UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
[ X ] Quarterly report under SectionQUARTERLY REPORT UNDER SECTION 13 or 15(d) of the Securities Ex-
change Act ofOF THE SECURITIES EX-
CHANGE ACT OF 1934
For the quarterquarterly period ended JulyJanuary 31, 20112012
[ ] Transition report under SectionTRANSITION REPORT UNDER SECTION 13 or 15(d) of the Securities Ex-
change Act ofOF THE SECURITIES EX-
CHANGE ACT OF 1934
For the transition period from ___________ to ____________
Commission File Number: 000-05378
GEORGE RISK INDUSTRIES, INC.
(Exact name of small business issuer as specified in its charter)
Colorado 84-0524756
(State of incorporation) (IRS Employers Identification No.)
802 South Elm St.
Kimball, NE 69145
(Address of principal executive offices) (Zip Code)
(308) 235-4645
(Registrant's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ]
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares of the Registrant's Common Stock outstanding, as of
September 13, 2011March 16, 2012 was 5,047,370.5,042,800.
Transitional Small Business Disclosure Format: Yes [ X ] No [ ]
GEORGE RISK INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
The unaudited financial statements for the three-monththree and nine month period
ended JulyJanuary 31, 2011,2012, are attached hereto.
GEORGE RISK INDUSTRIES, INC.
BALANCE SHEETS
JulyJanuary 31, April 30,
20112012 2011
------------ ------------
(unaudited)
ASSETS
Current Assets:Assets
Cash and cash equivalents $ 5,518,0005,186,000 $ 5,254,000
Investments andMarketable securities 19,377,000(Note 2) 19,735,000 19,512,000
Accounts receivable:
Trade, net of $27,511$14,000 and $5,053$5,000
doubtful account allowance 1,958,0001,692,000 1,574,000
Other 1,000 1,000
Note receivable, current 6,0005,000 5,000
Inventories 2,089,000(Note 3) 2,133,000 1,854,000
Prepaid expenses 153,000159,000 151,000
Deferred current income taxes 127,000130,000 166,000
------------ ------------
Total Current Assets $29,229,000$29,041,000 $28,517,000
Property and Equipment, net at cost 771,000$ 810,000 $ 639,000
Other Assets
Investment in Land Limited Land Partnership,
at cost 218,000228,000 218,000
Projects in process 69,00024,000 213,000
Note receivable --5,000 1,000
Other 1,000 0
------------ ------------
Total Other Assets $ 287,000258,000 $ 432,000
TOTAL ASSETS $30,287,000$30,109,000 $29,588,000
============ ============
GEORGE RISK INDUSTRIES, INC.
BALANCE SHEETS
JulyJanuary 31, April 30,
20112012 2011
------------ ------------
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable, trade $ 90,00059,000 $ 128,000
Dividends payable 483,000589,000 483,000
Accrued expenses:expenses
Payroll and relatedother expenses 270,000273,000 212,000
Property taxes 2,000 --0
Income tax payable 326,000140,000 36,000
------------ ------------
Total Current Liabilities $ 1,171,0001,063,000 $ 859,000
Long-Term Liabilities
Aircraft ownershipowership deposit payable 5,000 5,000
Deferred income taxes 61,00074,000 53,000
------------ ------------
Total Long-Term Liabilities $ 66,00079,000 $ 58,000
Stockholders' Equity
Convertible preferred stock, 1,000,000
shares authorized, Series 1-noncumulative,
$20 stated value, 25,000 shares authorized,
4,100 issued and outstanding 99,000 99,000
Common stock, Class A, $.10 par value,
10,000,000 shares authorized, 8,502,832
shares issued and outstanding 850,000 850,000
Additional paid-in capital 1,736,000 1,736,000
Accumulated other comprehensive income (112,000)133,000 281,000
Retained earnings 29,907,00029,596,000 29,115,000
Treasury stock, 3,455,3623,459,312 and 3,451,857
shares, at cost (3,430,000)(3,447,000) (3,410,000)
------------ ------------
Total Stockholders' Equity $29,050,000$28,967,000 $28,671,000
TOTAL LIABILITESLIABILITIES AND STOCKHOLDERS' EQUITY $30,287,000$30,109,000 $29,588,000
============ ============
GEORGE RISK INDUSTRIES, INC.
INCOME STATEMENTS
FOR THE THREE MONTHS ENDED JULY(unaudited)
Three months Nine months Three months Nine months
ended ended ended ended
January 31, January 31, January 31, January 31,
2012 2012 2011 AND 2010
July 31,
2011
2010
------------ ------------
(unaudited) (unaudited)---------------------------------------------------
Net Sales $ 2,598,0002,584,000 $ 2,007,0007,742,000 $ 2,220,000 $ 6,404,000
Less: Costcost of Goods Sold (1,191,000) (1,229,000)goods sold (1,247,000) (3,801,000) (1,119,000) (3,442,000)
------------ ------------ ------------ ------------
Gross Profit $ 1,407,0001,337,000 $ 778,0003,941,000 $ 1,101,000 $ 2,962,000
Operating Expenses:
General and
Administrative 206,000administrative 181,000 Sales 341,000 391,000590,000 184,000 567,000
Selling 411,000 1,173,000 381,000 1,155,000
Engineering 16,000 17,00014,000 43,000 22,000 59,000
Rent Paidpaid to Related Partiesrelated
parties 11,000 34,000 11,000 34,000
------------ ------------ ------------ ------------
Total Operating Expenses $ 574,000617,000 $ 600,0001,840,000 $ 598,000 $ 1,815,000
Income From Operations 833,000 178,000720,000 2,101,000 503,000 1,147,000
Other Income (Expense)
Other Income 8,0006,000 18,000 2,000 9,000
Dividend and Interest Income 192,000 182,000interest
income 222,000 562,000 216,000 536,000
Gain (Loss)(loss) on Salesale of
Investments 379,000 (56,000)investments (384,000) (104,000) 97,000 (2,000)
Gain (loss) on sale of
assets 0 13,000 0 0
------------ ------------ ------------ ------------
$ 579,000(156,000) $ 128,000489,000 $ 315,000 $ 543,000
Income Before Provisions
for Income Taxes 1,412,000 306,000Tax 564,000 2,590,000 818,000 1,690,000
Provisions for Income TaxesTax
Current Expense 292,000 89,000283,000 786,000 202,000 476,000
Deferred Tax Expense 328,000 (32,000)tax expense
(benefit) (155,000) 163,000 (136,000) (192,000)
------------ ------------ ------------ ------------
Total Income Tax Expense $ 620,000 $ 57,000128,000 949,000 66,000 284,000
Net Income $ 792,000436,000 $ 249,000
Basic and Diluted Earnings1,641,000 $ 752,000 $ 1,406,000
============ ============ ============ ============
Cash Dividends
Common Stock ($0.23
per share) 0 (1,160,000)
Common Stock ($0.20
per share) 0 (1,013,000)
Income Per Share of Common Stock $ 0.16 $ 0.05(Note 5):
Basic $0.09 $0.33 $0.15 $0.28
Diluted $0.09 $0.32 $0.15 $0.28
Weighted Average Number of
Common Shares Outstanding 5,048,365 5,062,892Outstanding:
Basic 5,043,585 5,045,898 5,054,500 5,059,213
Diluted 5,064,085 5,066,398 5,075,000 5,079,713
GEORGE RISK INDUSTRIES, INC.
STATEMENTSTATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED(unaudited)
JulyThree months Nine months Three months Nine months
ended ended ended ended
January 31, January 31, January 31, January 31,
2012 2012 2011 2010
---------------------------
(unaudited) (unaudited)2011
----------------------------------------------------
Net Income $ 792,000436,000 $ 249,0001,641,000 $ 752,000 $ 1,406,000
------------ ------------ ------------ ------------
Other Comprehensive Income, net of tax
Unrealized gain (loss) on securities:
Unrealized holding
gains (losses) arising
during period (564,000) (355,000)377,000 (582,000) (98,000) 50,000
Reclassification adjustment
for gains
(losses) included in net income (114,000) 85,000(gains) losses 313,000 327,000 (76,000) 51,000
Income tax expense related
to other comprehensive
income 283,000 113,000(288,000) 106,000 73,000 (43,000)
------------ ------------ ------------ ------------
Other Comprehensive
Income (Loss) $ (395,000)402,000 $ (157,000)(149,000) $ (101,000) $ 58,000
Comprehensive Income (Loss) $ 397,000838,000 $ 92,0001,492,000 $ 651,000 $ 1,464,000
============ ============ ============ ============
GEORGE RISK INDUSTRIES, INC.
STATEMENTSTATEMENTS OF CASH FLOWS
(unaudited)
For the threeNine months Nine months
ended Julyended
January 31, January 31,
2012 2011
2010
---------------------------
(unaudited) (unaudited)----------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 792,0001,641,000 $ 249,0001,406,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 37,000 37,000120,000 114,000
(Gain) loss on sale of investments (379,000) 56,000104,000 2,000
(Gain) loss on sale of assets (13,000) 0
Reserve for bad debts 21,000 5,0009,000 10,000
Reserve for obsolete inventory 35,000 8,000 31,000
Deferred income taxes 328,000 (31,000)163,000 (192,000)
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable (406,000) 79,000(127,000) (11,000)
Inventories (243,000) 236,000(315,000) 115,000
Prepaid expenses (2,000) 56,000(7,000) 57,000
Income tax overpayment -- 88,0000 (23,000)
Increase (decrease) in:
Accounts payable (37,000) 1,000(69,000) 0
Accrued expenses 60,000 62,00063,000 75,000
Income tax payable 290,000 --104,000 0
------------ ------------
Net cash provided by (used in) operating
activities $ 469,0001,708,000 $ 869,0001,561,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Other assets manufactured & purchased 145,000 (31,000)189,000 (82,000)
Proceeds from receiptsale of insurance claim -- 132,000assets 20,000 0
(Purchase) of property and property/equipment (169,000) (17,000)(298,000) (44,000)
Proceeds from sale of marketable securities 8,000 1,554,000168,000 1,584,000
(Purchase) of marketable securities (169,000) (419,000)(748,000) (762,000)
(Purchase) of long-term investment (10,000) 0
(Loans) made to employees (2,000) --
Collection(10,000) 0
Collections of loans to employees 2,000 3,0005,000 10,000
(Purchase) of treasury stock (20,000) (20,000)(37,000) (59,000)
------------ ------------
Net cash provided by (used in) investing
activities $ (205,000)(721,000) $ 1,202,000647,000
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid (1,055,000) (924,000)
------------ ------------
Net cash provided by (used in) financing
activities $(1,055,000) $ -- $ --(924,000)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS $ 264,000(68,000) $ 2,071,0001,284,000
Cash and cash equivalents, beginning of
period $ 5,254,000 $ 3,641,000
------------ ------------
Cash and cash equivalents, end of period $ 5,518,0005,186,000 $ 5,712,0004,925,000
============ ============
Supplemental Disclosure of Cash Flow
Information
Cash payments for:
Income taxes $0 $0$ 680,000 $ 497,000
Interest expense $0 $00 0
Cash receipts for:
Income taxes 0 0
GEORGE RISK INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
JULYJANUARY 31, 2011
Note 1 Unaudited Interim Financial Statements
The accompanying unaudited financial statements have been prepared in
accordance with the instructions for Form 10-Q and do not include all of the
inform-
ationinformation and footnotes required by generally accepted accounting principlesprin-
ciples in the United States of America (US GAAP) for complete financia
statements. These financial statements. It is suggested that these condensed finan-
cial statements should be read in conjunction with
the financial statements and notes thereto includedcontained in the Company's April 30, 2011company's annual report
on Form 10-K.10-K for the year ended April 30, 2011. In the opinion of management,manage-
ment, all adjustments, consisting only of normal recurring adjustments consideredcon-
sidered necessary for a fair presentation, have been included. Operating
results for any quarter are not necessarily indicative of the results for any
other quarter or for the full year. We have evaluated subsequent events
through March 16, 2012, the issuance date of these financial statements. The
Company did not have any material, recognizable subsequent events.
Note 2 Marketable Securities
The Company has investments in publicly traded equity securities as well
as certain state and municipal debt securities. These securities are class-
ified as available-for-sale securities, and are reported at fair value.
Refer to Note 7, Fair Value Measurements, for additional information on the
fair value measurements for all assets and liabilities, including invest-
ments, that are measured at fair value in these financial statements. Available-for-saleAvail-
able -for-sale investments in debt securities mature between August 2011February 2012
and June 2042. The Company uses the average cost method to determine the
cost of securities sold and the amount reclassified out of accumulated other
comprehensive income into earnings. Unrealized gains and losses are excluded
from earnings and reported separately as a component of stockholder's equity.stockholders'equity.
Dividend and interest income are accrued as earned.
As of JulyJanuary 31, 2011,2012, investments available-for-sale consisted of the
following:
Gross Gross
Cost Unrealized Unrealized Fair
Basis Gains Losses Value
------------ ------------ ------------ ------------
Municipal bonds $ 9,322,0009,498,000 $ 144,000272,000 $ (107,000)(70,000) $ 9,359,0009,700,000
Corporate bonds $ 81,000166,000 $ 2,00010,000 $ --0 $ 83,000176,000
Equity securities $ 9,169,0006,680,000 $ 294,000368,000 $ (526,000)(351,000) $ 8,937,0008,697,000
Money markets/markets and CDs $ 998,0001,162,000 $ --0 $ --0 $ 998,0001,162,000
------------ ------------ ------------ ------------
Total $19,570,000$19,506,000 $ 440,000650,000 $ (633,000) $19,377,000(421,000) $19,735,000
In accordance with US GAAP, the Company evaluates all marketable
securities for other-than temporary declines in fair value, which are defined
as when the cost basis exceeds the fair value for approximately one year.
The Company also evaluates the nature of the investment, cause of impairment
and number of investments that are in an unrealized position. When an other-
than-temporary decline is identified, the Company will decrease the cost of
the marketable security to the new fair value and recognize a real loss. The
investments are periodically evaluated to determine if impairment changes are
required. As a result of this standard, management did not record anyrecorded impairment
losses of $5,000 for the quarter ended JulyJanuary 31, 20112012 and recorded an im-
pairment loss of $71,000 for the nine months ended January 31, 2012. As for
the corresponding periods last year, management did not record an impairment
losses of $7,000loss for the quarter, while $11,000 of loss was recorded for the nine months
ended JulyJanuary 31, 2010.2011.
The following table shows the investments with unrealized losses that
are not deemed to be other-than-temporarily impaired, aggregated by invest-
ment category and length of time that individual securities have been in a
continuous unrealized loss position, at JulyJanuary 31, 2011.2012.
Less than 12 months 12 months or greater Total
----------------------- --------------------- ---------------------
Fair Unrealized Fair Unrealized Fair Unrealized
Value Loss Value Loss Value Loss
...........................................................................
Municipal bonds
$ 728,000879,000 $ (15,000) $3,545,000(6,000) $1,797,000 $ (92,000)(64,000) $2,676,000 $ 4,273,000 $ (107,000)(70,000)
Equity securities
$1,835,000 $(112,000) $2,044,000 $(292,000)$2,676,000 $ 3,879,000(189,000) $1,199,000 $ (404,000)
----------- ---------- ----------- ---------- ------------ ------------(162,000) $3,875,000 $ (351,000)
Total
$2,563,000 $(127,000) $5,589,000 $(384,000)$3,555,000 $ 8,152,000(195,000) $2,996,000 $ (511,000)(226,000) $6,551,000 $ (421,000)
Municipal Bonds
---------------
The unrealized losses on the Company's investments in municipal bonds were
caused by interest rate increases. The contractual terms of these invest-
ments do not permit the issuer to settle the securities at a price less than
the amortized cost of the investment. Because the Company has the ability to
hold these investments until a recovery of fair value, which may be maturity,
the Company does not consider these investments to be other-than-temporarily
impaired at JulyJanuary 31, 20112012.
Marketable Equity Securities
----------------------------
The Company's investments in marketable equity securities consist of a wide
variety of companies. Investments in these companies include growth, growth
income, and foreign investment objectives. Management hasThe individual holdings have been
evaluated, and due to management's plan to hold onto these investments for an
extended period, the in-
dividual holdings, and because of the recent decline in the stock market,Company does not consider these investments to be other-than-temporarilyother-
than-temporarily impaired at JulyJanuary 31, 2011.2012.
Note 3 Inventories
Inventories at JulyAt January 31, 2011,2012, inventories consisted of the following:
Raw Materialsmaterials $ 1,517,0001,509,000
Work in Process 577,000process 505,000
Finished Goods 190,000goods 287,000
------------
$ 2,284,0002,301,000
Less: allowance for obsolete inventory (195,000)(168,000)
------------
Net InventoriesTotals $ 2,089,000
============2,133,000
Note 4 Business Segments
The following is financial information relating to industry segments:
For the quarter ended
JulyJanuary 31,
2012 2011 2010
---------------------------
Net revenue:
Security alarm products 2,279,000 1,797,0002,287,000 1,921,000
Other products 319,000 210,000297,000 299,000
------------ ------------
Total net revenue $ 2,598,0002,584,000 $ 2,007,0002,220,000
Income from operations:
Security alarm products 731,000 159,000637,000 435,000
Other products 102,000 19,00083,000 68,000
------------ ------------
Total income from operations $ 833,000720,000 $ 178,000503,000
Identifiable assets:
Security alarm products 3,495,000 2,485,0003,302,000 2,694,000
Other products 1,201,000 916,0001,213,000 974,000
Corporate general 25,591,000 24,923,00025,594,000 25,060,000
------------ ------------
Total assets $30,287,000 $28,324,000$30,109,000 $28,728,000
Depreciation and amortization:
Security alarm products 6,000 6,000
Other products 33,000 25,000 24,000
Corporate general 6,0005,000 7,000
------------ ------------
Total depreciation and amortization $ 37,00044,000 $ 37,00038,000
Capital expenditures:
Security alarm products -- --0 0
Other products 169,000 5,00096,000 11,000
Corporate general -- 12,0000 0
------------ ------------
Total capital expenditures $ 169,00096,000 $ 17,00011,000
Note 5 Earnings per Share
Basic and diluted earning per share, assuming convertible preferred
stock was converted for each period presented, are:
For the three months ended JulyJanuary 31, 2011
----------------------------------------2012
-------------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- -------------- --------------------
Net Income $ 792,000
=============436,000
===========
Basic EPS $ 792,000 5,048,365436,000 5,043,585 $ 0.15690.086
Effect of dilutive securities:
Convertible preferred stock --0 20,500
(0.0007)----------- ------------- -------------- ---------------------
Diluted EPS $ 792,000 5,068,865436,000 5,064,085 $ 0.15620.086
For the threenine months ended JulyJanuary 31, 2010
----------------------------------------2012
-------------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- -------------- --------------------
Net Income $ 249,000
=============$1,641,000
===========
Basic EPS $1,641,000 5,045,898 $ 249,000 5,062,892 $ 0.04920.325
Effect of dilutive securities:
Convertible preferred stock --0 20,500
(0.0002)----------- ------------- -------------- ---------------------
Diluted EPS $1,641,000 5,066,398 $ 0.323
For the three months ended January 31, 2011
--------------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- -----------
Net Income $ 752,000
===========
Basic EPS $ 752,000 5,054,500 $ 0.149
Effect of dilutive securities:
Convertible preferred stock 0 20,500
----------- ------------- -----------
Diluted EPS $ 249,000 5,083,392752,000 5,075,000 $ 0.04900.148
For the nine months ended January 31, 2011
--------------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- -----------
Net Income $1,406,000
===========
Basic EPS $1,406,000 5,059,213 $ 0.278
Effect of dilutive securities:
Convertible preferred stock 0 20,500
----------- ------------- -----------
Diluted EPS $1,406,000 5,079,713 $ 0.277
Note 6 Retirement Benefit Plan
On January 1, 1998, the Company adopted the George Risk Industries, Inc.
Retirement Savings Plan (the "Plan)"Plan"). The Plan is a defined contribution
savings plan designed to provide retirement income to eligible employees of
the corporation. The Plan is intended to be qualified under Section 401 (k)401(k)
of the Internal Revenue Code of 1986, as amended. Matching contributions by
the Company of approximately $3,000 were paid during each quarter ending
January 31, 2012 and 2011. Likewise, the quartersCompany paid matching contributions
of $9,000 during the nine-month periods ending JulyJanuary 31, 20112012 and 2010, respectively.2011.
There were no discretionary con-
tributionscontributions paid during either the quarters or
nine-month periods ending JulyJanuary 31, 2012 and 2011, and 2010, re-
spectively.respectively.
Note 7 Fair Value Measurements
Generally accepted accounting principles in the United States of America
(US GAAP) defines fair value as the price that would be received from selling
an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. When determining the fair value
measurements for assets and liabilities, which are required to be recorded at
fair value, we consider the principal or most advantageous market in which we
would transact and the market-based risk measurements or assumptions that
market participants would use in pricing the asset or liability, such as
in-
herentinherent risk, transfer restrictions, and credit risk.
US GAAP establishes a fair value hierarchy that prioritizes the inputs
to valuation techniques used to measure fair value. The hierarchy gives the
highest priority to unadjusted quoted prices in active markets for identical
assets or liabilities (level 1 measurements) and the lowest priority to un-
observable inputs (level 3 measurements). The levels of the fair value
hierarchy under US GAAP are described below:
Level 1 - Valuation is based upon quoted prices for identical in-
struments traded in active markets.
Level 2 - Valuation is based upon quoted prices for similar in-
struments in active markets, quoted prices for identical
or similar instruments in markets that are not active,
and model-based valuation techniques for which all sig-
nificant assumptions are observable in the market.
Level 3 - Valuation is generated from model-based techniques that
use significant assumptions not observable in the market.
These unobservable assumptions reflect our own estimates
of assumptions that market participants would use in
pricing the asset or liability. Valuation techniques
include use of option pricing models, discounted cash
flow models and similar techniques.
Investments and Marketable Securities
----------------------------------------------------------
As of JulyJanuary 31, 2011,2012, our investments consisted of money markets, CDs,
publicly traded equity securities as well asand certain state and municipal debt
securities. Our marketable securitiesinvestments are valued using third-party broker statements.
The value of the majority of securitiesinvestments is derived from quoted market inform-
ation.information. The
inputs to the valuation are generally classified as Level 1 given the active market for
these securities, however, if an active market does not exist, which is the
case for municipal and corporate bonds, the inputs are recorded at a lower level in the fair value hierarchy.as Level 2.
Fair Value Hierarchy
--------------------
The following tables set forth our assets and liabilities measured at fair
value on a recurring basis and a non-recurring basis by level within the fair
value hierarchy. As required by US GAAP, assets and liabilities are
classified in their entirety based on the lowest level of input that is
significant to the fair value measurement.
Assets Measured at Fair Value on a Recurring Basis
as of JulyJanuary 31, 20112012
---------------------------------------------------
Level 1 Level 2 Level 3 Total
------- ------- ------- -------
Assets:
MarketableMoney Markets and CDs $1,162,000 $ 0 $ 0 $ 1,162,000
Equity Securities $10,018,000$8,697,000 $ 9,359,0000 $ -- $19,377,0000 $ 8,697,000
Municipal and Corporate
Bonds $ 0 $9,876,000 $ 0 $ 9,876,000
----------- ----------- ----------- --------------------- ------------
Total fair value of
assets measured on a
recurring basis $10,018,000$9,859,000 $9,876,000 $ 9,359,000 $ -- $19,377,000
=========== =========== =========== ===========0 $19,735,000
GEORGE RISK INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Item 2. Management Discussion and Analysis of Financial Condition and
Results of Operations
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the attached con-
densed consolidated financial statements, and with the Company'sGeorge Risk
Industries' audited financial statements and discussion for the fiscal year
ended April 30, 2011.
Liquidity and capital resources
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Operating
---------
Net cash increased $264,000 during the quarter ended July 31, 2011 as com-
pared to an increase of $2,071,000 during the corresponding quarter last
year. Accounts receivable increased $406,000decreased $68,000 for the quarter ending Julynine months ended January 31, 2011 compared with a $79,000 decrease2012, while,
for the same quarterperiod last year, net cash increased $1,284,000. Accounts re-
eivable increased $127,000 for the current nine months and increased $11,000
for the same period last year. The in-
creaseincrease in cash flow for accounts receivable for the current periodre-
ceivable is a re-
flectionreflection of increased sales. At the quarter ended JulyJanuary 31, 2011, 63.69%2012, 64.93% of
the receivables arewere considered current (less than 45 days) while 4.95%and 2.82% of the
total arewere over 90 days past due. This is inFor comparison, to having 78.15%73.70% of the receivables
consideredwere current and 4.06% over1.55% were past 90 days past due at JulyJanuary 31, 2010.2011. Inventories
increased $243,000 during$315,000 for the current quarter as com-
pared to a $236,000 decreasenine months, and it decreased $115,000 for
the same period last year. Management has hadThe current increase is due to increase its
raw material purchases as a result of the increase inincreased sales
and the priceprices of raw materials keeps rising. At the quarter ended July 31, 2011 there was a
$2,000 increasehave increased. Changes in prepaid expenses
while at Julyin regards to cash flow increased by $7,000 and decreased by $57,000 for the
nine-month periods ending January 31, 2010, there was a
$56,000 decrease.2012 and 2011, respectively. There was
not an income tax overpayment for the quarternine months ended JulyJanuary 31, 2011,2012,
while there was an $88,000 decreasea $23,000 increase in income tax over-
paymentoverpayment for the corresponding quartercor-
responding period last year. Management paid income tax estimates based on
prior year taxable income.
AtFor the quarternine months ended JulyJanuary 31, 2011,2012, accounts payable shows a decrease of
$37,000 as compared to a decrease of $1,000decreased
$69,000 while cash flow towards accounts payable did not fluctuate for the
same quarter the year
before.period ended January 31, 2011. The change in cash in regards to
accounts payable can vary. It really depends on the time of the month the
invoices are due, since the com-
panycompany pays all its invoices within the terms.
Accrued expenses increased $60,000$63,000 for the current quarter as compared to a $62,000 increasenine months ended January 31,
2012, and these expenses increased $75,000 for the quarter ended July 31, 2010.corresponding nine months
last year. The current increase is due toa result of increased em-
ploymentsales commissions
and more payroll and commission dollars.employees. Income tax payable in-
creased $290,000increased $104,000 for the quarter ended Julynine
months ending January 31, 2011,2012, while there was no payable on the books for
the corresponding quarter the sameperiod last year.
Investing
---------
As for our investment activities, the Company has spent approximately
$169,000$298,000 on acquisitions of property and equipment for the current fiscal
quarter. In comparison withnine-month
period and $44,000 was spent during the corresponding quarter last year, there was
activity of $17,000. The $169,000 represents annine months ended January 31, 2011.
Two in-house mold,built molds, valued at $265,000 and previously a
projectclassified as
projects in process, which waswere completed during the quarter.current nine-month period.
Additionally, the Company continues to purchase marketable securities, which
include municipal and corporate bonds and quality stocks. Cash spent on purchasespur-
chases of marketable securities for the quarternine months ended JulyJanuary 31, 20112012
was $169,000 compared with
$419,000$748,000 and $762,000 was spent duringfor the quartercorresponding period last year.
In addition, proceeds from the sale of marketable securities for the nine
months ended JulyJanuary 31, 2010.2012 were $168,000 and $1,584,000 for the same
period last year. We continue to use "money manager" accounts for most stock transactions.trans-
actions. By doing this, the Company gives an independent third party firm,
who are experts in this field, permission to buy and sell stocks at will.
The Company pays a quarterly service fee based on the value of the investments.invest-
ments. Furthermore, the Company continues to purchase back its common stock
when the opportunity arises. For the quarternine months ended JulyJanuary 31, 2011,2012, the
Company purchased $20,000$37,000 worth of treasury stock and also $20,000$59,000 worth of treasury stockwas
bought back for the quarternine months ended JulyJanuary 31, 2010.2011. We have been
actively searching for stockholders that have been "lost" over the years.
The payment of dividends over the last seven fiscal years has also prompted
many stockholders and/or their relatives and descendants to sell back their
stock to the Company.
Financing
---------
Cash flows from financing activities decreased by $1,055,000 for the nine
months ending January 31, 2012. That figure consists of the payment of
dividends during the second quarter. The company declared a dividend of
$0.23 per share of common stock on September 30, 2011 and these dividends
were paid by October 31, 2011. As for the prior year numbers, net cash used
in financing activities was $924,000 for the nine months ending January 31,
2011. A dividend of $0.20 per common share was also declared and paid during
the second fiscal quarter last year.
The following is a list of ratios to help analyze George Risk Industries'
performance:
For the quarter ended
JulyJanuary 31,
2012 2011 2010
---------------------------
Working capital
(current assets - current liabilities) $ 28,058,00027,978,000 $ 26,673,00026,844,000
Current ratio
24.961 38.410(current assets / current liabilities) 27.320 33.978
Quick ratio
22.932 35.160((cash + investments+ AR) / current
liabilities) 25.036 30.581
Results of Operationsoperations
~~~~~~~~~~~~~~~~~~~~~
Net sales were $2,598,000$2,584,000 for the quarter ended JulyJanuary 31, 2011,2012, which is ana
16.4% increase of 29.44% from the corresponding quarter last year. NetYear-to-date net
sales forat January 31, 2012 were $7,742,000, which is a 20.9% increase from the
quarter ended July 31, 2010 were $2,007,000.same period last year. Even though the majority of the Company's products
are tied to the housing market, the increase in sales is a result of the
Company focusing on gaining market share in the industry. The Company is
accomplishing this by having excellent customer service and being willing to
make many customized parts. Cost of goods sold was 45.84%48.26% of net sales for
the quarter ended JulyJanuary 31, 20112012 and 61.24%50.41% for the same quarter ended July 31, 2010.last year.
Year-to-date cost of goods sold percentages were 49.1% for the current nine
months and 53.75% for the corresponding nine months last year. Management
continues to keep labor and other manufac-
turingmanufacturing expenses down and has reachedstrives to
stay in the desired cost of goods sold percent-
agepercentage range of 45 to 50%. Also,
management raised prices at January 1, 2011.
This was the first overall price increase to take place in almost 10 years.2012. The price increase helps decreasein-
crease the cost of goods sold percentage.gross profit.
Operating expenses were 22.1%23.88% of net sales for the quarter ended JulyJanuary 31,
20112012 as compared to 29.9%26.94% for the corresponding quarter last year. Manage-
ment's goal is to always keep theYear-to-
date operating expenses around 30% or lesswere 23.77% of net sales asfor the nine months ended
January 31, 2012, while they were 28.34% for the same period last year.
Having relatively the same percentages for operating expenses shows that
management has been able to achieve over the years.a good grip on spending habits. Income from operations for
the quarter ended JulyJanuary 31, 20112012 was at $833,000,$720,000, which is a 367.98% increase43.14% in-
crease from the corresponding quarter last year, which had income from oper-
ations of $503,000. Income from operations for the nine months ended January
31, 2012 was at $2,101,000, which is an 83.17% increase from the correspond-
ing nine months last year, which had income from operations of $178,000.$1,147,000.
Other income and expenses showed a $579,000loss of $156,000 and a gain of $489,000
for the quarter and nine months ended JulyJanuary 31, 2011 as compared to having a $128,000 gain2012. The numbers for the
corresponding periods last year were gains of $315,000 for the quarter ended July 31,
2010. The main reasonand
$543,000 for the bigger gains in othernine-months ending January 31, 2011. Dividend and interest
income was up 2.78% for the quarter and was up 4.85% for the current nine-
month period when comparing to the same time periods last year. During the
current quarter, is that we hadthere was a $379,000 realized gain$384,000 loss on investments recorded. Manage-
ment wrote down $5,000 of impaired investments during the quarter ending
January 31, 2012. There was not a write down of investments for the quarter as compared to a $56,000 realized loss for the correspondingsame
quarter last year. In turn, netAs for the nine months ended January 31, 2012 and 2011,
there were write-downs of $71,000 and $11,000, respectively.
Net income for the quarter ended JulyJanuary 31, 20112012 was at
$792,000,$436,000, which is a
218.07% increase42.02% decrease from the corresponding quarter last year, which showed a net
incomegain of $249,000. Earnings per share$752,000. Net income for the quarternine months ended JulyJanuary 31, 2012 was
$1,641,000, a 16.71% increase from the same period last year. Net income for
the nine months ended January 31, 2011 were $0.16 per common share and $0.05was $1,406,000. Earnings per common
share for the quarter ended JulyJanuary 31, 2010.2012 was $0.09 per share and $0.33
per share for the year-to-date numbers. EPS for the quarter and nine months
ended January 31, 2011 was $0.15 per share and $0.28 per share, respectively.
New Product Developmentproduct information
~~~~~~~~~~~~~~~~~~~~~~~
Mold design has been completedIn response to customer requests, we have modified our 3/4" and production started1" recessed
contacts into a shorter and stubby version. This makes for easier install-
ation. Depending on the part number, these are used in steel door or
aluminum and wood doors.
We have also added a service repair connector to our 700 Series
switches.product line. The
weather pack nylon connectors are environmentally sealed to withstand ex-
posure to temperature and moisture. This connector (SRC-12) is a miniature surface mount contact switch with terminal
blocks. This has been requested by customers for some time and will be
GRI's smallest surface mount terminal switch. Sales have been strong with
nearly 13,000 sold since May 2011.
Splice and corner connecting pieces for the E-Z Duct Quarter Round Raceway
are currently being molded. We are also working on a plastic housingan ideal
companion for our very popular flat magnet (MF-875).great selling HVAC kits and other applications for removal
of equipment for service and repair.
Engineering has nearly completed work on a garage door alert (DM-1) which will
monitor when the garage door has been left open and will automatically shut
the door - either--either by a timed delay after the garage door has been opened or
closing at a set time every day. We believeManagement believes this will be a good up
sell as a lot ofmany home burglariesburglars gain access through a garage door that is left
open or unlocked.
Engineering is completing new water sensors (WM2600-10 & WM-10P) made fromworking on a flexible cord. This design will contain multiple sensors to cover a larger
detection area such as along the wall of a computer or utility room. We hope
to launch both of these products in the next couple of weeks and they will be
promoted asplastic housing for our new products at the International Security Conference in New
York the first week of November 2011.
Engineering isvery popular MF-875 flat
magnet. They are also looking to complete a design on an 110V Current
Controller which would work with our contact switches to secure the door of
a storage unit and also turn on the light when the door is opened.
Recently Issued Accounting Pronouncementsissued accounting pronouncements
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
There are no new accounting pronouncements that significantly affect the
Company.
Other Information
~~~~~~~~~~~~~~~~~
Management is always open to the possibility to acquire a business that would
complement our existing operations. This would require no outside financing.
The intent is to utilize the equipment, marketing techniques and established
customers to increase sales and profits.
There are no known seasonal trends with any of GRI'sour products, since we sell to
distributors and OEM manufacturers. OurThe products are tied to the housing
industry and will fluctuate with building trends.
GEORGE RISK INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Item 3. Controls and Procedures
(a) Information required by Item 307
Our Chief Executive Officer and our Chief Financial Officer, after evaluating
the effectiveness of the Company's "disclosure controls and procedures" (as
defined in the Securities Exchange Act of 1934 (Exchange Act) Rules 13a-15(e)
or 15d-15(e)) as of the end of the period covered by this quarterly report,
have concluded that our disclosure controls and procedures are effective
based on their evaluation of these controls and procedures required by para-
graph (b) of Exchange Act Rules 13a-15 or 15d-15.
(b) Information required by Item 308
This disclosure is not yet required.
Item 3A. Controls and Procedures
Evaluation of disclosure controls and procedures:
-------------------------------------------------
Based on their evaluation of our disclosure controls and procedures (as de-
fined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of JulyJan-
uary 31, 2011, our president and chief executive officer and our chief financialfinan-
cial officer have concluded that our disclosure controls and procedures are
effective such that information required to be disclosed by us in the reports
that we file or submit under the Exchange Act is (i) recorded, processed,
summarized and reported within the time periods specified in the Securities
and Exchange Commission's rules and (ii) accumulated and communicated to our
management, including our chief executive officer and our chief financial
officer, as appropriate to allow timely decisions regarding disclosure. A
control system cannot provide absolute assurance, however, that the ob-
jectives of the control systems are met, and no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud,
if any, within a company have been detected.
Changes in internal controls over financial reporting:
------------------------------------------------------
There was no change in our internal controls over financial reporting that
occurred during the period covered by this report, that has materially
affected, or is reasonably likely to materially affect, our internal con-
trolscontrols
over financial reporting.
Management's Annual Report on Internal Control over Financial Reporting:
------------------------------------------------------------------------
Our management is responsible for establishing and maintaining adequate in-
ternal control over financial reporting, as such term is defined in Rules
13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control system was
designed to provide reasonable assurance regarding the reliability of finan-
cial reporting and the preparation of financial statements for external pur-
poses, in accordance with generally accepted accounting principles. Because
of inherent limitations, a system of internal control over financial re-
porting may not prevent or detect misstatements. Therefore, even those
systems determined to be effective can provide no reasonable assurance of
achieving their control objectives. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may
become inadequate due to change in conditions, or that the degree of com-
pliance with the policies or procedures may deteriorate.
Our management, including our principal executive officer and principal
accounting officer, conducted an evaluation of the effectiveness of our
in-
ternalinternal control over financial reporting using the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) in
Internal Control-Integrated Framework. Based on its evaluation, our manage-
ment concluded that as of JulyJanuary 31, 20112012 our internal control over
financial reporting is effective.
This quarterly report does not include an attestation report of the Corpor-
ation's registered public accounting firm regarding internal control over
financial reporting. Management's report was not subject to attestation by
the Corporation's registered public accounting firm pursuant to Section
404 (c)404(c) of the Sarbanes-Oxley Act of 2002, as amended, that permits the CorporationCor-
poration to provide only the management's report in this quarterly report.
GEORGE RISK INDUSTRIES, INC.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table provides information relating to the Company's
repurchase of common stock for the firstthird quarter of fiscal year 2012.
Period Number of shares repurchased
--------------------------------------------------------------------- ----------------------------
MayNovember 1, 2011 - May 31,November 30, 2011 750
June1,200
December 1, 2011 - June 30, 2011 2,755
July 1, 2011 - JulyDecember 31, 2011 100200
January 1, 2012 - January 31, 2012 0
Item 3. Defaults upon Senior Securities
Not applicable
Item 4. (Removed and Reserved)Submission of Matters to a Vote of Securities
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
31. Certifications pursuant to Rule 13a-14(a)
31.1 Certification of the Chief Executive Officer
31.2 Certification of the Chief Financial Officer
32. Certifications pursuant to 18 U.S.CU.S.C. 1350
32.1 Certification of the Chief Executive Officer
32.2 Certification of the Chief Financial Officer
B. Reports on Form 8-K
No 8-K reports were filed during the quarter ended JulyJanuary 31, 2011.2012.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
George Risk Industries, Inc.
(Registrant)
Date 09-13-201103-16-2012 By: /s/ KenKenneth R. Risk
KenKenneth R. Risk
President and Chairman of the Board
Date 09-13-201103-16-2012 By: /s/ Stephanie M. Risk
Stephanie M. Risk
Chief Financial Officer and Controller