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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 JULY 29, 2000
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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)
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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 - 4,428,821 shares
(excluding treasury shares) as of September 5, 2000
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ASTRO-MED, INC.
INDEX
PAGE NO.
Part I. Financial Information:
Consolidated Balance Sheets -
January 31, 2000 and July 29, 2000........................ 3
Consolidated Statements of Income -
Three Months Ended July 31, 1999 and July 29, 2000 ....... 4
Consolidated Statements of Income -
Six Months Ended July 31, 1999 and July 29, 2000 ......... 5
Consolidated Statements of Cash Flows -
Six Months Ended July 31, 1999 and July 29, 2000 ......... 6
Notes to Consolidated Financial Statements -
July 29, 2000............................................. 7,8
Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 9-11
Part II. Other Information................................... 12
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Part I. FINANCIAL INFORMATION
ASTRO-MED, INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
JANUARY 31, JULY 29,
ASSETS 2000 2000
---- ----
(Unaudited)
CURRENT ASSETS
Cash and Cash Equivalents................... $ 4,035,867 $ 2,294,610
Securities Available for Sale............... 7,211,921 6,199,442
Accounts Receivable, Net.................... 9,270,814 10,264,957
Inventories................................. 11,537,478 11,602,574
Prepaid Expenses and Other Current Assets... 1,926,111 1,894,947
----------- -----------
Total Current Assets................... 33,982,191 $32,256,530
PROPERTY, PLANT AND EQUIPMENT 20,089,355 20,426,627
Less Accumulated Depreciation............... (12,577,878) (13,179,859)
----------- -----------
7,511,477 7,246,768
OTHER ASSETS
Excess of Cost Over Net Assets Acquired..... 3,153,371 2,860,669
Amounts Due from Officers................... 480,314 480,314
Other....................................... 257,178 146,728
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3,890,863 3,487,711
----------- -----------
$45,384,531 $42,991,009
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable............................ $ 6,379,792 $ 4,672,886
Accrued Compensation........................ 1,710,622 1,521,144
Accrued Expenses............................ 2,324,593 1,971,261
Income Taxes................................ 1,169,234 1,028,517
Current Maturities of Long-Term Debt........ 60,452 56,164
----------- ----------
Total Current Liabilities.............. 11,644,693 9,249,972
LONG-TERM DEBT, Less Current Maturities....... 71,588 38,132
DEFERRED INCOME TAXES......................... 447,666 388,769
SHAREHOLDERS' EQUITY
Preferred Stock, $10 Par Value,
Authorized 100,000 Shares, None Issued....
Common Stock, $.05 Par Value, Authorized
13,000,000 Shares, Issued 5,148,035
and 5,157,663 Shares, Respectively........ 257,402 257,883
Additional Paid-In Capital.................. 5,647,791 5,695,423
Retained Earnings........................... 33,065,454 33,137,437
Treasury Stock, at Cost (729,295 Shares).... (5,268,103) (5,268,103)
Accumulated Other Comprehensive
Income (Loss)............................. (481,960) (508,504)
----------- -----------
33,220,584 33,314,136
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$45,384,531 $42,991,009
=========== ===========
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ASTRO-MED, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED
JULY 31, JULY 29,
1999 2000
---- ----
Net Sales.................................... $11,084,681 $13,219,471
Cost of Sales................................ 6,518,432 7,816,885
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Gross Profit................................. 4,566,249 5,402,586
Costs and Expenses:
Selling, General and Administrative........ 3,575,366 3,998,476
Research and Development................... 792,830 1 142,544
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4,368,196 5,141,020
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Operating Income............................. 198,053 261,566
Other Income (Expense):
Investment Income.......................... 174,778 111,064
Interest Income (Expense).................. (3,481) 3,287
Other, Net................................. (7,821) (18,853)
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163,476 95,498
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Income before Income Taxes..................... 361,529 357,064
Provision for Income Taxes.................. 91,000 89,266
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Net Income................................... $ 270,529 $ 267,798
=========== ===========
Earnings Per Common Share-basic.............. $ .06 $ .06
==== =====
Earnings Per Common Share-diluted............ $ .06 $ .06
==== =====
Weighted Average Number of Common and Common
Equivalent Shares Outstanding-basic........ 4,433,858 4,425,039
========= =========
Weighted Average Number of Common and Common
Equivalent Shares Oustanding-diluted....... 4,497,357 4,458,497
========= =========
Dividends Declared Per Common Share.......... $.04 $.04
==== ====
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ASTRO-MED, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
SIX MONTHS ENDED
JULY 31, JULY 29,
1999 2000
---- ----
Net Sales.................................... $21,461,938 $25,593,672
Cost of Sales................................ 12,840,942 15,021,163
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Gross Profit................................. 8,620,996 10,572,509
Costs and Expenses:
Selling, General and Administrative........ 7,263,416 7,905,553
Research and Development................... 1,673,839 2,235,634
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8,937,255 10,141,187
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Operating Income (Loss)...................... (316,259) 431,322
Other Income (Expense):
Investment Income.......................... 346,267 230,480
Interest Expense........................... (7,573) (2,198)
Other, Net................................. 22,435 (90,899)
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316,259 137,383
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Income before Income Taxes................... 0 568,705
Provision for Income Taxes................... 0 (143,047)
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Net Income................................... $ 0 $ 425,658
=========== ===========
Earnings Per Common Share-basic.............. $ .00 $ .10
==== =====
Earnings Per Common Share-diluted............ $ .00 $ .10
==== =====
Weighted Average Number of Common and Common
Equivalent Shares Outstanding-basic........ 4,454,251 4,422,043
========= =========
Weighted Average Number of Common and Common
Equivalent Shares Oustanding-diluted....... 4,488,747 4,468,492
========= =========
Dividends Declared Per Common Share.......... $.08 $.08
==== ====
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ASTRO-MED, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED
JULY 31, JULY 29,
1999 2000
---- ----
Cash Flows from Operating Activities:
Net Income................................... $ 0 $ 425,658
Adjustments to Reconcile Net Income to
Net Cash Used by Operating Activities:
Depreciation and Amortization............ 724,685 669,320
Gain on Sale of Assets................... 3,912 --
Other.................................... (65,304) --
Changes in Assets and Liabilities:
Accounts Receivable.................... (474,706) (994,142)
Inventories............................ (229,387) (65,096)
Other.................................. 136,825 22,231
Accounts Payable and Accrued Expenses.. (432,562) (2,086,099)
Income Taxes........................... (76,760) (211,113)
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Total Adjustments.................... (413,297) (2,664,899)
Net Cash Used by
Operating Activities................... (413,297) (2,239,241)
Cash Flows from Investing Activities:
Proceeds from Sales of Securities
Available for Sale......................... 2,616,150 2,726,901
Purchases of Securities Available
for Sale................................... (2,772,170) (1,714,423)
Proceeds from Sales of Assets................ 2,800 --
Refund of Purchase Price for Acquisition..... 225,000
Additions to Property, Plant and Equipment... (742,439) (396,186)
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Net Cash Provided (Used) by
Investing Activities..................... (895,659) 841,292
Cash Flows from Financing Activities:
Principle Payments on Capital Leases......... (86,788) (37,744)
Proceeds from Common Shares Issued
Under Employee Benefit Plans............... 9,331 48,120
Purchases of Treasury Stock.................. (404,001) --
Dividends Paid............................... (358,571) (353,682)
---------- ----------
Net Cash Used by Financing Activities...... (840,029) (343,306)
Net Decrease in Cash and Cash Equivalents........ (2,148,985) (1,741,255)
Cash and Cash Equivalents, Beginning of Period... 4,946,289 4,035,867
---------- ----------
Cash Equivalents, End of Period.............. $2,797,304 $2,294,610
========== ==========
Supplemental Disclosures of Cash Flow
Information:
Cash Paid During the Period for:
Interest................................. $ 7,260 $ 2,250
Income Taxes............................. $ 45,830 $ 232,823
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ASTRO-MED, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 29, 2000
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, 2000.
(b) Earnings per common share has 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 basic
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, if dilutive, common equivalent shares for stock options
outstanding during the period.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JULY 31, JULY 29, JULY 31, JULY 29,
1999 2000 1999 2000
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted Average Common Shares
Outstanding-basic ...................... 4,433,858 4,425,039 4,454,251 4,422,043
Diluted Effect of Options Outstanding...... 63,499 33,458 34,496 46,449
--------- --------- --------- ---------
Weighted Average Common Shares
Outstanding - diluted.................... 4,497,357 4,458,497 4,488,747 4,468,492
========= ========= ========= =========
</TABLE>
For the three month's ended July 31, 1999 and July 29, 2000, respectively, the
diluted per share amounts do not reflect options outstanding of 636,500 and
1,000,875, respectively because their effect is anti-dilutive.
For the six month's ended July 31, 1999 and July 29, 2000, respectively, the
diluted per share amounts do not reflect options outstanding of 650,500 and
997,875, respectively because their effect is anti-dilutive.
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.
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Note 2 - CHANGE IN ACCOUNTING PRINCIPLES (continued)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JULY 31, JULY 29, JULY 31, JULY 29,
1999 2000 1999 2000
---- ---- ---- ----
<S> <C> <C> <C> <C>
Comprehensive Income:
Net Income............................ $270,529 $267,798 $ 0 $425,658
-------- -------- --------- --------
Other Comprehensive Income (Loss):
Foreign currency translation
adjustments, net of tax....... 64,354 (60,679) (23,663) (73,092)
Unrealized gain (loss)
in securities:
Unrealized holding gain (loss)
arising during the period,
net of tax................... (99,514) 11,446 (159,577) 46,548
Reclassification adjustment
for gain (loss) included in
net income, net of tax....... -- -- -- (1,875)
-------- -------- --------- --------
Other Comprehensive Income (Loss)..... (35,160) (49,233) (183,240) (28,419)
Comprehensive Income (Loss) .......... $235,369 $218,565 $(183,240) $397,239
======== ======== ========= ========
</TABLE>
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:
JANUARY 31, JULY 29,
2000 2000
---- ----
Materials and Supplies... $ 5,835,050 $ 5,956,072
Work-In-Process.......... 1,557,734 1,470,664
Finished Goods........... 4,144,694 4,175,838
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$11,537,478 $11,602,574
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ASTRO-MED, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
Astro-Med's sales in the quarter were $13,219,000, a 19% increase from
the 2nd quarter sales of the prior year. Sales through the Company's domestic
channels were $9,339,000, a 9% increment from last year, while export sales at
$3,880,000, increased 52% from last year. Export sales volume is distributed
globally through Europe, Asia, Middle East, South & Central America, Canada and
Australia markets. In this quarter, shipments to European customers represented
60% of export sales, with sales of Telefactor products representing $906,000 of
the increase.
Relative to the Company's three product groups, the
Grass-Telefactor-TM- group proved especially strong in this quarter, accounting
for 38% of total revenue. The product group reached a record sales volume of
$5,036,000, representing a 75% increase from the prior year's sales. The
inclusion of the Telefactor product line at $1,822,000, coupled with shipments
of the new Aurora-TM- product line drove the quarter's strong results.
The Company's QuickLabel-Registered Trademark- Systems (QLS) products
reached sales of $4,613,000 in the quarter, a 14% increase from last year. Sales
of QLS products through the Company's domestic and export channels were both
healthy. However, sales through the export channels were especially strong,
rising 19% from the prior year level.
Test and Measurement (T & M) sales, which include shipments of the
Company's newest line of recorder workstations, Everest-TM-, were $3,570,000.
Customer acceptance of the Everest by both Aerospace and non-aerospace companies
continues to grow in spite of delayed capital budgetary approvals and funding
timetables that somewhat tempered the current quarter's volume of Everest
shipments. While 2nd quarter sales passed the 1st quarter's volume by 8%, sales
of T & M products ran behind the prior year's 2nd quarter by 14%. Volatility in
the aerospace market has continued to affect the Company's consistent growth
strategy.
After two quarters, the Company's current year's sales are $25,593,000.
This volume is running ahead of the prior year by 19%, as a combination of QLS
unit growth (up 16%), the addition of the Telefactor product line ($3,230,000)
and new product introductions from Grass Instruments (Aurora) positively
impacting this year's growth.
The T & M product group shows a mixed performance through six months,
exhibiting sales growth between the 1st two quarters of this year, but lagging
behind in aggregate dollars from last year's sales by 8%.
Gross profits in the 2nd quarter totaled $5,402,000, an 18% improvement
over last year. The mix of sales in the 2nd quarter produced a gross profit
margin of 40.9%, slightly lower than last year's 41.2% gross profit margin. For
the year, gross profit dollars are $10,572,000, a 23% improvement from last
year. Relative to gross
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profit margins, this year's sales mix generated a gross profit margin of 41.3%,
an improvement on the prior year's gross profit margin of 40.2%.
The second quarter's operating expenses of $5,141,000 increased 18% from
last year's second quarter spending. The increment is traceable exclusively to
personnel additions in sales, service, research and development, and general and
administrative functions associated with the Telefactor acquisition. On a year
to date basis, operating expenses were $10,141,000, 13% higher than the prior
year's first six months. Exhibiting a similar profile, the increase is due to
personnel additions from the Telefactor acquisition.
Operating income reached $261,000 in the quarter, a strong improvement
from the first quarter of 54% and a 32% increase from the prior year's 2nd
quarter's operating increase. Our operating profit margin also improved from
last year to reach 2% of sales. For the six-month period, operating income was
$431,000, an improvement of $748,000 from the prior year's operating loss of
$316,000. The current year's operating margin on sales is 1.7% as compared with
a negative 1.5% for the comparable period last year.
Other income in the quarter was $95,000, down from the prior year's
$163,000. The change is due to lower interest and dividend income stemming from
a reduced level of investable funds. For the first six months, the Company's
other income totaled $137,000 as compared to other income for the prior year of
$316,000. The result is traceable to lower interest income and foreign currency
translation adjustments in the current year. The reduced income level also stems
from a lower pool of investable funds.
Net income in the quarter was $268,000 equal to 6(cent) per common
share. This result approximates last year's net income in the 2nd quarter of
$271,000 or 6(cent) per common share. The return on sales for the quarter was 2%
down from the prior year's return of 2.5%. For the year, the Company has earned
net income of $426,000 or 10(cent) per common share, which compares favorably to
the Company's break even performance for last year's first six months.
FINANCIAL CONDITION:
The Company's balance sheet at quarter's end consisted of Assets of
$42,991,000, Liabilities of $9,677,000 and Shareholders' Equity of $33,314,000.
Relative to liquidity, the Company's combined Cash and Securities Available for
Sale declined $2,754,000 from year-end to $8,494,000 at the end of the quarter.
The decrease was due to cash being consumed in funding trade payable obligations
as well as an increase in accounts receivable.
Relative to capital asset efficiency, the Company's accounts receivable
investment of $10,265,000 represents 65 days sales outstanding whereas the
inventory balances of $11,603,000 reflects a turnover rate of 2 times.
Capital expenditures during the first six months were $396,000 with
spending confined to machinery and equipment, information technology hardware
and software, and building improvements.
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We paid $354,000 in cash dividends to shareholders during the first six
months. At the end of the quarter, the Company's book value per share was $7.47
per share, up nominally from the year end value of $7.39 per share.
SAFE HARBOR STATEMENT
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; risks associated with the Euro conversion; and the risks described
from time to time in Astro-Med's reports filed with the Securities and Exchange
Commission.
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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: September 5, 2000 By
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A. W. Ondis, Chairman
(Principal Executive Officer)
Date: September 5, 2000 By
-----------------------------
Joseph P. O'Connell, Vice
President and Treasurer
(Principal Financial Officer)
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