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
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EXCHANGE ACT OF 1934
For the quarterly period ended August 04,November 3, 2001
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OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-13200
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Astro-Med, Inc.
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(Exact name of registrant as specified in its charter)
Rhode Island 05-0318215
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
600 East Greenwich Avenue, West Warwick, Rhode Island 02893
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(Address of principal executive offices) (Zip Code)
(401) 828-4000
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(Registrant's telephone number, including area code)
__________________________------------------------
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 - 4,265,4854,266,558 shares (excluding treasury
shares) as of August 31,November 30, 2001
-1-
ASTRO-MED, INC.
INDEX
Page No.
Part I. Financial Information:
Consolidated Balance Sheets -
August 4, 2001 and January 31, 2001....................... 3
Consolidated Statements of Income -
Three Months Ended August 4, 2001 and July 29, 2000 ...... 4
Consolidated Statements of Income -
Six Months Ended August 4, 2001 and July 29, 2000 ........ 5
Consolidated Statements of Cash Flows -
Six Months Ended August 4, 2001 and July 29, 2000 ........ 6
Notes to Consolidated Financial Statements -
August 4, 2001............................................. 7-9
Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 10-12
Part II. Other Information...................................Page No.
-------
Part I. Financial Information:
Consolidated Balance Sheets -
November 3, 2001 and January 31, 2001......................... 3
Consolidated Statements of Income -
Three-Months Ended November 3, 2001 and October 28, 2000...... 4
Consolidated Statements of Income -
Nine-Months Ended November 3, 2001 and October 28, 2000....... 5
Consolidated Statements of Cash Flows
Nine-Months Ended November 3, 2001 and October 28, 2000....... 6
Notes to Consolidated Financial Statements November 3, 2001..... 7-9
Management's Discussion and Analysis of Financial
Condition and Results of Operations........................... 10-12
Part II. Other Information....................................... 13
-2-
Part I. FINANCIAL INFORMATION
ASTRO-MED, INC.
CONSOLIDATED BALANCE SHEETS
August,4November,3 January 31,
ASSETS 2001 2001
---- ----
(Unaudited)
CURRENT ASSETS
Cash and Cash Equivalents ....................................................Equivalents............................ $ 2,106,6491,631,830 $ 806,069
Securities Available for Sale ................................................ 4,058,580Sale........................ 3,529,544 5,362,523
Accounts Receivable, Net ..................................................... 8,328,505Net............................. 9,520,351 10,663,624
Inventories, Net ............................................................. 11,598,509Net..................................... 10,821,872 10,782,425
Prepaid Expenses and Other Current Assets .................................... 2,135,191Assets............ 2,217,102 2,038,227
------------ ------------
Total Current Assets .................................................... 28,227,434Assets............................ 27,720,699 29,652,868
PROPERTY, PLANT AND EQUIPMENT ...................................................................... 23,186,824EQUIPMENT.......................... 23,416,542 22,547,305
Less Accumulated Depreciation ................................................ (14,935,751)Depreciation........................ (15,260,249) (14,259,992)
------------ ------------
8,251,0738,156,293 8,287,313
OTHER ASSETS
Goodwill ..................................................................... 2,392,213Goodwill............................................. 2,353,540 2,465,494
Amounts Due from Officers ....................................................Officers............................ 480,314 480,314
Other ........................................................................ 83,555Other................................................ 69,438 172,941
------------ ------------
2,956,0822,903,292 3,118,749
------------ ------------
$ 39,434,58938,780,284 $ 41,058,930
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable .............................................................Payable..................................... $ 3,687,4353,553,974 $ 3,711,248
Accrued Compensation ......................................................... 1,201,516Compensation................................. 1,199,956 1,974,223
Accrued Expenses ............................................................. 1,587,749Expenses..................................... 1,418,349 1,916,597
Income Taxes Payable ......................................................... 30,330Payable................................. - 96,058
Current Maturities of Long-Term Debt ......................................... 44,813Debt................. 36,912 46,832
------------ ------------
Total Current Liabilities ............................................... 6,551,843Liabilities....................... 6,209,191 7,744,958
LONG-TERM DEBT, Less Current Maturities ........................................ --Maturities................ - 24,755
DEFERRED INCOME TAXES .......................................................... 923,914TAXES.................................. 932,921 996,157
SHAREHOLDERS' EQUITY
Preferred Stock, $10 Par Value,
Authorized 100,000 Shares, None Issued ..................................... -- --Issued............. - -
Common Stock, $.05 Par Value, Authorized
13,000,000 Shares, Issued, 5,162,9335,164,080
5,160,780 Shares, respectively ............................................. 258,147.................... 258,204 258,039
Additional Paid-In Capital ................................................... 5,629,597Capital........................... 5,633,496 5,706,870
Retained Earnings ............................................................ 32,283,684Earnings.................................... 31,883,326 32,667,859
Treasury Stock, at Cost (897,895 and
930,895 Shares, respectively) .................................................................... (5,860,610) (6,076,003)
Accumulated Other Comprehensive Loss ......................................... (351,986)Loss................. (276,244) (263,705)
------------ ------------
31,958,83231,638,172 32,293,060
------------ ------------
$ 39,434,58938,780,284 $ 41,058,930
============ ============
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ASTRO-MED, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
------------------
August 4, July 29,
2001 2000
---- ----
Net Sales................................... $12,131,706 $13,381,804
Cost of Sales............................... 7,365,737 7,979,218
----------- -----------
Gross Profit................................ 4,765,969 5,402,586
Costs and Expenses:
Selling, General and Administrative....... 4,156,183 3,998,476
Research and Development.................. 928,920 1,142,544
----------- -----------
5,085,103 5,141,020
----------- -----------
Operating Income(Loss)...................... (319,134) 261,566
Other Income (Expense):
Investment Income......................... 79,858 111,064
Interest Income (Expense)................. (1,471) 3,287
Other, Net................................ (1,825) (18,853)
----------- -----------
76,562 95,498
----------- -----------
Income (Loss) before Income Taxes........... (242,572) 357,064
(Provision) Benefit for Income Taxes........ 48,514 (89,266)
----------- -----------
Net Income (Loss)........................... $ (194,058) $ 267,798
Three-Months Ended
-------------------
November 3, October 28,
2001 2000
---- ----
Net Sales...................................................... $12,398,711 $11,880,940
Cost of Sales.................................................. 7,957,468 7,648,059
----------- -----------
Gross Profit................................................... 4,441,243 4,232,881
Costs and Expenses:
Selling, General and Administrative.......................... 3,869,002 4,148,908
Research and Development..................................... 997,231 978,439
----------- -----------
4,866,233 5,127,347
----------- -----------
Operating Loss................................................. (424,990) (894,466)
Other Income (Expense):
Investment Income............................................ 58,715 111,698
Interest Expense............................................. (531) (3,841)
Other, Net................................................... 79,632 (143,364)
----------- -----------
137,816 (35,507)
----------- -----------
Loss before Income Taxes....................................... (287,174) (929,973)
Provision for Income Tax Benefit............................... (57,435) (232,000)
----------- -----------
Net Loss....................................................... $ (229,739) $ (697,973)
=========== ===========
Loss Per Common Share-basic and diluted........................ $ (0.05) $ (0.16)
=========== ===========
Weighted Average Number of Common and Common
Equivalent Shares Outstanding-basic
and diluted.................................................. 4,265,520 4,428,825
=========== ===========
Dividends Declared Per Common Share............................ $ 0.04 $ 0.04
=========== ===========
Net Income (Loss) Per Common
Share-basic and diluted.................. ($ 0.05) $ 0.06
=========== ===========
Weighted Average Number of Common
Shares Outstanding - basic 4,264,406 4,425,039
=========== ===========
Weighted Average Number of Common and Common
Equivalent Shares Outstanding - diluted... 4,264,406 4,468,497
=========== ===========
Dividends Declared Per Common Share......... $ .04 $ .04
=========== ===========
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ASTRO-MED, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
Six Months Ended
----------------
August 4, July 29,
2001 2000
---- ----
Net Sales...................................... $24,567,716 $25,908,578
Cost of Sales.................................. 14,749,650 15,336,069
---------- ----------
Gross Profit................................... 9,818,066 10,572,509
Costs and Expenses:
Selling, General and Administrative.......... 8,283,265 7,905,553
Research and Development..................... 1,837,454 2,235,634
---------- ----------
10,120,719 10,141,187
Operating Income (Loss)........................ (302,653) 431,322
Other Income (Expense):
Investment Income............................ 164,986 230,480
Interest Expense............................. (2,760) (2,198)
Other, Net................................... 84,937 (90,899)
----------- ----------
247,163 137,383
Income (Loss) before Income Taxes.............. (55,490) 568,705
(Provision)Benefit for Income Taxes............ 11,096 (143,047)
---------- ----------
Net Income (Loss).............................. $ (44,394) $ 425,658
========== ==========
Net Income (Loss) Per Common
Share-basic and diluted...................... $ (0.01) $ 0.10
========== ==========
Weighted Average Number of Common
Shares Outstanding - basic................... 4,252,809 4,422,043
========== ==========
Weighted Average Number of Common and Common
Equivalent Shares Outstanding - diluted...... 4,252,809 4,468,492
========== ==========
Dividends Declared Per Common Share............ $ .08 $ .08
========== ==========
Nine-Months Ended
November 3, October 28,
2001 2000
---- ----
Net Sales........................................... $36,966,427 $37,795,116
Cost of Sales....................................... 22,707,117 22,989,726
----------- -----------
Gross Profit........................................ 14,259,310 14,805,390
Costs and Expenses:
Selling, General and Administrative............... 12,152,267 12,054,515
Research and Development.......................... 2,834,685 3,214,073
----------- -----------
14,986,952 15,268,588
----------- -----------
Operating Loss...................................... (727,642) (463,198)
Other Income (Expense):
Investment Income................................. 223,701 342,178
Interest Expense.................................. (3,291) (6,038)
Other, Net........................................ 164,569 (234,264)
----------- -----------
384,979 101,876
----------- -----------
Loss before Income Taxes............................ (342,663) (361,322)
Provision for Income Tax Benefit.................... (68,531) (88,954)
----------- -----------
Net Loss............................................ $ (274,132) $ (272,368)
=========== ===========
Loss Per Common Share-basic and diluted............. $ (0.06) $ (0.06)
=========== ===========
Weighted Average Number of Common and Common
Equivalent Shares Outstanding-basic
and diluted....................................... 4,257,046 4,424,321
=========== ===========
Dividends Declared Per Common Share................. $ 0.12 $ 0.12
=========== ===========
-5-
ASTRO-MED, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
----------------
August 4, July 29,
2001 2000
---- ----
Cash Flows from Operating Activities:
Net Income (Loss)............................ $ (44,394) $ 425,658
Adjustments to Reconcile Net Income (Loss) to
Net Cash Provided (Used) by Operating Activities:
Depreciation and Amortization........... 749,040 669,320
Other................................... (160,524) -
Changes in Assets and Liabilities:
Accounts Receivable...................... 2,335,119 (994,142)
Inventories.............................. (930,069) (65,096)
Other.................................... 30,879 22,229
Accounts Payable and Accrued Expenses.... (995,422) (2,086,099)
Income Taxes............................. (65,728) (211,113)
----------- ------------
Total Adjustments...................... 963,295 (2,664,901)
Net Cash Provided (Used) by
Operating Activities..................... 918,901 (2,239,243)
Cash Flows from Investing Activities:
Proceeds from Sales of Securities
Available for Sale......................... 2,200,044 2,726,901
Purchases of Securities Available
for Sale................................... (896,101) (1,714,423)
Refund of Purchase Price for Acquisition..... - 225,000
Additions to Property, Plant and Equipment... (563,990) (396,186)
----------- ------------
Net Cash Provided by Investing Activities.. 739,953 841,292
Cash Flows from Financing Activities:
Principle Payments on Capital Leases......... (26,775) (37,744)
Proceeds from Common Shares Issued
Under Employee Benefit Plans............... 8,282 48,120
Dividends Paid............................... (339,781) (353,682)
----------- ------------
Net Cash Used by Financing Activities...... (358,274) (343,306)
Net Increase (Decrease) in Cash and
Cash Equivalents.............................. 1,300,580 (1,741,257)
Cash and Cash Equivalents, Beginning of Period... 806,069 4,035,867
----------- ------------
Cash Equivalents, End of Period.............. $ 2,106,649 $ 2,294,610
=========== ============
Supplemental Disclosures of Cash Flow
Information:
Cash Paid During the Period for:
Interest................................. $ 2,760 $ 2,250
Income Taxes............................. $ 89,319 $ 232,823
Nine-Months Ended
November 3, October 28,
2001 2000
---- ----
Cash Flows from Operating Activities:
Net Loss.................................................. $ (274,132) $ (272,368)
Adjustments to Reconcile Net Loss to Net
Cash Provided (Used) by Operating Activities:
Depreciation and Amortization........................ 1,112,211 1,063,305
Gain on Sale of Assets............................... (25,000) -
Other................................................ (149,465) 69,661
Changes in Assets and Liabilities:
Accounts Receivable................................... 1,143,273 (97,214)
Inventories........................................... (192,721) 299,210
Other................................................. 16,951 37,156
Accounts Payable and Accrued Expenses................. (1,299,996) (1,867,588)
Income Taxes.......................................... (187,863) (841,544)
----------- -----------
Total Adjustments................................... 417,390 (1,337,014)
Net Cash Provided (Used) by
Operating Activities.................................. 143,258 (1,609,382)
Cash Flows from Investing Activities:
Proceeds from Sales of Securities
Available for Sale...................................... 1,917,987 3,109,928
Purchases of Securities Available
for Sale................................................ - (2,084,572)
Proceeds from Sales of Assets............................. 25,000 -
Refund of Purchase Price for Acquisition.................. - 225,000
Additions to Property, Plant and Equipment................ (727,283) (705,731)
----------- -----------
Net Cash Provided by Investing
Activities............................................ 1,215,704 544,625
Cash Flows from Financing Activities:
Principle Payments on Capital Leases...................... (34,675) (48,712)
Proceeds from Common Shares Issued
Under Employee Benefit Plans............................ 11,875 51,492
Dividends Paid............................................ (510,401) (531,356)
----------- -----------
Net Cash Used by Financing Activities................... (533,201) (528,576)
Net Increase (Decrease) in Cash and Cash
Equivalents............................................... 825,761 (1,593,333)
Cash and Cash Equivalents, Beginning of Period................ 806,069 4,035,867
----------- -----------
Cash and Cash Equivalents, End of Period...................... $ 1,631,830 $ 2,442,534
=========== ===========
Supplemental Disclosures of Cash Flow
Information:
Cash Paid During the Period for:
Interest.............................................. $ 3,291 $ 3,246
Income Taxes.......................................... $ 128,196 $ 752,591
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ASTRO-MED, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 4,November 3, 2001
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, 2001.
(b) Net income (loss) per common share has been computed and presented
pursuant to the provisions of Statement of Financial Accounting Standards No.
128, Earnings Per Share. Net income (loss) per share is based on the weighted
average number of shares outstanding during the period. Net income (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.
Three MonthsThree-Months Ended Six MonthsNine-Months Ended
------------------ ----------------
August 4, July 29, August 4, July 29,-----------------
November 3, October 28, November 3, October 28,
2001 2000 2001 2000
---- ---- ---- ----
Weighted Average Common Shares
Outstanding-basic........................ 4,264,406 4,425,039 4,252,809 4,422,043Outstanding-basic ..................... 4,265,520 4,428,825 4,257,046 4,424,321
Diluted Effect of Options Outstanding......Outstanding..... - 33,458 - 46,449- -
--------- ------------------- --------- ---------
Weighted Average Common Shares
Outstanding - diluted.................... 4,264,406 4,458,497 4,252,809 4,468,492diluted................... 4,265,520 4,428,825 4,257,406 4,424,321
========= ========= ========= =========
For the three monthsthree-month's ended August 4,November 3, 2001 and July 29,October 28, 2000,
respectively, the diluted per share amounts do not reflect options outstanding
of 1,687,4501,686,950 and 1,000,875,1,125,825, respectively because their effect is anti-dilutive.
For the six monthsnine-month's ended August 4,November 3, 2001 and July 29,October 28, 2000,
respectively, the diluted per share amounts do not reflect options outstanding
of 1,687,4501,686,950 and 997,875,943,875, respectively because their effect is anti-dilutive.
(c) Derivative Instruments and Hedging: On February 1, 2001, the Company
adopted SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities, as amended by SFAS No. 137, Accounting for Derivative Instruments
and Hedging Activities - Deferral of the Effective Date of SFAS No. 133, and as
amended in June 2000 by SFAS No. 138 Accounting for Certain Derivative
Instruments and Certain Hedging Activities - an Amendment to SFAS No. 133
(combined SFAS No. 133). The statement requires companies to record derivatives
on the balance sheet as assets or liabilities, measured at fair value. Gains or
losses resulting from changes in the values of those derivatives would be
accounted for depending on the use of the derivative and whether it qualifies
for hedge accounting. The adoption of this statement did not have a material
impact on the Company's results of operations or financial position.
(d) Revenue Recognition: Revenue is recognized when products or services
are performed and the risk and rewards of ownership have been transferred.
-7-
(e) In July 2000, the Emerging Issues Task Force, a body of the Financial
Accounting Standards Board, reached a consensus on Issue No. 00-10, Accounting
for Shipping and Handling Fees and Costs. The consensus requires companies to
start reporting amounts billed to customers in a sales transaction related to
shipping and handling as revenue in the fourth quarter of fiscal year 2001. The
Company previously reported these amounts as a reduction of cost of goods sold.
All previous periods presented have been reclassified to conform to the current
practice. The amount reclassed for three-months and six-monthsnine-months ending July 29,October
28, 2000 were $162,000approximately $150,000 and $315,000,$470,000, respectively.
(f) In July 2001, the Financial Accounting Standards Board (FASB)
released for issuance SFAS No. 141, "Business Combinations" and SFAS No. 142,
"Goodwill and Other Intangible Assets." SFAS No. 141 requires that the purchase
method of accounting be used for all business combinations initiated after June
30, 2001. SFAS No. 142 changes the accounting for goodwill from an amortization
method to an impairment-only approach. Under SFAS No. 142, amortization of
goodwill to earnings will cease and instead, the carrying value of goodwill will
be evaluated for impairment on at least an annual basis. The Company will adopt
SFAS No. 141 and SFAS No. 142 effective January 31, 2002. The Company is
evaluating the impact of adoption of these standards and has not yet determined
the effect of adoption on its financial statements.
In August 2001, the FASB issued SFAS No: 143, Accounting for Asset
Retirement Obligations. SFAS No. 143 requires the fair value of a liability for
an asset retirement obligation to be recognized in the period in which it is
incurred if a reasonable estimate of fair value can be made. The associated
asset retirement costs are capitalized as part of the carrying amount of the
long-lived asset. SFAS 143 is effective for fiscal years beginning after June
15, 2002. The Company believes the adoption of this Statement will not have a
material impact on its financial statements.
In August 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets, which supersedes SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of, and the accounting and reporting provisions of APB No. 30. SFAS
No. 144 addresses the financial and reporting for the impairment or disposal of
long-lived assets and is effective for fiscal years beginning after December
15,2001, and interim periods within those fiscal years. The Company is currently
reviewing this statement to determine its effect on the Company's financial
statements.
Note 2 - COMPREHENSIVE INCOME
The Company's total comprehensive income is as follows.follows;
Three MonthsThree-Months Ended Six MonthsNine-Months Ended
------------------ ----------------
August 4, July 29, August 4, July 29,-----------------
November 3, October 28, November 3, October 28,
2001 2000 2001 2000
---- ---- ---- ----
Comprehensive Income:
Net Income (Loss)..................... ($194,058) $267,798 ($ 44,394) $425,658
-------- -------- -------- --------....................... $(229,739) $(697,973) $(274,132) $(272,368)
--------- --------- --------- ---------
Other Comprehensive Loss:
Foreign currency translation
adjustments, net of tax......... (22,190) (60,679) (93,580) (73,092)9,551 (95,480) (84,032) (168,572)
Unrealized gain (loss)
in securities:
Unrealized holding gain (loss)
arising during the period,
net of tax..................... (17,823) 11,446 4,674 46,54866,191 65,220 71,493 111,768
Reclassification adjustment
for gain (loss) included in
net income, net of tax.........tax........ - - 625 (1,875)
-------- -------- -------- --------- -
--------- --------- --------- ---------
Other Comprehensive Loss.............. (40,013) (49,233) (88,281) (28,419)Income (Loss)....... 75,742 (30,260) (12,539) (56,804)
Comprehensive Income (Loss) .......... ($234,071) $218,565 ($132,675) $397,239
======== ======== ======== ========............ $(153,997) $(728,233) $(286,671) $(329,172)
========= ========= ========= =========
-8-
Note 3 - INVENTORIES
Inventories, net of reserves 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:
August 4,November 3, January 31,
2001 2001
---- ----
Materials and Supplies... $ 6,112,2415,880,212 $ 5,921,934
Work-In-Process.......... 1,381,3481,243,526 1,282,466
Finished Goods........... 4,104,9203,698,134 3,578,025
----------- -----------
$11,598,509 $10,782,425------------
$10,821,872 $ 10,782,425
=========== =======================
-9-
ASTRO-MED, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations:
- -------------------------------------------
For the Three-Months Ending August 4,November 3, 2001 vs. July 29,October 28, 2000
- -----------------------------------------------------------------------------------------------------------------------------
Sales in the secondthird quarter were $12,132,000, a decrease$12,399,000, an increase of 9%4% from the
prior year's secondthird quarter sales of $13,382,000.$11,881,000. Domestic sales were $8,795,000,$9,104,000,
down from $9,501,000$9,230,000 for the secondthird quarter of the prior fiscal year. Sales
through the Company's international channels were $3,337,000, down
14% over$3,295,000, 24% higher than
the previous year's secondthird quarter sales of $3,881,000. Our
international sales continued to be negatively impacted by the sluggish European
economy and by the strong U.S. dollar.$2,651,000.
Sales were lowermixed in each of the Company's product groups. Grass-
Telefactor's sales were $4,400,000, a 14% decrease from the $5,110,000 of sales
reported in the second quarter of the previous year. This decrease in clinical
sales resulted primarily from an unusually large backlog in the prior year.
QuickLabel
Systems (QLS) product sales were $4,761,000, down 4%a record $5,506,000, 21% higher than the
$4,544,000 from the
$4,958,000 the previous year. QLS sales were 9% and 55% higher in the
domestic and international channels, respectively. This decrease isincrease in sales can be
attributed to the decreasedemand for the Company's printer system products expanding in
hardware sales as a result of customers delaying their capital spending.both channels. Test & Measurement (T&M) sales in the quarter were $2,971,000,$3,487,000,
down 10%4% from $3,314,000$3,622,000 reported in the secondprevious year. Domestically, T&M sales
improved over last year by 4%, as T&M's new products (e.g. the Everest and Dash
18) have started to gain acceptance in the marketplace. However, the decline in
the quarter is attributed to T&M's international sales decreasing 31% from the
same period last year. Grass-Telefactor's sales were $3,406,000, an 8% decrease
from the $3,715,000 of sales reported in the third quarter of the previous year.
Sales in the international channels were up 38%, while domestic sales were 17%
lower than the previous year. The declinedecrease in T&Mdomestic sales is a
resultattributed to
customers delaying their acquisition of delays in deliveringnew monitoring systems due the new Dash 18 to the marketplace.current
economic uncertainty.
Gross profit dollars were $4,766,000$4,441,000 in the quarter. The gross profit
margin realized in the quarter was 39.3%35.8%, an increase from last year's margin of
35.6%. The margin improvement can be attributed to the benefits of the workforce
reductions completed in the last fiscal year. However, this improvement was
partially offset by the lower margins caused by the change in sales mix and
lower yields on the T&M and QLS products this quarter.
Operating Expenses in the quarter were $4,866,000. Selling, general and
administrative spending declined 7% from last year to $3,869,000 due to the
benefits of the workforce reductions and reduced spending in this quarter as
compared to last year.
Research and development funding increased 2% from the prior year to
$997,000. In the quarter, R & D spending was 8.0% of sales down from last year's
rate of 8.2%.
Other Income (Expense) for the quarter improved to $138,000 of income
from last year's $36,000 of expense. Investment income decreased $53,000 as a
result of a lower investment base and lower yields on investments. The favorable
$223,000 change in Other, Net is attributed primarily to a $25,000 gain on the
sale of equipment and a $171,000 improvement in foreign exchange gains and
losses. In the prior year, the net foreign exchange loss for the quarter was
$136,000 as opposed to the current quarter's net foreign exchange gain of
$35,000.
Net loss in the current quarter was $230,000, equal to $0.05 loss per
share. This compares to net loss of $698,000, equal to $0.16 net loss per share
in the prior year's quarter.
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Results of Operations (continued):
For the Nine-Months Ending November 3, 2001 vs. October 28, 2000
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Sales for the nine-month were $36,966,000, down 2% from the prior
year's sales of $37,795,000. Domestic sales were $26,940,000, down 3% from
$27,788,000 for the nine-months in the prior fiscal year. Sales through the
Company's international channels were $10,028,000, which is essentially flat
with the previous year's sales of $10,007,000.
Sales were mixed in each of the Company's product groups. QuickLabel
Systems (QLS) product sales were $15,161,000, 3% higher than the $14,758,000
from the previous year. QLS sales were 20% higher in the international channels,
while domestic sales were 4% lower than last year. Test & Measurement (T&M)
sales were $9,475,000, down 5% from $9,950,000 reported in the previous year.
Domestically, T&M sales improved over last year by 3%, as T&M's new products
(e.g. the Everest and Dash 18) have started to gain acceptance in the
marketplace. However, the decline in T&M's sales in the quarter is attributed to
international sales decreasing 31% from the same period last year.
Grass-Telefactor's sales were $12,330,000, a 6% decrease from the $13,087,000 of
sales reported in the previous year. Grass-Telefactor's domestic and
international sales were lower than the previous year by 6% and 4%,
respectively. The decline in Grass-Telefactor's sales is attributed to customers
delaying their acquisition of new monitoring systems due the current economic
uncertainty and delays in the introduction of new software applications.
Gross profit dollars were $14,259,000, a 4% decrease over last year.
The gross profit margin realized this fiscal year was 38.6%, a decrease from
last year's margin of 40.4%39.2%. ProductThe margin decline is attributed to a change in the
sales mix and lower margins inyields on T&M and QLS account for this quarter's
results.products.
Operating Expenses inyear-to-date were $14,987,000 down 2% from the quarter were $5,085,000.prior
year's $15,269,000. Selling, general and general administrative spending rose 4%less than
1% from last year to $4,156,000 due to higher
international dealer commissions in this quarter as compared to last year.
Excluding the impact of these commissions the selling and general administrative
spending was approximately flat with the previous year.$12,152,000.
Research and development funding decreased 19%12% from the prior year to
$929,000. In the quarter,$2,835,000. Thus far this year, R & D spending was 7.7% of sales down from last
year's rate of 8.5%.
Operating loss in the quarterthis year was $319,000$728,000 as compared to an operating loss
of $463,000 in the operating
income for last year's second quarterprior year. The result being a combination of $262,000.lower sales
volume, sales mix and lower gross profit margins.
Other income for the quarter decreasedIncome increased to $77,000$385,000 from last year's $95,000.
Net loss in the current quarter was $194,000, equal to $0.05 loss per
share. This compares to net income of $268,000, equal to $0.06 net income per
share in the prior year's quarter.
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Results of Operations (continued):
- ----------------------------------
For the Six-Months Ending August 4, 2001 vs. July 29, 2000
- ----------------------------------------------------------
Sales in the first half of this year were $24,568,000, down 5% from the
prior year's sales of $25,909,000. Domestic sales were $17,835,000, down from
$18,554,000 for the first half of the prior fiscal year. The decline in the
domestic sales is attributed to the 11% decline in the QLS domestic sales.
Domestic T&M and Grass-Telefactor sales were essentially flat with the prior
year. Sales through the Company's international channels were $6,733,000, 9%
lower than the previous year's first half sales of $7,355,000. Our international
sales continued to be negatively impacted by the sluggish European economy and
by the strengthening of the U.S. dollar.
Sales were lower in each of the Company's product groups. Grass-
Telefactor's sales$102,000.
Investment Income decreased to $8,919,000, a 5% decrease over the $9,368,000 of
sales reported in the first half of the previous year. This decrease in clinical
sales resulted primarily from an unusually large backlog in first half of the
prior year. QuickLabel Systems (QLS) product sales were $9,660,000, down 5% from
the $10,214,000 the previous year. This decrease is attributed to the decrease
in hardware sales$118,000 as a result of our customers delaying their capital spending.
Test & Measurement (T&M) sales were $5,989,000, down 5% from $6,327,000 reporteda lower investment base and
lower yields. The change in the previous year. The decline in T&M salesOther, Net is a result of delays in
delivering the new Dash 18attributed primarily to the marketplace.
Gross profit dollars were $9,818,000, a 7% decrease over last year. The
gross profit margin realized in the first half of this fiscal year was 40.0%, a
decrease from last year's margin of 40.8%. Product mix and lower margins in T&M
and QLS account for the decline in the margin.
Operating Expenses in the first half were $10,121,000 down slightly from
the prior year. Selling and general administrative spending rose 5% from last
year to $8,283,000 due to higher international dealer commissions in the first
half of this year as compared to last year. Excluding the impact of these higher
international dealer commissions selling and general administrative spending was
approximately flat with the prior year.
Research and development funding decreased 18% from the prior year to
$1,837,000. In the first half of this year, R & D spending was 7.5% of sales
down from last year's rate of 8.6%.
Operating loss in the first half of this year was $303,000 as compared to
operating income of $431,000 in the prior year.
Other income increased to $247,000 from last year's $137,000. The increase
is attributed tofollowing:
a $125,000 gain relating to the settlement of litigation on a contract dispute.dispute,
a $25,000 gain on the sale of equipment and a $263,000 improvement in foreign
exchange gains and losses. In the prior year, the net foreign exchange loss was
$243,000 as opposed to the current year's net foreign exchange gain of $20,000.
Net loss in the first half of this year was $44,000,$274,000, equal to $0.01$0.06 loss per share. This compares to
a net incomeloss of $426,000,$272,000, equal to $0.10 income$0.06 loss per share, in the prior year.
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Financial Condition:
- ---------------------------------------
The Company's Statements of Cash Flows for the six-monthsnine-months ending
August 4,November 3, 2001 and July 29,October 28, 2000 are included on page 6. Net cash flow
provided by operating activities for the first half of this yearperiod was $919,000$143,000 versus cash flow
used by operating activities of $2,239,000$1,609,000 in the previous year.
Cash and securities available for sale at August 4,November 3, 2001 totaled
$6,165,000,$5,161,000, which approximatedwas lower than the year-end balance at year-end.of $6,169,000. The
decrease in cash and securities is attributed to the cash used to fund operating
losses, fixed asset additions and dividends exceeding the cash generated by
operations.
The collection cycle improved by 118 days decreasing to 5558 days sales
outstanding at the end of the secondthird quarter as compared to the 66 days sales
outstanding at year-end.
Inventory rose to $11,599,000 fromat the end of the third quarter equaled $10,822,000 which was
slightly higher than the year-end level $10,782,000 asof $10,782,000. Inventory turns at the
Company increased inventory in anticipationend of the new Dash 18third quarter and Pronto
product lines. In addition, inventory increased as a result of items being
manufactured for anticipated sales thatyear-end were delayed. As a result of these
items, inventory turns declined to 2.0 from the year-end turns of 2.5.2.5 turns.
Capital expenditures during the six-monthsnine-months ended August 4,November 3, 2001 were
$564,000,$727,000, up 42%3% from the prior year amount of $396,000.$706,000. The increase is
primarily attributed to the purchase of machinery and equipment that will
improve our manufacturing process.
In the second quarter,During this fiscal year, the Company entered into a new $2.0 million
line of credit agreement, all of which is currently available. Any borrowings on
this line of credit bear interest at LIBOR plus 11/2%. With the addition of this
line of credit the Company currently has $3.5 million of available and unused
borrowings.
In the secondthird quarter, the Company entered into a foreign exchange zero
cost collar agreement to minimize the risk associated with changes in the
foreign exchange rates on certain foreign denominated receivables. This
agreement is a combination of buying a put and selling a call or vice versa and
effectively provides the Company a hedge on certain foreign denominated
receivables between an upper and a lower exchange rate limit. The notional
amount of the agreement is $200,000.$225,000. The agreement expired on August 3,November 2, 2001.
The spot rate on the date the contract expired was within the collar limits and
neither party exercised its option.
Safe Harbor Statement
- ---------------------
This document contains forward-looking statements based on current expectations
that involve a number of risks and uncertainties. Factors which could cause
actual results to differ materially from those anticipated include, but are not
limited to, general economic, financial and business conditions; declining
demand in the test and measurement markets, especially defense and aerospace;
competition in the specialty printer industry; ability to develop market
acceptance of the QLS color printer products and effective design of customer
required features; competition in the data acquisition industry; competition in
the neurophysiology industry; the impact of changes in foreign currency exchange
rates on the results of operations; the ability to introduce new software
applications for all products; the ability to successfully integrate
acquisitions; the business abilities and judgment of personnel and changes in
business strategy.
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
None.
(b) Reports on Form 8-K:
No reports on Form 8-K have been filed during the quarter for which this
report is filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ASTRO-MED, INC.
(Registrant)
Date: SeptemberDecember 7, 2001 By /s/ A. W. Ondis
--------------------------------------------------------------
A. W. Ondis, Chairman
(Principal Executive Officer)
Date: SeptemberDecember 7, 2001 By /s/ Joseph P. O'Connell
--------------------------------------------------------------
Joseph P. O'Connell, Vice
President and Treasurer
(Principal Financial Officer)
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