<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 October 28, 2000
-------------------------------------------------
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________________ to _______________________
Commission file number 0-13200
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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 .
--- ---
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 - 4,229,127 shares
(excluding treasury shares) as of November 30, 2000
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<PAGE>
ASTRO-MED, INC.
INDEX
Page No.
--------
Part I. Financial Information:
Consolidated Balance Sheets -
January 31, 2000 and October 28, 2000 ...................... 3
Consolidated Statements of Income -
Three Months Ended October 30, 1999 and October 28, 2000.... 4
Consolidated Statements of Income -
Nine Months Ended October 30, 1999 and October 28, 2000 .... 5
Consolidated Statements of Cash Flows -
Nine Months Ended October 30, 1999 and October 28, 2000 .... 6
Notes to Consolidated Financial Statements -
October 28, 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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<PAGE>
Part I. FINANCIAL INFORMATION
ASTRO-MED, INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
January 31, October 28,
ASSETS 2000 2000
---- ----
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and Cash Equivalents................... $ 4,035,867 $ 2,442,534
Securities Available for Sale............... 7,211,921 6,186,565
Accounts Receivable, Net.................... 9,270,814 9,368,028
Inventories................................. 11,537,478 11,238,268
Prepaid Expenses and Other Current Assets... 1,926,111 1,946,444
----------- -----------
Total Current Assets................... 33,982,191 $31,181,839
PROPERTY, PLANT AND EQUIPMENT 20,089,355 20,687,495
Less Accumulated Depreciation............... (12,577,878) (13,509,836)
----------- -----------
7,511,477 7,177,659
OTHER ASSETS
Goodwill, Net of Accumulated Amortization... 3,153,371 2,797,025
Amounts Due from Officers................... 480,314 480,314
Other....................................... 257,178 121,916
----------- -----------
3,890,863 3,399,255
----------- -----------
$45,384,531 $41,758,753
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable............................ $ 6,379,792 $ 4,986,648
Accrued Compensation........................ 1,710,622 1,432,008
Accrued Expenses............................ 2,324,593 2,128,763
Income Taxes................................ 1,169,234 327,690
Current Maturities of Long-Term Debt........ 60,452 57,038
----------- ----------
Total Current Liabilities.............. 11,644,693 8,932,147
LONG-TERM DEBT, Less Current Maturities....... 71,588 26,290
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 5,158,387 Shares, Respectively........ 257,402 257,926
Additional Paid-In Capital.................. 5,647,791 5,698,758
Retained Earnings........................... 33,065,454 32,261,730
Treasury Stock, at Cost (729,295 Shares).... (5,268,103) (5,268,103)
Accumulated Other Comprehensive Income (Loss) (481,960) (538,764)
----------- -----------
33,220,584 32,411,547
----------- -----------
$45,384,531 $41,758,753
=========== ===========
</TABLE>
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<PAGE>
ASTRO-MED, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended
October 30, October 28,
1999 2000
---- ----
<S> <C> <C>
Net Sales.................................... $11,044,728 $11,730,836
Cost of Sales................................ 6,470,743 7,497,955
----------- -----------
Gross Profit................................. 4,573,985 4,232,881
Costs and Expenses:
Selling, General and Administrative........ 3,376,717 4,148,908
Research and Development................... 770,182 978,439
----------- -----------
4,146,899 5,127,347
Operating Income (Loss)...................... 427,086 (894,466)
Other Income (Expense):
Investment Income.......................... 166,353 111,698
Interest Expense........................... (3,718) (3,841)
Other, Net................................. (40,962) (143,364)
------------ -----------
121,673 (35,507)
Income (Loss) before Income Taxes............ 548,759 (929,973)
Provision for Income Tax Expense (Benefit)... 138,314 (232,000)
------------ ------------
Net Income (Loss)............................ $ 410,445 $ (697,973)
=========== ===========
Earnings (Loss) Per Common Share-basic....... $ .09 $(.16)
==== =====
Earnings (Loss) Per Common Share-diluted..... $ .09 $(.16)
==== =====
Weighted Average Number of Common and Common
Equivalent Shares Outstanding-basic........ 4,410,402 4,428,825
========= =========
Weighted Average Number of Common and Common
Equivalent Shares Oustanding-diluted....... 4,451,715 4,446,487
========= =========
Dividends Declared Per Common Share.......... $.04 $.04
==== ====
</TABLE>
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<PAGE>
ASTRO-MED, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Nine Months Ended
October 30, October 28,
1999 2000
---- ----
<S> <C> <C>
Net Sales.................................... $32,506,666 $37,324,509
Cost of Sales................................ 19,311,685 22,519,119
----------- -----------
Gross Profit................................. 13,194,981 14,805,390
Costs and Expenses:
Selling, General and Administrative........ 10,640,132 12,054,515
Research and Development................... 2,444,022 3,214,073
----------- -----------
13,084,154 15,268,588
----------- -----------
Operating Income (Loss)...................... 110,827 (463,198)
Other Income (Expense):
Investment Income.......................... 512,620 342,178
Interest Expense........................... (11,291) (6,038)
Other, Net................................. (63,397) (234,264)
----------- ----------
437,932 101,876
----------- -----------
Income (Loss) before Income Taxes............ 548,759 (361,322)
Provision for Income Tax Expense (Benefit)... 138,314 ( 88,953)
----------- ------------
Net Income (Loss)............................ $ 410,445 $ (272,368)
=========== ===========
Earnings (Loss) Per Common Share-basic. ..... $ .09 $(.06)
=== =====
Earnings (Loss) Per Common Share-diluted..... $ .09 $(.06)
==== =====
Weighted Average Number of Common and Common
Equivalent Shares Outstanding-basic........ 4,439,580 4,424,321
========= =========
Weighted Average Number of Common and Common
Equivalent Shares Oustanding-diluted....... 4,498,602 4,463,154
========= =========
Dividends Declared Per Common Share.......... $.12 $.12
==== ====
</TABLE>
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<PAGE>
ASTRO-MED, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
-----------------
October 30, October 28,
1999 2000
---- ----
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income (Loss) ........................... $ 410,445 $ (272,368)
Adjustments to Reconcile Net Income (Loss) to Net
Cash Provided(Used) by Operating Activities:
Depreciation and Amortization .......... 950,283 1,063,305
Gain on Sale of Assets ................. 3,912 --
Other .................................. (895) 69,661
Changes in Assets and Liabilities:
Accounts Receivable ..................... (399,864) (97,214)
Inventories ............................. (267,732) 299,210
Other ................................... (98,441) 37,156
Accounts Payable and Accrued Expenses ... 1,057,768 (1,867,588)
Income Taxes ............................ 45,541 (841,544)
----------- -----------
Total Adjustments ..................... 1,290,572 (1,337,014)
Net Cash Provided (Used) by
Operating Activities: ................... 1,701,017 (1,609,382)
Cash Flows from Investing Activities:
Proceeds from Sales of Securities
Available for Sale ........................ 3,386,519 3,109,928
Purchases of Securities Available
for Sale .................................. (3,670,486) (2,084,572)
Proceeds from Sales of Assets ............... 2,800 --
Refund of Purchase Price for Acquisition .... 225,000
Additions to Property, Plant and Equipment .. (867,871) (705,731)
----------- -----------
Net Cash (Used) Provided by
Investing Activities .................... (1,149,038) 544,625
Cash Flows from Financing Activities:
Principle Payments on Capital Leases ........ (188,733) (48,712)
Proceeds from Capital Lease Obligations ..... 135,615 --
Proceeds from Common Shares Issued
Under Employee Benefit Plans .............. 14,495 51,492
Purchases of Treasury Stock ................. (451,001) --
Dividends Paid .............................. (535,141) (531,356)
----------- -----------
Net Cash Used by Financing Activities ..... (1,024,765) (528,576)
Net Decrease in Cash and Cash Equivalents ....... (472,786) (1,593,333)
Cash and Cash Equivalents, Beginning of Period .. 4,946,289 4,035,867
----------- -----------
Cash Equivalents, End of Period ............. $ 4,473,503 $ 2,442,534
=========== ===========
Supplemental Disclosures of Cash Flow
Information:
Cash Paid During the Period for:
Interest ................................ $ 10,979 $ 3,246
Income Taxes ............................ $ 45,830 $ 752,591
</TABLE>
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<PAGE>
ASTRO-MED, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 28, 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. Earning (loss) per share - basic is based on the weighted
average number of shares outstanding during the period. Earnings (loss) 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 Nine Months Ended
October 30, October 28, October 30, October 28,
1999 2000 1999 2000
---- ---- --- ----
<S> <C> <C> <C> <C>
Weighted Average Common Shares
Outstanding-basic ..................... 4,410,402 4,428,825 4,439,580 4,424,321
Diluted Effect of Options Outstanding..... 41,313 17,662 59,022 38,833
--------- ---------- --------- ---------
Weighted Average Common Shares
Outstanding - diluted................... 4,451,715 4,446,487 4,498,602 4,463,154
========= ========= ========= =========
</TABLE>
For the three month's ended October 30, 1999 and October 28, 2000,
respectively, the diluted per share amounts do not reflect options outstanding
of 545,375 and 1,125,825, respectively because their effect is anti-dilutive.
For the nine month's ended October 30, 1999 and October 28, 2000,
respectively, the diluted per share amounts do not reflect options outstanding
of 545,375 and 943,875, respectively because their effect is anti-dilutive.
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<PAGE>
Note 2 - COMPREHENSIVE INCOME
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, are as follows.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
October 30, October 28, October 30, October 28,
1999 2000 1999 2000
---- ---- ---- ----
<S> <C> <C> <C> <C>
Comprehensive Income:
Net Income (Loss) .................... $ 410,445 $(697,973) $ 410,445 $(272,368)
--------- --------- --------- ---------
Other Comprehensive Income (Loss):
Foreign currency translation
adjustments, net of tax ...... 6,858 (95,480) (16,805) (168,572)
Unrealized gain (loss)
in securities:
Unrealized holding gain (loss)
arising during the period,
net of tax .................. (31,666) 65,220 (191,243) 111,768
Reclassification adjustment
for gain (loss) included in
net income, net of tax ...... -- -- -- --
--------- --------- --------- ---------
Other Comprehensive Loss ............. (24,808) (30,260) (208,048) (56,804)
Comprehensive Income (Loss) ............. $ 385,637 $(728,233) $ 202,397 $(329,172)
========= ========= ========= =========
</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:
<TABLE>
<CAPTION>
January 31, October 28,
2000 2000
---- ----
<S> <C> <C>
Materials and Supplies... $ 5,835,050 $ 5,583,992
Work-In-Process.......... 1,557,734 1,298,125
Finished Goods........... 4,144,694 4,356,151
----------- -----------
$11,537,478 $11,238,268
=========== ===========
</TABLE>
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<PAGE>
ASTRO-MED, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
FOR THREE-MONTHS ENDING OCTOBER 28, 2000 VS. OCTOBER 30, 1999:
Net Sales were $11,731,000 up 6% over last year's quarter sales of
$11,045,000. Excluding Telefactor, which was acquired in December of 1999, our
net sales for the quarter were essentially flat. However, the $680,000 of
Telefactor products sold during the quarter was well below the breakeven level
required by Telefactor's current cost structure. Hence, this quarter's low
volume of Telefactor shipments together with the weak demand for Astro-Med
products in our export markets, were the prime contributors to the third
quarter's loss of $698,000.
Profiling the sales by Product Group has QuickLabel Systems (QLS) sales
at $4,233,000, up 5% from the third quarter of last year. The Grass-Telefactor
product sales were $3,648,000, up 41% over last year's quarter with Telefactor
accounting for 26% of increase. Test & Measurement's (T & M) sales were
$3,850,000, down 13% over last year. The decline in T & M sales is attributed
primarily to the lower volume of Everest sales, the Company's new touch screen
windows based data recorder. The Everest was introduced in the second quarter of
this year to replace older technology in the telemetry markets.
In our domestic markets, sales rose 13% over last year to $9,082,000.
Growth in those channels was affected by a 12% increase in QLS's sales as well
as by a 60% increase in Grass-Telefactor sales volume, with 34% of the increase
attributed to Telefactor sales. T & M's domestic sales decreased 12% from last
year's third quarter sales. In the international markets, export sales declined
12% to $2,649,000 as compared to last year's third quarter. The decline can be
attributed to the continued strength of the dollar rendering our products less
competitive in foreign markets. To address these pricing pressures we are
developing and introducing new lower cost products to compete with foreign
manufacturers.
Gross Profit was $4,233,000 in the third quarter, a 7% decline over
last year. The gross profit margin for the quarter was 36.1% compared to last
year's gross profit margin of 41.4%. The decline in the third quarter margin is
mainly attributable to 1) product mix and the decline in the sales volume; 2)
costs associated with transferring Telefactor's Pennsylvania manufacturing
operation to our Braintree, Massachusetts facility and 3) the severance costs
relating to the Telefactor workforce reduction.
Operating expenses reached $5,127,000 in the quarter, increasing 24%
from last year's expense level. The increment is traceable exclusively to
general and administrative functions associated with the Telefactor acquisition
as well as personnel additions in sales, service, research and development.
Spending in the quarter consumed 43.7CENTS of each sales dollar up from last
year's level of 37.5CENTS. In addition, the Company continues to make strategic
investments in its new product initiatives through its research and development
(R&D) spending. R&D as a percentage of sales in the third quarter was 8.3% up
from 7.0% over last year.
An operating loss of $894,000 was incurred this year as compared to
operating income of $427,000 in the prior year.
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<PAGE>
FOR THREE-MONTHS ENDING OCTOBER 28, 2000 VS. OCTOBER 30, 1999 (CONTINUED):
The Company incurred a loss of $36,000 in the quarter from its
non-operating activities, down from the prior year's income level of $122,000.
This decline is attributed to lower investment income stemming from a lower
level of investments and foreign currency translation and transactions losses of
$136,000.
Net loss in the third quarter was $698,000 or 16CENTS loss per share.
The Company reported net income of $410,000 or 9CENTS earnings per share for the
prior year's third quarter.
FOR NINE-MONTHS ENDED OCTOBER 28, 2000 VS. OCTOBER 30, 1999
After nine months, sales are $37,325,000, 15% higher than last year's
sales of $32,507,000. QLS's sales were $13,735,000, up 13% from last year while
Grass-Telefactor sales were $12,880,000, up 53% over the last year with
Telefactor contributing 46% of the increase. Although T & M's sales of
$10,710,000 are behind last year's by 10%, the current trend in T & M continues
to be positive. We have experienced sales growth in each succeeding quarter of
the current fiscal year.
Sales through domestic channels were $27,319,000, up 14% from last
year. Export sales were $10,006,000, up 16% from last year with Telefactor
accounting for the majority of the increase. Growth in the domestic channels was
helped by the increase in QLS's sales to $9,341,000, up 17% over last year and
an increase in Grass-Telefactor's sales to $9,506,000, up 47% over last year
with 40% of the increase attributed to Telefactor. T & M's domestic net sales
decreased to $8,472,000, down 10% over last year's sales.
On a year to date basis, gross profit was $14,805,000, reflecting a
gross profit margin of 39.7%, a decline over last year's margin of 40.6%. The
decline in gross margin can be attributed directly to the third quarter product
mix and the previously mentioned Telefactor costs. Prior to the third quarter,
the year to date gross profit margin was 41.3%.
After nine months, operating expenses were $15,269,000, representing a
17% increase over last year. This increase is primarily attributed to the
Telefactor factors previously mentioned. Spending in the quarter consumed
40.9CENTS of each sales dollar up from last year's level of 40.3CENTS.
After three-quarters, the operating loss incurred was $463,000
reflecting a $574,000 decline from the prior year's operating income of
$111,000.
Other income for the nine months was $102,000 as compared with $438,000
for the previous year. Lower investment income and $239,000 of foreign currency
translation and transaction losses accounted for the decrease.
After nine months the Company's net loss is $272,000 or 6CENTS loss per
share as compared to net income of $410,000 or 9CENTS earnings per share for the
prior year.
FINANCIAL CONDITION:
The Company's statements of cash flow for the nine-months ended October
28, 2000 and October 30, 1999 are included on page 6. Net cash flow from
operations for the third quarter equaled $629,000, down 3% from last year. Net
cash used by operations for the nine-months of the current fiscal year equaled
$1,609,000. This significant cash outflow from operations can be mainly
attributed to an effort to bring accounts payable current and meeting income tax
payment obligations.
During the nine-months ended, approximately $3.0 million of debt
securities matured of which $1.0 million was used to fund operating activities
and capital expenditures.
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<PAGE>
FINANCIAL CONDITION (CONTINUED):
We paid cash dividends during the third quarter of 4CENTS per share.
The Company's book value per share at the end of the third quarter was $7.32,
down slightly from the year end value of $7.39 per share.
On November 22, 2000, the Company repurchased 201,600 shares of its
common stock for $806,400.
NEW ACCOUNTING PRONOUNCEMENTS:
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133 "Accounting for
Derivative Instruments and Hedging Activities." SFAS 133 requires an entity to
recognize all derivatives as either assets or liabilities and measure those
instruments at fair value. In June 1999, the FASB issued SFAS 137, which
deferred the effective date of SFAS 133 to all fiscal quarters of years
beginning after June 15, 2000. In June 2000, the FASB issued SFAS 138 which
addressed issues causing implementation difficulties with SFAS 133 and also
amended the accounting and reporting standards of SFAS 133 for certain
derivative instruments and hedging activities. The Company does not currently
enter into derivative transactions; however, the Company is evaluating whether
the use of foreign exchange contracts will minimize its foreign currency
exposures in the future.
In December 1999, the Securities and Exchange Commission (SEC) issued
Staff Accounting Bulletin (SAB) 101, "Revenue Recognition in Financial
Statements," which summarizes the staff's views regarding the application of
generally accepted accounting principles to selected revenue recognition issues.
In June 2000, the SEC issued SAB 101B which delayed the implementation date of
SAB 101 until no later than the fourth quarter of 2000.
The Company is still in the process of evaluating the impact of the
adoption of SAB 101 on the results of operations and financial position.
In July 2000, the Emerging Issues Task Force (EITF) reached a consensus
on Issue No. 00-10, "Accounting for Shipping and Handling Fees and Costs". The
consensus provides guidance as to how a seller of goods should classify costs
incurred for shipping and handling in the income statement. The EITF determined
that amounts billed to a customer in a sale transaction related to shipping and
handling should be classified as revenue. The EITF requires that the Company
adopt this guidance in the fourth quarter. The Company currently includes
amounts billed to customers as a reduction of shipping and handling costs which
are included in the cost of sales. Upon adoption, the Company will present such
costs as revenue.
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; the impact of changes in
foreign exchange rates on the result from operations; the ability to
successfully integrate acquisitions and eliminate redundant costs and the risks
described from time to time in Astro-Med's reports filed with the Securities and
Exchange Commission.
-11-
<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 4, 2000 By ____________________________
A. W. Ondis, Chairman
(Principal Executive Officer)
Date: December 4, 2000 By ____________________________
Joseph P. O'Connell, Vice
President and Treasurer
(Principal Financial Officer)
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