Table of Contents
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

OR

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

For the transition period from
to

Commission file number
0-13200

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.

Large accelerated filer   Accelerated filer 
Non-accelerated
filer
   Smaller reporting company 
   Emerging growth company 

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, 2019September 
4
, 2020 was 7,069,568.

7,168,424.


Table of Contents

ASTRONOVA, INC.

INDEX

Page No.
Part I.
   
Page No.
Item 1.
 

Part I.

Financial Information

Item 1.

Financial Statements
3
 
3

4
 
4

5
 
5

6
 
6-7
7
 
8
9-23
8-23

Item 2.

24-31
23-33

Item 3.

33
Item 4.
33
Part II.
  31 

Item 4.

1.
34
Item 1A.
34-35
Item 2.
36
Item 5.
36
Item 6.
37-38
 Controls and Procedures
39
31

Part II.

Other Information

Item 1.

Legal Proceedings32

Item 1A.

Risk Factors32

Item 5.

Other Information32

Item 6.

Exhibits33

Signatures

34

2

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).

3

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).

4

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).

5

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
 
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
 
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 
  
 
 
   
 
 
   
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 

6

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).

7

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 haswe 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 150225 independent dealers and representatives selling and marketing our products in over 5060 countries.

The

Our business consists of two2 segments, Product Identification (“PI”) and Test & Measurement (“T&M”). The Product IdentificationPI 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 hardwaredigital color label tabletop printers, high-volume presses and software productsspecialty original equipment manufacturer (“OEM”) printing systems, as well as a wide range of label, tag and associatedflexible 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 printingIn the T&M segment, we have a long history of using our technologies to provide networking systems and supplies sold underhigh-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 printon-demand in their own facilities. The Test & Measurementaerospace 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. Productsdata 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’sour 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 accountingself-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.

8

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 byAugust 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 StandardsStandard 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 obtaininternal-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 theadoption of this guidance did not have a material impact this new guidance will have on itsour 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 ninesix 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.

9

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 warrantieswarranties. Contract liabilities were $352,000 and were $387,000 and $373,000$466,000 at November 2, 2019August 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 $279,000decrease 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 tothat 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 estimatedremaining benefit term, which was estimatedwe currently estimate to be approximately 106 years. The balance of these contract assets at January 31, 20192020 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, 2019August 1, 2020 and the balance of deferred incremental direct costs net of accumulated amortization at November 2, 2019August 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
10

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 ninesix 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 238,47711,560 and 206,592218,466
, 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, 2019August 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 ninesix months ended November 2, 2019August 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 
11

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
to
us for general corporate purposes. Revolving credit loans may be borrowed, at the Company’sour 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.
12

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’sour option, either (a) the LIBOR rateRate (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’sour 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 rateRate 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’sour 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 rateA&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 
  
 
 
   
 
 
 
13

Table of Contents
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, 2019August 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 completionPaycheck 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 AgreementPPP 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.

14

Table of Contents
Note
9
 – 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 theour variable rate term loan borrowing by the Company.(the “Swaps”). Both swaps have beenSwaps 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’smodified our exposure to interest rate risk and foreign currency exchange rate risk by converting the Company’sour floating-rate debt denominated in U.S. Dollars on our Danish subsidiary’sANI 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 involvesinvolved 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’sto modify our exposure to interest rate risk by effectively converting the Company’sour floating-rate debtborrowings to fixed-rate debt forover the next five years,term of the loan, thus reducing the impact of interest-rate changes on future interest expense. This swap involvesinvolved 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 ninesix months ended November 2, 2019August 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 
  
 
 
   
 
 
    
 
 
   
 
 
 
15

Table of Contents
   
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 expectsAugust 1, 2020, we expect to reclassify approximately $0.2$0.1 million of net gainslosses 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-ratefloating
 interest
rate debt.

Note
10
 – 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 areyears, 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 CompanyAugust 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 toWe did 0t incur any excess royalty expense for the guaranteed minimum royalty payments, the Company also incurredthree 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 condensedour 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’sour condensed consolidated balance sheet at November 2, 2019.

August 1, 2020.

Note 111
1
 – 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 itsour 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 Companythat 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 ClassificationNovember 2,
2019

Lease Assets

Right of Use Assets$ 1,767

Lease Liabilities – Current

Other Liabilities and
Accrued Expenses
429

Lease Liabilities – Long Term

Lease Liabilities1,350

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 
16

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 
17

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 5.75.5 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
2
 – 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
  
 
 
   
 
 
   
 
 
 
18

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
3
 – 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, timetime-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, theThe 2018 Plan was amendedauthorizes the issuance of up to increase the number of950,000 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 Companyus 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’sour common stock on the date of grant and expire after ten years. As of November 2, 2019, 161,375Under the 2018 Plan, 305,338 unvested shares of restricted stock and options to purchase an aggregate of 146,000135,500 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 noNo 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, 1,007August 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 184,650148,725 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 aseach of February 1, 2019 and supersedes the prior program. Pursuant to the New Program, beginning with fiscal 2020, eachour
non-employee director will
directors automatically receivereceives a grant of restricted stock on the date of their
re-election
to the Company’sour board of directors. The number of whole shares to be granted will beis 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 20202021 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 thenon-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, sharesShares 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 Boardour 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

Stock Options

There were no0 stock options granted during the ninesix 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 ninesix months ended November 2, 2019August 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 1.71.1 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 ninesix months ended November 2, 2019August 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 
  
 
 
   
 
 
 
20

Table of Contents
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 ninesix months ended November 2,August 1, 2020 and August 3, 2019, and October 27 2018, there were 5,4418,851 and 3,9122,796 shares, respectively, purchased under this plan. As of November 2, 2019, 28,412August 1, 2020, 16,124 shares remain available.

available

 for purchase under our Employee Stock Purchase Plan
.
Note 141
4
 – 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 CompanyAugust 1, 2020, we recognized an income tax benefitexpense 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,
we
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 secondfirst 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 threesix months ended October 27, 2018, the CompanyAugust 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 benefitsignificant 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 windfallshortfall tax benefitsexpense 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 ninesix months ended October 27, 2018, the Company August 3, 2019,

we
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 maintainsposition 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
5
 – Segment Information

AstroNova reports

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

21

Table of Contents
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
6
 – 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, 2019August 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

22

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’scurrent 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 AstroNovaour 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 itsWe organize our structure around a core set of competencies, including research and development, manufacturing, service, marketing and distribution. It marketsWe market and sells itssell 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 identificationby 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 itssell 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
24

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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 thirdsecond quarter of the current year was $33.3$27.7 million, representing a 17.4% decrease compared to the previous year thirdsecond quarter revenue of $34.2$33.5 million. Revenue through domestic channels for the thirdsecond quarter of the current year was $21.8$17.9 million, an increasea decrease of 1.3% over13.5% from the prior year’s thirdsecond quarter. International revenue for the thirdsecond quarter of the current year was $11.5$9.8 million, representing 34.5%35.4% of AstroNova’s thirdour second quarter revenue and reflects a 9.2%23.6% decrease overfrom 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 thirdsecond quarter international revenue includes an unfavorable foreign exchange rate impact of $0.3$0.1 million.

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Hardware revenue in the current quarter was $12.2$8.4 million, a 7.1%32.1% decrease compared to the prior year’s thirdsecond quarter revenue of $13.1$12.4 million. The current quarter decrease in hardware revenue is primarily dueattributable 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 increaseas 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 recordersboth the ToughWriter and increased sales forHoneywell 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 segmentfor 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 thirdsecond 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 overcompared to the prior year’s thirdsecond 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 asdecreased 29.5% compared to the thirdsecond quarter revenue of $3.0 million in the prior yearyear. The decrease is due primarily attributable to a decreasedeclines in repair revenue of QuickLabelrelated to the aerospace printer product suppliesline 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 thirdsecond quarter gross profit was $12.3$9.8 million, an 11.6%18.3% decrease compared to prior year thirdsecond quarter gross profit of $13.9$12.0 million. The Company’sOur current quarter gross profit margin of 36.9%35.4% reflects a 380 basis0.4 percentage point decline from the prior year’s thirdsecond 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 thirdsecond quarter is primarily attributable to decreased revenue and unfavorableless favorable product mix, which were slightly offset by current quarter reductions in both the PImanufacturing and T&M segments.

period costs.

Operating expenses for the current quarter were $11.9$9.6 million, a 2.6% increasean 11. 4% decrease compared to the prior year thirdsecond 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% increase13.4% decrease compared to $6.6the 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 thirdcurrent 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 declineprimarily due to decreases in employee wage and benefits, for the current year. Both generalsupplies expenditures and administrative expenses of $2.8 milliontravel 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 withis 5.4% compared to 5.3% for the same period of the prior year.

Other expenseincome in the thirdsecond quarter of fiscal 2020the current year was $0.2$0.3 million compared to $0.5other expense of $0.2 million in the thirdsecond quarter of the prior year. Current quarter other expense primarilyincome 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 thirdsecond quarter of fiscal 2019the prior year consisted primarily of interest expense on debt of $0.2 million and net foreign exchange loss of $0.3 million.

The benefitprovision for federal, state and foreign income taxes for the thirdsecond 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 reductionsignificant 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 secondfirst 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’svesting of stock and an effective tax rate of 22.3%.

The Companygrants.

We reported net income of $0.5 million$3,000 or $0.06$0.00 per diluted share for the thirdsecond quarter of the current year. On a comparable basis, net income for the prior year’s thirdsecond 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 thirdsecond quarter of fiscal 20202021 compared to 4.1%2.8% for the thirdsecond quarter of fiscal 2019.

Nine2020.

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

August 3, 2019

Revenue by product group and current period percentage change over the prior year for the ninesix 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 ninesix months of the current year was $103.0$58.6 million, representing a 3.5% increase15.9% decrease compared to the previous year’s first ninesix months of revenue of $99.5$69.6 million. Revenue through domestic channels for the first ninehalf 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 slight22.5% decrease from the previous year international revenue of $38.7$27.0 million. The current year’s first ninesix months of international revenue reflected an unfavorable foreign exchange rate impact of $1.2$0.3 million.

Hardware revenue in the first ninesix months of the current year was $37.5$17.4 million, a 1.3%31.6% decrease compared to the prior year’s first ninesix months of revenue of $38.0$25.4 million. The decrease in hardware salesrevenue is primarily relateddue to thea 38.8% decline in the T&M segment resulting from lower aerospace printer product line relatedsales 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 revenuesales for the first six months of the current year, was also tempered by an increaseas hardware sales decreased 13.6% on declines in sales of most hardware products in the PI segment hardwareother than sales asrelated to the productTrojanLabel launch of the new QL-300
T3-OPX
which provided a significant contribution to current year revenue as did salesfor 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 monthshalf of the current year was $55.5$36.3 million, representing a 5.3% increase4.1% decrease over the prior year’s first ninesix 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 increasedecline in supplies revenue is due primarilywas also impacted by declines in sales in the PI segment related to the increase in inkjet printer suppliesdecreased 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 electrophotographicink 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 ninesix months of the current year, a 13.4% increase23.4% decrease compared to the prior year’s first ninesix months service and other revenues of $8.8$6.5 million. The current year increasedecrease is primarily due to an increasea decline in repairsrepair and parts revenues inrevenue 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 partsrepair 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 ninesix months gross profit was $38.5$20.6 million, a 2.3%21.3% decrease from prior year’s first ninesix months gross profit of $39.4$26.2 million. The Company’sOur gross profit margin of 37.4%35.2% in the current year reflects a decrease from the prior year’s first ninesix 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 periodmanufacturing costs and adverseless favorable product mix.

Operating expenses for the first ninesix months of the current fiscal year were $34.4$19.8 million, a 2.4% increase12.4% decrease compared to the prior year’s first ninesix 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 ninesix months primarily due primarily to an increasedecreases in wages, outside services,travel and travelentertainment expenses, which were slightly offset by lower commissionsadvertising and benefits.trade show expenditures, and wage, employee benefit and commission expenditures. General and Administrative (“G&A”) expenses fordecreased 13.4% to $4.9 million in the first ninesix months of the current year were $8.4compared 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% increaseslight 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 ninesix months level of 5.9%5.4%.

Other expense during the first ninesix months of the current year was $0.8 million$23,000 compared to $1.3$0.6 million in the first ninesix months of the previous year. Current year other expense primarily includes interest expense of $0.6$0.5 million on the Company’sour debt and revolving credit line and $0.3$0.1 million related to the termination of net foreign exchange lossthe cross-currency interest rate swap $, which was partiallywere largely offset by investmenta $0.5 million gain on the translation of Eurodollar and otherDanish 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 ninesix months of fiscal 2019 includes2020 primarily included interest expense on debt of $0.6$0.4 million, and net foreign exchange loss of $0.8$0.2 million which wasand other expense of $0.1 million, partially offset by investment and other income of $0.1 million

The Companymillion.

27

Table of Contents
We recognized $0.2$0.4 million of income tax expense for the first ninesix months of the current fiscal year, which includesreflects a $0.4 millionsignificant 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 reversalexpiration 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 andresulting in a $0.348.6% 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 Companyposition 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 ninesix months of the current year. On a comparable basis, net income for the first ninesix 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 ninesix months of fiscal 20202021 compared to 3.4%3.8% for the first ninesix months of fiscal 2019.

2020.

Segment Analysis

The Company reports

We report two segments: Product Identification and Test & Measurement and evaluatesevaluate 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 printerdecreased 2.3% in the QuickLabel product group, slightly offset by declines in some of the Company’s inkjet printer product lines. Product Identification’s currentsecond 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 $63.4with revenue of $21.6 million compared to $22.1 million in the same period of the prior year. The current year increasequarter decrease in revenue is primarily attributable to strong demand fordeclines 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
T3-OPX
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 inthe significant contribution to current year revenue from salesas a result of both QuickLabel’s monochromatic printers andthe new product launch of TrojanLabel’sT2-C printers. This growth was tempered by lower sales of other inkjet color printers within the QuickLabel product group.
T3-OPX
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 9.211.2 %. The increase in current year segment operating profit and margin is primarily due to higher saleslower period and product mix early in the year.

operating costs.

28

Test & Measurement—T&M

Revenue from the T&M segment was $11.6$6.0 million for the thirdsecond 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 dueprimarily attributable to the decline in thesales of our aerospace printer product line acquired from Honeywell in fiscal 2018lines as a result of the ripple effects of the Boeing 737 MaxMAX grounding which resultedand the dramatic drop in partair travel due to new aircraft shipment reductionsthe 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 delaysa 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 thirdsecond quarter segment operating profitloss 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 ninesix 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 dueattributable to the decline in thesales of our aerospace printer product line acquired from Honeywelllines 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 increasein data recorder hardware sales, as well as a decline in supplies and service and other revenue in the hardwareaerospace 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 ninesix months operating profitloss 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 arehave 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 fundfacility. 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 athave funded acquisitions by borrowing under bank term loan facilities.

At the end of last quarter, the third quarter were $4.5 million. Duringdeterioration of our financial condition and operating results due to the third quarter ofdecline 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 agreementfinancial 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, 20192020.

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 milliona 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 foramended 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 ApSwe entered into an Amended and Restated Security and Pledge Agreement and a hedging agreement to managemortgage 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 interestLender with respect to approximately $8.9 millionour 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’sour 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.
29

Table of Contents
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’sour 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’sour 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’sour consolidated leverage ratio. The Company isWe 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 rateA&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 underEBITDA, 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 ratenature 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 ApSto 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 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.

The Parties must comply with various customary financial andnon-financialdefault, 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 onPPP, a portion of the Fourth Amendment and resulting changesPPP Loan in an amount up to the termsamount of the Credit Agreement.

The Company believes it is in compliance with allPPP Loan proceeds we spend on payroll, rent, utilities and interest on certain debt during the twenty-four week period following incurrence of the covenantsPPP 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.

31

Cash Flow

The Company’s

Our statements of cash flows for the ninesix 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 ninesix months of fiscal 20202021 compared to $2.5$1.0 million for the same period of the previous year. The decreaseincrease in net cash provided by operations for the first ninesix months of the current year is primarily due to the decrease in net income, and an increase in cash used forprovided by working capital. The combination of changes in accounts receivable, inventory, income taxes payable, accounts payable and accrued expenses negatively impactedincreased cash by $8.4$5.7 million for the first ninesix months of fiscal 2020,2021, compared to $6.8a decrease of $5.6 million for the same period in fiscal 2019.

The2020.

Our accounts receivable balance decreased to $22.1$14.8 million at the end of the thirdsecond 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 thirdsecond quarter of the current year as compared to thirdfourth 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 thirdsecond quarter of fiscal 2020,2021, compared to $30.2$33.9 million at year end and inventory days on hand increased to 152163 days at the end of the current quarter from 120151 days at the prior year end. The current period increasedecrease in inventory and related days on hand is due to lower forecasted sales, as well as a buildupsell 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 increasessegment. 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 decreasedincreased cash position at November 2, 2019August 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’sour Annual Report on Form
10-K
for the fiscal year ended January 31, 2019,2020 other than those which occuroccurring 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, thereThere 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’sour 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 customerscustomers;( 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’sour 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 ninesix 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

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

There are no pending or threatened legal proceedings against the Company believedus that we believe to be material to theour financial position or results of operationsoperations.
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 discussedconsidered 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 describedcash 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 additionalany 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 deembelieved to be immaterial alsomaterial, or are not identified below because they are common to all businesses. Past financial performance may materiallynot 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 resultsmarkets 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 valueterms 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 2.03Item 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 LenderSeptember 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 Amendmentpayment 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 amendsoccurrence of the Credit AgreementChange in Control and (ii) the announcement of a transaction expected to among other things, (i) increaseresult in a Change in Control, and ending on the aggregate amount available for borrowingssecond anniversary of the occurrence of a Change in Control. Severance payments to Mr. Smith under the revolving lineChange in Control Agreement include (A) payment of creditany 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 calculationend of the Company’sthen-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 thatbasis) 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 throughcomposition of a majority of our board of directors (the “Board) over a
two-year
period unless the second quarterselection or nomination of fiscal 2021, and adding a minimum consolidated EBITDA covenant commencing witheach of the fourth quarter new members is approved by
two-thirds
of fiscal 2020 and continuing throughthose remaining members of the second quarterBoard who were members at the beginning of fiscal 2021.

the

two-year
period.
The description of the Fourth AmendmentChange 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 10.110.7 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 AmendmentLoan 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.
10.2Promissory 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.
10.3Letter 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.
10.4Amended and Restated Credit Agreement dated as of December 9, 2019, by andJuly 30, 2020 among AstroNova, Inc., ANI ApS, Trojan LabelTrojanLabel ApS, and Bank of America, N.A.
10.5Amended 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.
10.6Open-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.
10.7Change in Control Agreement dated September 8, 2020 by and between AstroNova, Inc. and David S. Smith.*
31.1 
31.2 
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
101101.INS  The following materials from Registrant’s Quarterly Report onForm 10-Q for XBRL Instance Document—the period ended November 2, 2019, formattedinstance 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, 2019September 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)

34

39