<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 May 2, 1998
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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.
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(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 .
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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 - 4,757,354 shares
(excluding treasury shares) as of May 30,1998
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ASTRO-MED, INC.
INDEX
<TABLE>
<CAPTION>
Page No.
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Part I. Financial Information:
<S> <C>
Consolidated Balance Sheets -
January 31, 1998 and May 2, 1998. ........................ 3
Consolidated Statements of Income -
Three Months Ended May 3, 1997 and May 2, 1998............ 4
Consolidated Statements of Cash Flows -
Three Months Ended May 3, 1997 and May 2, 1998............ 5
Notes to Consolidated Financial Statements -
May 2, 1998............................................... 6,7
Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 8,9
Part II. Other Information.................................. 10
</TABLE>
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<PAGE>
Part I. FINANCIAL INFORMATION
ASTRO-MED, INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
January 31, May 2,
ASSETS 1998 1998
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(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and Cash Equivalents...................... $ 5,659,552 $ 5,504,771
Securities Available for Sale.................. 7,472,693 7,518,610
Accounts Receivable, Net....................... 7,828,064 7,397,735
Inventories.................................... 10,341,856 10,717,883
Prepaid Expenses and Other Current Assets...... 1,561,313 1,790,036
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Total Current Assets......................... 32,863,478 32,929,035
PROPERTY, PLANT AND EQUIPMENT 18,056,693 18,241,180
Less Accumulated Depreciation.................. (10,155,952) (10,513,570)
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7,900,741 7,727,610
OTHER ASSETS
Excess of Cost Over Net Assets Acquired........ 940,084 931,009
Amounts Due from Officers...................... 453,264 453,264
Other.......................................... 656,147 656,126
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2,049,495 2,040,399
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$42,813,714 $42,697,044
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable............................... $ 2,267,722 $ 2,403,226
Accrued Compensation........................... 1,221,662 1,320,561
Accrued Expenses............................... 1,470,849 1,570,787
Income Taxes................................... 614,631 568,654
Current Maturities of Long-Term Debt........... 177,774 177,774
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Total Current Liabilities.................... 5,752,638 6,041,002
LONG-TERM DEBT, Less Current Maturities......... 227,998 171,793
EXCESS OF NET ASSETS ACQUIRED OVER COST......... 326,519 272,099
DEFERRED INCOME TAXES........................... 747,560 747,560
SHAREHOLDERS' EQUITY
Preferred Stock, $10 Par Value,
Authorized 100,000 Shares, None Issued........
Common Stock, $.05 Par Value, Authorized
13,000,000 Shares, Issued 5,140,448
and 5,141,249 Shares, Respectively............ 257,023 257,062
Additional Paid-In Capital..................... 5,649,101 5,654,568
Retained Earnings.............................. 33,085,917 32,790,389
Treasury Stock, at Cost (355,895 Shares
and 383,895 Shares, Respectively)............. (3,062,945) (3,102,945)
Accumulated Other Comprehensive Income (Loss).. (170,097) (134,484)
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35,758,999 35,464,590
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$42,813,714 $42,697,044
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</TABLE>
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ASTRO-MED, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended
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May 3, May 2,
1997 1998
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<S> <C> <C>
Net Sales.................................................. $11,706,507 $10,056,440
Cost of Sales.............................................. 7,202,596 6,180,833
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Gross Profit............................................... 4,503,911 3,875,607
Costs and Expenses:
Selling, General and Administrative....................... 3,139,098 3,507,636
Research and Development.................................. 709,328 757,964
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3,848,426 4,265,600
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Operating Income (Loss).................................... 655,485 (389,992)
Other Income (Expense):
Investment Income......................................... 194,199 208,804
Interest Expense.......................................... (3,239) (6,143)
Other, Net................................................ (24,018) 46,523
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166,942 249,184
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Income (Loss) before Income Taxes.......................... 822,427 (140,808)
Provision (Benefit) for Income Taxes....................... (244,055) 37,000
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Net Income (Loss).......................................... $ 578,372 $ (103,808)
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Earnings (Loss) Per Common Share-basic..................... $.12 $(.02)
==== =====
Earnings (Loss) Per Common Share-diluted................... $.12 $(.02)
==== =====
Weighted Average Number of Common and Common
Equivalent Shares Outstanding-basic....................... 4,917,691 4,780,634
========= =========
Weighted Average Number of Common and Common
Equivalent Shares Oustanding-diluted...................... 4,964,505 4,780,634
========= =========
Dividends Declared Per Common Share........................ $.04 $.04
==== ====
</TABLE>
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<PAGE>
ASTRO-MED, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
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May 3, May 2,
1997 1998
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<S> <C> <C>
Cash Flows from Operating Activities:
Net Income (Loss)................................. $ 578,372 $ (103,808)
Adjustments to Reconcile Net Income (Loss) to
Net Cash Provided by Operating Activities:
Depreciation and Amortization.............. 310,573 312,273
Other...................................... (72,785) 35,634
Changes in Assets and Liabilities:
Accounts Receivable..................... 613,665 430,329
Inventories............................. (30,894) (376,027)
Other................................... (493,749) (228,723)
Accounts Payable and Accrued Expenses... 264,713 334,341
Income Taxes............................ 118,415 (45,977)
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Total Adjustments..................... 472,150 113,943
Net Cash Provided by
Operating Activities.......................... 1,288,310 358,042
Cash Flows from Investing Activities:
Proceeds from Sales of Securities
Available for Sale.............................. 378,326 1,417,000
Purchases of Securities Available
for Sale........................................ (464,862) (1,462,917)
Additions to Property, Plant and Equipment........ (121,076) (184,487)
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Net Cash Used by
Investing Activities.......................... (207,612) (230,404)
Cash Flows from Financing Activities:
Principle Payments on Capital Leases.............. (29,275) (56,205)
Proceeds from Common Shares Issued
Under Employee Benefit Plans.................... 6,875 5,467
Purchases of Treasury Stock....................... (313,835) (39,961)
Dividends Paid.................................... (147,829) (191,720)
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Net Cash Used by Financing Activities (484,064) (282,419)
Net Increase (Decrease) in Cash and
Cash Equivalents............................... 596,634 (154,781)
Cash and Cash Equivalents, Beginning of Period...... 6,561,184 5,659,552
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Cash and Cash Equivalents, End of Period............ $7,157,818 $5,504,771
========== ==========
Supplemental Disclosures of Cash Flow
Information:
Cash Paid During the Period for:
Interest..................................... $ 7,099 $ 8,956
Income Taxes................................. $ 33,456 $ 5,675
</TABLE>
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<PAGE>
ASTRO-MED, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 2, 1998
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, 1998.
(b) Earnings per common share have been computed and presented pursuant to
the provisions of Statement of Financial Accounting Standards No. 128, Earnings
Per Share, which was adopted in fiscal 1998. Net income per share is based on
the weighted average number of shares outstanding during the period. Net income
per share assuming dilution is based on the weighted average number of shares
and common equivalent shares for stock options outstanding during the period.
<TABLE>
<CAPTION>
Three Months Ended
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May 3, May 2,
1997 1998
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<S> <C> <C>
Weighted Average Common Shares
Outstanding-basic............................ 4,917,691 4,780,634
Diluted Effect of Options Outstanding......... 46,814 38,404
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Weighted Average Common Shares
Outstanding-diluted.......................... 4,964,505 4,819,038
========= =========
</TABLE>
Note 2 - CHANGE IN ACCOUNTING PRINCIPLES
Effective February 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income". This statement
requires presentation of the components of comprehensive income, including the
changes in equity from non-owner sources such as unrealized gains (losses) on
securities and foreign currency translation adjustments. The Company's total
comprehensive income is as follows.
<TABLE>
<CAPTION>
Three Months Ended
---------------------
May 3, May 2,
1997 1998
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<S> <C> <C>
Comprehensive Income:
Net Income (Loss).......................... $578,372 $(103,808)
Other Comprehensive Income (Loss):
Foreign currency translation adjustments.. (55,098) 58,408
Unrealized gain(loss) on securities....... (17,687) (22,795)
-------- --------
Comprehensive Income (Loss)................ $505,587 $ (68,195)
======== =========
</TABLE>
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<PAGE>
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, May 2,
1998 1998
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<S> <C> <C>
Materials and Supplies.. $ 5,620,041 $ 5,856,244
Work-In-Process......... 993,149 1,007,122
Finished Goods.......... 3,728,666 3,854,517
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$10,341,856 $10,717,883
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</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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Net Sales were $10,056,000 in the first quarter, down from sales of
$11,707,000 in the first quarter of the prior year. The Company continues to
weather the negative effects of various market and financial adversities. These
include consolidation in the aerospace and defense industries, dysfunction in
the Asian markets, and a stronger dollar in the European markets. The effect of
these conditions is especially conspicuous in the Test and Measurement (T&M)
group where 1st quarter sales of $4,392,000 were 29% below last year's 1st
quarter. Our other two product groups, QuickLabel Systems (QLS) and Grass
Instruments (Grass) continued their growth profile with 1st quarter sales of
$3,322,000 and $2,342,000 respectively. These sales volumes represent increases
over the prior year's 1st quarter of 1 % and 5%, respectively.
Gross Profit dollars were $3,876,000 during the first quarter with a
corresponding margin of 39%. Notwithstanding the change in product mix in this
quarter's sales (i.e., higher percentage of QLS & Grass products) from last
year's 1st quarter sales, this quarter's gross profit margin matched last year's
result of 39%.
Operating expenses in the 1st quarter were $4,266,000 reflecting an 11%
increase over last year's 1st quarter. The increment was due to personnel
additions in field selling, research & development, and information technology,
as well as marketing expenses related to advertising and trade shows.
Other Income rose 49% to $249,000 as an outgrowth of increases in interest
and dividend income, and gains realized on foreign currency translations.
Net loss after taxes in the quarter was $104,000. This reflects a loss of 2
cents per share on a fully diluted basis as compared to the prior year's 1st
quarter net income of $578,000 or 12 cents per share on a fully diluted basis.
Financial Condition:
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Total assets at the end of the first quarter were $42,697,000, nominally
lower than the prior fiscal year end asset balance of $42,814,000.
Cash and investments in marketable securities decreased 1% to $13,023,000 at
the end of the quarter from the previous year end balance of $13,132,000.
Working capital level at $26,888,000 was 1% lower than the year end working
capital balance of $27,111,000. The Company's current ratio at quarter's end
was 5.5 : 1 against a year end current ratio of 5.7 : 1. Capital expenditures
during the quarter reached $184,000 as the Company continues its investment in
information technology as well as additional manufacturing test equipment.
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<PAGE>
In accordance with its Common Stock Repurchase Plan, the Company purchased
28,000 shares of its common stock during the quarter. Currently, the Company is
authorized to acquire another 373,676 shares of its common stock. During the
quarter, the Company paid cash dividends of 4 cents per common share to
shareholders of record on March 27th. Shareholders' Equity declined 1% to
$35,465,000 at quarter's end.
Safe Harbor Statement
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This document contains forward-looking statements based on current
expectations that involve a number of risks and uncertainties. The factors that
could cause actual results to differ materially include the following: general
economic conditions and growth rates in the data acquisition, digital color
printing, and neurophysiology markets, including but not limited to the
electronic, printing, and medical markets; competitive factors and pricing
pressures; changes in product mix; changes in the seasonality of demand
patterns; the timely development and acceptance of new products; inventory risks
due to shifts in market demand; component constraints and shortages; risk of
non-payment of accounts receivable; ramp up and expansion of manufacturing
capacity; and the risks described from time to time in Astro-Med's reports filed
with the Securities and Exchange Commission.
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<PAGE>
PART II. OTHER INFORMATION
Item 4. Results of Votes of Security Holders
An Annual Meeting of Shareholders of the registrant was held May 19, 1998.
A proposed 1998 Non-qualified Stock Option Plan and a proposed increase in the
maximum shares under the 1997 Incentive Stock Option Plan were presented to the
shareholders for their approval. Also, shareholders were asked to elect a Board
of Directors to serve until the next Annual Meeting of Shareholders or until
their successors are elected and qualified.
The Company's 1998 Non-Qualified Stock Option Plan was approved by the
following vote: For--2,763,945; Against--735,471; Abstain--18,565.
The Company's proposed increase in the maximum shares under the 1997
Incentive Stock Option Plan was approved by the following vote:
For--2,741,201; Against--558,202; Abstain--14,425
In an uncontested election, nominees for directors were elected by the
following votes:
<TABLE>
<CAPTION>
Name of Nominee Votes Votes
for Director For Withheld
- ------------------------ --------- --------
<S> <C> <C>
Albert W. Ondis 4,357,492 22,832
Everett V. Pizzuti 4,357,492 22,832
Jacques V. Hopkins 4,359,022 21,302
Hermann Viets 4,359,022 21,302
Neil K. Robertson 4,353,935 26,389
</TABLE>
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: June 9, 1998 By ____________________________
A. W. Ondis, Chairman
(Principal Executive Officer)
Date: June 9, 1998 By ____________________________
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-31-1999
<PERIOD-START> FEB-01-1998
<PERIOD-END> MAY-02-1998
<CASH> 5,504,771
<SECURITIES> 7,518,610
<RECEIVABLES> 7,397,735
<ALLOWANCES> 0
<INVENTORY> 10,717,883
<CURRENT-ASSETS> 32,929,035
<PP&E> 18,241,180
<DEPRECIATION> 10,513,570
<TOTAL-ASSETS> 42,697,044
<CURRENT-LIABILITIES> 6,041,002
<BONDS> 171,793
0
0
<COMMON> 257,062
<OTHER-SE> 35,207,528
<TOTAL-LIABILITY-AND-EQUITY> 42,697,044
<SALES> 10,056,440
<TOTAL-REVENUES> 10,056,440
<CGS> 6,180,833
<TOTAL-COSTS> 6,180,833
<OTHER-EXPENSES> 4,265,600
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,143
<INCOME-PRETAX> (140,808)
<INCOME-TAX> (37,000)
<INCOME-CONTINUING> (103,808)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (103,808)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
