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 2, 1996 ------------------------------------------------ OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF -- EXCHANGE ACT OF 1934 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 incorporation or organization) Identification No.) 600 East Greenwich Avenue, West Warwick, Rhode Island 02893 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (401) 828-4000 - ------------------------------------------------------------------------------- (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 - 4,966,183 shares (excluding treasury shares) as of October 25, 1996
ASTRO-MED, INC. INDEX Page No. -------- Part I. Financial Information: Consolidated Balance Sheets - January 31, 1996 and November 2,1996...................... 3 Consolidated Statements of Income - Three Months Ended October 28, 1995 and November 2, 1996.. 4 Consolidated Statements of Income Nine Months Ended October 28, 1995 and November 2, 1996... 5 Consolidated Statements of Cash Flows - Nine Months Ended October 28, 1995 and November 2, 1996... 6 Notes to Consolidated Financial Statements - November 2, 1996.......................................... 7 Management's Discussion and Analysis of Financial Condition and Results of Operations....................... 8,9 Part II. Other Information................................... 10,11 Item 6. Exhibits and Reports on Form 8-K 2
Part I. FINANCIAL INFORMATION ASTRO-MED, INC. CONSOLIDATED BALANCE SHEETS <TABLE> <CAPTION> January 31, November 2, ASSETS 1996 1996 ------------ ------------ (Unaudited) <S> <C> <C> CURRENT ASSETS Cash and Cash Equivalents.................. $ 2,033,713 $ 6,138,942 Securities Available for Sale.............. 6,659,828 6,942,497 Accounts Receivable, Net................... 8,318,005 8,331,116 Inventories................................ 12,533,553 11,628,889 Prepaid Expenses and Other Current Assets.. 1,424,757 1,402,390 ----------- ----------- Total Current Assets..................... 30,969,856 34,443,834 PROPERTY, PLANT AND EQUIPMENT 17,063,855 17,196,310 Less Accumulated Depreciation.............. (8,350,722) (9,189,923) ----------- ----------- 8,713,133 8,006,387 OTHER ASSETS Excess of Cost Over Net Assets Acquired.... 1,012,693 985,459 Other...................................... 1,607,049 532,838 ----------- ----------- 2,619,742 1,518,297 ----------- ----------- $42,302,731 $43,968,518 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts Payable........................... $ 2,136,825 $ 2,528,646 Accrued Compensation....................... 1,200,082 880,003 Accrued Expenses........................... 730,345 1,194,395 Income Taxes............................... 432,540 1,072,153 Current Maturities of Long-Term Debt....... 50,000 50,000 ----------- ----------- Total Current Liabilities................ 4,549,792 5,725,197 LONG-TERM DEBT, Less Current Maturities..... 175,000 125,000 EXCESS OF NET ASSETS ACQUIRED OVER COST..... 761,879 598,619 DEFERRED INCOME TAXES....................... 834,754 834,754 STOCKHOLDERS' EQUITY Preferred Stock, $10 Par Value, Authorized 100,000 Shares, None Issued.... Common Stock, $.05 Par Value, Authorized 13,000,000 Shares, Issued 5,123,310 and 5,135,578 Shares, Respectively........ 256,166 256,779 Additional Paid-In Capital................. 5,554,100 5,615,571 Retained Earnings.......................... 31,079,623 32,385,272 Treasury Stock, at Cost (103,066 Shares and 169,395 Shares, Respectively)......... (902,169) (1,468,111) Cumulative Translation Adjustment.......... (38,368) (82,176) Net Unrealized Gain (Loss) on Securities Available for Sale........................ 31,954 (22,387) ----------- ----------- 35,981,306 36,684,948 ----------- ----------- $42,302,731 $43,968,518 =========== =========== </TABLE> 3
ASTRO-MED, INC. UNAUDITED CONSOLIDATED STATEMENTS OF INCOME <TABLE> <CAPTION> Three Months Ended -------------------------- October 28, November 2, 1995 1996 ------------ ------------ <S> <C> <C> Net Sales.................................... $10,823,820 $11,110,514 Cost of Sales................................. 6,587,639 6,572,197 ---------- ----------- Gross Profit.................................. 4,236,181 4,538,317 Costs and Expenses: Selling, General and Administrative......... 3,246,100 3,017,702 Research and Development.................... 591,821 643,092 ---------- ----------- 3,837,921 3,660,794 ---------- ----------- Operating Income.............................. 398,260 877,523 Other Income (Expense): Investment Income........................... 84,287 157,489 Interest Expense............................ (429) (3,349) Other, Net.................................. (2,747) 41,665 ---------- ----------- 81,111 195,805 ---------- ----------- Income before Income Taxes.................... 479,371 1,073,328 Provision for Income Taxes.................... 199,000 389,620 ---------- ----------- Net Income.................................... $ 280,371 $ 683,708 ========== =========== Earnings Per Common Share..................... $.06 $.14 ========== =========== Weighted Average Number of Common and Common Equivalent Shares Outstanding............... 5,097,232 5,014,191 ========== =========== Dividends Declared Per Common Share........... $.03 $.03 ========== =========== </TABLE> 4
ASTRO-MED, INC. UNAUDITED CONSOLIDATED STATEMENTS OF INCOME Nine Months Ended -------------------- <TABLE> <CAPTION> October 28, November 2, 1995 1996 ------------ ------------ <S> <C> <C> Net Sales.................................... $32,566,709 $32,779,109 Cost of Sales................................ 19,473,919 19,879,552 ----------- ----------- Gross Profit................................. 13,092,790 12,899,557 Costs and Expenses: Selling, General and Administrative........ 10,126,673 9,500,079 Research and Development.................... 1,811,923 1,846,599 ----------- ----------- 11,938,596 11,346,678 ----------- ----------- Operating Income.............................. 1,154,194 1,552,879 Other Income (Expense): Investment Income........................... 259,455 828,197 Interest Expense............................ (17,705) (15,366) Other, Net.................................. 234,363 81,200 ----------- ----------- 476,113 894,031 ----------- ----------- Income before Income Taxes.................... 1,630,307 2,446,910 Provision for Income Taxes.................... 482,000 733,620 ----------- ----------- Net Income .................................. $ 1,148,307 $ 1,713,290 =========== =========== Earnings Per Common Share.....................$ .23 $ .34 =========== =========== Weighted Average Number of Common and Common Equivalent Shares Outstanding............... 5,099,676 5,025,371 =========== =========== Dividends Declared Per Common Share...........$ .09 $ .09 =========== =========== </TABLE> 5
ASTRO-MED, INC. UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS <TABLE> <CAPTION> Nine Months Ended -------------------------- October 28, November 2, 1995 1996 ------------ ------------ <S> <C> <C> Cash Flows from Operating Activities: Net Income..................................... $1,148,307 $ 1,713,290 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation and Amortization.............. 961,223 703,175 Gain on Sale of Investment................. (416,090) Deferred Income Taxes...................... 108,965 Other...................................... (41,773) Changes in Assets and Liabilities: Decrease in Accounts Receivable.......... 84,900 60,389 (Increase) decrease in Inventories..... (1,104,524) 904,664 [Decrease(increase)in] Other............. 613,345 (95,881) (Decrease) increase in Accounts Payable and Accrued Expenses............. (559,567) 535,791 (Decrease) increase in Accrued Income Taxes............................. (91,333) 639,613 ---------- ----------- Total Adjustments...................... (28,764) 2,331,661 Net Cash Provided by Operating Activities....................... 1,119,543 4,044,951 Cash Flows from Investing Activities: Proceeds from Sales of Securities Available for Sale........................... 2,696,728 1,487,684 Purchases of Securities Available for Sale................................... (2,190,401) (282,669) Proceeds from Sale of Building................. 515,935 Additions to Property, Plant and Equipment..... (829,192) (649,455) ---------- ----------- Net Cash (used) Provided by Investing Activities....................... (322,865) 1,071,495 Cash Flows from Financing Activities: Payments of Long-Term Debt..................... (350,000) (50,000) Short-Term Borrowing from Bank................. 500,000 Proceeds from Common Shares Issued Under Employee Benefit Plans................. 84,102 62,084 Purchases of Treasury Stock.................... (176,254) (565,942) Dividends Paid................................. (452,992) (457,359) ---------- ----------- Net Cash (Used) by Financing Activities...... (395,144) (1,011,217) Net Increase/(Decrease) in Cash and Cash Equivalents.................................... 401,534 4,105,229 Cash and Cash Equivalents, Beginning of Period... 1,107,191 2,033,713 ---------- ----------- Cash and Cash Equivalents, End of Period......... $1,508,725 $ 6,138,942 ========== =========== Supplemental Disclosures of Cash Flow Information: Cash Paid During the Period for: Interest................................... $ 21,942 $ 24,477 Income Taxes............................... $ 260,869 $ 69,855 </TABLE> 6
ASTRO-MED, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS November 2, 1996 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. All accounting policies have been applied in a manner consistent with prior periods. 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, 1996. (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. 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 2, 1996 1996 ----------- ----------- <S> <C> <C> Materials and Supplies.. $ 6,460,730 $ 6,289,658 Work-In-Process......... 1,381,220 1,234,000 Finished Goods.......... 4,691,603 4,105,231 ----------- ----------- $12,533,553 $11,628,889 =========== =========== </TABLE> 7
ASTRO-MED, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations: - ---------------------- Net Sales in the Company's third fiscal quarter increased 3% over the prior year fiscal third quarter. Growth was most evident in our domestic channels where Sales increased 7% over last year. Internationally, volume was comparable to last year although our Asian, UK and Italian sales revenues experienced growth. The Company continues to expand new product offerings during the third quarter with the Printing Systems including Sundance, Data Acquisition Systems and Astro-DAQ. Demand was healthy for both the Company's traditional core recorder products as well as the Grass Instrument line of products. The third quarter sales mix generated $4,538,000 in Gross Profits for the three month period. This result was 7% higher than last year's third quarter and produced a yield of 40.8% as compared with the prior year's mark of 39.1%. The Company has improved its Gross Profit Percent during each quarter of the current fiscal year to a nine month Gross Profit Percent of 39.4%. Although this level is behind last year's 40.2%, the Company expects the improvement trend to continue. Astro-Med's quarterly operating expenses of $3,660,000 were 5% lower than last year. This result is consistent with this year's pace in spending which is also 5% behind last year's level for nine months, as the Company has reduced its selling expenses and administrative personnel from prior year levels. Other Income was $196,000 in the quarter against last year's results of $81,000 for the same quarter. This year's improvement is a result of additional interest earned on the Company's expanded investment portfolio. After nine months the Company has other income of $894,000 in comparison to last year's $476,000. The improvement is attributable to gains on sale of investments and interest income. Net Income in the quarter was $684,000 generating a 6.2% return on sales. This quarter's income was better than last year's 3rd quarter by $404,000 or 144%. The Company has earned $1,713,000 in Net Income after nine months of the current fiscal year against a prior year result of $1,148,000 for the same time frame. Financial Condition: - -------------------- The Company increased its cash position by $937,000 in the 3rd quarter. Normal operations generated $1,563,000 in cash available while Investing requirements of $359,000 including capital expenditures and Financing activities of $267,000 including (dividends and treasury stock) purchases consumed cash. The Net Working Capital balances rose $513,000 in the three months to $28,718,000 at quarter's end. The growth in the accounts receivable investment was the primary factor. 8
The Company's cash and cash equivalent balances have risen by $4,105,000 during the current fiscal year. The result is traceable to Operations which have produced $4,033,000 in operating cash flow while the Company's Investing and Financing activities have offset their respective cash flows. 9
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, 1996 By /s/ A. W. Ondis ----------------------------- A. W. Ondis, Chairman (Principal Executive Officer) Date: December 2, 1996 By /s/ Joseph P. O'Connell ----------------------------- Joseph P. O'Connell, Vice President and Treasurer (Principal Financial Officer) 10
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 2, 1996. 11