<PAGE>
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 November 1, 1997
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OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-13200
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Astro-Med, Inc.
- -------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Rhode Island 05-0318215
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
600 East Greenwich Avenue, West Warwick, Rhode Island 02893
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(Address of principal executive offices) (Zip Code)
(401) 828-4000
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(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 the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock, $.05 Par Value - 4,809,904 shares
(excluding treasury shares) as of December 2, 1997
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ASTRO-MED, INC.
INDEX
Page No.
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Part I. Financial Information:
Consolidated Balance Sheets -
January 31, 1997 and November 1, 1997........................ 3
Consolidated Statements of Income -
Three Months Ended November 2, 1996 and November 1, 1997..... 4
Consolidated Statements of Income -
Nine Months Ended November 2, 1996 and November 1, 1997...... 5
Consolidated Statements of Cash Flows -
Nine Months Ended November 2, 1996 and November 1, 1997...... 6
Notes to Consolidated Financial Statements -
November 1, 1997............................................. 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations.......................... 8,9
Part II. Other Information................................... 10
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Part I. FINANCIAL INFORMATION
ASTRO-MED, INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
January 31, November 1,
ASSETS 1997 1997
---- ----
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and Cash Equivalents.................. $ 6,561,184 $ 6,485,277
Securities Available for Sale.............. 7,099,358 7,437,510
Accounts Receivable, Net................... 8,311,736 8,206,339
Inventories................................ 10,361,505 10,199,655
Prepaid Expenses and Other Current Assets.. 1,441,505 1,346,758
----------- -----------
Total Current Assets..................... 33,775,288 33,675,539
PROPERTY, PLANT AND EQUIPMENT 17,046,969 17,957,665
Less Accumulated Depreciation.............. (8,986,149) (10,057,557)
----------- -----------
8,060,820 7,900,108
OTHER ASSETS
Excess of Cost Over Net Assets Acquired.... 976,384 949,159
Other...................................... 508,935 785,668
----------- -----------
1,485,319 1,734,827
----------- -----------
$43,321,427 43,310,474
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable........................... $ 1,614,986 $ 2,495,317
Accrued Compensation....................... 1,115,026 1,163,211
Accrued Expenses........................... 1,318,103 1,283,114
Income Taxes............................... 819,535 360,620
Current Maturities of Long-Term Debt....... 97,706 150,628
----------- -----------
Total Current Liabilities................ 4,965,356 5,452,890
LONG-TERM DEBT, Less Current Maturities...... 258,135 285,873
EXCESS OF NET ASSETS ACQUIRED OVER COST...... 544,199 380,939
DEFERRED INCOME TAXES........................ 794,895 794,895
STOCKHOLDERS' EQUITY
Preferred Stock, $10 Par Value,
Authorized 100,000 Shares, None Issued....
Common Stock, $.05 Par Value, Authorized
13,000,000 Shares, Issued 5,136,737
and 5,139,495 Shares, Respectively........ 256,837 256,975
Additional Paid-In Capital................. 5,624,239 5,642,368
Retained Earnings.......................... 32,772,044 33,451,461
Treasury Stock, at Cost (209,395 Shares
and 329,895 Shares, Respectively)......... (1,804,986) (2,851,695)
Cumulative Translation Adjustment.......... (76,649) (102,561)
Net Unrealized (Loss) on Securities
Available for Sale........................ (12,643) (671)
----------- -----------
36,758,842 36,395,877
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$43,321,427 $43,310,474
=========== ===========
</TABLE>
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ASTRO-MED, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended
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November 2, November 1,
1996 1997
---- ----
<S> <C> <C>
Net Sales.................................... $11,110,514 $11,344,294
Cost of Sales................................. 6,572,197 6,857,626
----------- -----------
Gross Profit.................................. 4,538,317 4,486,668
Costs and Expenses:
Selling, General and Administrative.......... 3,017,702 3,383,091
Research and Development..................... 643,092 668,924
----------- -----------
3,660,794 4,052,015
Operating Income.............................. 877,523 434,653
Other Income (Expense):
Investment Income............................ 157,489 211,241
Interest Expense............................. (3,349) (7,546)
Other, Net................................... 41,665 84,040
----------- -----------
195,805 287,735
----------- -----------
Income before Income Taxes.................... 1,073,328 722,388
Provision for Income Taxes.................... 389,620 223,945
----------- -----------
Net Income.................................... $ 683,708 $ 498,443
=========== ===========
Earnings Per Common Share..................... $.14 $.10
==== ====
Weighted Average Number of Common and Common
Equivalent Shares Outstanding................ 5,014,191 4,896,071
========== ===========
Dividends Declared Per Common Share........... $.03 $.04
==== ====
</TABLE>
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ASTRO-MED, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Nine Months Ended
-----------------
November 2, November 1,
1996 1997
---- ----
<S> <C> <C>
Net Sales.................................... $32,779,109 $33,727,329
Cost of Sales................................ 19,879,552 20,735,370
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Gross Profit................................. 12,899,557 12,991,959
Costs and Expenses:
Selling, General and Administrative......... 9,500,079 9,772,735
Research and Development.................... 1,846,599 2,075,620
----------- -----------
11,346,678 11,848,355
Operating Income............................. 1,552,879 1,143,604
Other Income (Expense):
Investment Income........................... 828,197 606,159
Interest Expense............................ (15,366) (20,840)
Other, Net.................................. 81,200 (4,440)
----------- -----------
894,031 580,879
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Income before Income Taxes................... 2,446,910 1,724,483
Provision for Income Taxes................... 733,620 510,000
----------- -----------
Net Income .................................. $ 1,713,290 $ 1,214,483
=========== ===========
Earnings Per Common Share.................... $.34 $.25
==== ====
Weighted Average Number of Common and Common
Equivalent Shares Outstanding............... 5,025,371 4,919,601
=========== ===========
Dividends Declared Per Common Share.......... $.09 $.12
==== ====
</TABLE>
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<PAGE>
ASTRO-MED, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
-----------------
November 2, November 1,
1996 1997
---- ----
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income...................................... $1 ,713,290 $ 1,214,483
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Depreciation and Amortization................. 703,175 935,373
Gain on Sale of Investment.................... (416,090)
Other......................................... (13,940)
Changes in Assets and Liabilities:
Accounts Receivable......................... 60,389 105,397
Inventories................................. 904,664 161,850
Other....................................... (95,881) (284,263)
Accounts Payable and Accrued Expenses....... 535,791 893,529
Income Taxes................................ 639,613 (458,915)
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Total Adjustments........................ 2,331,661 1,339,031
Net Cash Provided by
Operating Activities.......................... 4,044,951 2,553,514
Cash Flows from Investing Activities:
Proceeds from Sales of Securities
Available for Sale............................. 1,487,684 2,335,200
Purchases of Securities Available
for Sale....................................... (282,669) (2,571,075)
Proceeds from Sale of Building.................. 515,935
Additions to Property, Plant and Equipment...... (649,455) (710,696)
----------- -----------
Net Cash Provided by
Investing Activities.......................... 1,071,495 (946,571)
Cash Flows from Financing Activities:
Payments of Long-Term Debt...................... (50,000) (119,339)
Proceeds from Common Shares Issued
Under Employee Benefit Plans................... 62,084 18,267
Purchases of Treasury Stock..................... (565,942) (1,046,709)
Dividends Paid.................................. (457,359) (535,069)
----------- -----------
Net Cash (Used) by Financing Activities........ (1,011,217) (1,682,850)
Net Increase in Cash and Cash
Equivalents..................................... 4,105,229 (75,907)
Cash and Cash Equivalents, Beginning of Period...... 2,033,713 6,561,184
----------- -----------
Cash and Cash Equivalents, End of Period............ $ 6,138,942 $ 6,485,277
=========== ===========
Supplemental Disclosures of Cash Flow
Information:
Cash Paid During the Period for:
Interest...................................... $ 24,477 $ 25,061
Income Taxes.................................. $ 69,855 $ 751,437
Other Non-Cash Transactions:
Acquisition of Leased Equipment............... $ 200,000
</TABLE>
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<PAGE>
ASTRO-MED, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
November 1, 1997
Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) The accompanying financial statements have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission, and reflect all adjustments which, in the opinion of
management, are necessary for a fair statement of the results of the interim
periods presented. These financial statements do not include all disclosures
associated with annual financial statements and, accordingly, should be read in
conjunction with footnotes contained in the Company's annual report on Form 10-K
for the year ended January 31, 1997.
(b) Earnings per common share are computed based on the weighted average
number of common shares and common share equivalents outstanding during each
period. Common share equivalents include the dilutive effect of certain stock
options under the treasury stock method. Fully diluted earnings per share have
not been separately presented since they would not be materially different.
In February, 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard (SFAS) No. 128, Earnings Per Share,
which supercedes APB Opinion 15. The Statement's objective is to simplify and
harmonize the computation of earnings per share and to make the U.S. standard
for computing earnings per share more compatible with the EPS standards of other
countries and with that of the International Accounting Standards Committee. As
required by SFAS No. 128, the Company will adopt this statement for the fiscal
year ending January 31, 1998.
Pro-Forma basic and diluted earnings per share had the Company adopted
SFAS No. 128 for the third quarter of fiscal year 1997 would have been $.14.
Pro-Forma basic and diluted earnings per share had the Company adopted SFAS No.
128 for the nine month period of fiscal year 1997 would have been $.34.
Pro-Forma basic and diluted earnings per share had the Company adopted
SFAS No. 128 for the third quarter of fiscal year 1998 would have been $.10.
Pro-Forma basic and diluted earnings per share had the Company adopted SFAS No.
128 for the nine month period of fiscal year 1998 would have been $.25.
Note 2 - 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, November 1,
1997 1997
---- ----
<S> <C> <C>
Materials and Supplies.. $ 5,558,216 $ 5,449,024
Work-In-Process......... 779,337 1,069,655
Finished Goods.......... 4,023,952 3,680,976
----------- -----------
$10,361,505 $10,199,655
=========== ===========
</TABLE>
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<PAGE>
ASTRO-MED, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations:
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Sales in the 3rd quarter of $11,344,000 increased 2% over last year's 3rd
quarter. The increase was confined to our domestic channels which saw volume
growth of 10% over the prior year's 3rd quarter sales. International sales
showed mixed results with sales volume from our European and Canadian branches
up 2% over last year, while sales volume from our export channels were behind
last year by 42%. The lower sales volume from the export channel is traceable
primarily to soft demand in the Asian and Pacific Rim markets.
Product line performance reflects 9% sales growth in the QLS [Quick Label
Systems] division which includes the CQL-4 Color Printer, and 15% sales growth
in the Grass Instrument Products division, driven primarily by the Heritage
digital EEG and PSG Systems sales. Sales volume in the Core Products line was
down 7% from last year's 3rd quarter level.
After nine months, current fiscal year sales of $33,727,000 are ahead of
last year by 3%. Domestic sales are up 10% while international sales are down
15% from the prior year's nine month volume.
Gross profit was $4,487,000 in the 3rd quarter or a 40% margin. The result
was below last year's 3rd quarter margin of 41% due to a combination of product
mix and factory related expenses. After nine months, gross profit of $12,992,000
is virtually flat with last year and gross profit margins at 39% are comparable
to last year's level of 39%.
Operating expenses were $4,052,000 during the 3rd quarter, an increase of
11% over last year's 3rd quarter. The increase reflects the investment the
Company continues to make in expanding its field sales personnel as well as its
commitment to new product development through R & D funding.
After nine months, operating expenses are $11,848,000, higher by 4% over the
prior year's nine month result. This year's spending has selling & marketing up
7%, R & D up 12% and G & A down 9% from last year's results.
Other income, net, for the 3rd quarter was $288,000, a 47% increase over
last year's 3rd quarter. The improvement stems from additional interest and
dividend income as well as gains related to foreign currency valuations. On a
year to date basis, other income, net, is $581,000 as compared to last year's
$894,000. The primary reason for the difference is a $416,000 gain realized on
the sale of a partnership interest during the 1st quarter of the prior fiscal
year.
Income taxes for the 3rd quarter were at a rate of 31% as compared to last
year's 36% rate in the 3rd quarter. For the nine month period, this year's
provision for income taxes was 30% and matched last year's rate.
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Financial Condition:
- -------------------
On the Balance Sheet total assets of $43,310,000 are flat with the previous
fiscal year-end. During the nine months, Cash and marketable securities have
risen by $262,000 to $13,923,000. Working capital levels excluding cash and
marketable securities declined 6% to $14,300,000, while the Company's current
ratio remained strong at 6.2 to 1.
Capital expenditures this year are $711,000 and are mostly related to
investments in machinery and equipment, building renovations and information
technology improvements.
During the 3rd quarter the Company purchased an additional 43,000 shares of
common stock under its Stock Repurchase Plan. To date, the Company has
purchased 126,000 shares of treasury stock at an aggregate cost of $1,047,000.
The Shareholders' Equity investment rose nominally from the 2nd quarter to
$36,396,000 at quarter's end resulting in a book value of $7.43 per share.
Safe Harbor Statement:
- ---------------------
Statements which are not historical facts including statements about our
expectations on new and existing products and opportunities, market growth,
demand and acceptance of new and existing products are forward looking
statements that involve risks and uncertainties. Those uncertainties include
but are not limited to product demand and market acceptance risks; the impact of
competitive products and pricing; delays or difficulties in developing,
producing, testing and selling new products and technologies; capacity and
supply constraints or difficulties; trade, legal, social and economic risks such
as licensing, and trade restrictions, including those affecting international
trade; and other risk factors listed from time to time in the Company's SEC
reports including but not limited to the report on Form 10-Q for the quarter
ended November 1, 1997.
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<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
None.
(b) Reports on Form 8-K:
No reports on Form 8-K have been filed during the quarter for which
this report is filed.
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.
ASTRO-MED, INC.
(Registrant)
Date: December 2, 1997 By /s/ A. W. Ondis
-----------------------------
A. W. Ondis, Chairman
(Principal Executive Officer)
Date: December 2, 1997 By /s/ Joseph P. O'Connell
-----------------------------
Joseph P. O'Connell, Vice
President and Treasurer
(Principal Financial Officer)
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-START> AUG-3-1997
<PERIOD-END> NOV-1-1997
<CASH> 6,485,277
<SECURITIES> 7,437,510
<RECEIVABLES> 8,206,339
<ALLOWANCES> 0
<INVENTORY> 10,199,655
<CURRENT-ASSETS> 33,675,539
<PP&E> 17,957,665
<DEPRECIATION> 10,057,557
<TOTAL-ASSETS> 43,310,474
<CURRENT-LIABILITIES> 5,452,890
<BONDS> 285,873
0
0
<COMMON> 256,975
<OTHER-SE> 36,138,902
<TOTAL-LIABILITY-AND-EQUITY> 43,310,474
<SALES> 11,344,294
<TOTAL-REVENUES> 11,344,294
<CGS> 6,857,626
<TOTAL-COSTS> 6,857,626
<OTHER-EXPENSES> 4,052,015
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,546
<INCOME-PRETAX> 722,388
<INCOME-TAX> 223,945
<INCOME-CONTINUING> 498,443
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 498,443
<EPS-PRIMARY> .10
<EPS-DILUTED> .10
</TABLE>
