0
0
<OTHER-SE> 35,024,021
<TOTAL-LIABILITY-AND-EQUITY> 42,177,294
<SALES> 38,233,312
<TOTAL-REVENUES> 38,233,312
<CGS> 21,950,539
<TOTAL-COSTS> 36,069,191
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 159,952
<INCOME-PRETAX> 2,770,489
<INCOME-TAX> 847,000
<INCOME-CONTINUING> 1,923,489
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,923,489
<EPS-PRIMARY> .38
<EPS-DILUTED> .38
</TABLE>
