UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM

10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~November 2, 2019~~

August 1, 2020

☐	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

AstroNova, Inc.

(Exact name of registrant as specified in its charter)


Rhode Island		05-0318215
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer 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)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $.05 Par Value	ALOT	NASDAQ Global Market

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 ☒ No ☐.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

S-T (§

(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule

12b-2

of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule

12b-2

of the Exchange Act) Yes ☐ No ☒.

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

The number of shares of the registrant’s common stock, $.05 par value per share, outstanding as of ~~December 5, 2019~~September

, 2020 was ~~7,069,568.~~

7,168,424.

Table of Contents

ASTRONOVA, INC.

INDEX


			Page No.
Part I.	Financial Information
~~Page No.~~ Item 1.	Financial Statements
~~Part I.~~	~~Financial Information~~
~~Item 1.~~	~~Financial Statements~~
	Unaudited Condensed Consolidated Balance Sheets – ~~November 2, 2019~~August 1, 2020 and January 31, ~~2019~~2020			3
	3
	Unaudited Condensed Consolidated Statements of Income — Three and ~~Nine~~Six Months Ended ~~November 2,~~August 1, 2020 and August 3, 2019 ~~and October 27, 2018~~			4
	4
	Unaudited Condensed Consolidated Statements of Comprehensive Income — Three and ~~Nine~~Six Months Ended ~~November 2,~~August 1, 2020 and August 3, 2019 ~~and October 27, 2018~~			5
	5
	Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity — Three and ~~Nine~~Six Months Ended ~~November 2,~~August 1, 2020 and August 3, 2019 ~~and October 27, 2018~~			6
	~~6-7~~
	Unaudited Condensed Consolidated Statements of Cash Flows — ~~Nine~~Six Months Ended ~~November 2,~~August 1, 2020 and August 3, 2019 ~~and October 27, 2018~~			7
	8
	Notes to the Condensed Consolidated Financial Statements (unaudited)			~~9-23~~ 8-23
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations			~~24-31~~ 23-33
Item 3.	Quantitative and Qualitative Disclosures about Market Risk			33
Item 4.	Controls and Procedures			33
Part II.	Other Information				31
Item 4. 1.	Legal Proceedings			34
Item 1A.	Risk Factors			34-35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds			36
Item 5.	Other Information			36
Item 6.	Exhibits			37-38
Signatures		~~Controls and Procedures~~		39	31
~~Part II.~~	~~Other Information~~
~~Item 1.~~	~~Legal Proceedings~~			32
~~Item 1A.~~	~~Risk Factors~~			32
~~Item 5.~~	~~Other Information~~			32
~~Item 6.~~	~~Exhibits~~			33
~~Signatures~~				34

Table of Contents

Part I. FINANCIAL INFORMATION

Item 1.

Financial Statements

ASTRONOVA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, Except Share Data)

   November 2,
2019 January 31,
2019
   (Unaudited)
ASSETS

CURRENT ASSETS

Cash and Cash Equivalents
   $ 4,468 $ 7,534
Accounts Receivable, net
   22,094 23,486
Inventories, net
   35,594 30,161
Prepaid Expenses and Other Current Assets
   3,059 1,427


Total Current Assets
   65,215 62,608
Property, Plant and Equipment, net
   11,323 10,380
Intangible Assets, net
   26,454 29,674
Goodwill
   12,110 12,329
Deferred Tax Assets, net
   3,482 2,928
Right of Use Assets
   1,767 —
Other Assets
   1,014 1,064


TOTAL ASSETS
   $ 121,365 $ 118,983


LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES

Accounts Payable
   $ 6,674 $ 5,956
Accrued Compensation
   2,968 5,023
Other Liabilities and Accrued Expenses
   3,789 2,911
Current Portion of Long-Term Debt
   5,116 5,208
Revolving Credit Facility
   6,500 1,500
Current Liability – Royalty Obligation
   2,000 1,875
Current Liability – Excess Royalty Payment Due
   419 1,265
Deferred Revenue
   387 373
Income Taxes Payable
   —   554


Total Current Liabilities
   27,853 24,665
Long-Term Debt, net of current portion
   9,004 12,870
Royalty Obligation, net of current portion
   8,488 9,916
Lease Liabilities, net of current portion
   1,350 —
Deferred Tax Liabilities
   539 40
Other Long-Term Liabilities
   1,178 1,717


TOTAL LIABILITIES
   48,412 49,208
SHAREHOLDERS’ EQUITY

Common Stock, $0.05 Par Value, Authorized 13,000,000 shares; Issued 10,333,915 shares and 10,218,559 shares at November 2, 2019 and January 31, 2019, respectively
   518 511
AdditionalPaid-in Capital
   55,870 53,568
Retained Earnings
   51,142 49,511
Treasury Stock, at Cost, 3,279,831 and 3,261,672 shares at November 2, 2019 and January 31, 2019, respectively
   (33,454 ) (32,997 )
Accumulated Other Comprehensive Loss, net of tax
   (1,123 ) (818 )


TOTAL SHAREHOLDERS’ EQUITY
   72,953 69,775


TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
   $ 121,365 $ 118,983


	August 1, 2020			January 31, 2020
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents	$	11,235		$	4,249
Accounts Receivable, net		14,816			19,784
Inventories, net		32,368			33,925
Prepaid Expenses and Other Current Assets		2,899			2,193

Total Current Assets		61,318			60,151
Property, Plant and Equipment, net		11,466			11,268
Intangible Assets, net		23,436			25,383
Goodwill		12,552			12,034
Deferred Tax Assets, net		5,103			5,079
Right of Use Assets		1,541			1,661
Other Assets		1,063			1,088

TOTAL ASSETS	$	116,479		$	116,664

LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts Payable	$	5,127		$	4,409
Accrued Compensation		2,575			2,700
Other Liabilities and Accrued Expenses		3,637			4,711
Current Portion of Long-Term Debt		4,392			5,208
Revolving Credit Facility		2,000			6,500
Current Liability – Royalty Obligation		2,000			2,000
Current Liability – Excess Royalty Payment Due		147			773
Deferred Revenue		351			466

Total Current Liabilities		20,229			26,767
Long-Term Debt, net of current portion		9,859			7,715
Royalty Obligation, net of current portion		7,087			8,012
Long-Term Debt – PPP Loan		4,422			—
Lease Liabilities, net of current portion		1,191			1,279
Other Long-Term Liabilities		652			1,081
Deferred Tax Liabilities		482			435

TOTAL LIABILITIES		43,922			45,289
SHAREHOLDERS’ EQUITY
Common Stock, $0.05 Par Value, Authorized 13,000,000 shares; Issued 10,412,254 shares and 10,343,610 shares at August 1 , 2020 and January 31, 2020, respectively		520			517
Additional Paid-in Capital		57,284			56,130
Retained Earnings		49,236			49,298
Treasury Stock, at Cost, 3,295,188 and 3,281,701 shares at August 1, 2020 and January 31, 2020, respectively		(33,568	)		(33,477	)
Accumulated Other Comprehensive Loss, net of tax		(915	)		(1,093	)

TOTAL SHAREHOLDERS’ EQUITY		72,557			71,375

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	116,479		$	116,664

See Notes to condensed consolidated financial statements (unaudited).

Table of Contents

ASTRONOVA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, Except Per Share Data)

(Unaudited)

   Three Months Ended Nine Months Ended
   November 2,
2019 October 27,
2018 November 2,
2019 October 27,
2018
Revenue
   $ 33,318 $ 34,196 $ 102,967 $ 99,490
Cost of Revenue
   21,021 20,288 64,454 60,073


Gross Profit
   12,297 13,908 38,513 39,417
Operating Expenses:

Selling and Marketing
   6,944 6,587 20,122 19,484
Research and Development
   2,076 2,123 5,868 5,844
General and Administrative
   2,830 2,836 8,445 8,298


Operating Expenses
   11,850 11,546 34,435 33,626


Operating Income
   447 2,362 4,078 5,791
Other Expense, net
   (238 ) (538 ) (788 ) (1,320 )


Income before Income Taxes
   209 1,824 3,290 4,471
Income Tax (Benefit) Provision
   (247 ) 407 182 1,046


Net Income
   $ 456 $ 1,417 $ 3,108 $ 3,425


Net Income per Common Share—Basic:
   $ 0.06 $ 0.21 $ 0.44 $ 0.50


Net Income per Common Share—Diluted:
   $ 0.06 $ 0.20 $ 0.43 $ 0.49


Weighted Average Number of Common Shares Outstanding:

Basic
   7,047 6,925 7,013 6,858
Diluted
   7,199 7,167 7,272 7,056


	Three Months Ended					Six Months Ended
	August 1, 2020		August 3, 2019			August 1, 2020			August 3, 2019
Revenue	$	27,658	$	33,468		$	58,578		$	69,649
Cost of Revenue		17,871		21,491			37,935			43,433

Gross Profit		9,787		11,977			20,643			26,216
Operating Expenses:
Selling and Marketing		5,555		6,413			11,481			13,178
Research and Development		1,493		1,785			3,433			3,792
General and Administrative		2,535		2,616			4,861			5,615

Operating Expenses		9,583		10,814			19,775			22,585

Operating Income		204		1,163			868			3,631
Other Income (Expense), net		328		(183	)		(23	)		(550	)

Income Before Income Taxes		532		980			845			3,081
Income Tax Provision		529		29			411			429

Net Income	$	3	$	951		$	434		$	2,652

Net Income per Common Share - Basic:	$	0 .00	$	0.14		$	0.06		$	0.38

Net Income per Common Share - Diluted:	$	0.0 0	$	0.13		$	0.06		$	0.36

Weighted Average Number of Common Shares Outstanding:
Basic		7,105		7,021			7,089			6,996
Diluted		7,123		7,371			7,114			7,310

See Notes to condensed consolidated financial statements (unaudited).

Table of Contents

ASTRONOVA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Thousands)

(Unaudited)

   Three Months
Ended Nine Months
Ended
   November 2,
2019    October 27,
2018 November 2,
2019 October 27,
2018
Net Income
   $ 456    $ 1,417 $ 3,108 $ 3,425
Other Comprehensive Income (Loss), Net of Taxes and Reclassification Adjustments:

Foreign Currency Translation Adjustments
   87    (157 ) (166 ) (775 )
Change in Value of Derivatives Designated as Cash Flow Hedge
   62    221 62 766
Losses (Gains) from Cash Flow Hedges Reclassified to Income Statement
   3    (150 ) (201 ) (605 )
Realized Loss on Securities Available for Sale Reclassified to Income Statement
   —      —   —   3




Other Comprehensive Income (Loss)
   152    (86 ) (305 ) (611 )




Comprehensive Income
   $ 608    $ 1,331 $ 2,803 $ 2,814


	Three Months Ended						Six Months Ended
	August 1, 2020			August 3, 2019			August 1, 2020			August 3, 2019
Net Income	$	3		$	951		$	434		$	2,652
Other Comprehensive Income (Loss), Net of Taxes:
Foreign Currency Translation Adjustments		351			(81	)		210			(253	)
Change in Value of Derivatives Designated as Cash Flow Hedge		(229	)		(116	)		(270	)		—
Losses (Gains) from Cash Flow Hedges Reclassified to Income Statement		232			(60	)		193			(204	)

Cross-Currency Interest Rate Swap Termination		45			—			45			—
Other Comprehensive Income (Loss)		399			(257	)		178			(457	)

Comprehensive Income	$	402		$	694		$	612		$	2,195

See Notes to condensed consolidated financial statements (unaudited).

Table of Contents

ASTRONOVA, INC.

~~CONDENSED~~

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

($ In Thousands, Except per Share Data)

(Unaudited)

   Common Stock    Additional
Paid-in
Capital Retained
Earnings Treasury
Stock Accumulated
Other
Comprehensive
Income (Loss) Total
Shareholders’
Equity
   Shares    Amount
Balance February 1, 2019
   10,218,559    $ 511    $ 53,568 $ 49,511 $ (32,997 ) $ (818 ) $ 69,775
Share-Based Compensation
   —      —      601 —   —   —   601
Employee Option Exercises
   27,990    1    306 —   (11 ) —   296
Restricted Stock Awards Vested, net
   9,522    1    (1 ) —   (69 ) —   (69 )
Cash Dividend—$0.07 per share
   —      —      —   (489 ) —   —   (489 )
Net Income
   —      —      —   1,700 —   —   1,700
Other Comprehensive Loss
   —      —      —   —   —   (200 ) (200 )






Balance May 4, 2019
   10,256,071    $ 513    $ 54,474 $ 50,722 $ (33,077 ) $ (1,018 ) $ 71,614
Share-Based Compensation
   —      —      451 —   —   —   451
Employee Option Exercises
   13,821    1    198 —   —   —   199
Restricted Stock Awards Vested, net
   45,658    2    (2 ) —   (377 ) —   (377 )
Cash Dividend—$0.07 per share
   —      —      —   (493 ) —   —   (493 )
Net Income
   —      —      —   951 —   —   951
Other Comprehensive Loss
   —      —      —   —   —   (257 ) (257 )






Balance August 3, 2019
   10,315,550    $ 516    $ 55,121 $ 51,180 $ (33,454 ) $ (1,275 ) $ 72,088
Share-Based Compensation
   —      —      525 —   —   —   525
Employee Option Exercises
   18,365    2    224 —   —   —   226
Cash Dividend—$0.07 per share
   —      —      —   (494 ) —   —   (494 )
Net Income
   —      —      —   456 —   —   456
Other Comprehensive Income
   —      —      —   —   —   152 152






Balance November 2, 2019
   10,333,915    $ 518    $ 55,870 $ 51,142 $ (33,454 ) $ (1,123 ) $ 72,953

   Common Stock    Additional
Paid-in
Capital Retained
Earnings Treasury
Stock Accumulated
Other
Comprehensive
Income (Loss) Total
Shareholders’
Equity
   Shares    Amount
Balance February 1, 2018
   9,996,120    $ 500    $ 50,016 $ 45,700 $ (32,397 ) $ (172 ) $ 63,647
Share-Based Compensation
   —      —      363 —   —   —   363
Employee Option Exercises
   53,010    3    574 —   (88 ) —   489
Restricted Stock Awards Vested, net
   16,981    1    (1 ) —   (40 ) —   (40 )
Cash Dividend—$0.07 per share
   —      —      —   (480 ) —   —   (480 )
Net Income
   —      —      —   814 —   —   814
Other Comprehensive Loss
   —      —      —   —   —   (163 ) (163 )






Balance April 28, 2018
   10,066,111    $ 504    $ 50,952 $ 46,034 $ (32,525 ) $ (335 ) $ 64,630
Share-Based Compensation
   —      —      466 —   —   —   466
Employee Option Exercises
   40,302    —      461 —   (278 ) —   183
Restricted Stock Awards Vested, net
   30,084    3    (2 ) —   (157 ) —   (156 )
Cash Dividend—$0.07 per share
   —      —      —   (481 ) —   —   (481 )
Net Income
   —      —      —   1,194 —   —   1,194
Reclassification of Certain Income Tax Effects from Accumulated Other Comprehensive Loss
   —      —      —   14 —   —   14
Other Comprehensive Loss
   —      —      —   —   —   (362 ) (362 )






Balance July 28, 2018
   10,136,497    $ 507    $ 51,877 $ 46,761 $ (32,960 ) $ (697 ) $ 65,488
Share-Based Compensation
   —      —      510 —   —   —   510
Employee Option Exercises
   54,952    3    561 —   —   —   564
Restricted Stock Awards Vested, net
   5,306    —      —   —   —   —   —
Cash Dividend—$0.07 per share
   —      —      —   (485 ) —   —   (485 )
Net Income
   —      —      —   1,417 —   —   1,417
Other Comprehensive Loss
   —      —      —   —   —   (86 ) (86 )






Balance October 27, 2018
   10,196,755    $ 510    $ 52,948 $ 47,693 $ (32,960 ) $ (783 ) $ 67,408


	Common Stock				Additional Paid-in Capital			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
	Shares		Amount		Additional Paid-in Capital			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
Balance February 1, 2020		10,343,610	$	517	$	56,130		$	49,298		$	(33,477	)	$	(1,093	)	$	71,375
Share-Based Compensation		—		—		495			—			—			—			495
Employee Option Exercises		4,456		—		32			—			—			—			32
Restricted Stock Awards Vested, net		23,638		1		(1	)		—			(54	)		—			(54	)
Common Stock – Cash Dividend - $0.07 per share		—		—		—			(497	)		—			—			(497	)
Net Income		—		—		—			432			—			—			432
Other Comprehensive Loss		—		—		—			—			—			(221	)		(221	)

Balance May 2, 2020		10,371,704	$	518	$	56,656		$	49,233		$	(33,531	)	$	(1,314	)	$	71,562
Share-Based Compensation		—		—		601			—			—			—			601
Employee Option Exercises		4,874		—		29			—			—			—			29
Restricted Stock Awards Vested, net		35,676		2		(2	)		—			(37	)		—			(37	)
Net Income		—		—		—			3			—			—			3
Other Comprehensive Income		—		—		—			—			—			399			399

Balance August 1, 2020		10,412,254	$	520	$	57,284		$	49,236		$	(33,568	)	$	(915	)	$	72,557


	Common Stock				Additional Paid-in Capital			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
	Shares		Amount		Additional Paid-in Capital			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
Balance February 1, 2019		10,218,559	$	511	$	53,568		$	49,511		$	(32,997	)	$	(818	)	$	69,775
Share-Based Compensation		—		—		601			—			—			—			601
Employee Option Exercises		27,990		1		306			—			(11	)		—			296
Restricted Stock Awards Vested, net		9,522		1		(1	)		—			(69	)		—			(69	)
Common Stock – Cash Dividend - $0.07 per share		—		—		—			(489	)		—			—			(489	)
Net Income		—		—		—			1,700			—			—			1,700
Other Comprehensive Loss		—		—		—			—			—			(200	)		(200	)

Balance May 4, 2019		10,256,071	$	513	$	54,474		$	50,722		$	(33,077	)	$	(1,018	)	$	71,614
Share-Based Compensation		—		—		451			—			—			—			451
Employee Option Exercises		13,821		1		198			—			—			—			199
Restricted Stock Awards Vested, net		45,658		2		(2	)		—			(377	)		—			(377	)
Common Stock – Cash Dividend - $0.07 per share		—		—		—			(493	)		—			—			(493	)
Net Income		—		—		—			951			—			—			951
Other Comprehensive Loss		—		—		—			—			—			(257	)		(257	)

Balance August 3, 2019		10,315,550	$	516	$	55,121		$	51,180		$	(33,454	)	$	(1,275	)	$	72,088

Table of Contents

ASTRONOVA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(Unaudited)

   Nine Months Ended
   November 2,
2019 October 27,
2018
Cash Flows from Operating Activities:

Net Income
   $ 3,108 $ 3,425
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:

Depreciation and Amortization
   4,692 4,633
Amortization of Debt Issuance Costs
   37 38
Share-Based Compensation
   1,576 1,339
Deferred Income Tax Provision
   —   (67 )
Changes in Assets and Liabilities:

Accounts Receivable
   1,296 248
Inventories
   (5,412 ) (1,140 )
Income Taxes
   (2,639 ) (244 )
Accounts Payable and Accrued Expenses
   (1,586 ) (4,793 )
Other
   (84 ) (916 )


Net Cash Provided by Operating Activities
   988 2,523
Cash Flows from Investing Activities:

Proceeds from Sales/Maturities of Securities Available for Sale
   —   1,511
Honeywell Asset Purchase and License Agreement—TSA Agreement Payment
   —   (400 )
Additions to Property, Plant and Equipment
   (2,422 ) (1,902 )


Net Cash Used by Investing Activities
   (2,422 ) (791 )
Cash Flows from Financing Activities:

Net Cash Proceeds from Common Shares Issued Under Employee Benefit Plans and Employee Stock Option Plans, Net of Payment of Minimum Tax Withholdings
   276 1,041
Borrowings under Revolving Credit Facility
   5,000 3,000
Repayment under Revolving Credit Facility
   —   (1,500 )
Payment of Minimum Guarantee Royalty Obligation
   (1,375 ) (1,250 )
Principal Payments of Long-Term Debt
   (3,998 ) (4,012 )
Dividends Paid
   (1,477 ) (1,446 )


Net Cash Used by Financing Activities
   (1,574 ) (4,167 )


Effect of Exchange Rate Changes on Cash and Cash Equivalents
   (58 ) 74


Net Decrease in Cash and Cash Equivalents
   (3,066 ) (2,361 )
Cash and Cash Equivalents, Beginning of Period
   7,534 10,177


Cash and Cash Equivalents, End of Period
   $ 4,468 $ 7,816


Supplemental Disclosures of Cash Flow Information:

Cash Paid During the Period for Interest
   $ 350 $ 449
Cash Paid During the Period for Income Taxes, Net of Refunds
   $ 2,746 $ 3,154
Schedule ofNon-Cash Financing Activities:

Value of Shares Received in Satisfaction of Option Exercise Price
   $ 11 $ 366


	Six Months Ended
	August 1, 2020			August 3, 2019
Cash Flows from Operating Activities:
Net Income	$	434		$	2,652
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation and Amortization		3,133			3,142
Amortization of Debt Issuance Costs		24			25
Share-Based Compensation		1,096			1,052
Changes in Assets and Liabilities:
Accounts Receivable		5,069			2,754
Inventories		1,767			(6,872	)
Income Taxes		143			(2,037	)
Accounts Payable and Accrued Expenses		(1,244	)		533
Other		(1,258	)		(237	)

Net Cash Provided by Operating Activities		9,164			1,012
Cash Flows from Investing Activities:
Additions to Property, Plant and Equipment		(1,201	)		(1,538	)

Net Cash Used for Investing Activities		(1,201	)		(1,538	)
Cash Flows from Financing Activities:
Net Cash Proceeds from Employee Stock Option Plans		6			443
Net Cash Proceeds from Share Purchases under Employee Stock Purchase Plan		55			53
Net Cash Used for Payment of Taxes Related to Vested Restricted Stock		(91	)		(446	)
Borrowings under Revolving Credit Facility		5,000			2,000
Repayment under Revolving Credit Facility		(9,500	)		—
Payment of Minimum Guarantee Royalty Obligation		(1,000	)		(875	)
Proceeds from Long-Term Debt – PPP Loan		4,422			—
Proceeds from Long-Term Debt Borrowings		15,232			—
Payoff of Long-Term Debt		(11,732	)		—
Principal Payments of Long-Term Debt		(2,104	)		(2,788	)
Payment of Debt Issuance Costs		(89	)		—
Dividends Paid		(497	)		(982	)

Net Cash Used for Financing Activities		(298	)		(2,595	)

Effect of Exchange Rate Changes on Cash and Cash Equivalents		(679	)		110

Net Increase (Decrease) in Cash and Cash Equivalents		6,986			(3,011	)
Cash and Cash Equivalents, Beginning of Period		4,249			7,534

Cash and Cash Equivalents, End of Period	$	11,235		$	4,523

Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Period for Interest	$	309		$	352
Cash Paid During the Period for Income Taxes, Net of Refunds	$	251		$	2,469
Schedule of Non-Cash Financing Activities:
Value of Shares Received in Satisfaction of Option Exercise Price	$	—		$	11

See Notes to condensed consolidated financial statements (unaudited).

Table of Contents

ASTRONOVA, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1 – Business and Basis of Presentation

Overview

Headquartered in West Warwick, Rhode Island, AstroNova, Inc. leverages its expertise in data visualization technologies to design, develop, manufacture and distribute a broad range of specialty printers and data acquisition and analysis systems. Our products are employed around the world in a wide range of applications in the aerospace, apparel, automotive, avionics, chemical, computer peripherals, communications, distribution, food and beverage, general manufacturing, packaging and transportation industries. In the United States, ~~the Company has~~we have factory-trained direct field salespeople located in major cities from coast to coast. We also have direct field sales or service centers in Canada, China, Denmark, France, Germany, ~~India,~~ Malaysia, Mexico, Singapore, ~~Spain~~ and the United Kingdom staffed by our own employees and dedicated third-party contractors. Additionally, we utilize over ~~150~~225 independent dealers and representatives selling and marketing our products in over 5060 countries.

~~The~~

Our business consists of ~~two~~2 segments, Product Identification (“PI”) and Test & Measurement (“T&M”). The ~~Product Identification~~PI segment includes specialty printing systems and related supplies sold under the brand names QuickLabel

, TrojanLabel

and GetLabels

™

. The T&M segment includes our line of aerospace flight deck printers and test and measurement data acquisition systems sold under the AstroNova

brand name.

PI products sold under the QuickLabel, TrojanLabel and GetLabels brands are used in brand owner and commercial applications to provide product packaging, marketing, tracking, branding and labeling solutions to a wide array of industries. The PI segment offers a variety of ~~hardware~~digital color label tabletop printers, high-volume presses and ~~software products~~specialty original equipment manufacturer (“OEM”) printing systems, as well as a wide range of label, tag and ~~associated~~flexible packaging material substrates and other supplies, including ink and toner, that allow customers to mark, track, protect and enhance the appearance of their products. ~~PI includes specialty printing~~In the T&M segment, we have a long history of using our technologies to provide networking systems and ~~supplies sold under~~high-resolution light-weight flight deck and cabin printers for the ~~QuickLabel~~^®~~, TrojanLabel~~^® ~~and GetLabels~~^™ brand names. PI products are used in industrial and commercial product packaging, branding and labeling applications to print custom labels, packaging materials and corresponding visual content to enable our customers to digitally print~~on-demand~~ ~~in their own facilities. The Test & Measurement~~aerospace market. In addition, the T&M segment includes ~~systems sold under the AstroNova~~^® ~~brand name as well as the Company’s line of aerospace flight deck printers. Products~~data acquisition recorders, sold under the AstroNova brand, to enable our customers to acquire and record visual and electronic signal data from local and networked data streams and sensors. The recorded data is processed and analyzed and then stored and presented in various visual output formats. ~~In the aerospace market, the Company has a long history of using its data visualization technologies to provide networking systems and high-resolution light-weight flight deck and cabin printers.~~

Unless otherwise indicated, references to ~~“AstroNova,” the “Company,”~~“AstroNova”, “we,” “our,” and “us” in this Quarterly Report on

Form 10-Q

refer to AstroNova, Inc. and its consolidated subsidiaries.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles and reflect all adjustments consisting of normal recurring adjustments which, in the opinion of management, are necessary for a fair presentation of the results of the interim periods included herein. These financial statements do not include all disclosures associated with annual financial statements and, accordingly, should be read in conjunction with ~~the Company’s~~our Annual Report on Form

10-K

for the fiscal year ended January 31, ~~2019.~~

2020.

The presentation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported and disclosed in the condensed consolidated financial statements and accompanying ~~notes.~~notes, including those that require consideration of forecasted financial information, in context of the unknown future impacts of

COVID-19

using information that is reasonably available to us at this time. Some of the more significant estimates relate to revenue recognition, the allowances for doubtful accounts, inventory valuation, income taxes, impairment of long-lived assets and goodwill, share-based compensation, accrued expenses, ~~lease accounting~~self-insurance liability accrual and warranty reserves. Management’s estimates are based on the facts and circumstances available at the time estimates are made, historical experience, risk of loss, general economic conditions and trends, and management’s assessments of the probable future outcome of these ~~matters.~~matters, including our expectations at the time regarding the duration, scope and severity of the

COVID-19

pandemic. Consequently, actual results could differ from those estimates.

Results of operations for the interim periods presented herein are not necessarily indicative of the results that may be expected for the full year.

Certain amounts in the prior year financial statements have been reclassified to conform to the current year’s presentation.

Table of Contents

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of ~~the Company~~ AstroNova, Inc

and its wholly-owned subsidiaries. All significant intercompany accounts and transactions are eliminated in consolidation.

Note 2 – Summary of Significant Accounting Policies Update

The accounting polices used in preparing the condensed consolidated financial statements in this Form

10-Q

are the same as those used in preparing ~~the Consolidated Financial Statements~~ our consolidated financial statements included in our Annual Report on Form

10-K

for the fiscal year ended January 31, 2019, except for the change resulting from the adoption of Accounting Standard Codification Topic 842 (“ASC 842”), Leases. See Note 11 for further details related to the new lease accounting policy as a result of this adoption.

2020.

Recently Adopted Accounting Pronouncements

~~Leases~~

Fair Value Measurement

In ~~February 2019, the Company adopted the guidance issued by~~August 2018, the Financial Accounting Standards Board (“FASB”) ~~related to leases. See Note 11 for further details related to this adoption, including policy and expanded disclosure requirements.~~

~~Recent Accounting Standards Not Yet Adopted~~

~~Internal-Use~~ ~~Software~~

~~In August 2018, the FASB~~ issued Accounting ~~Standards~~Standard Update (“~~ASU’~~ASU”)~~2018-15,~~ ~~“Intangibles—Goodwill andOther—Internal-Use~~ ~~Software (Subtopic350-40):~~ ~~Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” ASU2018-15~~ reduces complexity for the accounting for costs of implementing a cloud computing service arrangement and aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain~~internal-use~~ software (and hosting arrangements that include an internal use software license). This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 (Q1 fiscal 2021 for AstroNova), with early adoption permitted. Implementation should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is currently evaluating the impact this new guidance will have on its consolidated financial statements.

~~Fair Value Measurement~~

~~In August 2018, the FASB issued ASU~~

2018-13, “Fair

Value Measurement (Topic 820), Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement.” ASU

2018-13

modifies the disclosure requirements for fair value measurements by removing, modifying or adding certain disclosures. ~~This ASU is effective for annual periods beginning after December 15, 2019 including interim periods within those fiscal years (Q1 fiscal 2021 for AstroNova), with early adoption permitted.~~ The provisions of ASU

2018-13

relating to changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. The remaining provisions should be applied retrospectively to all periods presented upon their effective date. We adopted the provisions of this guidance effective February 1, 2020. The ~~Company is currently evaluating the~~adoption of this guidance did not have a material impact ~~this new guidance will have~~ on ~~its~~our consolidated financial statements and related disclosures.

Recent Accounting Standards Not Yet Adopted

Reference Rate Reform

In March 2020, the FASB issued ASU

2020-04,

“Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” ASU

2020-04

provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued. The amendments are effective for all entities as of March 12, 2020 through December 31, 2022. We are currently in the process of evaluating the impact of the transition from LIBOR to an alternative reference rate, but we do not expect that to have a material impact on our consolidated financial statements.

No other new accounting pronouncements, issued or effective during the ~~nine~~six months of the current year, have had or are expected to have a material impact on our consolidated financial statements.

Note 3 – Revenue Recognition

We derive revenue from the sale of (i) hardware, including digital color label printers and specialty OEM printing systems, portable data acquisition systems and airborne printers used in the flight deck and cabin of military, commercial and business aircraft, (ii) related supplies required in the operation of the hardware, (iii) repairs and maintenance of hardware and (iv) service agreements.

Table of Contents

Revenues disaggregated by primary geographic markets and major product types are as follows:

Primary geographical markets:

   Three Months Ended    Nine Months Ended
(In thousands)    November 2,
2019    October 27,
2018    November 2,
2019    October 27,
2018
United States
   $ 21,831    $ 21,542    $ 64,471    $ 60,752
Europe
   7,059    7,573    22,408    23,292
Asia
   1,396    1,560    7,063    4,653
Canada
   1,441    1,860    4,346    5,836
Central and South America
   1,019    921    3,232    3,078
Other
   572    740    1,447    1,879








Total Revenue
   $ 33,318    $ 34,196    $ 102,967    $ 99,490

Three Months Ended

Six Months Ended

(In thousands)
August 1,
2020

August 3,
2019

August 1,
2020

August 3,
2019

United States
   $ 17,866    $ 20,648    $ 37,655    $ 42,640
Europe
   6,314    7,473    13,764    15,349
Canada
   1,452    1,389    2,880    2,905
Central and South America
   914    1,325    1,868    2,213
Asia
   831    2,218    1,841    5,667
Other
   281    415    570    875








Total Revenue
   $ 27,658    $ 33,468    $ 58,578    $ 69,649

Major product types:

   Three Months Ended    Nine Months Ended
(In thousands)    November 2,
2019    October 27,
2018    November 2,
2019    October 27,
2018
Hardware
   $ 12,160    $ 13,096    $ 37,514    $ 37,989
Supplies
   17,655    18,107    55,463    52,690
Service and Other
   3,503    2,993    9,990    8,811








Total Revenue
   $ 33,318    $ 34,196    $ 1 02,967    $ 99,490

Three Months Ended

Six Months Ended

(In thousands)
August 1,
2020

August 3,
2019

August 1,
2020

August 3,
2019

Hardware
   $ 8,439    $ 12,437    $ 17,354    $ 25,355
Supplies
   17,140    18,080    36,258    37,808
Service and Other
   2,079    2,951    4,966    6,486








Total Revenue
   $ 27,658    $ 33,468    $ 58,578    $ 69,649

Contract Assets and Liabilities

We normally do not have contract assets, which are primarily unbilled accounts receivable that are conditional on something other than the passage of time. Our contract liabilities, which represent billings in excess of revenue recognized, are related to advanced billings for purchased service agreements and extended ~~warranties~~warranties. Contract liabilities were $352,000 and ~~were $387,000 and $373,000~~$466,000 at ~~November 2, 2019~~August 1, 2020 and January 31, ~~2019,~~2020, respectively, and are recorded as deferred revenue in

the

accompanying

condensed consolidated balance ~~sheet.~~ sheet

The ~~Company recognized $279,000~~decrease in the deferred revenue balance during the six months ended August 1, 2020 is primarily due to approximately $429,000 of revenue recognized during the ~~nine month~~ period ~~ended November 2, 2019, related to~~that was included in the deferred revenue balance at January 31, ~~2019.~~

2020, offset by cash payments received in advance of satisfying performance obligations.

Contract Costs

We recognize an asset for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year. We have determined that certain costs related to obtaining sales contracts for our aerospace printer products meet the requirement to be capitalized. These costs are deferred and amortized based on the forecasted number of units sold over the ~~estimated~~remaining benefit term, which ~~was estimated~~we currently estimate to be approximately 106 years. The balance of these contract assets at January 31, ~~2019~~2020 was ~~$903,000. During the third quarter of the current year the Company recognized additional direct costs of $121,000. The Company~~$944,000. We amortized ~~$82,000~~$29,000 of direct costs for the ~~nine months~~

six-months

ended ~~November 2, 2019~~August 1, 2020 and the balance of deferred incremental direct costs net of accumulated amortization at ~~November 2, 2019~~August 1, 2020 was ~~$942,000,~~$915,000, of which ~~$117,000~~$59,000 is reported in other current assets and ~~$825,000~~$856,000 is reported in other assets in the accompanying condensed consolidated balance sheet. ~~The remaining contract costs are expected to be amortized over the estimated remaining period~~

Table of ~~benefit, which we currently estimate to be approximately seven years.~~

Contents

Note 4 – Net Income Per Common Share

Basic net income per share is calculated by dividing net income by the weighted average number of shares outstanding during the period. Diluted net income per share is calculated by dividing net income by the weighted average number of shares and, if dilutive, common equivalent shares, determined using the treasury stock method for stock options, restricted stock awards and restricted stock units outstanding during the period. A reconciliation of the shares used in calculating basic and diluted net income per share is as follows:

   Three Months Ended    Nine Months Ended
   November 2,
2019    October 27,
2018    November 2,
2019    October 27,
2018
Weighted Average Common Shares Outstanding – Basic
   7,046,803    6,924,554    7,012,595    6,858,365
Effect of Dilutive Options, Restricted Stock Awards and Restricted Stock Units
   151,795    242,074    259,840    197,760








Weighted Average Common Shares Outstanding – Diluted
   7,198,598    7,166,628    7,272,435    7,056,125


	Three Months Ended				Six Months Ended
	August 1, 2020		August 3, 2019		August 1, 2020		August 3, 2019
Weighted Average Common Shares Outstanding – Basic		7,105,241		7,020,890		7,089,169		6,995,679
Effect of Dilutive Options, Restricted Stock Awards and Restricted Stock Units		17,354		350,312		24,359		313,862

Weighted Average Common Shares Outstanding – Diluted		7,122,595		7,371,202		7,113,528		7,309,541

For the three and ~~nine~~six months ended ~~November 2,~~August 1, 2020, the diluted per share amounts do not reflect common equivalent shares outstanding of 901,962 and 912,508

respectively. For the three and six months ended August 3, 2019, the diluted per share amounts do not reflect common equivalent shares outstanding of ~~238,477~~11,560 and ~~206,592~~218,466

, ~~respectively. For the three and nine months ended October 27, 2018, the diluted per share amounts do not reflect common equivalent shares outstanding of 228,600 and 333,175~~,

respectively. These outstanding common equivalent shares were not included due to their anti-dilutive effect.

Note 5 – Intangible Assets

Intangible assets are as follows:

   November 2, 2019    January 31, 2019
(In thousands)    Gross
Carrying
Amount    Accumulated
Amortization Currency
Translation
Adjustment    Net
Carrying
Amount    Gross
Carrying
Amount    Accumulated
Amortization Currency
Translation
Adjustment    Net
Carrying
Amount
Miltope:

Customer Contract Relationships
   $ 3,100    $ (1,947 ) $ —      $ 1,153    $ 3,100    $ (1,723 ) $ —      $ 1,377
RITEC:

Customer Contract Relationships
   2,830    (988 ) —      1,842    2,830    (725 ) —      2,105
Non-Competition Agreement
   950    (823 ) —      127    950    (681 ) —      269
TrojanLabel:

Existing Technology
   2,327    (968 ) 92    1,451    2,327    (711 ) 140    1,756
Distributor Relations
   937    (273 ) 34    698    937    (200 ) 56    793
Honeywell:

Customer Contract Relationships
   27,243    (6,060 ) —      21,183    27,243    (3,869 ) —      23,374












Intangible Assets, net
   $ 37,387    $ (11,059 ) $ 126    $ 26,454    $ 37,387    $ (7,909 ) $ 196    $ 29,674


	August 1, 2020									January 31, 2020
(In thousands)	Gross Carrying Amount		Accumulated Amortization			Currency Translation Adjustment		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Currency Translation Adjustment		Net Carrying Amount
Miltope:
Customer Contract Relationships	$	3,100	$	(2,176	)	$	—	$	924	$	3,100	$	(2,021	)	$	—	$	1,079
RITEC:
Customer Contract Relationships		2,830		(1,236	)		—		1,594		2,830		(1,076	)		—		1,754
Non-Competition Agreement		950		(950	)		—		—		950		(871	)		—		79
TrojanLabel:
Existing Technology		2,327		(1,222	)		160		1,265		2,327		(1,053	)		78		1,352
Distributor Relations		937		(344	)		69		662		937		(297	)		27		667
Honeywell:
Customer Contract Relationships		27,243		(8,252	)		—		18,991		27,243		(6,791	)		—		20,452

Intangible Assets, net	$	37,387	$	(14,180	)	$	229	$	23,436	$	37,387	$	(12,109	)	$	105	$	25,383

There were no0 impairments to intangible assets during the periods ended ~~November 2, 2019~~August 1, 2020 and ~~October 27, 2018.~~August 3, 2019. With respect to the acquired intangibles included in the table above, amortization expense of ~~$1.1~~$1.0 million and ~~$1.0~~$1.1 million has been included in the condensed consolidated statements of income for the three months ended ~~November 2,~~August 1, 2020 and August 3, 2019, ~~and October 27, 2018,~~ respectively. Amortization expense of ~~$3.2 million and $3.1~~$2.1 million related to the

above acquired intangibles has been included in the accompanying condensed consolidated statement of income for each of the ~~nine~~six months ended ~~November 2, 2019~~August 1, 2020 and ~~October 27, 2018, respectively.~~

August 3, 2019.

Estimated amortization expense for the next five fiscal years is as follows:

(In thousands)    Remaining
2020    2021    2022    2023    2024
Estimated amortization expense
   $ 1,050    $ 4,071    $ 3,983    $ 3,978    $ 3,975


(In thousands)	Remaining 2021		2022		2023		2024		2025
Estimated amortization expense	$	1,993	$	3,969	$	3,963	$	3,965	$	3,393

Table of Contents

Note 6 – Inventories

Inventories are stated at the lower of cost~~(first-in,~~

(first-in,

first-out)

and net realizable value and include material, labor and manufacturing overhead. The components of inventories are as follows:

(In thousands)    November 2, 2019    January 31, 2019
Materials and Supplies
   $ 21,116    $ 17,517
Work-In-Process
   1,586    1,633
Finished Goods
   18,170    15,688




   40,872    34,838
Inventory Reserve
   (5,278 )    (4,677 )




   $ 35,594    $ 30,161


(In thousands)	August 1, 2020			January 31, 2020
Materials and Supplies	$	21,287		$	20,151
Work-In-Process		1,857			1,408
Finished Goods		16,927			17,992

		40,071			39,551
Inventory Reserve		(7,703	)		(5,626	)

	$	32,368		$	33,925

Note 7 – ~~Revolving Line of Credit~~

~~The Company has a revolving line of credit under its existing~~ Credit Agreement and Debt

Credit Agreement

On July 30, 2020, we entered into an Amended and Restated Credit Agreement (the “A&R Credit Agreement”) with Bank of ~~America.~~America, N.A., as lender (the “Lender”), our wholly owned subsidiary, ANI ApS, a Danish private limited liability company and TrojanLabel ApS, a Danish private limited liability company and wholly-owned subsidiary of ANI ApS(“TrojanLabel”). The A&R Credit Agreement amended and restated the Credit Agreement dated as of February 28, 2017 (the “Existing Credit Agreement”) by and among us, ANI ApS, TrojanLabel and the Lender. In connection with the A&R Credit Agreement, we entered into an Amended and Restated Security and Pledge Agreement and a mortgage in favor of the Lender with respect to our owned real property in West Warwick, Rhode Island. Under the A&R Credit Agreement, AstroNova, Inc. is the sole borrower, and its obligations are guaranteed by ANI ApS and TrojanLabel.

Immediately prior to the closing of the A&R Credit Agreement, we repaid $1.5

million in principal amount of term loans outstanding under the Existing Credit Agreement.

The A&R Credit Agreement provides for (i) a term loan in the principal amount of $15.2

million,

which we used to refinance the outstanding term loans borrowed by us and ANI ApS under the Existing Credit Agreement and a portion of the outstanding revolving loans borrowed by us under the Existing Credit Agreement, and (ii) a $10.0

million

revolving credit facility available

us for general corporate purposes. Revolving credit loans may be borrowed, at ~~the Company’s~~our option, in U.S. Dollars or, subject to certain conditions, Euros, British Pounds, Canadian Dollars or Danish Kroner. ~~Amounts borrowed~~

At August 1, 2020,

the balance outstanding on the revolving line of credit is

2.0

million

The outstanding balance bears interest at a weighted average annual rate of

2.78

% and $

81,000

and $

153,000

of interest has been incurred on this obligation and included in other income (expense) in the accompanying condensed consolidated income statement for the three and six month periods ended August 1, 2020, respectively. At August 1, 2020, there was

8.0

million

remaining

available for borrowing under the revolving credit facility.

The A&R Credit Agreement was accounted for as a debt modification in a non-troubled debt restructuring

We incurred

0.2

million of

new debt issuance costs

related to the term loan, of which $

0.1

million

of new lender fees were

recorded against the debt as debt issuance costs and will be amortized over the term of the loan and

0.1

million

of third party fees that were

expensed as incurred. Additionally, $

0.1

million of unamortized debt issuance costs related to the prior term debt will be amortized over the remaining life of the new term loan. We also incurred

0.1

million of

new debt issuance

fees in connection with the revolving line of credit which are included as a component of prepaid expenses

and

other current assets and will be amortized over the remaining life of the A&R Credit Agreement.

Under the A&R Credit Agreement, the principal amount of each

quarterly installment

required to be paid on the last day of each of our fiscal quarters ending July 31, 2020 and October 31, 2020 is $0.8 million;

the principal amount of the quarterly installment required to be paid on the last day of our fiscal quarter ending January 31, 2021 is $1.1 million; the principal amount of the quarterly installment required to be paid on the last day of the our fiscal quarter ending April 30, 2021 is $1.1 million; the principal amount of each quarterly installment required to be paid on the last day of each of the our fiscal quarters ending July 31, 2021, October 31, 2021, January 31, 2022 and April 30, 2022 is $1.4 million, and the entire remaining principal balance of the term loan is required to be paid on June 15, 2022.

We may voluntarily prepay the term loan, in whole or in part, from time to time without premium or penalty (other than customary breakage costs, if applicable). We may repay borrowings under the revolving credit facility at any time without premium or penalty (other than customary breakage costs, if applicable), but in any event no later than June 15, 2022, and any outstanding revolving loans thereunder will be due and payable in full, and the revolving credit facility will terminate, on such date. We may reduce or terminate the revolving line of credit at any time, subject to certain thresholds and conditions, without premium or penalty.

Table of Contents

Under the A&R Credit Agreement the term loan and revolving credit loans bear interest at a rate per annum equal to, at the ~~Company’s~~our option, either (a) the LIBOR ~~rate~~Rate (or in the case of revolving credit loans denominated in a currency other than U.S. Dollars, the applicable quoted rate), plus a margin that varies within a range of ~~1.0%~~

2.15% to ~~1.5%~~ 3.65%

based on ~~the Company’s~~our consolidated leverage ratio, or (b) a fluctuating reference rate equal to the highest of (i) the federal ~~funds’~~fund rate plus ~~0.50%~~

0.50

%, (ii) Bank of America’s publicly announced prime rate, or (iii) the LIBOR ~~rate~~Rate plus

1.00% or (iv) 1.00%,

plus a margin that varies within a range of ~~0.0%~~

1.15% to ~~0.5%~~ 2.65%

based on ~~the Company’s~~our consolidated leverage ratio.

At November 2, 2019, $6.5 million has been drawn on the revolving line of credit. The outstanding balance bears interest at a weighted average annual rate of 5.26% and $93,000 and $39,000 of interest has been incurred on this obligation and included in other expense in the accompanying condensed consolidated income statement for the nine month periods ended November 2, 2019 and October 27, 2018, respectively. At November 2, 2019, there was $3.5 million available for borrowing under the revolving credit facility.

Following the completion of the third quarter of fiscal 2020, the Company entered into a Fourth Amendment to the Credit Agreement to, among other things, temporarily increase the revolving line of credit from $10.0 million to $17.5 million and modify certain of the financial covenants with which the Company must comply thereunder. For additional information on the amendment and the resulting changes to the terms of the agreement, see Note 17 – Subsequent Events.

~~The Company is~~ We are also required to pay a commitment fee on the undrawn portion of the revolving credit facility atthat varies within a range of

.25% and .675%

based on our consolidated leverage ratio.

The loans under the ~~rate~~A&R Credit Agreement are subject to certain mandatory prepayments, subject to various exceptions, from (a) net cash proceeds from certain dispositions of ~~0.25%~~ ~~per annum~~.

~~Note 8 –~~property, (b) net cash proceeds from certain issuances of equity, (c) net cash proceeds from certain issuances of additional debt and (d) net cash proceeds from certain extraordinary receipts.

Amounts repaid under the revolving credit facility may be reborrowed, subject to continued compliance with the A&R Credit Agreement. No amount of the term loan that is repaid may be reborrowed.

Under the A&R Credit Agreement , we must comply with various customary financial and

non-financial

covenants including a maximum consolidated leverage ratio, a minimum consolidated fixed charge coverage ratio, a minimum level of EBITDA, a consolidated asset coverage ratio and a minimum level of liquidity. The primary

non-financial

covenants limit our and our subsidiaries’ ability to incur future indebtedness, to place liens on assets, to pay dividends or distributions on capital stock, to repurchase or acquire capital stock, to conduct mergers or acquisitions, to sell assets, to alter the capital structure, to make investments and loans, to change the nature of their business, and to prepay subordinated indebtedness, in each case subject to certain exceptions and thresholds as set forth in the A&R Credit Agreement.

The Lender is entitled to accelerate repayment of the loans and to terminate its revolving credit commitment under the A&R Credit Agreement upon the occurrence of any of various customary events of default, which include, among other events, the following (which are subject, in some cases, to certain grace periods): failure to pay when due any principal, interest or other amounts in respect of the loans, breach of any of our covenants or representations under the loan documents, default under any other of our or our subsidiaries’ significant indebtedness agreements, a bankruptcy, insolvency or similar event with respect to us or any of our subsidiaries, a significant unsatisfied judgment against us or any of our subsidiaries, or our undergoing a change of control.

In addition to the guarantees by ANI ApS and TrojanLabel, our obligations under the A&R Credit Agreement are also secured by substantially all of AstroNova, Inc.’s personal property assets (including a pledge of the equity interests it holds in ANI ApS, in our wholly-owned German subsidiary AstroNova GmbH, and in our wholly-owned French subsidiary AstroNova SAS), subject to certain exceptions, and by a mortgage on our owned real property in West Warwick, Rhode Island.

Long-Term Debt

Long-term debt in the accompanying condensed consolidated balance sheets is as follows:

(In thousands)    November 2, 2019    January 31, 2019
USD Term Loan (3.30% as of November 2, 2019 and 4.02% as of January 31, 2019); maturity date of November 20, 2022
   $ 9,000    $ 11,250
USD Term Loan (3.30% as of November 2, 2019 and 4.02% as of January 31, 2019); maturity date of January 31, 2022
   5,244    6,992




   $ 14,244    $ 18,242
Debt Issuance Costs, net of accumulated amortization
   (124 )    (164 )
Current Portion of Term Loans
   (5,116 )    (5,208 )




Long-Term Debt
   $ 9,004    $ 12,870


(In thousands)	August 1, 2020			January 31, 2020
USD Term Loan (4.65% as of August 1, 2020); maturity date of June 15, 2022	$	14,430		$	—
USD Term Loan (3.03% as of January 31, 2020)		—			8,250
USD Term Loan (3.03% as of January 31, 2020)		—			4,784

	$	14,430		$	13,034
Debt Issuance Costs, net of accumulated amortization		(179	)		(111	)
Current Portion of Term Loans		(4,392	)		(5,208	)

Long-Term Debt	$	9,859		$	7,715

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During the three and six months ended August 1, 2020, we recognized $82,000 and $166,000 of interest expense, respectively, which was included in other income (expense) in the accompanying condensed consolidated income statement. During the three and six months ended August 3, 2019, we recognized $117,000 and $185,000 of interest expense, respectively, which was included in other income (expense) in the accompanying condensed consolidated income statement.

The schedule of required principal payments remaining during the next five years on long-term debt outstanding as of ~~November 2, 2019~~August 1, 2020 is as follows:


~~(In thousands)~~
~~Fiscal 2020, remainder~~	$	~~1,210~~
~~Fiscal 2021~~		~~5,208~~
~~Fiscal 2022~~		~~5,576~~
~~Fiscal 2023~~		~~2,250~~
~~Fiscal 2024~~		—

	$	~~14,244~~

~~Following~~


(In thousands)
Fiscal 2021, remainder	$	1,854
Fiscal 20 22		5,326
Fiscal 202 3		7,250

	$	14,430

Note 8 – Paycheck Protection Program Loan

On May 6, 2020, we entered into a loan agreement with, and executed a promissory note in favor of Greenwood Credit Union (“Greenwood”) pursuant to which we borrowed $4.4 million (the “PPP Loan”) from Greenwood pursuant to the ~~completion~~Paycheck Protection Program (“PPP”) administered by the United States Small Business Administration (the “SBA”) and authorized by the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), enacted on March 27, 2020. The terms of the PPP Loan were subsequently revised in accordance with the provisions of the Paycheck Protection Flexibility Act of 2020 (the “PPP Flexibility Act”) which was enacted on June 5, 2020.

The PPP Loan, which will mature on May 6, 2022, is unsecured and bears interest at a rate of 1.0% per annum, accruing from the loan date, and is payable monthly. NaN

payments are due on the PPP Loan

until the date on which the lender determines the amount of the PPP Loan that is eligible

for

forgiveness, so long as we apply for forgiveness within the ten

months from the

end of the twenty-four week period following the date of

loan

disbursement

, but interest will continue to accrue during the deferral period. We accrued interest for the PPP Loan in the amount of $

11,000

which is included in other income in the accompanying condensed consolidated statements of income for the three and six month periods ended August 1, 2020.

The PPP Loan may be prepaid at any time without penalty. The loan agreement and promissory note include customary provisions for a loan of this type, including prohibitions on our payment of dividends or repurchase of shares of our stock while the PPP Loan remains outstanding. The loan agreement and promissory note also include events of default relating to, among other things, payment defaults, breaches of the provisions of the loan agreement or the promissory note, and cross-defaults on other loans.

Subject to the limitations and conditions set forth in the CARES Act, the PPP Flexibility Act, and the regulations and guidance provided by the SBA with respect to the PPP, a portion of the PPP Loan in an amount up to the amount of the PPP Loan proceeds that we spend on payroll, rent, utilities and interest on certain debt during the twenty-four-week period following incurrence of the PPP Loan, may be forgiven under the PPP. The amount of the PPP Loan to be forgiven in respect of rent, utilities and interest on certain debt will be capped at

40%

of the forgiven amount, with the remaining forgiven amount allocated to payroll costs. We have fully utilized the PPP Loan proceeds for qualifying expenses and during the third quarter of ~~fiscal 2020,~~this current year we expect to apply for forgiveness of the ~~Company entered into a Fourth Amendment to its Credit Agreement~~PPP Loan in accordance with ~~Bank of America governing the Company’s long-term debt. Refer to Note 17 – Subsequent Events for additional information on the Fourth Amendment and the resulting changes to~~ the terms of the ~~Credit Agreement.~~

CARES Act, as amended by the PPP Flexibility Act. Whether our application for forgiveness will be granted and in what amount is subject to an application to, and approval by, the SBA and may also be subject to further requirements in any regulations and guidelines the SBA may adopt. The PPP Loan is classified as long-term debt in the condensed consolidated balance sheet until the forgiveness determination has been made by the SBA.

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Note

– Derivative Financial Instruments and Risk Management

~~The Company has~~

In February 28, 2017, as part of the Existing Credit Agreement, we entered into a cross-currency interest rate swap to manage the interest rate risk and foreign currency exchange risk associated with the floating-rate foreign currency-denominated term loan borrowing by ~~our Danish Subsidiary~~

ANI ApS

and an interest rate swap to manage the interest rate risk associated with ~~the~~our variable rate term loan borrowing ~~by the Company.~~(the “Swaps”). Both ~~swaps have been~~Swaps were designated as cash flow hedges of floating-rate borrowings.

~~The~~

Our cross-currency interest rate swap agreement ~~utilized by the Company~~ effectively ~~modifies the Company’s~~modified our exposure to interest rate risk and foreign currency exchange rate risk by converting ~~the Company’s~~our floating-rate debt denominated in U.S. Dollars on our ~~Danish subsidiary’s~~ANI ApS’s books to a fixed-rate debt denominated in Danish Kroner for the term of the loan, thus reducing the impact of interest-rate and foreign currency exchange rate changes on future interest expense and principal repayments. This swap ~~involves~~involved the receipt of floating interest rate amounts in U.S. Dollars in exchange for fixed-rate interest payments in Danish Kroner, as well as exchanges of principal at the inception spot rate, over the life of the term loan.

~~The~~

Subsequently, concurrent with our borrowings to fund the payments for the Asset Purchase and License Agreement with Honeywell International, we entered into an interest rate swap agreement ~~utilized by the Company on its term loan effectively modifies the Company’s~~to modify our exposure to interest rate risk by effectively converting ~~the Company’s~~our floating-rate ~~debt~~borrowings to fixed-rate debt ~~for~~over the ~~next five years,~~term of the loan, thus reducing the impact of interest-rate changes on future interest expense. This swap ~~involves~~involved the receipt of floating interest rate amounts in U.S. Dollars in exchange for fixed interest rate payments in U.S. dollars over the life of the term loan.

As a direct result of the terms of the Lender’s conditions for entry into the A&R Credit Agreement, on July 30, 2020, we terminated the two Swaps that we used to manage the interest rate and foreign currency exchange risks associated with our prior borrowings under the Existing Credit Agreement. The terms of the A&R Credit Agreement caused those swaps to cease to be effective hedges of the underlying exposures. The termination of the Swaps were contracted immediately prior to the end of the second quarter of fiscal 2021 at a cash cost of approximately $0.7 million which is included in the accounts payable balance in the accompanying condensed consolidated balance sheet at August 1, 2020 and, was settled in the third quarter. Upon termination, the remaining balance of $58,000 in accumulated other comprehensive loss related to the cross-currency interest rate swap was reclassified into earnings as the forecasted foreign currency interest payments will not occur and is included in other income (expense) in the accompanying condensed consolidated statements of income for the three and six month periods ended August 1, 2020. The balance in accumulated other comprehensive loss related to the interest rate swap of $0.2 million is being amortized into earnings through the original term of the hedge relationship as the underlying floating interest rate debt still exists.

The following table summarizes the notional amount and fair value of our derivative instruments:


	August 1, 2020						January 31, 2020
Cash Flow Hedges			Fair Value Derivatives						Fair Value Derivatives
(In thousands)	Notional Amount		Asset		Liability		Notional Amount		Asset		Liability
Cross-currency Interest Rate Swap	$	—	$	—	$	—	$	4,489	$	—	$	250
Interest Rate Swap	$	—	$	—	$	—	$	8,250	$	—	$	96

The fair value of both the ~~Company’s derivative instrument:~~

Cash Flow Hedges    November 2, 2019    January 31, 2019
(In thousands)
      Fair Value Derivatives       Fair Value Derivatives
   Notional Amount    Asset    Liability    Notional Amount    Asset    Liability
Cross-currency Interest Rate Swap
   $ 4,949    $ —      $ 329    $ 6,329    $ —      $ 600
Interest Rate Swap
   $ 9,000    $ —      $ 88    $ 11,250    $ 85    $ —

Cross-currency Interest Rate Swap and the Interest Rate swap are included in other long-term liabilities on the condensed consolidated balance sheets for the period ended January 31, 2020.

The following table presents the impact of ~~the Company’s~~

our

derivative instruments in our condensed consolidated financial statements for the three and ~~nine~~six months ended ~~November 2, 2019~~August 1, 2020 and ~~October 27, 2018:~~

   Three Months Ended
   Amount of Gain (Loss)
Recognized in OCI
on Derivative    Location of
Gain (Loss)
Reclassified
from Accumulated
OCI into
Income (Expense)    Amount of Gain (Loss)
Reclassified from
Accumulated OCI
into Income (Expense)
Cash Flow Hedge
(In thousands)
   November 2,
2019    October 27,
2018    November 2,
2019 October 27,
2018
Swap Contracts
   $ 80    $ 283    Other Income (Expense)    $ (3 ) $ 192






   Nine Months Ended
   Amount of Gain (Loss)
Recognized in OCI
on Derivative    Location of
Gain (Loss)
Reclassified
from Accumulated
OCI into Income (Expense)    Amount of Gain (Loss)
Reclassified from
Accumulated OCI
into Income (Expense)
Cash Flow Hedge
(In thousands)
   November 2,
2019    October 27,
2018    November 2,
2019 October 27,
2018
Swap Contracts
   $ 82    $ 981    Other Income (Expense)    $ 259 $ 775

August 3, 2019:


	Three Months Ended
	Amount of Gain (Loss) Recognized in OCI on Derivative						Location of Gain (Loss) Reclassified from Accumulated OCI into Income		Amount of Gain (Loss) Reclassified from Accumulated OCI into Income
Cash Flow Hedge (In thousands)	August 1, 2020			August 3, 2019					August 1, 2020			August 3, 2019
Swap contracts	$	(290	)	$	(147	)		Other Income (Expense)	$	(297	)	$	77

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	Six Months Ended
	Amount of Gain (Loss) Recognized in OCI on Derivative					Location of Gain (Loss) Reclassified from Accumulated OCI into Income		Amount of Gain (Loss) Reclassified from Accumulated OCI into Income
Cash Flow Hedge (In thousands)	August 1, 2020			August 3, 2019				August 1, 2020			August 3, 2019
Swap contracts	$	(340	)	$	2		Other Income (Expense)	$	(248	)	$	262

At ~~November 2, 2019, the Company expects~~August 1, 2020, we expect to reclassify approximately ~~$0.2~~$0.1 million of net ~~gains~~losses on the frozen OCI balance associated with the terminated interest rate swap ~~contracts~~ from accumulated other comprehensive loss to earnings during the next 12 months due to ~~changes in foreign exchange rates and~~ the payment of variable interest associated with the ~~floating-rate~~floating

interest

rate debt.

Note

– Royalty Obligation

In fiscal 2018, ~~AstroNova, Inc.~~we entered into an Asset Purchase and License Agreement ~~(the “Honeywell Agreement”)~~ with Honeywell International, Inc. (“Honeywell”) to acquire an exclusive, perpetual, world-wide license to manufacture Honeywell’s narrow-format flight deck printers for two aircraft families along with certain inventory used in the manufacturing of the licensed printers. The purchase price included a guaranteed minimum royalty payment of $15.0 million, to be paid over ten ~~years. Royalty payments are~~years, based on gross revenues from the sales of the printers, paper and repair services of the licensed products. The royalty rates vary based on the year in which they are paid or earned, and product sold or service provided, and range from single-digit to mid double-digit percentages of gross revenue.

The guaranteed minimum royalty payment obligation was recorded at the present value of the minimum annual royalty payments using a present value factor of 2.8%, which is based on the estimated

after-tax

cost of debt for similar companies. As of ~~November 2, 2019, the Company~~August 1, 2020, we had paid an aggregate of ~~$3.0~~$4.5 million of the guaranteed minimum royalty obligation. At ~~November 2, 2019,~~August 1, 2020, the current portion of the outstanding guaranteed minimum royalty obligation of $2.0 million is to be paid over the next twelve months and is reported as a current liability and the remainder of ~~$8.5~~$7.1 million is reported as a long-term liability on ~~the Company’s~~

our

condensed consolidated balance sheet. ~~In addition to~~We did 0t incur any excess royalty expense for the ~~guaranteed minimum royalty payments, the Company also incurred~~three and

six

month

periods ended August 1, 2020. We did incur excess royalty expense of $0.1

million

and ~~$0.8~~$0.7 million, respectively, for the three and ~~nine~~

six

month

periods ended ~~November 2,~~August 3, 2019, ~~and $0.7 million and $2.0 million, respectively, for the three and nine month periods ended October 27, 2018~~ which is included in cost of revenue in ~~the Company’s condensed~~our consolidated statements of income. A total of ~~$0.4~~$0.1 million of excess royalty is payable and reported as a current liability on ~~the Company’s~~our condensed consolidated balance sheet at ~~November 2, 2019.~~

August 1, 2020.

Note 111

– Leases

~~Policy~~

On February 1, 2019 the Company adopted ASC 842, Leases. This new guidance requires a lessee to recognize assets and liabilities on the balance sheet for all leases, with the result being the recognition of a right of use (ROU) asset and a lease liability. The lease liability is equal to the present value of the minimum lease payments for the term of the lease, including any optional renewal periods determined to be reasonably certain to be exercised, using a discount rate determined at lease commencement. This discount rate is the rate implicit in the lease, if known; otherwise, the incremental borrowing rate for the expected lease term is used. The Company’s incremental borrowing rate approximates the rate the Company would have to pay to borrow on a collateralized basis over a similar term at lease inception. The value of the ROU asset is equal to the initial measurement of the lease liability plus any lease payments made to the lessor at or before the commencement date and any unamortized initial direct costs incurred by the lessee, less any unamortized lease incentives received.

There are two types of leases, operating leases and finance leases. Lease classification is determined at lease commencement. All of the Company’s leases are classified as operating leases. Operating lease expense is recognized on a straight-line basis over the lease term and included in general and administrative expense on the condensed consolidated statement of income. For operating leases, ROU assets are classified in other long-term assets, short-term lease liabilities are classified in other current liabilities, and long-term lease liabilities are classified in other long-term liabilities on the condensed consolidated balance sheet. On the cash flow statement, payments for operating leases are classified as operating activities.

~~The Company enters~~

We enter into lease contracts for certain of ~~its~~our facilities at various locations worldwide. At inception of a contract, the Company determines whether the contract is or contains a lease. If the Company has a right to obtain substantially all of the economic benefits from the use of the identified asset and the right to direct the use of the asset, then the contract contains a lease. Several of the Company’s lease contracts include options to extend the lease term and the Company includes the renewal options for these leases in the determination of the ROU asset and lease liability when the likelihood of renewal is determined to be reasonably certain.

~~In addition, several of our lease agreements includenon-lease~~ ~~components for items such as common area maintenance and utilities which are accounted for separately from the lease component.~~

~~Adoption Method and Impact~~

~~The Company applied ASC 842 to all leases in effect at February 1, 2019 and adopted the accounting standard using thenon-comparative~~ transition option, which does not require the restatement of prior years. Comparative information has not been adjusted and continues to be reported under the previous accounting guidance. The Company has elected the package of practical expedients, which allows entities to not reassess (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs. The Company has made an accounting policy election to apply the short-term exception, which does not require the capitalization of leases with terms of 12 months or less. On February 1, 2019, the Company recognized $2.0 million of ROU assets and lease liabilities on its consolidated balance sheet. The adoption did not have a material impact on the Company’s results of operations or cash flows.

~~Disclosure~~

Our leases have remaining lease terms of 1 to 128 years, some of which include options to extend the lease term for periods of up to five years when it is reasonably certain ~~the Company~~that we will exercise such options.

The company leases office space from an affiliate. This lease is classified as an operating lease with annual rental payments of approximately $64,000 and $66,000 in fiscal 2020 and 2021, respectively.

Balance sheet and other information related to our leases is as follows:


~~Operating Leases~~ ~~(In thousands)~~	~~Balance Sheet Classification~~	~~November 2,~~ ~~2019~~
~~Lease Assets~~	~~Right of Use Assets~~	$	~~1,767~~
~~Lease Liabilities – Current~~	~~Other Liabilities and~~ ~~Accrued Expenses~~		~~429~~
~~Lease Liabilities – Long Term~~	~~Lease Liabilities~~		~~1,350~~


Operating Leases (In thousands)	Balance Sheet Classification	August 1, 2020		January 31, 2020
Lease Assets	Right of Use Assets	$	1,541	$	1,661
Lease Liabilities – Current	Other Liabilities and Accrued Expenses		394		416
Lease Liabilities – Long Term	Lease Liabilities		1,191		1,279

Table of Contents

Lease cost information is as follows:

      Three Months Ended    Nine Months Ended
Operating Leases
(In thousands)
   Statement of Income Classification    November 2,
2019    November 2,
2019
Operating Lease Costs
   General and Administrative Expense    $ 119    $ 329


		Three Months Ended		Six Months Ended
Operating Leases (In thousands)	Statement of Income Classification	August 1, 2020		August 1, 2020
Operating Lease Costs	General and Administrative Expense	$	122	$	242

		Three Months Ended		Six Months Ended
Operating Leases (In thousands)	Statement of Income Classification	August 3, 2019		August 3, 2019
Operating Lease Costs	General and Administrative Expense	$	118	$	210

Table of Contents

Maturities of operating lease liabilities are as follows:

(In thousands)
   November 2,
2019
2020
   $ 94
2021
   420
2022
   354
2023
   302
2024
   275
Thereafter
   564


Total Lease Payments
   2,009
Less: Imputed Interest
   (230 )


Total Lease Liabilities
   $ 1,779


(In thousands)	August 1, 2020
2021	$	214
2022		363
2023		312
2024		286
2025		179
Thereafter		419

Total Lease Payments		1,773
Less: Imputed Interest		(188	)

Total Lease Liabilities	$	1,585

As of ~~November 2, 2019,~~August 1, 2020, the weighted-average remaining lease term and weighted-average discount rate for our operating leases are ~~5.7~~5.5 years and ~~3.98%~~4.0%, respectively. We calculated the weighted-average discount rate using incremental borrowing rates, which equal the rates of interest that we would pay to borrow funds on a fully collateralized basis over a similar term.

Supplemental cash flow information related to leases is as follows:

   Three Months Ended    Nine Months Ended
(In thousands)
   November 2,
2019    November 2,
2019
Cash paid for amounts included in the measurement of lease liabilities:
   $ 108    $ 306

~~As previously disclosed in our fiscal year 2019 Annual Report on Form10-K~~ ~~and under the previous lease accounting standard, future minimum operating lease commitments that had initial or remainingnon-cancelable~~ ~~lease terms in excess of one year at January 31, 2019 were as follows:~~

(In thousands)
2020
   $ 574
2021
   520
2022
   387
2023
   294
2024
   273
Thereafter
   568


   $ 2,616


	Three Months Ended		Six Months Ended
(In thousands)	August 1, 2020		August 1, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	125	$	231

	Three Months Ended		Six Months Ended
(In thousands)	August 3, 2019		August 3, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	98	$	198

Note 121

– Accumulated Other Comprehensive Loss

The changes in the balance of accumulated other comprehensive loss (“AOCL”) by component are as follows:

(In thousands)
   Foreign Currency
Translation
Adjustments    Cash
Flow
Hedges    Total
Balance at January 31, 2019
   $ (852 )    $ 34    $ (818 )
Other Comprehensive Loss before reclassification
   (166 )    62    (104 )
Amounts reclassified from AOCL to Earnings
   0    (201 )    (201 )






Other Comprehensive Loss
   (166 )    (139 )    (305 )






Balance at November 2, 2019
   $ (1,018 )    $ (105 )    $ (1,123 )


(In thousands)	Foreign Currency Translation Adjustments			Cash Flow Hedges			Total
Balance at January 31, 2020	$	(985	)	$	(108	)	$	(1,093	)
Other Comprehensive Loss before reclassification		210			(270	)		(60	)
Amounts reclassified from AOCL to Earnings		—			193			193

Other Comprehensive Income (Loss)		210			(32	)		178

Balance at August 1, 2020	$	(775	)	$	(140	)	$	(915	)

Table of Contents

The amounts presented above in other comprehensive loss are net of taxes except for translation adjustments associated with our German and Danish subsidiaries.

Note 131

– Share-Based Compensation

We have one equity incentive plan from which we are authorized to grant equity awards, the AstroNova, Inc. 2018 Equity Incentive Plan (the “2018 Plan”). The 2018 Plan provides for, among other things, the issuance of awards, including incentive stock options,

non-qualified

stock options, stock appreciation rights, ~~time~~time-based restricted stock units (“RSUs”), or performance-based restricted stock units ~~(PSUs), restricted stock units (RSUs)~~(“PSUs”) and restricted stock awards (RSAs). ~~At our annual meeting of shareholders held on June 4, 2019, the~~The 2018 Plan ~~was amended~~authorizes the issuance of up to ~~increase the number of~~950,000 shares of ~~the Company’s~~ common stock, ~~available for issuance by 300,000, bringing the total number of shares available for issuance under the 2018 Plan from 650,000 to 950,000,~~ plus an additional number of shares equal to the number of shares subject to awards granted under previous equity incentive plans that are forfeited, cancelled, satisfied without the issuance of stock, otherwise terminated (other than by exercise), or, for shares of stock issued pursuant to any unvested award, that are reacquired by ~~the Company~~us at not more than the grantee’s purchase price (other than by exercise). Under the 2018 Plan, all awards to employees generally have a minimum vesting period of one year. Options granted under the 2018 Plan must be issued at an exercise price of not less than the fair market value of ~~the Company’s~~our common stock on the date of grant and expire after ten years. ~~As of November 2, 2019, 161,375~~Under the 2018 Plan, 305,338 unvested shares of restricted stock and options to purchase an aggregate of ~~146,000~~135,500 shares were outstanding ~~under the 2018 Plan.~~

as of August 1, 2020.

In addition to the 2018 Plan, we previously granted equity awards under our 2015 Equity Incentive Plan (the “2015 Plan”) and our 2007 Equity Incentive Plan (the “2007 Plan”). ~~Both the 2007 Plan and the 2015 Plan have expired and no~~No new awards may be issued under either the 2007 or 2015 plans, but outstanding awards will continue to be governed by those plans. As of ~~November 2, 2019, 1,007~~August 1, 2020, options to purchase an aggregate of 344,245 shares were outstanding under the 2007 Plan and 14,583 unvested shares of restricted stock and options to purchase an aggregate of ~~376,645 shares were outstanding under the 2007 Plan and 27,527 unvested shares of restricted stock and options to purchase an aggregate of 184,650~~148,725 shares were outstanding under the 2015 Plan.

~~On January 31, 2019, the compensation committee of the Company’s board of directors adopted an Amended and Restated~~

We also have a

Non-Employee

Director Annual Compensation Program (the ~~“New Program”~~“Program”), under which ~~became effective as~~each of ~~February 1, 2019 and supersedes the prior program. Pursuant to the New Program, beginning with fiscal 2020, each~~our

non-employee ~~director will~~

directors automatically ~~receive~~receives a grant of restricted stock on the date of their

re-election

to ~~the Company’s~~our board of directors. The number of whole shares ~~to be~~ granted ~~will be~~is equal to the number calculated by dividing the stock component of the director compensation amount determined by the compensation committee for that year by the fair market value of our stock on that day. The value of the restricted stock award for fiscal ~~2020~~2021 is $60,000. To account for the partial year beginning on February 1, 2019 and continuing through the 2019 annual meeting, and thereby provide for the alignment of the timing of annual grants of restricted stock under the New Program with the election of directors at the annual meeting, a total of 4,340 shares of restricted stock were granted to the~~non-employee~~ ~~directors on February 1, 2019. A total of 11,560 shares were awarded to thenon-employee~~ ~~directors as compensation under the New Program in the second quarter of fiscal 2020. Other than the shares granted on February 1, 2019, which vested on June 1, 2019, shares~~Shares of restricted stock granted under the ~~New~~ Program ~~will~~ become vested on the first anniversary of the date of grant, conditioned upon the recipient’s continued service on ~~the Board~~our board of directors through that date.

~~In March 2019, the Company granted 47,474 RSUs and 50,148 PSUs to certain key employees.~~

Share-based compensation expense was recognized as follows:

   Three Months Ended    Nine Months Ended
(In thousands)    November 2,
2019    October 27,
2018    November 2,
2019    October 27,
2018
Stock Options
   $ 148    $ 215    $ 487    $ 571
Restricted Stock Awards and Restricted Stock Units
   371    290    1,074    757
Employee Stock Purchase Plan
   6    5    15    11








Total
   $ 525    $ 510    $ 1,576    $ 1,339

Three Months Ended

Six Months Ended

(In thousands)
August 1,
2020

August 3,
2019

August 1,
2020

August 3,
2019

Stock Options
   $ 131    $ 127    $ 264    $ 339
Restricted Stock Awards and Restricted Stock Units
   465    320    822    704
Employee Stock Purchase Plan
   5    4    10    9








Total
   $ 601    $ 451    $ 1,096    $ 1,052








19
Table of Contents

Stock Options

There were no0 stock options granted during the ~~nine~~six months ended ~~November 2,~~August

1, 2020 and August 3, 2019. ~~The fair value of stock options granted during the nine months ended October 27, 2018 were estimated using the following assumptions:~~


	~~Nine Months Ended~~
	~~October 27,~~ ~~2018~~
~~Risk Free Interest Rate~~		~~2.6~~	%
~~Expected Volatility~~		~~39.3~~	%
~~Expected Life (in years)~~		~~9.0~~
~~Dividend Yield~~		~~1.5~~	%

There were no stock options granted during the three month period ended October 27, 2018. The weighted average fair value per share for stock options granted was $7.41 during the nine month period ended October 27, 2018.

Aggregated information regarding stock option activity for the ~~nine~~six months ended ~~November 2, 2019~~August 1, 2020 is summarized below:

   Number of
Options    Weighted Average
Exercise Price
Outstanding at January 31, 2019
   771,145    $ 14.30
Granted
   —      —
Exercised
   (55,175 )    11.68
Forfeited
   (8,275 )    16.72
Canceled
   (400 )    6.22




Outstanding at November 2, 2019
   707,295    $ 14.48


	Number of Options			Weighted Average Exercise Price
Outstanding at January 31, 2020		679,044		$	14.46
Granted		—			—
Exercised		(800	)		7.36
Forfeited		(48,374	)		12.83
Canceled		(1,400	)		7.36

Outstanding at August 1, 2020		628,470		$	14.61

Set forth below is a summary of options outstanding at ~~November 2, 2019:~~

Outstanding
   Exercisable
Range of
Exercise prices
   Number
of
Shares    Weighted-
Average
Exercise
Price    Weighted-
Average
Remaining
Contractual Life    Number
of
Shares    Weighted-
Average
Exercise
Price    Weighted
Average
Remaining
Contractual
Life
$5.00-10.00
   55,881    $ 7.97    2.4    55,881    $ 7.97    2.4
$10.01-15.00
   414,814    $ 13.62    6.1    326,794    $ 13.64    5.6
$15.01-20.00
   236,600    $ 17.53    8.1    112,795    $ 17.08    7.8












   707,295    $ 14.48    6.5    495,470    $ 13.78    5.8

August 1, 2020:


Outstanding							Exercisable
Range of Exercise prices	Number of Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life		Number of Shares		Weighted- Average Exercise Price		Weighted Average Remaining Contractual Life
$5.00-10.00		42,281	$	7.98		1.8		42,281	$	7.98		1.8
$10.01-15.00		364,464	$	13.63		5.4		319,166	$	13.65		5.0
$15.01-20.00		221,725	$	17.48		7.3		167,367	$	17.22		7.2

		628,470	$	14.61		5.8		528,814	$	14.33		5.5

As of ~~November 2, 2019,~~August 1,

2020

, there was approximately ~~$0.9~~$0.5 million of unrecognized compensation expense related to stock options which is expected to be recognized over a weighted average period of approximately ~~1.7~~1.1 years.

Restricted Stock Units ~~(“RSUs”), Performance Based Restricted Stock Units (“PSUs”)~~(RSUs) and Restricted Stock Awards ~~(“RSAs”)~~

(RSAs)

Aggregated information regarding RSU ~~PSU~~ and RSA activity for the ~~nine~~six months ended ~~November 2, 2019~~August 1, 2020 is summarized below:

   RSUs, PSUs &
RSAs    Weighted Average
Grant Date Fair Value
Outstanding at January 31, 2019
   133,667    $ 13.99
Granted
   113,522    20.16
Vested
   (55,180 )    16.62
Forfeited
   (2,100 )    19.45




Outstanding at November 2, 2019
   189,909    $ 16.85


	RSAs & RSUs			Weighted Average Grant Date Fair Value
Outstanding at January 31, 2020		134,634		$	16.79
Granted		245,131			7.61
Vested		(59,314	)		17.66
Forfeited		(530	)		18.39

Outstanding at August 1, 2020		319,921		$	9.59

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As of ~~November 2, 2019,~~August 1, 2020, there was approximately $2.5 million of unrecognized compensation expense related to RSUs and RSAs which is expected to be recognized over a weighted average period of 0.9 years.

Employee Stock Purchase Plan

~~AstroNova has~~

We have

an Employee Stock Purchase Plan allowing eligible employees to purchase shares of common stock at a 15% discount from fair value on the first or last day of an offering period, whichever is less. A total of 247,500 shares were reserved for issuance under this plan. During the ~~nine~~six months ended ~~November 2,~~August 1, 2020 and August 3, 2019, ~~and October 27 2018,~~ there were ~~5,441~~8,851 and ~~3,912~~2,796 shares, respectively, purchased under this plan. As of ~~November 2, 2019, 28,412~~August 1, 2020, 16,124 shares remain ~~available.~~

available

for purchase under our Employee Stock Purchase Plan

Note 141

– Income Taxes

~~The Company’s~~

Our

effective tax rates for the period are as follows:

   Three Months
Ended Nine Months
Ended
Fiscal 2020
   (118.2 )% 5.5 %
Fiscal 2019
   22.3 % 23.4 %

~~The Company determines its~~


	Three Months Ended			Six Months Ended
Fiscal 2021		99.4	%		48.6	%
Fiscal 2020		3.0	%		13.9	%

We determine our estimated annual effective tax rate at the end of each interim period based on full-year forecasted

pre-tax

income and facts known at that time. The estimated annual effective tax rate is applied to the

year-to-date

pre-tax

income at the end of each interim period with the cumulative effect of any changes in the estimated annual effective tax rate being recorded in the fiscal quarter in which the change is determined. The tax effect of significant unusual items is reflected in the period in which they occur.

During the three months ended ~~November 2, 2019, the Company~~August 1, 2020, we recognized an income tax ~~benefit~~expense of approximately ~~$247,000.~~$529,000. The effective tax rate in this period was directly impacted by 1) a significant increase in forecasted operating results for our fiscal 2021 as compared to operating results forecasted at the end of our first quarter of fiscal 2021, a $122,000 expense arising from a

shortfall

related to

our

stock and a $79,000 expense related to return to provision adjustments from foreign tax returns

filed

in the quarter. During the three months ended August 3, 2019,

recognized an income tax expense of approximately $29,000. The effective tax rate in this period was directly impacted by a significant reduction in forecasted operating results for our fiscal 2020 as compared to operating results forecasted at the end of our ~~second~~first quarter of fiscal 2020 2)and a ~~$306,000 tax benefit related to the reversal of previously uncertain tax positions due to the finalization of an IRS audit and 3) an $18,000~~$135,000 tax benefit arising from windfall tax benefits related to ~~the Company’s~~

our

stock.

During the ~~three~~six months ended ~~October 27, 2018, the Company~~August 1, 2020, we recognized an income tax expense of approximately ~~$407,000.~~$411,000. The effective tax rate in this period was directly impacted by a ~~$98,000 benefit~~significant increase in forecasted operating results for our fiscal 2021 as compared to operating results forecasted at the end of our first quarter of fiscal 2021,

$118,000 expense arising from ~~windfall~~shortfall tax ~~benefits~~expense related to

our

stock, a $79,000 expense related to return to provision adjustments from foreign tax returns

filed

in the ~~Company’s stock.~~

~~During the nine months ended November 2, 2019, the Company recognized an income tax expense of approximately $182,000. The effective tax rate in this period was directly impacted by 1)~~year and a ~~$359,000~~$78,000 tax benefit related to ~~the reversal of previously uncertain tax positions due to the finalization of an IRS audit and~~ the expiration of the statute of limitations on previously uncertain tax ~~positions and 2) a $251,000 tax benefit arising from windfall tax benefits related to the Company’s stock.~~positions. During the ~~nine~~six months ended ~~October 27, 2018, the Company~~ August 3, 2019,

recognized an income tax expense of approximately ~~$1,046,000.~~$429,000. The effective tax rate in this period was directly impacted by a ~~$210,000 benefit arising from windfall tax benefits related to the Company’s stock and a $78,000~~$53,000 tax benefit related to the expiration of the statute of limitations on a previously uncertain tax ~~position.~~

~~The Company maintains~~position and a $232,000 tax benefit arising from windfall tax benefits related to

our

stock

We maintain a valuation allowance on some of ~~its~~

our

deferred tax assets in certain jurisdictions. A valuation allowance is required when, based upon an assessment of various factors, including recent operating loss history, anticipated future earnings, and prudent and reasonable tax planning strategies, it is more likely than not that some portion of the deferred tax assets will not be realized.

Unrecognized tax benefits represent the difference between tax positions taken or expected to be taken in a tax return and the benefits recognized for financial reporting purposes. As of ~~November 2, 2019, the Company’s~~ August 1, 2020,

our

cumulative unrecognized tax benefits totaled ~~$360,000~~$319,000 compared to ~~$618,000~~$362,000 as of January 31, ~~2019.~~2020. Besides the expiration of the statute of limitations on a previously uncertain tax position, ~~and finalization of an IRS audit,~~ there were no0 other developments affecting unrecognized tax benefits during the quarter ended ~~November 2, 2019.~~

August 1, 2020.

Note 151

– Segment Information

~~AstroNova reports~~

We report two segments: Product Identification (“PI”) and Test & ~~Measurement. The Company evaluates~~Measurement (“T&M”). We evaluate segment performance based on the segment profit (loss) before corporate expenses.

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Summarized below are the Revenue and Segment Operating Profit for each reporting segment:

   Three Months Ended Nine Months Ended
   Revenue    Segment Operating Profit Revenue    Segment Operating Profit
(In thousands)
   November 2,
2019    October 27,
2018    November 2,
2019 October 27,
2018 November 2,
2019    October 27,
2018    November 2,
2019 October 27,
2018
Product Identification
   $ 21,749    $ 21,684    $ 1,880 $ 2,014 $ 67,484    $ 63,407    $ 6,990 $ 5,833
T&M
   11,569    12,512    1,397 3,184 35,483    36,083    5,533 8,256










Total
   $ 33,318    $ 34,196    3,277 5,198 $ 102,967    $ 99,490    12,523 14,089









Corporate Expenses
         2,830 2,836       8,445 8,298




Operating Income
         447 2,362       4,078 5,791
Other Expense, Net
         (238 ) (538 )       (788 ) (1,320 )




Income Before Income Taxes
         209 1,824       3,290 4,471
Income Tax (Benefit) Provision
         (247 ) 407       182 1,046




Net Income
         $ 456 $ 1,417       $ 3,108 $ 3,425


	Three Months Ended										Six Months Ended
	Revenue				Segment Operating Profit (Loss)						Revenue				Segment Operating Profit (Loss)
(In thousands)	August 1, 2020		August 3, 2019		August 1, 2020			August 3, 2019			August 1, 2020		August 3, 2019		August 1, 2020			August 3, 2019
Product Identification	$	21,629	$	22,144	$	3,146		$	2,224		$	44,009	$	45,735	$	6,292		$	5,110
T&M		6,029		11,324		(407	)		1,555			14,569		23,914		(563	)		4,136

Total	$	27,658	$	33,468		2,739			3,779		$	58,578	$	69,649		5,729			9,246

Corporate Expenses						2,535			2,616							4,861			5,615

Operating Income						204			1,163							868			3,631
Other Income (Expense), Net						328			(183	)						(23	)		(550	)

Income Before Income Taxes						532			980							845			3,081
Income Tax Provision						529			29							411			429

Net Income					$	3		$	951						$	434		$	2,652

Note 161

– Fair Value

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

The following tables provide a summary of the financial ~~assets and~~ liabilities that are measured at fair value as of ~~November 2, 2019~~August 1, 2020 and January 31, ~~2019:~~

Assets measured at fair value:
   Fair value measurement at
November 2, 2019    Fair value measurement at
January 31, 2019
(In thousands)    Level 1    Level 2    Level 3    Total    Level 1    Level 2    Level 3    Total
Interest Rate Swap Contract (included in Other Assets)
   $ —      $ —      $ —      $ —      $ —      $ 85    $ —      $ 85
















Total Assets
   $ —      $ —      $ —      $ —      $ —      $ 85    $ —      $ 85
















Liabilities measured at fair value:
   Fair value measurement at
November 2, 2019    Fair value measurement at
January 31, 2019
(In thousands)    Level 1    Level 2    Level 3    Total    Level 1    Level 2    Level 3    Total
Cross-Currency Interest Rate Swap Contract (included in Other Long-Term Liabilities)
   $ —      $ 329    $ —      $ 329    $ —      $ 600    $ —      $ 600
Interest Rate Swap Contract (included in Other Long-Term Liabilities)
   —      88    —      88    —      —      —      —
Earnout Liability (included in Other Long-Term Liabilities)
   —      —      14    14    —      —      14    14
















Total Liabilities
   $ —      $ 417    $ 14    $ 431    $ —      $ 600    $ 14    $ 614

2020:


Liabilities measured at fair value:	Fair value measurement at August 1, 2020								Fair value measurement at January 31, 2020
(In thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cross-Currency Interest Rate Swap Contract (included in Other Long-Term Liabilities)	$	—	$	—	$	—	$	—	$	—	$	250	$	—	$	250
Interest Rate Swap Contract (included in Other Long-Term Liabilities)		—		—		—		—		—		96		—		96
Earnout Liability (included in Other Long-Term Liabilities)		—		—		—		—		—		—		14		14

Total Liabilities	$	—	$	—	$	—	$	—	$	—	$	346	$	14	$	360

We use the market approach to measure fair value of our derivative instruments. Derivative instruments were measured at fair value using readily observable market inputs, such as quotations on interest rates and foreign exchange rates, and are classified as Level 2 because they are

over-the-counter

contracts with a bank counterparty that are not traded in an active market.

~~The fair value~~

Table of the earnout liability incurred in connection with the Company’s acquisition of TrojanLabel was determined using the option approach methodology, which includes using significant inputs that are not observable in the market and therefore classified as Level 3. Key assumptions in estimating the fair value of the contingent consideration liability included (1) the estimated earnout targets over the next seven years, (2) the probability of success (achievement of the various contingent events) and (3) a risk-adjusted discount rate used to adjust the probability-weighted earnout payments to their present value. At each reporting period, the contingent consideration liability is recorded at its fair value with changes reflected in general and administrative expense in the condensed consolidated statements of operations. There was no change in the fair value of the earnout liability for the nine months ended November 2, 2019.

Contents

Assets and Liabilities Not Recorded at Fair Value

~~The Company’s~~

Our

long-term debt, including the current portion of long-term debt not reflected in the financial statements at fair value, is reflected in the table below:

   November 2, 2019
   Fair Value Measurement    Carrying
Value
(In thousands)
   Level 1    Level 2    Level 3    Total
Long-Term Debt and related current maturities
   $ —      $ —      $ 14,545    $ 14,545    $ 14,244
   January 31, 2019
   Fair Value Measurement    Carrying
Value
(In thousands)
   Level 1    Level 2    Level 3    Total
Long-Term Debt and related current maturities
   $ —      $ —      $ 18,857    $ 18,857    $ 18,242

~~The~~


	August 1, 2020
	Fair Value Measurement
(In thousands)	Level 1		Level 2		Level 3		Total		Carrying Value
Long-Term debt and related current maturities	$	—	$	—	$	14,430	$	14,430	$	14,430


	January 31, 2019
	Fair Value Measurement
(In thousands)	Level 1		Level 2		Level 3		Total		Carrying Value
Long-Term debt and related current maturities	$	—	$	—	$	13,258	$	13,258	$	13,034

For the period ended August 1, 2020, the fair value of our long-term debt, including the ~~Company’s~~current portion, approximates carrying value. For the period ended January 31, 2020, the fair value of our long-term debt, including the current portion, is estimated by discounting the future cash flows using current interest rates at which similar loans with the same maturities would be made to borrowers with similar credit ratings and is classified as Level 3.

~~Note 17 – Subsequent Event~~

On December 9, 2019, the Company and its wholly owned Danish subsidiaries, ANI ApS and TrojanLabel ApS (the “Parties”), entered into a Fourth Amendment (the “Fourth Amendment”) to the Credit Agreement dated as of February 28, 2017 between the Parties and Bank of America, N.A. (as previously amended, the “Credit Agreement”). The Fourth Amendment amends the Credit Agreement to, among other things, (i) increase the aggregate amount available for borrowings under the revolving line of credit prior to November 1, 2020 from $10.0 million to $17.5 million and (ii) modify the financial covenants with which the Company must comply thereunder by excluding certain capital expenditures from the calculation of the Company’s consolidated fixed charge coverage ratio, providing that the minimum consolidated fixed charge coverage ratio covenant will be suspended through the second quarter of fiscal 2021, and adding a minimum consolidated EBITDA covenant commencing with the fourth quarter of fiscal 2020 and continuing through the second quarter of fiscal 2021.

Item 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Business Overview

This section should be read in conjunction with ~~the AstroNova~~our condensed consolidated financial statements included elsewhere herein and our Annual Report on Form

10-K

for the fiscal year ended January 31, ~~2019.~~

2020.

AstroNova is a multi-national enterprise that leverages its proprietary data visualization technologies to design, develop, manufacture, distribute and service a broad range of products that acquire, store, analyze and present data in multiple formats. ~~The Company organizes its~~We organize our structure around a core set of competencies, including research and development, manufacturing, service, marketing and distribution. ~~It markets~~We market and ~~sells its~~sell our products and services through the following two segments:

Product Identification (“PI”) – offers color and monochromatic digital label printers, over-printers and custom OEM printers. PI also offers software to design, manage and print labeling ~~software, spare parts, service contracts~~ and packaging images locally and across networked printing systems, as well as all related printing supplies such as pressure sensitive labels, tags, inks, toners and thermal transfer ribbons used ~~in those product identification~~by digital printers.

PI also provides

on-site

and remote service, spare parts and various service contracts.

Test and Measurement (“T&M”) – offers a suite of products and services that acquire data from local and networked data streams and sensors as well as wired and wireless networks. The ~~recorded data is processed and analyzed and then stored and presented in various visual output formats. The~~ T&M segment ~~also~~ includes a line of aerospace printers that are used to print hard copies of data required for the safe and efficient operation of aircraft including navigation maps, clearances, arrival and departure procedures, flight itineraries, weather maps, performance data, passenger data, and various air traffic control data. Aerospace products also include ~~Ethernet switches, which are used in military~~ aircraft networking systems for high-speed onboard data transfer.

We market and ~~military vehicles to connect multiple computers or Ethernet devices.~~

~~The Company markets and sells its~~sell our products and services globally through a diverse distribution structure of direct sales personnel, manufacturers’ representatives and authorized dealers that deliver a full complement of branded products and services to customers in our respective markets. Our growth strategy centers on organic growth through product innovation made possible by research and development initiatives, as well as strategic acquisitions that fit into or complement existing core businesses.

In fiscal 2018, we entered into an Asset Purchase and License Agreement (“Honeywell Agreement”) with Honeywell International, Inc. (“Honeywell”) pursuant to which, we acquired the exclusive perpetual world-wide license to manufacture Honeywell’s narrow format flight deck printers for the Boeing 737 and Airbus 320 aircraft. This added the two highest volume commercial aircraft programs in regular production to our product portfolio.

In March 2019, all major civil aviation authorities worldwide grounded the Boeing 737 MAX aircraft for safety reasons. In April 2019, Boeing reduced the number of 737 MAX aircraft produced per month from 52 to 42, and in January 2020, Boeing ceased production of the 737 MAX completely. At this time, it is not known when the Boeing 737 MAX will be certified to return to service by the various civil aviation authorities. However, on May 27, 2020, in anticipation of an eventual certification, Boeing announced that it would

re-start

production at low initial rates and gradually increase production in the future.

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On August 3, 2020 the United States Federal Aviation Administration issued a notice of proposed rulemaking for a Boeing 737 MAX airworthiness directive , which is the first step in a multi-step process that we expect to result in the 737 MAX being certified to return to service within the current fiscal year. Once the timing of the recertification and return to service is clear, and Boeing’s manufacturing dates and delivery schedules for their 737 MAX aircraft customers are established, we expect that Boeing and Boeing’s customers will begin to order printers from us for those aircraft. While we have experienced some low levels of new printer orders and shipments since the production halt, we expect that the adverse impact on our revenue and profitability by the 737 MAX production decline to date will continue until customer demand returns and expect that the impact will begin to abate as demand recovers.

On March 11, 2020, the World Health Organization declared

COVID-19,

a respiratory illness caused by a novel coronavirus, to be a

pandemic. COVID-19

has spread throughout the United States and the rest of the world and has impacted all major markets in which we, our customers, suppliers and other business partners conduct business. Since that time, governments in affected regions have implemented, and we expect that they will continue to implement and periodically change policies in relation to safety precautions including quarantines, travel restrictions, business closures, cancellations of public gatherings and other measures as they deem necessary. Many organizations and individuals, including us and our employees have taken and are taking additional steps to avoid or reduce infection, including limiting travel and working from home when possible. These measures are disrupting normal business operations both inside our operations and in our customer base in the affected geographic areas and as a result have had significant negative impacts on businesses and financial markets worldwide.

Independent of the impacts of the 737 MAX production declines, due to the

COVID-19

pandemic, global air travel demand precipitously declined, and as a result the number of flights scheduled by airlines has declined sharply although during the past quarter the number of flights has increased modestly in several markets including the United States. It is unknown how this will develop due to the unpredictable course of the pandemic and the perceived risk of air travel. As a result, order demand for new deliveries of all aircraft models by airlines has declined and is expected to remain lower for an unknown period. Manufacturers who make the airplanes that use our aerospace products have reduced their projected production rates across most or all of their product lines. As the

COVID-19

pandemic impact on the air travel industry continues, the financial health of the airlines and airframe manufacturers is likely to become stressed, and the ultimate impact on the structure of the industry and the individual companies that comprise it is unknown. Because we are the primary source for aircraft cabin printers to the airframe manufacturers for a majority of aircraft models produced in the world, the longer term demand for our products is defined less by the impact of

COVID-19

on particular airlines within the industry than the health of the industry as a whole, which in turn is driven by the demand for air travel. Although we do not know what the timing and rate of recovery will be, we do expect that the industry will recover when effective vaccines and treatments for

COVID-19

become both widely available and accepted, and demand for air travel recovers, which will lead to increased demand for aircraft and our products.

Demand for spare products, paper, parts and repairs has also been significantly impacted by the decline in air travel demand, and although during the past several weeks we have experienced modest increases in demand for these as flight hours have increased slightly, it is unknown whether this will continue or increase, or at what pace. While the major aircraft manufacturers have provided limited guidance about their projected production rate changes that we are using to align our overall production capacity, in general, we project our production of products according to customer forecasts and order rates and at this time, the actual rates and timing of increased production requirements remains uncertain.

The decline in demand has had and will continue to have a material adverse impact on our revenues and results of operations until demand recovers. Our strategy and operational plans are to maintain sufficient capabilities to satisfy demand as and when it occurs, while prudently adjusting costs as appropriate in the interim.

The

COVID-19

pandemic has also had an adverse impact on the sales of our Product Identification hardware products due to travel restrictions, because in most cases customers have preferred

in-person

demonstrations of these printers at their production sites prior to placing orders with us and those visits have been severely limited. Additionally, the widespread cancellation of trade shows, which traditionally provided an effective forum for customers to consider our products, has also had an adverse impact on traditional methods of sales lead generation. However, a greater reliance on and the increasing effectiveness of various forms of digital advertising and internet-based marketing techniques, including remote video demonstrations and support, has proven effective in obtaining sales, which has begun to offset this impact. Our customers’ acceptance of remote methods in their buying processes has changed, but the degree to which that will continue to be the case in the coming months and once the current

COVID-19

crisis has abated is unknown. Despite favorable market reception to our recently refreshed and expanded product lines, the degree to which the level of hardware sales will be mitigated by altering our

go-to-market

strategies until it is possible for our direct sales force and distributors to travel to visit customers and attend and present products at trade shows is unknown. These same dynamics have also affected our Test and Measurement product lines.

Immediately after the

COVID-19

crisis began, we experienced a greater demand for ink, toner, media and parts supplies that are used in our digital label printers. While those initial increases have abated modestly in certain markets in the most recent quarter, we believe, based on backlog and inquiries from customers that underlying overall demand remains strong. Increased demand for supplies from our food & beverage and other consumer goods product customers, and from customers selling products that have experienced higher demand as a result of the

COVID-19

crisis, such as certain medical, janitorial and sanitation related products, have continued. As the COVID

-19

crisis has developed, we believe that the health and safety protocols and scheduling innovations we have

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implemented in our production facility, the relative effectiveness of public policies to control the pandemic in Rhode Island and near our production facilities in Germany and Canada, and the efforts of our employees to adapt to altered schedules, have contributed to our ability to

re-establish

normal order fulfillment lead times after some initial periods of extended lead times because of temporary labor shortages.

In general, we believe that the very diversified nature of our end markets and the relative concentration of business in consumer

non-durable

market related applications impart a greater degree of near- and longer-term stability to our Product Identification segment.

Since the

COVID-19

pandemic began to impact us in early March 2020, we have closely monitored the government and health authority recommendations applicable to us and have made modifications to our operations based on that guidance and based on our growing experience. Since March, a large majority of

non-production

related team members have worked remotely, and more recently some have split time between

on-site

and remote work. When and to what degree team members will return to on premises work is still unknown. Some inefficiencies related to remote work have occurred, but we believe overall effectiveness and productivity have been satisfactorily maintained. We have maintained sufficient capacity and employment levels in our manufacturing facilities located in West Warwick, Rhode Island, as well as in our manufacturing facilities in Canada and Germany to satisfy customer demand and related contractual commitments. The heightened cleaning and sanitization standards, as well as several new health and safety protocols, procedures and workplace modifications implemented to safeguard our team member will be maintained as long as necessary.

The future course of the

COVID-19

crisis is unknown and if it were to worsen it could have further material adverse impacts on our ability to maintain workforce levels, productivity and output.

In response to the

COVID-19

pandemic and related economic dislocation, we have implemented and will continue to implement a variety of expense reduction and cash preservation initiatives. On April 27, 2020, our board of directors decided to suspend our quarterly cash dividend beginning with the second quarter of our fiscal year 2021. As the

COVID-19

related economic impact has continued and various governmental economic support programs have ended, more recently, we have reduced our direct labor staffing levels and implemented furloughs and work-share programs. We continue to monitor and examine our overall and product line-specific cost structures and customer demand patterns, and as time progresses and the near and longer-term business outlook becomes clearer, we may make additional adjustments to employment levels.

In addition to the reductions in demand for many of our products and the workforce impacts caused by the

COVID-19

pandemic, we have also experienced some limited and temporary difficulties in obtaining raw materials and components for our products. These difficulties have had no meaningful negative impact on our production efficiency or our ability to satisfy customer requirements. However, more extensive and disruptive impacts may be experienced in the future, depending on how the

COVID-19

pandemic and its impacts on the economy evolve.

Despite disruptions in the capital markets as a result of impact of the

COVID-19

outbreak, we successfully renegotiated the terms of our credit facilities with Bank of America, and we believe that this, together with our internal cash generation capacity and the receipt of a PPP loan, will provide us with sufficient liquidity in the future assuming consistent market conditions. However, if the negative impacts of the

COVID-19

pandemic become worse, and we were to need additional capital resources, there is no assurance that we could obtain them, and the failure to do so could have a material adverse impact on our business prospects.

Results of Operations

Three Months Ended ~~November 2,~~August 1, 2020 vs. August 3, 2019 ~~vs. Three Months Ended October 27, 2018~~

Revenue by segment and current quarter percentage change over the prior year for the three months ended ~~November 2,~~August 1, 2020 and August 3, 2019 ~~and October 27, 2018~~ were:

(Dollars in thousands)
   November 2,
2019    As a
% of
Revenue October 27,
2018    As a
% of
Revenue % Change
Over
Prior Year
Product Identification
   $ 21,749    65.3 % $ 21,684    63.4 % 0.3 %
T&M
   11,569    34.7 % 12,512    36.6 % (7.5 )%






Total
   $ 33,318    100.0 % $ 34,196    100.0 % (2.6 )%


(Dollars in thousands)	August 1, 2020		As a % of Revenue			August 3, 2019		As a % of Revenue			% Change Compared to Prior Year
Product Identification	$	21,629		78.2	%	$	22,144		66.2	%		(2.3	)%
T&M		6,029		21.8	%		11,324		33.8	%		(46.8	)%

Total	$	27,658		100.0	%	$	33,468		100.0	%		(17.4	)%

Revenue for the ~~third~~second quarter of the current year was ~~$33.3~~$27.7 million, representing a 17.4% decrease compared to the previous year ~~third~~second quarter revenue of ~~$34.2~~$33.5 million. Revenue through domestic channels for the ~~third~~second quarter of the current year was ~~$21.8~~$17.9 million, ~~an increase~~a decrease of ~~1.3% over~~13.5% from the prior year’s ~~third~~second quarter. International revenue for the ~~third~~second quarter of the current year was ~~$11.5~~$9.8 million, representing ~~34.5%~~35.4% of ~~AstroNova’s third~~our second quarter revenue and reflects a ~~9.2%~~23.6% decrease ~~over~~from the previous year ~~third quarter primarily as a result of weaker demand from a few customers in Asia in the Product Identification segment and a global slowdown in demand for certain aircraft models in the T&M segment.~~second quarter. Current year ~~third~~second quarter international revenue includes an unfavorable foreign exchange rate impact of ~~$0.3~~$0.1 million.

Table of Contents

Hardware revenue in the current quarter was ~~$12.2~~$8.4 million, a ~~7.1%~~32.1% decrease compared to the prior year’s ~~third~~second quarter revenue of ~~$13.1~~$12.4 million. The ~~current quarter~~ decrease ~~in hardware revenue~~ is primarily ~~due~~attributable to the decline in aerospace printer sales related to the Honeywell product lines within the T&M segment. This decline is a result of the ripple effects of the Boeing 737 Max grounding, due in part to reductions in new aircraft shipments, as well as the delay of retrofit printer upgrade orders for earlier 737 models so that those planes could remain in service. The decline of aerospace printer hardware sales in the T&M segment, ~~was partly offset by an increase~~as hardware revenue for that segment decreased 44.3% compared to the second quarter of the prior year. The decrease in T&M segment hardware sales primarily resulted from decreased aerospace printer product line sales of ~~data acquisition recorders~~both the ToughWriter and ~~increased sales for~~Honeywell product lines. The PI segment also contributed to the ~~ToughSwitch product line. The current quarter~~ overall decline in hardware sales ~~was also tempered by an increase in PI segment~~for the current quarter, as hardware sales asin that segment decreased 3.2% for the current quarter, with small declines in sales of most hardware products, which were partially offset by sales related to the product launch of the new QL~~-300~~

T3-OPX

in the TrojanLabel product group, as well as increased sales of the

T2-C

and

T-4

product lines, all of which provided a significant contribution to ~~third~~second quarter ~~revenue, as did sales of TrojanLabel printers, which experienced continued growth during the current quarter.~~

revenue.

Supplies revenue in the current quarter was ~~$17.7~~$17.1 million, a ~~2.5%~~5.2% decrease ~~over~~compared to the prior year’s ~~third~~second quarter supplies revenue of $18.1 million. The decrease is primarily attributable to the lower ink jet and thermal transfer ribbon supplies in the QuickLabel product group in the PI segment, as well as reduced revenue from supplies sales in the aerospace product group in the T&M segment. These current quarter declines in supplies revenue were partially offset by increased revenue from sales of electrophotographic supplies in the Quick Label product group and Trojan Label supplies, both in the PI segment.

Service and other revenues of $2.1 million in the current quarter ~~supplies revenue as~~decreased 29.5% compared to ~~the third~~second quarter revenue of $3.0 million in the prior ~~year~~year. The decrease is due primarily ~~attributable~~ to ~~a decrease~~declines in repair revenue ~~of QuickLabel~~related to the aerospace printer product ~~supplies~~line in the T&M segment, as well as declines in parts and repair revenue in the Product Identification segment. ~~The decrease in supplies revenue for the current quarter was slightly offset by an increase in TrojanLabel product supplies revenue within the Product Identification segment.~~

Service and other revenue was $3.5 million in the current quarter, a 17.0% increase over the prior year revenue of $3.0 million. The current quarter increase is primarily due to an increase in parts and repair revenue related to the AstroNova aerospace printer product lines in the T&M segment.

Current year ~~third~~second quarter gross profit was ~~$12.3~~$9.8 million, an ~~11.6%~~18.3% decrease compared to prior year ~~third~~second quarter gross profit of ~~$13.9~~$12.0 million. ~~The Company’s~~Our current quarter gross profit margin of ~~36.9%~~35.4% reflects a ~~380 basis~~0.4 percentage point decline from the prior year’s ~~third~~second quarter gross profit margin of ~~40.7%~~35.8%. The lower gross profit and related profit margin for the current quarter compared to the prior year’s ~~third~~second quarter is primarily attributable to decreased revenue and ~~unfavorable~~less favorable product mix, which were slightly offset by current quarter reductions in ~~both the PI~~manufacturing and ~~T&M segments.~~

period costs.

Operating expenses for the current quarter were ~~$11.9~~$9.6 million, ~~a 2.6% increase~~an 11. 4% decrease compared to the prior year ~~third~~second quarter operating expenses of ~~$11.5~~$10.8 million. Specifically, current quarter selling and marketing expenses were ~~$6.9~~$5.5 million, a ~~5.4% increase~~13.4% decrease compared to ~~$6.6~~the second quarter of the prior year. The decline for the current quarter was primarily due to a decrease in travel and entertainment expenses; employee wage, benefit and commission expenses, and advertising and trade show expenditures. Current quarter general and administrative expenses were $2.5 million, a 3.1% decrease compared to the second quarter of the prior year. The decline for the current year was primarily due to a decrease in fees paid for outside services and employee expenses, offset by increases in employee benefits and professional fee expenses. Research and development (“R&D”) expenses were $1.5 million in the ~~third~~current quarter, a 16.4% decrease compared to $1.8 million in the second quarter of the prior year ~~as the increases in wages, travel, entertainment and trade show expenditures were offset by a decline~~primarily due to decreases in employee wage and benefits, ~~for the current year. Both general~~supplies expenditures and ~~administrative expenses of $2.8 million~~travel and ~~research and development (“R&D”) expenses of $2.1 million remained unchanged from the third quarter of the prior year.~~entertainment expenses. The R&D spending as a percentage of revenue for the current quarter ~~of 6.2% remained consistent with~~is 5.4% compared to 5.3% for the same period of the prior year.

Other ~~expense~~income in the ~~third~~second quarter of ~~fiscal 2020~~the current year was ~~$0.2~~$0.3 million compared to ~~$0.5~~other expense of $0.2 million in the ~~third~~second quarter of the prior year. Current quarter other ~~expense primarily~~income includes $0.6 million of gain on the translation of Eurodollar and Danish Kroner receivable balances at significantly higher exchange rates for those currencies as compared to the US Dollar, which was partially offset by interest expense on ~~the Company’s~~ debt and the revolving line of credit of $0.2 ~~million.~~million and $0.1 million related to the termination of the cross-currency interest rate swap. Other expense for the ~~third~~second quarter of ~~fiscal 2019~~the prior year consisted primarily of interest expense on debt of $0.2 ~~million and net foreign exchange loss of $0.3~~ million.

The ~~benefit~~provision for federal, state and foreign income taxes for the ~~third~~second quarter of the current year is ~~$0.2~~$0.5 million, resulting in an effective tax rate of ~~negative 118.2%~~99.4%. This rate was impacted by a ~~reduction~~significant increase in ~~internally~~ forecasted operating results for our fiscal 2021 as compared to operating results forecasted at the end of our first quarter of fiscal year 2021, a $122,000 expense arising from a windfall shortfall tax expense related to the vesting of stock grants to directors and officers and a $79,000 expense related to return to provision adjustments from foreign tax returns filed in the quarter. This compares to the prior year’s second quarter tax provision of $29,000, resulting in an effective tax rate of 3.0% The effective tax rate for the prior year second quarter of 3.0% reflected a significant reduction in forecasted operating results for fiscal 2020 as compared to operating results at the end offor the ~~second~~first quarter of fiscal 2020 and also reflected a ~~$0.3 million~~$135,000 tax benefit related to the reversal of previously uncertain tax positions due to the finalization of an IRS audit and an $18,000 tax benefit arising from windfall tax benefits related to the Company’s stock. This compares to the prior year’s third quarter tax provision of $0.4 million, which reflected a benefit of $0.1 million related to windfall tax benefits related to the ~~Company’s~~vesting of stock ~~and an effective tax rate of 22.3%.~~

~~The Company~~grants.

We reported net income of ~~$0.5 million~~$3,000 or ~~$0.06~~$0.00 per diluted share for the ~~third~~second quarter of the current year. On a comparable basis, net income for the prior year’s ~~third~~second quarter was ~~$1.4~~$1.0 million or ~~$0.20~~$0.13 per diluted share. Return on revenue was ~~1.4%~~0.0% for the ~~third~~second quarter of fiscal ~~2020~~2021 compared to ~~4.1%~~2.8% for the ~~third~~second quarter of fiscal ~~2019.~~

~~Nine~~2020.

Table of Contents

Six Months Ended ~~November 2, 2019~~August 1, 2020 vs. ~~Nine~~Six Months Ended ~~October 27, 2018~~

August 3, 2019

Revenue by product group and current period percentage change over the prior year for the ~~nine~~six months ended ~~November 2,~~August 1, 2020 and August 3, 2019 ~~and October 27, 2018~~ were:

(Dollars in thousands)
   November 2,
2019    As a
% of
Revenue October 27,
2018    As a
% of
Revenue % Change
Over
Prior Year
Product Identification
   $ 67,484    65.5 % $ 63,407    63.7 % 6.4 %
T&M
   35,483    34.5 % 36,083    36.3 % (1.7 )%






Total
   $ 102,967    100.0 % $ 99,490    100.0 % 3.5 %


(Dollars in thousands)	August 1, 2020		As a % of Revenue			August 3, 2019		As a % of Revenue			% Change Compared to Prior Year
Product Identification	$	44,009		75.1	%	$	45,735		65.7	%		(3.8	)%
T&M		14,569		24.9	%		23,914		34.3	%		(39.1	)%

Total	$	58,578		100.0	%	$	69,649		100.0	%		(15.9	)%

Revenue for the first ~~nine~~six months of the current year was ~~$103.0~~$58.6 million, representing a ~~3.5% increase~~15.9% decrease compared to the previous year’s first ~~nine~~six months of revenue of ~~$99.5~~$69.6 million. Revenue through domestic channels for the first ~~nine~~half of the current year was $37.7 million, a decrease of 11.7% from prior year domestic revenue of $42.6 million. International revenue for the first six months of the current year was ~~$64.5 million, an increase of 6.1% from prior year domestic revenue of $60.8 million. International revenue for the first nine months of the current year was $38.5~~$20.9 million, a ~~slight~~22.5% decrease from the previous year international revenue of ~~$38.7~~$27.0 million. The current year’s first ~~nine~~six months of international revenue reflected an unfavorable foreign exchange rate impact of ~~$1.2~~$0.3 million.

Hardware revenue in the first ~~nine~~six months of the current year was ~~$37.5~~$17.4 million, a ~~1.3%~~31.6% decrease compared to the prior year’s first ~~nine~~six months of revenue of ~~$38.0~~$25.4 million. The decrease in hardware ~~sales~~revenue is primarily ~~related~~due to ~~the~~a 38.8% decline in the T&M segment resulting from lower aerospace printer product line ~~related~~sales for both the ToughWriter and Honeywell product lines. The PI segment also contributed to the Honeywell Agreement in the T&M segment. This decline is a result of the ripple effects of the Boeing 737 Max grounding, due in part to reductions in new aircraft shipments, as well as lower retrofit printer upgrade orders for older 737 models so that those planes could remain in service. This decline of hardware sales in the T&M segment was slightly offset by an increase in sales of data acquisition recorders and other aerospace printers. The overall decline in hardware ~~revenue~~sales for the first six months of the current year, ~~was also tempered by an increase~~as hardware sales decreased 13.6% on declines in sales of most hardware products in the PI segment ~~hardware~~other than sales asrelated to the ~~product~~TrojanLabel launch of the new QL~~-300~~

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which provided a significant contribution to ~~current year~~ revenue ~~as did sales~~for the first six months of ~~the TrojanLabel printers which also experienced continued growth during the current year.~~

fiscal 2021.

Supplies revenue in the first ~~nine months~~half of the current year was ~~$55.5~~$36.3 million, representing a ~~5.3% increase~~4.1% decrease over ~~the~~ prior year’s first ~~nine~~six months revenue of ~~$52.7~~$37.8 million. The decrease in the current year supplies revenue is primarily attributable to the decrease in sales of supplies in the aerospace product group in the T&M segment. The current year ~~increase~~decline in supplies revenue ~~is due primarily~~was also impacted by declines in sales in the PI segment related to ~~the increase in inkjet printer supplies~~decreased ink jet and ~~label sales, tempered by lower~~ thermal film supplies sales, which were slightly offset by increases in sales of transfer ribbon products within the QuickLabel product group and ~~electrophotographic~~ink and media supplies ~~revenue~~ in the ~~Product Identification segment.~~

TrojanLabel product group.

Service and other revenues were ~~$10.0~~$5.0 million in the first ~~nine~~six months of the current year, a ~~13.4% increase~~23.4% decrease compared to the prior year’s first ~~nine~~six months service and other revenues of ~~$8.8~~$6.5 million. The current year ~~increase~~decrease is primarily due to ~~an increase~~a decline in ~~repairs~~repair and parts ~~revenues in~~revenue related to the ~~AstroNova~~ aerospace printer product line, as well as sales declines in parts and ~~an increase in customer demand for parts in the data recorder product line. Also contributing to the current year increase were sales of parts~~repair revenue in the Product Identification ~~segment as a result of the increase in the installed base of printers currently in the field.~~ segment.

Current year first ~~nine~~six months gross profit was ~~$38.5~~$20.6 million, a ~~2.3%~~21.3% decrease from prior year’s first ~~nine~~six months gross profit of ~~$39.4~~$26.2 million. ~~The Company’s~~Our gross profit margin of ~~37.4%~~35.2% in the current year reflects a decrease from the prior year’s first ~~nine~~six months gross profit margin of ~~39.6%~~37.6%. The lower gross profit margin for the current year compared to the prior year is primarily due to lower revenue, higher ~~period~~manufacturing costs and ~~adverse~~less favorable product mix.

Operating expenses for the first ~~nine~~six months of the current fiscal year were ~~$34.4~~$19.8 million, a ~~2.4% increase~~12.4% decrease compared to ~~the~~ prior year’s first ~~nine~~six months operating expenses of ~~$33.6~~$22.6 million. Selling and marketing expenses for the current year of ~~$20.1~~$11.5 million ~~increased 3.3%~~decreased by 12.9% compared to the previous year’s first ~~nine~~six months primarily due ~~primarily~~ to ~~an increase~~decreases in ~~wages, outside services,~~travel and ~~travel~~entertainment expenses, ~~which were slightly offset by lower commissions~~advertising and ~~benefits.~~trade show expenditures, and wage, employee benefit and commission expenditures. General and Administrative ~~(“G&A”)~~ expenses ~~for~~decreased 13.4% to $4.9 million in the first ~~nine~~six months of the current year ~~were $8.4~~compared to $5.6 million in the first six months of the prior year, primarily due to a decrease in outside service fees, as well as lower travel costs and professional service fees, partially offset by an increase in bonus expense. R&D spending in the first six months of the current year was $3.4 million, a ~~1.8% increase~~slight decrease compared to the prior year’s first nine months G&A expenses of $8.3 million. The increase in G&A expenses in the current year was primarily due to an increase in outside service fees and corporate related expenditures, partially offset by a decrease in employee benefits. R&D spending in the first nine months of the current year was $5.9 million, a slight increase compared to the prior year’s first ninesix months spending of ~~$5.8~~$3.8 million. Current year spending on R&D represents ~~5.7%~~5.9% of revenue compared to the prior year’s first ~~nine~~six months level of ~~5.9%~~5.4%.

Other expense during the first ~~nine~~six months of the current year was ~~$0.8 million~~$23,000 compared to ~~$1.3~~$0.6 million in the first ~~nine~~six months of the previous year. Current year other expense primarily includes interest expense of ~~$0.6~~$0.5 million on ~~the Company’s~~our debt and revolving credit line and ~~$0.3~~$0.1 million related to the termination of ~~net foreign exchange loss~~the cross-currency interest rate swap $, which ~~was partially~~were largely offset by ~~investment~~a $0.5 million gain on the translation of Eurodollar and ~~other~~Danish Kroner receivable balances at significantly higher exchange rates for those currencies as compared to the US Dollar and investment income of $0.1 million. Other expense during the first ~~nine~~six months of fiscal ~~2019 includes~~2020 primarily included interest expense on debt of ~~$0.6~~$0.4 million, ~~and net~~ foreign exchange loss of ~~$0.8~~$0.2 million ~~which was~~and other expense of $0.1 million, partially offset by investment ~~and other~~ income of $0.1 ~~million~~

~~The Company~~million.

Table of Contents

We recognized ~~$0.2~~$0.4 million of income tax expense for the first ~~nine~~six months of the current fiscal year, which ~~includes~~reflects a ~~$0.4 million~~significant increase in forecasted operating results for our fiscal 2021 as compared to operating results forecasted at the end of our first quarter of fiscal 2021, a $118,000 expense arising from a shortfall tax expense related to our stock, a $79,000 expense related to return to provision adjustments from several foreign tax returns filed in the current year and a $78,000 tax benefit related to the ~~reversal~~expiration of ~~previously uncertain tax positions due to~~ the ~~finalization of an IRS audit and the expiration of~~ statute of limitations on previously uncertain tax positions ~~and~~resulting in a ~~$0.3~~48.6% effective tax rate. We recognized $0.4 million of income tax expense for the first six months of the prior fiscal year, which reflects a $232,000 tax benefit arising from windfall tax benefits related to the Company’s stock which resulted in a 5.5% effective tax rate. The Company recognized $1.0 million of income tax expense for the first nine months of the prior fiscal year. The 23.4% effective tax rate in that period was directly impacted by a $0.2 million tax benefit arising from windfall tax benefits related to the Company’sour stock and a ~~$0.1 million~~$53,000 tax benefit related to the expiration of the statute of limitations on a previously uncertain tax ~~position.~~

~~The Company~~position resulting in a 13.9% effective tax rate.

We reported net income of ~~$3.1~~$0.4 million, or ~~$0.43~~$0.06 per diluted share, for the first ~~nine~~six months of the current year. On a comparable basis, net income for the first ~~nine~~six months of the prior year was ~~$3.4~~$2.7 million, or ~~$0.49 per diluted share, which included $0.8 million ofafter-tax~~ income, or $0.12 per diluted share, as a result of a change in accounting estimates in the prior year’s first quarter for product cost and operating expenses related to a transition services agreement entered into with Honeywell in connection with the Honeywell Agreement. In addition, during the first quarter of fiscal 2019, a change in accounting estimate for revenue subject to customer rebates under the Honeywell Agreement increased net income by $0.3 million or $0.05$0.36 per diluted share. Return on revenue was ~~3.0%~~0.7% for the first ~~nine~~six months of fiscal ~~2020~~2021 compared to ~~3.4%~~3.8% for the first ~~nine~~six months of fiscal ~~2019.~~

2020.

Segment Analysis

~~The Company reports~~

We report two segments: Product Identification and Test & Measurement and ~~evaluates~~evaluate segment performance based on the segment profit before corporate and financial administration expenses. Summarized below are the Revenue and Segment Operating Profit (Loss) for each reporting segment:

   Three Months Ended Nine Months Ended
   Revenue    Segment Operating Profit Revenue    Segment Operating Profit
(In thousands)
   November 2,
2019    October 27,
2018    November 2,
2019 October 27,
2018 November 2,
2019    October 27,
2018    November 2,
2019 October 27,
2018
Product Identification
   $ 21,749    $ 21,684    $ 1,880 $ 2,014 $ 67,484    $ 63,407    $ 6,990 $ 5,833
T&M
   11,569    12,512    1,397 3,184 35,483    36,083    5,533 8,256










Total
   $ 33,318    $ 34,196    3,277 5,198 $ 102,967    $ 99,490    12,523 14,089









Corporate Expenses
         2,830 2,836       8,445 8,298




Operating Income
         447 2,362       4,078 5,791
Other Expense, Net
         (238 ) (538 )       (788 ) (1,320 )




Income Before Income Taxes
         209 1,824       3,290 4,471
Income Tax (Benefit) Provision
         (247 ) 407       182 1,046




Net Income
         $ 456 $ 1,417       $ 3,108 $ 3,425

Three Months Ended

Six Months Ended


Revenue

Segment Operating Profit
(Loss)

Revenue

Segment Operating Profit
(Loss)

(In thousands)

August 1,
2020

August 3,
2019

August 1,
2020

August 3,
2019

August 1,
2020

August 3,
2019

August 1,
2020

August 3,
2019

Product Identification
   $ 21,629    $ 22,144    $ 3,146 $ 2,224 $ 44,009    $ 45,735    $ 6,292 $ 5,110
T&M
   6,029    11,324    (407 ) 1,555 14,569    23,914    (563 ) 4,136










Total
   $ 27,658    $ 33,468    2,739 3,779 $ 58,578    $ 69,649    5,729 9,246









Corporate Expenses
      2,535 2,616    4,861 5,615




Operating Income
      204 1,163    868 3,631
Other Income (Expense), Net
      328 (183 )    (23 ) (550 )




Income Before Income Taxes
      532 980    845 3,081
Income Tax Provision
      529 29    411 429




Net Income
      $ 3 $ 951    $ 434 $ 2,652

Product Identification

~~Total current quarter revenue~~

Revenue from the Product Identification segment of $21.7 million was comparable to revenue for the same period of the prior year. Current quarter revenue includes increases in hardware and supplies revenue within the TrojanLabel product group, as well as a significant contribution from the introduction of the new QL~~-300~~ ~~printer~~decreased 2.3% in the ~~QuickLabel product group, slightly offset by declines in some of the Company’s inkjet printer product lines. Product Identification’s current~~second quarter segment operating profit was $1.9 million, reflecting a profit margin of 8.6%. This compares to the prior year’s third quarter segment profit of $2.0 million and related profit margin of 9.3%. The slight decrease in Product Identification current year third quarter operating segment operating margin is primarily due to higher operating expenses and adverse product mix.

~~Revenues from the Product Identification segment increased 6.4% to $67.5 million in the first nine months~~ of the current year, ~~from $63.4~~with revenue of $21.6 million compared to $22.1 million in the same period of the prior year. The current ~~year increase~~quarter decrease in revenue is primarily attributable to ~~strong demand for~~declines in the QuickLabel product group as a result of lower ink jet, thermal paper supplies and hardware product sales, as well as lower parts and repair revenue. The overall revenue decrease in PI was tempered by increased sales of both hardware and supplies within the TrojanLabel product group, specifically, TrojanLabel’s

T2-C

and

T-4

printers which experienced continued growth during the current quarter. There was also a significant contribution to current quarter revenue as a result of the new product launch of TrojanLabel’s

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product. Product Identification’s current quarter segment operating profit was $3.1 million, reflecting a profit margin of 14.5%. This compares to the prior year’s second quarter segment profit of $2.2 million and related profit margin of 10.0%. The increase in Product Identification current year second quarter segment operating profit and margin is primarily due to lower period and operating costs.

Revenues from the Product Identification segment decreased 3.8% to $44.0 million in the first six months of the current year from $45.7 million in the same period of the prior year. The current period decrease in revenue is primarily attributable to the decline in revenue from QuickLabel product group ink jet and thermal paper supplies, hardware and parts and repairs. The overall revenue decrease in PI was slightly tempered by an increase in sales of supplies in the first quarter from Asian customers, which subsequently declined. Also contributing to the increase in revenue for the current year was an increase in service and other revenue. Hardware revenue in the PI segment remained fairly constant compared to the prior year; however the segment did experience a significant revenue contribution from the introduction of QuickLabel’s new QL~~-300~~ ~~printer,~~TrojanLabel product group, as well as ~~double-digit growth in~~the significant contribution to current year revenue ~~from sales~~as a result of ~~both QuickLabel’s monochromatic printers and~~the new product launch of TrojanLabel’s~~T2-C~~ ~~printers. This growth was tempered by lower sales of other inkjet color printers within the QuickLabel product group.~~

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product. Product Identification current year segment operating profit was ~~$7.0~~$6.3 million with a profit margin of ~~10.4%~~14.3%, compared to the prior year segment operating profit of ~~$5.8~~$5.1 million and related profit margin of ~~9.2~~11.2 %. The increase in current year segment operating profit and margin is primarily due to ~~higher sales~~lower period and ~~product mix early in the year.~~

operating costs.

Table of Contents

Test & Measurement—T&M

Revenue from the T&M segment was ~~$11.6~~$6.0 million for the ~~third~~second quarter of the current fiscal year, representing a ~~7.5%~~46.8% decrease compared to revenue of ~~$12.5~~$11.3 million for the same period in the prior year. The decrease in revenue for the current quarter ~~revenue decrease~~ is ~~due~~primarily attributable to the decline in ~~the~~sales of our aerospace ~~printer~~ product ~~line acquired from Honeywell in fiscal 2018~~lines as a result of the ~~ripple effects of the~~ Boeing 737 ~~Max~~MAX grounding ~~which resulted~~and the dramatic drop in ~~part~~air travel due to ~~new aircraft shipment reductions~~the impact of

COVID-19.

To a lesser degree, the decrease in current quarter revenue was also impacted by a decline in T&M’s TMX hardware sales , as well as ~~delays~~a decline in supplies and service and other revenue in the aerospace product lines, offset slightly by an increase in sales of ~~several retrofit printer upgrade orders for earlier 737 models so that those planes could remain in service.~~the

EV-5000

data recorder. T&M’s ~~third~~second quarter segment operating ~~profit~~loss was ~~$1.4~~$0.4 million, reflecting a negative profit margin of ~~12.1%~~6.8%, a decrease compared to the prior year segment operating profit of ~~$3.2~~$1.6 million and related operating margin of ~~25.4%~~13.7%. The decrease in segment operating profit and related margin were due to lower sales revenue ~~adverse product mix and higher manufacturing and period costs.~~

in the current quarter.

Revenue from the T&M segment was ~~$35.5~~$14.6 million for the first ~~nine~~six months of the current fiscal year, a ~~1.7%~~39.1% decrease compared to sales of ~~$36.1~~$23.9 million for the same period in the prior year. The decrease in revenue for the ~~first nine months of the~~ current year is ~~also~~ primarily ~~due~~attributable to the decline in ~~the~~sales of our aerospace ~~printer~~ product ~~line acquired from Honeywell~~lines as a result of the ~~impact of the~~ Boeing 737 ~~Max grounding.~~ MAX grounding and the dramatic drop in air travel due to the impact of

COVID-19.

The decrease in current period revenue was also driven to a lesser degree by a decline ~~was slightly offset by an increase~~in data recorder hardware sales, as well as a decline in supplies and service and other revenue in the ~~hardware~~aerospace product ~~line as a result of increased sales of T&M data recorders and AstroNova aerospace printers, both experiencing double digit growth in the current year, and an increase in parts and repair revenue.~~lines. The segment’s first ~~nine~~six months operating ~~profit~~loss of ~~$5.5~~$0.6 million resulted in a ~~15.6%~~negative 3.9% profit margin compared to the prior year segment operating profit of ~~$8.3~~$4.1 million and related operating margin of ~~22.9%~~17.3%. The lower segment operating profit and related margin for the current year is due to lower sales revenue ~~adverse product mix and higher manufacturing costs and operating expenses.~~

in the current year.

Financial Condition and Liquidity

Overview

~~Generally,~~

Historically, our primary sources of short-term liquidity ~~are~~have been cash generated from operating activities and borrowings under our revolving credit ~~facility, as described below, which we use to supplement cash generated from operating activities and to fund~~facility. These sources have also funded a portion of our capital expenditures and contractual contingent consideration ~~obligations, and future acquisitions.~~obligations. We believe that our current level of cash and short-term financing capabilities along with future cash flows from operations will be sufficient to meet our operating and capital needs for at least the next 12 months.

~~Our cash and cash equivalents at~~have funded acquisitions by borrowing under bank term loan facilities.

At the end of last quarter, the ~~third quarter were $4.5 million. During~~deterioration of our financial condition and operating results due to the ~~third quarter of~~decline in 737

MAX-related

revenue and

COVID-19

impacts caused us to violate the current year, the Company borrowed an additional $3.0 million on its revolving credit facility. At November 2, 2019, under its existing revolving credit facility, the Company had an outstanding balance of $6.5 million and $3.5 million remaining available for borrowing.

~~The Company’s backlog decreased 18.8% fromyear-end~~ ~~to $20.8 million at the end of the third quarter of fiscal 2020.~~

~~Indebtedness~~

~~In fiscal 2018, the Company and the Company’s wholly owned Danish subsidiaries, ANI ApS and TrojanLabel ApS, entered into a credit agreement~~financial covenants in our Credit Agreement dated February 28, 2017 (the “Existing Credit Agreement”) with Bank of America, N.A. (the “Lender”)~~, which, as amended through November~~. On June 22, 2020, we entered into a letter agreement with the Lender wherein it agreed to waive compliance with those financial covenants for the measurement period ended May 2, ~~2019~~2020.

On July 30, 2020, we entered into an Amended and Restated Credit Agreement (the ~~“Credit~~“A&R Credit Agreement”)~~, provides for a secured credit facility consisting of a term loan to~~ with the Lender, our wholly owned subsidiary ANI ApS, ~~in the principal amount of $9.2 million~~a Danish private limited liability company and ANI ApS’s wholly-owned subsidiary TrojanLabel ApS, a ~~term loan to the Company in the principal amount of $15.0 million.~~Danish private limited liability company (“TrojanLabel”). The A&R Credit Agreement ~~also provides for a $10.0 million revolving credit facility for~~amended and restated the ~~Company.~~

~~Both term loans bear interest at a rate per annum equal to the LIBOR rate plus a margin that varies within a range of 1.0% to 1.5% based on the Company’s consolidated leverage ratio.~~

Existing Credit Agreement. In connection with our entry into the A&R Credit Agreement, ~~ANI ApS~~we entered into an Amended and Restated Security and Pledge Agreement and a ~~hedging agreement to manage~~mortgage in favor of the ~~variable interest rate risk and currency risk associated with its payments in respect to the term loan. Under this combined arrangement, payments of principal and interest~~Lender with respect to ~~approximately $8.9 million~~our owned real property in West Warwick, Rhode Island. Under the A&R Credit Agreement, AstroNova, Inc. is the sole borrower and its obligations are guaranteed by ANI ApS and TrojanLabel.

Immediately prior to the closing of the A&R Credit Agreement, we repaid $1.5 million in principal amount of term loans outstanding under the Existing Credit Agreement.

The A&R Credit Agreement provides for (i) a term loan in the principal amount of $15.2 million, which we used to refinance the outstanding term loans borrowed by us and ANI ApS under the Existing Credit Agreement and a portion of the ~~term loan will be made in Danish Kroner,~~outstanding revolving loans borrowed by us under the Existing Credit Agreement, and ~~interest on such principal amount will be payable at~~(ii) a ~~fixed rate of 0.67% per annum~~$10.0 million revolving credit facility available to us for the entire term, subject only to potential changes based on the Company’s consolidated leverage ratio. Additionally, the Company entered into a hedging agreement to manage the variable interest rate risk associated with its payments with respect to the $15.0 million term loan. Under this combined arrangement, interest will be payable at a fixed rate of 2.04% per annum for the entire term, plus an incremental margin of 1.0% to 1.5%, based on the Company’s consolidated leverage ratio.

general corporate purposes. Revolving credit loans may be borrowed, at ~~the Company’s~~our option, in U.S. Dollars or, subject to certain conditions, Euros, British Pounds, Canadian Dollars or Danish Kroner. ~~Amounts~~

On May 6, 2020, we entered into a Loan Agreement with and executed a promissory note in favor of Greenwood Credit Union (“Greenwood”) pursuant to which we borrowed $4.4 million (the “PPP Loan”) from Greenwood pursuant to the Paycheck Protection Program (the “PPP”) administered by the United States Small Business Administration (the “SBA”) and authorized by the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), enacted on March 27, 2020. The terms of the PPP Loan were subsequently revised in accordance with the provisions of the Paycheck Protection Flexibility Act of 2020 (the “PPP Flexibility Act”), which was enacted on June 5, 2020. We believe that our obtaining the PPP Loan and suspending the payment of dividends on our common stock were instrumental in our ability to successfully negotiate the A&R Credit Facility.

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As a result of the impact of the

COVID-19

pandemic, our customers may also experience liquidity pressure and be unable to pay us for products on a timely basis. During the first quarter we experienced a limited number of cases in which certain of our aerospace customers failed to pay us on a timely basis and we increased our reserves for potential losses on those accounts. In the second quarter, two small airlines we had small receivables balances with but which we had previously fully reserved, entered bankruptcy. In general, during the second quarter these problems abated and we did not increase our reserves. If the impact of the

COVID-19

crisis continues for a prolonged period of time or worsens, we may experience further adverse impacts of delayed aerospace receivable collections.

On August 1, 2020, our cash and cash equivalents were $11.2 million. The outstanding balance on our revolving line of credit is $2.0 million at August 1, 2020 and we have $8.0 million remaining available for borrowing. Obtaining the PPP Loan and completing the A&R Credit Facility along with the impact of increased cash generated from operations during the second quarter, have resulted in a significant improvement in our liquidity profile and we believe that our available cash and credit facilities combined with our cash generated from operations will be sufficient to support our operating requirements, so long as that the impact of

COVID-19

does not worsen.

Indebtedness

Under the A&R Credit Agreement, the term loan repayments are as follows: the principal amount of each quarterly installment required to be paid on the last day of each of our fiscal quarters ending July 31, 2020 and October 31, 2020 is $0.8 million; the principal amount of the quarterly installment required to be paid on the last day of our fiscal quarter ending January 31, 2021 is $1.1 million; the principal amount of the quarterly installment required to be paid on the last day of our fiscal quarter ending April 30, 2021 is $1.1 million; the principal amount of each quarterly installment required to be paid on the last day of each of our fiscal quarters ending July 31, 2021, October 31, 2021, January 31, 2022 and April 30, 2022 is s $1.4 million; the entire remaining principal balance of the term loan is required to be paid on June 15, 2022. We may voluntarily prepay the term loan, in whole or in part, from time to time without premium or penalty (other than customary breakage costs, if applicable). We may repay borrowings under the revolving credit facility at any time without premium or penalty (other than customary breakage costs, if applicable), but in any event no later than June 15, 2022, and any outstanding revolving loans thereunder will be due and payable in full, and the revolving credit facility will terminate, on such date. We may reduce or terminate the revolving line of credit at any time, subject to certain thresholds and conditions, without premium or penalty.

The loans under the A&R Credit Agreement are subject to certain mandatory prepayments, subject to various exceptions, from (a) net cash proceeds from certain dispositions of property, (b) net cash proceeds from certain issuances of equity, (c) net cash proceeds from certain issuances of additional debt and (d) net cash proceeds from certain extraordinary receipts.

Amounts repaid under the revolving credit facility may be reborrowed, subject to continued compliance with the A&R Credit Agreement. No amount of the term loan that is repaid may be reborrowed.

The interest rates under the A&R Credit Agreement are as follows: The term loan and revolving credit loans bear interest at a rate per annum equal to, at ~~the Company’s~~our option, either (a) the applicable LIBOR rate (or in the case of revolving credit loans denominated in a currency other than U.S. Dollars, the applicable quoted rate), plus a margin that varies within a range of ~~1.0%~~2.15% to ~~1.5%~~3.65% based on ~~the Company’s~~our consolidated leverage ratio, or (b) a fluctuating reference rate equal to the highest of (i) the federal ~~funds’~~fund rate plus 0.50%, (ii) Bank of America’s publicly announced prime rate, or (iii) the applicable LIBOR rate plus 1.00% or (iv) 1.00%, plus a margin that varies within a range of ~~0.0%~~1.15% to ~~0.5%~~2.65% based on ~~the Company’s~~our consolidated leverage ratio. ~~The Company is~~We are also required to pay a commitment fee on the undrawn portion of the revolving credit facility atthat varies within a range of .25% and .675% based on our consolidated leverage ratio.

Under the ~~rate~~A&R Credit Agreement , we must comply with various customary financial and

non-financial

covenants including a maximum consolidated leverage ratio, a minimum consolidated fixed charge coverage ratio, a minimum level of ~~0.25%~~ ~~per annum~~~~. Outstanding borrowings under~~EBITDA, a consolidated asset coverage ratio and a minimum level of liquidity. The primary

non-financial

covenants limit our and our subsidiaries’ ability to incur future indebtedness, to place liens on assets, to pay dividends or distributions on capital stock, to repurchase or acquire capital stock, to conduct mergers or acquisitions, to sell assets, to alter their capital structure, to make investments and loans, to change the ~~revolving credit line during fiscal 2020 bear interest at a weighted average annual rate~~nature of ~~5.26%~~their business, and ~~the Company has paid $93,000 of interest expense for revolving credit line borrowings for the nine months ended November 2, 2019.~~

~~The obligations of ANI ApS~~to prepay subordinated indebtedness, in respect of the $9.2 million term loan are guaranteed by the Company and TrojanLabel ApS. The Company’s obligations in respect of the $15.0 million term loan, revolving credit facility and its guarantee in respect of the ANI ApS term loan are secured by substantially all of the assets of the Company (including a pledge of a portion of the equity interests held by the Company in ANI ApS and the Company’s wholly owned German subsidiary, AstroNova GmbH),each case subject to certain ~~exceptions.~~

exceptions and thresholds as set forth in the A&R Credit Agreement.

~~The Parties must comply with various customary financial andnon-financial~~default, which include, among other events, the following (which are subject, in some cases, to certain grace periods): failure to pay when due any principal, interest or other amounts in respect of the loans, breach of any of our covenants or representations under the ~~Credit Agreement.~~

~~On December 9, 2019,~~loan documents, default under any other of our or our subsidiaries’ significant indebtedness agreements, a bankruptcy, insolvency or similar event with respect to us or any of our subsidiaries, a significant unsatisfied judgment against us or any of our subsidiaries, or our undergoing a change of control.

In addition to the ~~Company,~~guarantees by ANI ApS and TrojanLabel, our obligations under the A&R Credit Agreement are also secured by substantially all of AstroNova, Inc.’s personal property assets (including a pledge of the equity interests it holds in ANI ApS, in our wholly-owned German subsidiary AstroNova GmbH, and in our wholly-owned French subsidiary AstroNova SAS), subject to certain exceptions, and by a mortgage on our owned real property in West Warwick, Rhode Island.

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In connection with our entry into the A&R Credit Agreement, and as a condition of the Lender’s entry into the A&R Credit Agreement, we terminated our interest rate swap and cross-currency interest rate swap (the “Swaps”) that we previously used to manage the interest rate and foreign currency exchange risks associated with borrowings under the Existing Credit Agreement. We paid $0.7 million in connection with the termination of the Swaps.

The PPP Loan, which will mature on May 6, 2022, is unsecured and bears interest at a rate of 1.0% per annum, accruing from the loan date and is payable monthly. No payments are due on the PPP Loan for six months from the date of the first disbursement, but interest accrues during the deferral period. Interest accrued in the amount of $11,000 is included in other income (expense) for the three and six month periods ended August 1, 2020.

The PPP Loan may be prepaid at any time without penalty. The Loan Agreement and Promissory Note include customary provisions for a loan of this type, including prohibitions on our payment of dividends or repurchase of shares of our stock while the PPP Loan remains outstanding and events of default relating to, among other things, payment defaults, breaches of the provisions of the Loan Agreement or the Promissory Note and cross-defaults on other loans.

Subject to the limitations and conditions set forth in the CARES Act, the PPP Flexibility Act and the ~~Lender, entered into a Fourth Amendment (the “Fourth Amendment”)~~regulations and guidance provided by the SBA with respect to the ~~Credit Agreement. Refer to Part II, Item 5 Other Information for further details on~~PPP, a portion of the ~~Fourth Amendment and resulting changes~~PPP Loan in an amount up to the ~~terms~~amount of the ~~Credit Agreement.~~

~~The Company believes it is in compliance with all~~PPP Loan proceeds we spend on payroll, rent, utilities and interest on certain debt during the twenty-four week period following incurrence of the ~~covenants~~PPP Loan may be forgiven under the PPP. The amount of the PPP Loan to be forgiven in respect of rent, utilities and interest on certain debt will be capped at 40% of the ~~amended Credit Agreement.~~

forgiven amount, with the remaining forgiven amount allocated to payroll costs. We have fully utilized the PPP Loan proceeds for qualifying expenses and intend to apply for forgiveness of the PPP Loan during the third quarter of the current fiscal year. Whether our application for forgiveness will be granted and in what amount is subject to an application to, and approval by, the SBA and may also be subject to further requirements in any regulations and guidelines the SBA may adopt.

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Cash Flow

~~The Company’s~~

Our statements of cash flows for the ~~nine~~six months ended ~~November 2,~~August 1, 2020 and August 3, 2019 ~~and October 27, 2018~~ are included on page 87 of this report. Net cash provided by operating activities was ~~$1.0~~$9.2 million for the first ~~nine~~six months of fiscal ~~2020~~2021 compared to ~~$2.5~~$1.0 million for the same period of the previous year. The ~~decrease~~increase in net cash provided by operations for the first ~~nine~~six months of the current year is primarily due to the ~~decrease in net income, and an~~ increase in cash ~~used for~~provided by working capital. The combination of changes in accounts receivable, inventory, income taxes payable, accounts payable and accrued expenses ~~negatively impacted~~increased cash by ~~$8.4~~$5.7 million for the first ~~nine~~six months of fiscal ~~2020,~~2021, compared to ~~$6.8~~a decrease of $5.6 million for the same period in fiscal ~~2019.~~

~~The~~2020.

Our accounts receivable balance decreased to ~~$22.1~~$14.8 million at the end of the ~~third~~second quarter compared to ~~$23.5~~$19.8 million at year end. The ~~$1.4~~$5.0 million decrease in the accounts receivable balance from year end is directly related to the decrease in sales for the ~~third~~second quarter of the current year as compared to ~~third~~fourth quarter sales in fiscal ~~2019.~~

2020 and a decline in days sales outstanding for the second quarter of the current year, which was 47 compared to 55 days at prior year end. The decline in days sales outstanding is largely due to the relative decline in sales of aerospace products, which tend to have longer collection cycles.

The inventory balance was ~~$35.6~~$32.4 million at the end of the ~~third~~second quarter of fiscal ~~2020,~~2021, compared to ~~$30.2~~$33.9 million at year end and inventory days on hand increased to ~~152~~163 days at the end of the current quarter from ~~120~~151 days at the prior year end. The current period ~~increase~~decrease in inventory ~~and related days on hand~~ is due to ~~lower forecasted sales, as well as a buildup~~sell through of supplies inventory ~~for new product launches in our Product Identification segment. Also contributing to the inventory increase were delayed shipments to customers~~ in the Product Identification ~~segment and last time buy parts and safety stock increases~~segment. Demand declines in the ~~T&M segment.~~

aerospace product group resulted in unconsumed assembly and finished goods inventories, offsetting some of the Product Identification inventory decreases. Inventory days on hand increased by virtue of the lower aerospace sell through.

The net ~~decreased~~increased cash position at ~~November 2, 2019~~August 1, 2020 primarily resulted from cash provided by operations, as discussed above, as well as $4.4 million received from PPP loan proceeds and an additional net $3.5 million of proceeds received in the second quarter of fiscal 2021 related to the refinance of long-term debt.. The increase in cash for the first six months of the current year was offset by a $4.5 million net cash decrease on the revolving line of credit, principal payments of long-term debt and the guaranteed royalty obligation of ~~$4.0~~$2.1 million and ~~$1.4~~$1.0 million, respectively; cash used to acquire property, plant and equipment of ~~$2.4~~$1.2 million and dividends paid of ~~$1.5 million, offset by increased cash provided by current period borrowing on the Company’s existing revolving credit facility of $5.0~~$0.5 million.

Contractual Obligations, Commitments and Contingencies

There have been no material changes to our contractual obligations as disclosed in ~~the Company’s~~our Annual Report on Form

10-K

for the fiscal year ended January 31, ~~2019,~~2020 other than those ~~which occur~~occurring in the ordinary course of business.

Critical Accounting Policies, Commitments and Certain Other Matters

The preparation of our condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and disclosure of commitments and contingencies at the date of the condensed consolidated financial statements and reported amounts of revenue and expenses during the reporting period. We base these estimates and judgments on factors we believe to be relevant, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

The process of determining significant estimates is fact-specific and takes into account factors such as historical experience, current and expected economic conditions, product mix, and in some cases, actuarial and appraisal techniques. We constantly

re-evaluate

these significant factors and make adjustments where facts and circumstances dictate.

While we believe that the factors considered provide a meaningful basis for the accounting policies applied in the preparation of the condensed consolidated financial statements, we cannot guarantee that our estimates and assumptions will be accurate. As the determination of these estimates requires the exercise of judgment, actual results may differ from those estimates, and such differences may be material to our condensed consolidated financial statements. ~~Except for the changes resulting from the adoption of the new lease accounting standard during the period, there~~There have been no material changes to the application of critical accounting policies as disclosed in our Annual Report on Form

10-K

for the fiscal year ended January 31, ~~2019. See Note 11, Leases, in Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form10-Q,~~ ~~for an update on our lease accounting policy.~~

2020.

Forward-Looking Statements

This Quarterly Report on Form

10-Q

may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical fact, but rather reflect our current expectations concerning future events and results. We generally use the words “believes,” “expects,” “intends,” “plans,” “anticipates,” “likely,” “continues,” “may,” “will,” and similar expressions to identify forward-looking statements. Such forward-looking statements, including those concerning our expectations, involve risks, uncertainties and other factors, some of which are beyond our control, which may cause our actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. Factors which could cause actual results to differ materially from those anticipated include, but are not limited to (a) the impact of the ongoing

COVID-19

pandemic on us, our customers, our suppliers and the global economy; (b) general economic, financial and business conditions; ~~(b)~~(c) declining demand in the test and measurement markets, especially defense and aerospace; ~~(c)~~(d) competition in the specialty printer industry; ~~(d)~~(e) our ability to develop and introduce new products and achieve market acceptance of ~~our products and effective design of customer required features; (e)~~these products; (f) competition in the data acquisition industry; ~~(f)~~(g) the impact of changes in foreign currency

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exchange rates on the results of operations; ~~(g)~~(h) the ability to successfully integrate acquisitions and realize benefits from divestitures; ~~(h)~~(i) our ability to restructure the terms of our current credit facility and to otherwise manage our indebtedness; (j) our ability to obtain financing for working capital and capital expenditures; (k) the business abilities and judgment of personnel and changes in business strategy; ~~(i)~~(l) the efficacy of research and development investments to develop new products; ~~(j)~~(m) the launching of significant new products which could result in unanticipated expenses; ~~(k)~~(n) bankruptcy or other financial problems at major suppliers or customers that could cause disruptions in ~~the Company’s~~our supply chain or difficulty in collecting amounts owed by such customers; ~~(l)~~(o) any technology disruption or delay in implementing new technology; ~~(m)~~(p) a material security breach or cybersecurity attack impacting our business and our relationship with ~~customers~~customers;( q) difficulties encountered in connection with the certification of the 737 MAX for return to service; and ~~(n)~~(r) other risks included under

“Item 1A-Risk

Factors” in ~~the Company’s~~our Annual Report on Form

10-K

for the fiscal year ended January 31, ~~2019.~~2020. We assume no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

During the ~~nine~~six months ended ~~November 2, 2019,~~August 1, 2020, there were no material changes to our market risk disclosures as set forth in Part II, Item 7A “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form

10-K

for the year ended January 31, ~~2019.~~

2020.

Item 4.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management has evaluated, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report pursuant to

Rule 13a-15(b)

under the Securities Exchange Act of 1934, as amended (Exchange Act). Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective in ensuring that information required to be disclosed in our Exchange Act reports is (1) recorded, processed, summarized and reported in a timely manner, and (2) accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to have materially affected, our internal control over financial reporting.

We have not experienced any material impact to our internal controls over financial reporting despite the fact that most of our

non-production

employees are working remotely due to the

COVID-19

pandemic. We are continually monitoring and assessing the
COVID-19
situation with respect to our internal controls to minimize the potential impact on their design and operational effectiveness.
33
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PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

There are no pending or threatened legal proceedings against ~~the Company believed~~us that we believe to be material to ~~the~~our financial position or results of ~~operations~~operations.

Item 1A.

Risk Factors

This section augments and updates certain risk factors disclosed in Item 1A of Part I of our Annual Report on Form

10-K

for the ~~Company.~~

~~Item 1A.~~

~~Risk Factors~~

year ended January 31, 2020 (the “Annual Report”). We are providing the following information regarding changes that have occurred to the previously disclosed risk factors in our Annual Report on

Form 10-K.

In addition to the other information ~~set forth~~ in this Quarterly Report on Form

10-Q, ~~one~~

all risk factors should be carefully ~~consider the factors discussed~~considered in ~~Part I, Item 1A “Risk Factors” in the Company’s Annual Report on Form10-K~~ ~~for the fiscal year ended January 31, 2019,~~evaluating us and our common stock. Any of these risks, many of which are beyond our control, could materially and adversely affect our ~~business,~~ financial condition, results of operations or ~~future operating results. The risks described~~cash flows, or cause our actual results to differ materially from those projected in ~~our Annual Report on10-K~~ ~~are not the only risks that could affect our business, as additional~~any forward-looking statements. We may also face other risks and uncertainties that are not presently known, are not currently ~~known to us or that we currently deem~~believed to be ~~immaterial also~~material, or are not identified below because they are common to all businesses. Past financial performance may ~~materially~~not be a reliable indicator of future performance, and historical trends should not be used to anticipate results or trends in future periods. For more information, see “Forward-Looking Statements” elsewhere in this Quarterly Report.

The ongoing

COVID-19

pandemic has adversely affected and will likely continue to adversely affect our revenues, results of operations and financial condition.

Our business has been and will likely continue to be materially adversely affected by the widespread outbreak of contagious disease, including the recent outbreak of a respiratory illness caused by a novel coronavirus known as

COVID-19.

COVID-19

has been declared by the World Health Organization to be a “pandemic” and has spread to many of the countries in which we, our customers, our suppliers and our other business partners do business. National, state and local governments in affected regions have implemented and have periodically changed a variety of safety precautions, including quarantines, travel restrictions, business closures, cancellations of public gatherings and other measures, often without coordination and in contradictory ways. Many other businesses and other organizations with which we do business directly or which otherwise impact us have taken and are taking additional steps to avoid or reduce infection, including limiting travel and staying home from work which has required us to adapt our interaction to those entities’ requirements. These measures are disrupting normal business operations both inside and outside of affected areas and have had significant negative impacts on our business, the businesses of our suppliers and customers, and on businesses and financial ~~condition and/or operating results~~markets worldwide.

In response, we have established new procedures to monitor government recommendations and regulations and make good faith efforts to comply with both those regulations and the best practices recommendations issued by a variety of governmental health authorities and manufacturing industry organizations to which we belong. In addition, we have made significant modifications to our normal operations because of the

COVID-19

outbreak, including requiring most

non-production

related team members to work remotely, at least part-time. As a result of these safety protocols, routine health checks and segregating work groups to reduce close contact to the degree possible, we believe the risk of

COVID-19

outbreak in our facilities is relatively low compared to the overall positivity rate of the general populations where our businesses reside. Nevertheless while we maintained our manufacturing operational capacity at our manufacturing facilities located in West Warwick, Rhode Island, as well as our manufacturing facilities in Canada and Germany, because of the nature of

COVID-19’s

transmission dynamics, apparent long incubation period and inconsistent disease presentation among different people, there can be no assurance that our efforts to maintain safety will be successful and there is an unknown level of risk that

COVID-19

could infect our workforce, which could interrupt our production and potentially create liability for us.

We have experienced a number of adverse impacts as a result of the

COVID-19

outbreak, including reductions in demand for our products, delays and cancellations of orders for our products, difficulties in obtaining raw materials and components for our products, shortages of labor to manufacture our products, inefficiencies caused by remote workers’ difficulties in performing their normal work outputs, closures of the facilities of some of our suppliers and customers, and delays in collecting accounts receivable.

While it is not possible at this time to estimate the full scope of the impact that

COVID-19

will have on our business, customers, suppliers or other business partners, we expect that the continued spread of

COVID-19,

the measures taken by the governments of affected areas, actions taken to protect employees, and the impact of the pandemic on all business activities to continue to adversely impact our operational capacity and the efficiency of our team members and will continue to negatively affect our results of operations and financial condition.

The adverse effect of

COVID-19

on our business has negatively impacted our earnings and cash flow and this combined with disruptions in the credit and capital markets as a result of

COVID-19,

has affected and may continue to adversely affect the ~~value~~terms on which we are able to obtain any new financing should it be needed.

The aerospace industry, which we serve through our aerospace product line, has been significantly disrupted by the

COVID-19

outbreak, both inside and outside of the United States. The decline in air travel has had and will continue to have a material adverse impact on our financial results, the ultimate scope of which we cannot estimate at this time. Should one or more of our airplane OEM manufacturing customers or a significant number of airline customers fail to continue business as a going concern, declare bankruptcy, or otherwise reduce the demand for our products as a result of the impact of the

COVID-19

pandemic, it would have a material adverse impact on our business operations and financial results.

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If we are unable to successfully comply with our credit agreement with Bank of America or secure alternative financing, our business and financial condition could be materially adversely affected.

Our credit agreement with Bank of America requires us, among other things, to satisfy certain financial ratios on an ongoing basis, consisting of a maximum consolidated leverage ratio, a minimum consolidated fixed charge coverage ratio, a minimum level of EBITDA, a consolidated asset coverage ratio and a minimum level of liquidity. We are also required to comply with a number of other covenants and conditions, including limitations on our and our subsidiaries’ ability to incur future indebtedness, to place liens on assets, to pay dividends or distributions on their capital stock, to repurchase or acquire their capital stock, to conduct mergers or acquisitions, to sell assets, to alter their capital structure, to make investments and loans, to change the nature of their business, and to prepay subordinated indebtedness, in each case subject to certain exceptions and thresholds as set forth in the credit agreement. Although these arrangements were restructured after the onset of the

COVID-19

crisis, and took the status of the economic environment and our business at the time it was negotiated and executed into account, there is no assurance that the effects of the

COVID-19

pandemic on us, our customers and markets and the economic environment will not be worse than the parties anticipated, or that other unforeseen adverse impacts on our business may not occur such as to cause us to be able to comply with the covenants and other terms of the agreement. If we were thus to violate the terms of the credit agreement and we were unable to renegotiate its terms at that time, or secure alternative financing it could have a material adverse impact on us.

Our ability to meet these requirements can be affected by events beyond our control, and we may be unable to meet them. To the extent we fail to meet any such requirements and are in default under our debt obligations, our financial condition may be materially adversely affected. These restrictions may limit our ability to engage in activities that could otherwise benefit us. To the extent that we are unable to engage in activities that support the growth, profitability and competitiveness of our business, our business, results of operations and financial condition could be adversely affected.

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Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

During the second quarter of fiscal 2021, we made the following repurchases of our common ~~stock.~~

~~There have been no material updates to the risk factors previously disclosed in the Company’s Annual Report onForm 10-K~~ ~~for the fiscal year ended January 31, 2019.~~

stock:


	Total Number of Shares Repurchased			Average Price paid Per Share			Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares That May Be Purchased Under The Plans or Programs
May 1—May 31		—		$	—			—		—
June 1—June 30		7,917	(a)	$	6.63	(a)		—		—
July 1—July 31		—		$	—			—		—

(a)

Certain of our executives delivered 7,917 shares of our common stock toward the satisfaction of taxes due with respect to vesting of restricted shares. The shares delivered were valued at a weighted-average market value of $6.63 per share and are included with treasury stock in the consolidated balance sheet. These transactions were not part of a publicly announced purchase plan or program.

Item 5.

Other Information

~~The Company is~~

We are providing the following information in this Item 5 in lieu of disclosing the information under ~~Items 1.01 and 2.03~~Item 5.02(e) of a Current Report on Form

8-K

with a due date on or after the date hereof.

On ~~December 9, 2019, the Company, ANI ApS, TrojanLabel ApS and the Lender~~September 8, 2020, we entered into a change in control agreement (the “Change in Control Agreement”) with David Smith, our Vice President, Chief Financial Officer and Treasurer. The Change in Control Agreement provides for the ~~Fourth Amendment~~payment of severance benefits to Mr. Smith upon a Change in Control (as defined below) if Mr. Smith’s employment is terminated by us without “Cause” or by Mr. Smith for “Good Reason” (each as defined in the Change in Control Agreement) within the period (the “Change in Control Period”) beginning on the earlier of (i) 180 days prior to the ~~Credit Agreement. The Fourth Amendment amends~~occurrence of the ~~Credit Agreement~~Change in Control and (ii) the announcement of a transaction expected to ~~among other things, (i) increase~~result in a Change in Control, and ending on the ~~aggregate amount available for borrowings~~second anniversary of the occurrence of a Change in Control. Severance payments to Mr. Smith under the ~~revolving line~~Change in Control Agreement include (A) payment of ~~credit~~any accrued but unpaid salary or vacation payments and any unpaid portion of Mr. Smith’s bonus from the prior fiscal year; (B) payment of a portion of his bonus for the fiscal year in progress, prorated based upon the number of days elapsed in that fiscal year and calculated assuming that 100% of the target bonus is achieved, (C) payment of the sum of his annual salary and 75% of the amount of his target bonus for the fiscal year during which the Change in Control occurs (collectively, “Base Compensation”), (D) continued health coverage for 12 months or until he receives benefits from another employer, if earlier, (E) reimbursement for outplacement services, including office space and equipment, in an amount not to exceed 17% of his Base Compensation, and (F) immediate vesting of all unvested stock options, restricted stock awards, time-based restricted stock units and earned performance-based restricted stock units. If any payment or benefit under the Change in Control Agreement or under any other plan or agreement would constitute an “excess parachute payment” within the meaning of Section 280G of the Internal Revenue Code, and if Mr. Smith would be in a

better after-tax position

by reducing the payments or benefits, the amounts payable under the Change in Control Agreement will be reduced to the extent necessary to avoid the excise tax payable under Section 280G.

The Change in Control agreement will continue in effect until November 30, 2021 and will automatically be extended for additional

one-year

terms, unless either we or Mr. Smith provides written notice to the other party at least 90 days prior to ~~November 1, 2020 from $10.0 million to $17.5 million and (ii) modify~~ the ~~financial covenants with which the Company must comply thereunder by excluding certain capital expenditures from the calculation~~end of the ~~Company’s~~then-current term.

For purposes of the Change in Control Agreement, “Change in Control” means (i) the acquisition of 50% or more of the beneficial ownership of our combined voting securities by any person or group, which person or group did not theretofore beneficially own 30% or more of our combined voting securities; (ii) our consummation of a reorganization, merger or consolidation, in each case, with respect to which all or substantially all of the individuals and entities who were the beneficial owners of our voting securities immediately prior to such reorganization, merger or consolidation do not beneficially own, directly or indirectly, securities representing more than 50% of the voting power of then outstanding voting securities of the surviving corporation resulting from such a reorganization, merger or consolidation; (iii) the sale, exchange or other disposition (in one transaction or a series of related transactions) of all or substantially all of our assets (on a consolidated ~~fixed charge coverage ratio, providing that~~basis) to a party which is not controlled by or under common control with us; or (iv) a change in the ~~minimum consolidated fixed charge coverage ratio covenant will be suspended through~~composition of a majority of our board of directors (the “Board) over a

two-year

period unless the ~~second quarter~~selection or nomination of ~~fiscal 2021, and adding a minimum consolidated EBITDA covenant commencing with~~each of the ~~fourth quarter~~ new members is approved by

two-thirds

of ~~fiscal 2020 and continuing through~~those remaining members of the ~~second quarter~~Board who were members at the beginning of ~~fiscal 2021.~~

the

two-year

period.

The description of the ~~Fourth Amendment~~Change in Control Agreement is qualified in its entirety by reference to the full text of the ~~Fourth Amendment,~~Change in Control Agreement, a copy of which is attached hereto as Exhibit ~~10.1~~10.7 and is incorporated herein by reference.

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Item 6.

Exhibits



3A	Restated Articles of Incorporation of the Company and all amendments thereto, filed as Exhibit 3A to the Company’s Quarterly Report on Form10-Q for the quarter ended April 30, 2016 and incorporated by reference herein.

3B	By-laws of the Company as amended to date, filed as Exhibit 3B to the Company’s Annual Report on Form10-K/A for the fiscal year ended January 31, 2008 (File no.000-13200) and incorporated by reference herein.

	10.1	~~Fourth Amendment~~Loan Agreement effective as of May 6, 2020, by and between AstroNova, Inc. and Greenwood Credit Union, filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 2, 2020 and incorporated by reference herein.

	10.2	Promissory Note dated May 6, 2020, by and between AstroNova, Inc. and Greenwood Credit Union, filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 2, 2020 and incorporated by reference herein.

	10.3	Letter of Agreement dated June 22, 2020 between AstroNova, Inc. and Bank of America, N.A. , filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 2, 2020 and incorporated by reference herein.

	10.4	Amended and Restated Credit Agreement dated as of ~~December 9, 2019, by and~~July 30, 2020 among AstroNova, Inc., ANI ApS, ~~Trojan Label~~TrojanLabel ApS, and Bank of America, N.A.

	10.5	Amended and Restated Security and Pledge Agreement dated as of July 30, 2020 among AstroNova, Inc. and Bank of America, N.A. , filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K, event date July 30, 2020, and incorporated by reference herein.

	10.6	Open-End Mortgage Deed to Secure Present and Future Loans under Chapter 25 of Title 34 of the Rhode Island General Laws, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated as of July 30, 2020 among AstroNova, Inc. and Bank of America, N.A. , filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K, event date July 30, 2020, and incorporated by reference herein.

	10.7	Change in Control Agreement dated September 8, 2020 by and between AstroNova, Inc. and David S. Smith.*

31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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32.2		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

~~101~~101.INS		~~The following materials from Registrant’s Quarterly Report onForm 10-Q~~ ~~for~~ XBRL Instance Document—the ~~period ended November 2, 2019, formatted~~instance document does not appear in the Interactive Data File because its XBRL ~~(eXtensible Business Reporting Language): (i)~~tags are embedded within the ~~Condensed Consolidated Balance Sheets, (ii)~~Inline XBRL document

		101.SCH Inline XBRL Taxonomy Extension Schema Document

		101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document

		101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document

		101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document

		101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document

		104 Cover Page Interactive Data File (embedded within the Condensed Consolidated Statements of Income, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Shareholders’ Equity, (v) the Condensed Consolidated Statements of Cash Flows, and (vi) the Notes to the Condensed Consolidated Financial Statements. Filed electronically herein.Inline XBRL document)

*	Management contract or compensatory plan or arrangement.

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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.


	ASTRONOVA, INC.
	(Registrant)

Date: ~~December 10, 2019~~September 9, 2020	By	/s/ Gregory A. Woods
		Gregory A. Woods,
		President and Chief Executive Officer
		(Principal Executive Officer)

	By	/s/ David S. Smith
		David S. Smith,
		Vice President, Chief Financial Officer and Treasurer (Principal Accounting Officer and Principal Financial Officer)


	November 2, 2019			January 31, 2019
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents	$	4,468		$	7,534
Accounts Receivable, net		22,094			23,486
Inventories, net		35,594			30,161
Prepaid Expenses and Other Current Assets		3,059			1,427

Total Current Assets		65,215			62,608
Property, Plant and Equipment, net		11,323			10,380
Intangible Assets, net		26,454			29,674
Goodwill		12,110			12,329
Deferred Tax Assets, net		3,482			2,928
Right of Use Assets		1,767			—
Other Assets		1,014			1,064

TOTAL ASSETS	$	121,365		$	118,983

LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts Payable	$	6,674		$	5,956
Accrued Compensation		2,968			5,023
Other Liabilities and Accrued Expenses		3,789			2,911
Current Portion of Long-Term Debt		5,116			5,208
Revolving Credit Facility		6,500			1,500
Current Liability – Royalty Obligation		2,000			1,875
Current Liability – Excess Royalty Payment Due		419			1,265
Deferred Revenue		387			373
Income Taxes Payable		—			554

Total Current Liabilities		27,853			24,665
Long-Term Debt, net of current portion		9,004			12,870
Royalty Obligation, net of current portion		8,488			9,916
Lease Liabilities, net of current portion		1,350			—
Deferred Tax Liabilities		539			40
Other Long-Term Liabilities		1,178			1,717

TOTAL LIABILITIES		48,412			49,208
SHAREHOLDERS’ EQUITY
Common Stock, $0.05 Par Value, Authorized 13,000,000 shares; Issued 10,333,915 shares and 10,218,559 shares at November 2, 2019 and January 31, 2019, respectively		518			511
AdditionalPaid-in Capital		55,870			53,568
Retained Earnings		51,142			49,511
Treasury Stock, at Cost, 3,279,831 and 3,261,672 shares at November 2, 2019 and January 31, 2019, respectively		(33,454	)		(32,997	)
Accumulated Other Comprehensive Loss, net of tax		(1,123	)		(818	)

TOTAL SHAREHOLDERS’ EQUITY		72,953			69,775

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	121,365		$	118,983


	Three Months Ended						Nine Months Ended
	November 2, 2019			October 27, 2018			November 2, 2019			October 27, 2018
Revenue	$	33,318		$	34,196		$	102,967		$	99,490
Cost of Revenue		21,021			20,288			64,454			60,073

Gross Profit		12,297			13,908			38,513			39,417
Operating Expenses:
Selling and Marketing		6,944			6,587			20,122			19,484
Research and Development		2,076			2,123			5,868			5,844
General and Administrative		2,830			2,836			8,445			8,298

Operating Expenses		11,850			11,546			34,435			33,626

Operating Income		447			2,362			4,078			5,791
Other Expense, net		(238	)		(538	)		(788	)		(1,320	)

Income before Income Taxes		209			1,824			3,290			4,471
Income Tax (Benefit) Provision		(247	)		407			182			1,046

Net Income	$	456		$	1,417		$	3,108		$	3,425

Net Income per Common Share—Basic:	$	0.06		$	0.21		$	0.44		$	0.50

Net Income per Common Share—Diluted:	$	0.06		$	0.20		$	0.43		$	0.49

Weighted Average Number of Common Shares Outstanding:
Basic		7,047			6,925			7,013			6,858
Diluted		7,199			7,167			7,272			7,056


	Three Months Ended					Nine Months Ended
	November 2, 2019		October 27, 2018			November 2, 2019			October 27, 2018
Net Income	$	456	$	1,417		$	3,108		$	3,425
Other Comprehensive Income (Loss), Net of Taxes and Reclassification Adjustments:
Foreign Currency Translation Adjustments		87		(157	)		(166	)		(775	)
Change in Value of Derivatives Designated as Cash Flow Hedge		62		221			62			766
Losses (Gains) from Cash Flow Hedges Reclassified to Income Statement		3		(150	)		(201	)		(605	)
Realized Loss on Securities Available for Sale Reclassified to Income Statement		—		—			—			3

Other Comprehensive Income (Loss)		152		(86	)		(305	)		(611	)

Comprehensive Income	$	608	$	1,331		$	2,803		$	2,814


	Common Stock				Additional Paid-in Capital			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
	Shares		Amount		Additional Paid-in Capital			Retained Earnings			Treasury Stock						Total Shareholders’ Equity
Balance February 1, 2019		10,218,559	$	511	$	53,568		$	49,511		$	(32,997	)	$	(818	)	$	69,775
Share-Based Compensation		—		—		601			—			—			—			601
Employee Option Exercises		27,990		1		306			—			(11	)		—			296
Restricted Stock Awards Vested, net		9,522		1		(1	)		—			(69	)		—			(69	)
Cash Dividend—$0.07 per share		—		—		—			(489	)		—			—			(489	)
Net Income		—		—		—			1,700			—			—			1,700
Other Comprehensive Loss		—		—		—			—			—			(200	)		(200	)

Balance May 4, 2019		10,256,071	$	513	$	54,474		$	50,722		$	(33,077	)	$	(1,018	)	$	71,614
Share-Based Compensation		—		—		451			—			—			—			451
Employee Option Exercises		13,821		1		198			—			—			—			199
Restricted Stock Awards Vested, net		45,658		2		(2	)		—			(377	)		—			(377	)
Cash Dividend—$0.07 per share		—		—		—			(493	)		—			—			(493	)
Net Income		—		—		—			951			—			—			951
Other Comprehensive Loss		—		—		—			—			—			(257	)		(257	)

Balance August 3, 2019		10,315,550	$	516	$	55,121		$	51,180		$	(33,454	)	$	(1,275	)	$	72,088
Share-Based Compensation		—		—		525			—			—			—			525
Employee Option Exercises		18,365		2		224			—			—			—			226
Cash Dividend—$0.07 per share		—		—		—			(494	)		—			—			(494	)
Net Income		—		—		—			456			—			—			456
Other Comprehensive Income		—		—		—			—			—			152			152

Balance November 2, 2019		10,333,915	$	518	$	55,870		$	51,142		$	(33,454	)	$	(1,123	)	$	72,953


	November 2, 2019									January 31, 2019
(In thousands)	Gross Carrying Amount		Accumulated Amortization			Currency Translation Adjustment		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Currency Translation Adjustment		Net Carrying Amount
Miltope:
Customer Contract Relationships	$	3,100	$	(1,947	)	$	—	$	1,153	$	3,100	$	(1,723	)	$	—	$	1,377
RITEC:
Customer Contract Relationships		2,830		(988	)		—		1,842		2,830		(725	)		—		2,105
Non-Competition Agreement		950		(823	)		—		127		950		(681	)		—		269
TrojanLabel:
Existing Technology		2,327		(968	)		92		1,451		2,327		(711	)		140		1,756
Distributor Relations		937		(273	)		34		698		937		(200	)		56		793
Honeywell:
Customer Contract Relationships		27,243		(6,060	)		—		21,183		27,243		(3,869	)		—		23,374

Intangible Assets, net	$	37,387	$	(11,059	)	$	126	$	26,454	$	37,387	$	(7,909	)	$	196	$	29,674


(In thousands)	Remaining 2020		2021		2022		2023		2024
Estimated amortization expense	$	1,050	$	4,071	$	3,983	$	3,978	$	3,975


	Three Months Ended
	Amount of Gain (Loss) Recognized in OCI on Derivative				Location of Gain (Loss) Reclassified from Accumulated OCI into Income (Expense)	Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Expense)
Cash Flow Hedge (In thousands)	November 2, 2019		October 27, 2018			November 2, 2019			October 27, 2018
Swap Contracts	$	80	$	283	Other Income (Expense)	$	(3	)	$	192


	Nine Months Ended
	Amount of Gain (Loss) Recognized in OCI on Derivative				Location of Gain (Loss) Reclassified from Accumulated OCI into Income (Expense)	Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Expense)
Cash Flow Hedge (In thousands)	November 2, 2019		October 27, 2018			November 2, 2019			October 27, 2018
Swap Contracts	$	82	$	981	Other Income (Expense)	$	259		$	775


(In thousands)	Foreign Currency Translation Adjustments			Cash Flow Hedges			Total
Balance at January 31, 2019	$	(852	)	$	34		$	(818	)
Other Comprehensive Loss before reclassification		(166	)		62			(104	)
Amounts reclassified from AOCL to Earnings		0			(201	)		(201	)

Other Comprehensive Loss		(166	)		(139	)		(305	)

Balance at November 2, 2019	$	(1,018	)	$	(105	)	$	(1,123	)


	Number of Options			Weighted Average Exercise Price
Outstanding at January 31, 2019		771,145		$	14.30
Granted		—			—
Exercised		(55,175	)		11.68
Forfeited		(8,275	)		16.72
Canceled		(400	)		6.22

Outstanding at November 2, 2019		707,295		$	14.48


	RSUs, PSUs & RSAs			Weighted Average Grant Date Fair Value
Outstanding at January 31, 2019		133,667		$	13.99
Granted		113,522			20.16
Vested		(55,180	)		16.62
Forfeited		(2,100	)		19.45

Outstanding at November 2, 2019		189,909		$	16.85


Assets measured at fair value:	Fair value measurement at November 2, 2019								Fair value measurement at January 31, 2019
(In thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Interest Rate Swap Contract (included in Other Assets)	$	—	$	—	$	—	$	—	$	—	$	85	$	—	$	85

Total Assets	$	—	$	—	$	—	$	—	$	—	$	85	$	—	$	85


Liabilities measured at fair value:	Fair value measurement at November 2, 2019								Fair value measurement at January 31, 2019
(In thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cross-Currency Interest Rate Swap Contract (included in Other Long-Term Liabilities)	$	—	$	329	$	—	$	329	$	—	$	600	$	—	$	600
Interest Rate Swap Contract (included in Other Long-Term Liabilities)		—		88		—		88		—		—		—		—
Earnout Liability (included in Other Long-Term Liabilities)		—		—		14		14		—		—		14		14

Total Liabilities	$	—	$	417	$	14	$	431	$	—	$	600	$	14	$	614


	November 2, 2019
	Fair Value Measurement								Carrying Value
(In thousands)	Level 1		Level 2		Level 3		Total		Carrying Value
Long-Term Debt and related current maturities	$	—	$	—	$	14,545	$	14,545	$	14,244

	January 31, 2019
	Fair Value Measurement								Carrying Value
(In thousands)	Level 1		Level 2		Level 3		Total		Carrying Value
Long-Term Debt and related current maturities	$	—	$	—	$	18,857	$	18,857	$	18,242


(Dollars in thousands)	November 2, 2019		As a % of Revenue			October 27, 2018		As a % of Revenue			% Change Over Prior Year
Product Identification	$	21,749		65.3	%	$	21,684		63.4	%		0.3	%
T&M		11,569		34.7	%		12,512		36.6	%		(7.5	)%

Total	$	33,318		100.0	%	$	34,196		100.0	%		(2.6	)%

Large accelerated filer

Accelerated filer

Non-accelerated
filer

Smaller reporting company

Emerging growth company