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 ----------- 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 ------------------------------------------------ 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 - 4,757,354 shares (excluding treasury shares) as of May 30,1998 -1-
ASTRO-MED, INC. INDEX <TABLE> <CAPTION> Page No. -------- 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> -2-
Part I. FINANCIAL INFORMATION ASTRO-MED, INC. UNAUDITED CONSOLIDATED BALANCE SHEETS <TABLE> <CAPTION> January 31, May 2, ASSETS 1998 1998 ----------- ----------- (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 ----------- ----------- 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) ----------- ----------- 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 ----------- ----------- 2,049,495 2,040,399 ----------- ----------- $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 ----------- ----------- 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) ----------- ----------- 35,758,999 35,464,590 ----------- ----------- $42,813,714 $42,697,044 =========== =========== </TABLE> -3-
ASTRO-MED, INC. UNAUDITED CONSOLIDATED STATEMENTS OF INCOME <TABLE> <CAPTION> Three Months Ended ------------------------ May 3, May 2, 1997 1998 ----------- ----------- <S> <C> <C> Net Sales.................................................. $11,706,507 $10,056,440 Cost of Sales.............................................. 7,202,596 6,180,833 ----------- ----------- 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 ----------- ----------- 3,848,426 4,265,600 ----------- ----------- 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 ----------- ----------- 166,942 249,184 ----------- ----------- Income (Loss) before Income Taxes.......................... 822,427 (140,808) Provision (Benefit) for Income Taxes....................... (244,055) 37,000 ----------- ----------- Net Income (Loss).......................................... $ 578,372 $ (103,808) =========== =========== 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> -4-
ASTRO-MED, INC. UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS <TABLE> <CAPTION> Three Months Ended ------------------------ May 3, May 2, 1997 1998 ---------- ---------- <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) ---------- ---------- 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) ---------- ---------- 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) ---------- ---------- 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 ---------- ---------- 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> -5-
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 -------------------- May 3, May 2, 1997 1998 --------- --------- <S> <C> <C> Weighted Average Common Shares Outstanding-basic............................ 4,917,691 4,780,634 Diluted Effect of Options Outstanding......... 46,814 38,404 --------- --------- 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 -------- --------- <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> -6-
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 ----------- ----------- <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 ----------- ----------- $10,341,856 $10,717,883 =========== =========== </TABLE> -7-
ASTRO-MED, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations: - ---------------------- 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: - -------------------- 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. -8-
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 - --------------------- 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. -9-
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) -10-