UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
[ X ] Quarterly report under Section 13 or 15(d) of the Securities Ex-
change Act of 1934
For the quarter ended October 31, 2001
[ ] Transition report under Section 13 or 15(d) of the Securities Ex-
change Act of 1934
For the transition period from __________ to __________
Commission File Number: 0-5378
GEORGE RISK INDUSTRIES, INC.
(Exact name of small business issuer as specified in its charter)
Colorado 84-0524756
(State of incorporation) (IRS Employers Identification No.)
802 South Elm St.
Kimball, NE 69145
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (308) 235-4645
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares of the Registrant's Common Stock outstanding, as of
December 14, 2001, was 5,406,403.
Transitional Small Business Disclosure Format: Yes [ X ] No [ ]
GEORGE RISK INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
The unaudited financial statements for the three month period ended
October 31, 2001, and the six month period ended October 31, 2001, are
attached hereto.
GEORGE RISK INDUSTRIES, INC.
BALANCE SHEET
OCTOBER 31, 2001 AND OCTOBER 31, 2000
ASSETS
Current Assets
Cash and cash equivalents $ 1,147,000 $ 2,053,000
Marketable securities (Note 2) 8,565,000 6,709,000
Accounts receivable:
Trade, net of $50,000 doubtful account
allowance 1,590,000 2,372,000
Other 6,000 3,000
Income tax overpayment 15,000 72,000
Notes receivable 2,000 8,000
Inventories (Note 3) 2,630,000 1,923,000
Prepaid expenses 63,000 16,000
Deferred income taxes 52,000 31,000
------------ ------------
Total Current Assets $14,070,000 $13,187,000
Property and Equipment, net at cost $ 1,064,000 $ 1,265,000
Other Assets
Projects in process 127,000 40,000
Officer receivable 0 5,000
Long-term note receivable 3,000 0
Long-term deferred tax asset 0 38,000
Other 16,000 5,000
------------ ------------
Total Other Assets $ 146,000 $ 88,000
TOTAL ASSETS $15,280,000 $14,540,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable, trade $ 129,000 80,000
Accrued expenses
Payroll and related expenses 272,000 345,000
Property taxes 1,000 19,000
Notes payable, current 10,000 6,000
Deferred insurance settlement 0 48,000
------------ ------------
Total Current Liabilities $ 412,000 $ 498,000
Long-Term Liabilities
Notes payable 75,000 92,000
Deferred income taxes 0 26,000
------------ ------------
Total Long-Term Liabilities $ 75,000 $ 118,000
Stockholders' Equity
Convertible preferred stock, 1,000,000 shares
authorized, Series 1-noncumulative, $20
stated value, 25,000 shares authorized,
5,350 issued and outstanding 107,000 107,000
Common stock, Class A, $.10 par value,
10,000,000 shares authorized, 8,502,832
shares issued and outstanding 850,000 850,000
Additional paid-in capital 1,736,000 1,719,000
Accumulated other comprehensive income (1,202,000) (145,000)
Retained earnings 14,343,000 12,438,000
Less: cost of treasury stock, 2,775,429
shares, at cost (1,041,000) (1,045,000)
------------ ------------
Total Stockholders' Equity $14,793,000 $13,924,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $15,280,000 $14,540,000
============ ============
GEORGE RISK INDUSTRIES, INC.
STATEMENT OF INCOME AND RETAINED EARNINGS
Three months Six months Three months Six months
ended ended ended ended
October 31, October 31, October 31, October 31,
2001 2001 2000 2000
----------- ----------- ----------- -----------
Net Sales $ 3,369,000 $ 6,386,000 $ 3,934,000 $ 7,499,000
Less: cost of goods sold (1,698,000) (3,273,000) (2,076,000) (4,065,000)
------------ ------------ ------------ ------------
Gross Profit $ 1,671,000 $ 3,113,000 $ 1,858,000 $ 3,434,000
Operating Expenses:
General and
administrative 188,000 382,000 186,000 389,000
Selling 747,000 1,332,000 688,000 1,288,000
Engineering 20,000 32,000 24,000 46,000
------------ ------------ ------------ ------------
Total Operating Expenses $ 955,000 $ 1,746,000 $ 898,000 $ 1,723,000
Income From Operations 716,000 1,367,000 960,000 1,711,000
Other Income (Expense)
Interest Income 4,000 8,000 6,000 11,000
Interest Expense 0 0 0 (1,000)
Investment Income (Loss) 70,000 140,000 76,000 149,000
Gain/(loss) on sale of
investments 0 (118,000) 22,000 89,000
Other Income (Loss) 16,000 5,000 2,000 (7,000)
------------ ------------ ------------ ------------
$ 90,000 $ 35,000 $ 106,000 $ 241,000
Income Before Provisions
for Income Tax 806,000 1,402,000 1,066,000 1,952,000
Provisions for Income Tax (337,000) (585,000) (446,000) (815,000)
------------ ------------ ------------ ------------
Net Income $ 469,000 $ 817,000 $ 620,000 $ 1,137,000
Retained Earnings,
beginning of period $13,874,000 $13,526,000 $11,818,000 $11,301,000
Retained Earnings,
end of period $14,343,000 $14,343,000 $12,438,000 $12,438,000
=========== =========== =========== ===========
Income Per Share of
Common Stock (Note 7)
Basic $ .08 $ .14 $ .10 $ .19
Assuming Dilution $ .08 $ .14 $ .10 $ .19
GEORGE RISK INDUSTRIES, INC.
STATEMENT OF COMPREHENSIVE INCOME
Three months Six months Three months Six months
ended ended ended ended
October 31, October 31, October 31, October 31,
2001 2001 2000 2000
----------- ----------- ----------- -----------
Net Income $ 469,000 $ 817,000 $ 620,000 $ 1,137,000
----------- ----------- ----------- -----------
Other Comprehensive Income,
net of tax
Unrealized gain (loss) on securities:
Unrealized holding gains
(losses) arising during
period (311,000) (234,000) (244,000) (346,000)
Reclassification adjustment
for (gains) losses
included in net income 0 (118,000) (22,000) (89,000)
------------ ------------ ------------ ------------
Other Comprehensive
Income $ (311,000) $ (352,000) $ (266,000) $ (435,000)
Comprehensive Income $ 158,000 $ 465,000 $ 354,000 $ 702,000
============ ============ ============ ============
GEORGE RISK INDUSTRIES, INC.
STATEMENT OF CASH FLOWS
Three months Six months Three months Six months
ended ended ended ended
October 31, October 31, October 31, October 31,
2001 2001 2000 2000
----------- ----------- ----------- -----------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Income $ 469,000 $ 817,000 $ 620,000 $ 1,137,000
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation 61,000 121,000 65,000 127,000
Change in unrealized gain/
(loss) on investments (311,000) (352,000) (266,000) (435,000)
Changes in assets and
liabilities:
(Increase) decrease in:
Marketable securities 64,000 (2,348,000) (99,000) (71,000)
Accounts receivable 404,000 476,000 (264,000) (449,000)
Inventories 235,000 129,000 431,000 677,000
Prepaid expenses (18,000) (14,000) 16,000 35,000
Other assets (36,000) (94,000) 46,000 49,000
Receivables-officers
and employees 2,000 3,000 1,000 7,000
Increase (decrease) in:
Accounts payable (76,000) (51,000) 56,000 163,000
Accrued expenses (56,000) 4,000 (36,000) 44,000
Income tax payable (335,000) (19,000) (395,000) (26,000)
------------ ------------ ------------ ------------
Net cash provided by (used in)
operating activities $ 403,000 $(1,328,000) $ 175,000 $ 1,258,000
CASH FLOWS FROM INVESTING
ACTIVITIES:
(Purchase) Sale of property
and equipment (25,000) (42,000) (61,000) (132,000)
(Purchase) of treasury
stock 0 0 (7,000) (7,000)
------------ ------------ ------------ ------------
Net cash provided by (used in)
investing activities $ (25,000) $ (42,000) $ (68,000) $ (139,000)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Principal payments on
long-term debt (3,000) (6,000) (3,000) (24,000)
Treasury stock issued 21,000 21,000 0 0
------------ ------------ ------------ ------------
Net cash provided by (used in)
financing activities $ 18,000 $ 15,000 $ (3,000) $ (24,000)
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS $ 396,000 $(1,355,000) $ 104,000 $ 1,095,000
============ ============ ============ ============
Cash and cash equivalents,
beginning of period $ 751,000 $ 2,502,000 $ 1,949,000 $ 958,000
Cash and cash equivalents,
end of period $ 1,147,000 $ 1,147,000 $ 2,053,000 $ 2,053,000
GEORGE RISK INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2001
Note 1 Unaudited Interim Financial Statements
The accompanying financial statements have been prepared in accordance
with the instructions for Form 10QSB and do not include all of the inform-
ation and footnotes required by generally accepted accounting principals for
complete financial statements. In the opinion of management, all adjust-
ments, consisting only of normal recurring adjustments considered necessary
for a fair presentation, have been included. Operating results for any
quarter are not necessarily indicative of the results for any other quarter
or for the full year.
Note 2 Marketable Securities
Marketable equity securities are recorded at the lower of cost or market
and are classified as available-for-sale securities. The cost of marketable
securities sold is determined on the average cost method with realized gains
or losses being reflected in the income statement. The securities are
accounted for using fair value as required by FAS 115. Any unrealized gains
or losses are reported as a separate component of stockholder's equity
until realized. Dividend and interest income are accrued as earned.
Marketable equity securities and unrealized gains and losses consist of
the following as of October 31, 2001 and October 31, 2000:
Cost Basis $ 9,767,000 $ 6,854,000
Fair Value 8,565,000 6,709,000
------------ ------------
Net Unrealized Gain (Loss) $(1,202,000) $ (145,000)
Note 3 Inventories
At October 31, 2001 and October 31, 2000, respectively, inventories con-
sisted of the following:
Raw Materials $ 2,092,000 $ 1,313,000
Work in Process 341,000 444,000
Finished Goods 227,000 236,000
Warehouse in England 40,000 0
------------ ------------
$ 2,700,000 $ 1,993,000
Less: allowance for obsolete
inventory (70,000) (70,000)
------------ ------------
Net Inventories $ 2,630,000 $ 1,923,000
============ ============
Note 4 Business Segments
The following is financial information relating to industry segments:
For the quarter ended
October 31,
2001 2000
--------------------------
Net revenue:
Keyboard and other products $ 364,000 $ 642,000
Security alarm products 3,005,000 3,292,000
------------ ------------
Total net revenue $ 3,369,000 $ 3,934,000
Income from operations:
Keyboard and other products $ 77,000 $ 156,000
Security alarm products 639,000 804,000
------------ ------------
Total income from operations $ 716,000 $ 960,000
Identifiable assets:
Keyboard and other products $ 334,000 $ 602,000
Security alarm products 3,721,000 3,730,000
Corporate general 11,225,000 10,208,000
------------ ------------
Total assets $15,280,000 $14,540,000
Depreciation and amortization:
Keyboard and other products $ 2,000 $ 2,000
Security alarm products 37,000 41,000
Corporate general 22,000 22,000
------------ ------------
Total depreciation and amortization $ 61,000 $ 65,000
Capital expenditures:
Keyboard and other products $ 3,000 $ 0
Security alarm products 20,000 60,000
Corporate general 2,000 1,000
------------ ------------
Total capital expenditures $ 25,000 $ 61,000
Note 5 Revenue Recognition
George Risk Industries recognizes its revenues when goods are shipped
and billed to its customers. There is a $50,000 allowance that was
established to account for any uncollectable accounts.
Note 6 Subsequent Event - Purchase of Common Stock
In November 2001, George Risk Industries contracted with a stockholder
to purchase 321,000 shares of common stock for $560,000. These share were
placed in the treasury.
Note 7 Earnings Per Share
Basic and diluted earnings per share, assuming convertable preferred
stock was converted for each period presented, are:
For the three months ended October 31, 2001
-------------------------------------------
Income Share Per-Share
(Numerator) (Denominator) Amount
----------- ------------- ----------
Net income $ 469,000
===========
Basic EPS $ 469,000 5,720,773 $ 0.08
Effect of diluted secuities:
Convertible preferred stock 0 26,750
----------- ----------- ---------
Diluted EPS $ 469,000 5,747,523 $ 0.08
For the six months ended October 31, 2001
-------------------------------------------
Income Share Per-Share
(Numerator) (Denominator) Amount
----------- ------------- ----------
Net income $ 817,000
===========
Basic EPS $ 817,000 5,719,088 $ 0.14
Effect of diluted secuities:
Convertible preferred stock 0 26,750
----------- ----------- ---------
Diluted EPS $ 817,000 5,745,838 $ 0.14
For the three months ended October 31, 2000
-------------------------------------------
Income Share Per-Share
(Numerator) (Denominator) Amount
----------- ------------- ----------
Net income $ 620,000
===========
Basic EPS $ 620,000 5,908,742 $ 0.10
Effect of diluted secuities:
Convertible preferred stock 0 26,750
----------- ----------- ---------
Diluted EPS $ 620,000 5,935,492 $ 0.10
For the six months ended October 31, 2000
-------------------------------------------
Income Share Per-Share
(Numerator) (Denominator) Amount
----------- ------------- ----------
Net income $1,137,000
===========
Basic EPS $1,137,000 5,909,742 $ 0.19
Effect of diluted secuities:
Convertible preferred stock 0 26,750
----------- ----------- ---------
Diluted EPS $1,137,000 5,936,492 $ 0.19
GEORGE RISK INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Item 2. Management Discussion and Analysis of Financial Condition and
Results of Operations
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the attached
condensed consolidated financial statements, and with George Risk Industries'
audited financial statements and discussion for the fiscal year ended
April 30, 2001.
Net cash increased $396,000 during the quarter ended October 31, 2001 as com-
pared to an increase of only $104,000 during the corresponding quarter last
year. As for the year-to-date numbers, net cash decreased $1,355,000 for the
six months ended October 31, 2001, while, for the same period last year, net
cash increased $1,095,000. The main reason for the big decrease in the year-
to-date figures is that we transferred $2,500,000 into an annuity on the
marketable securities section. Marketable securities decreased $64,000 for
the quarter while it increased $2,348,000 for the year-to-date data. Except
for the annuity, we have not been putting much additional cash into the
marketable securities, but instead we are using the money already in the
investment accounts and hopefully are making smart investment choices.
Inventories decreased $235,000 during the current quarter as compared to a
$431,000 decrease last year. The year-to-date numbers show a $129,000 de-
crease in inventory for the current year, while there was a $677,000 decrease
for the same period last year. The smaller decrease in inventory happened
for a couple of reasons. First, our sales were down so we had a few more
materials on hand. Second, we had a better supply of some of our major raw
materials than we did at the same time last year. Accounts receivable de-
creased $404,000 during the current quarter as compared to a $264,000 in-
crease for the corresponding quarter last year. The year-to-date figures
show a decrease of $476,000 for the current six months and a $449,000 increase
for the same period last year. Sales have decreased, which accounts for most
of the decrease in accounts receivable, and we are collecting our accounts at
a faster rate. At October 31, 2001, 76.5% of the receivables were considered
current (less than 45 days) and 4.7% of the total were over 90 days past due.
For the quarter ended October 31, 2001 there was a $36,000 increase in other
assets while for the quarter ended October 31, 2000, there was a $46,000 de-
crease. The six months ended October 31, 2001, shows a $94,000 increase in
other assets while the same period last year shows a $49,000 decrease. The
reason for the big increase in other assets is that we have just completed a
remodeling project in our main building. This project consists of making
office space available for our sales staff.
At the quarter ended October 31, 2001, accounts payable decreased $76,000 as
compared to a $56,000 increase for the same quarter the year before. As for
year-to-date numbers, there was a $51,000 decrease for the six months ended
October 31, 2001, and a $163,000 increase for the same period ended October
31, 2000. As usual, we continue to strive to pay all of our bills within
terms and take all purchase discounts that are available. Notes payable de-
creased by $3,000 for the current quarter, while it decreased $3,000 for the
corresponding quarter last year. Year-to-date figures displayed a $6,000 de-
crease for the current six months, while there was a $24,000 decrease for
same period last year. No new notes have been needed to conduct our day to
day business. We have just been paying on the notes that are already on the
books. Income tax payable decreased $335,000 for the quarter ended October
31, 2001, while it decreased $395,000 for the quarter ended October 31, 2000.
For the six months ended October 31, 2001, income tax payable decreased
$19,000, while it also decreased $26,000 for the corresponding period a year
ago. These decreases reflect the decrease in net income.
The following is a list of ratios to help analyze George Risk Industries'
performance:
For the qtr ended October 31,
2001 2000
----------------------------
Working capital $13,658,000 $12,689,000
Current ratio 34.150 26.480
Quick ratio 27.432 22.357
Cash per share (including marketable
securities) $ 1.70 $ 1.48
Equity per share $ 2.58 $ 2.36
Net sales were $3,369,000 for the quarter ended October 31, 2001, which is a
14.4% decrease from the corresponding quarter last year. Year-to-date net
sales were $6,386,000 at October 31, 2001, which is a 14.8% decrease from the
same period last year. Cost of goods sold was 50.4% of net sales for the
quarter ended October 31, 2001 and 52.8% for the same quarter last year.
Year-to-date cost of goods sold percentages were 51.3% for the current six
months and 54.2% for the corresponding six months last year. Having
relatively the same percentage of cost of goods sold from period to period
shows that we keep our costs in line. Our cost of materials and direct labor
fluctuate in proportion to how our sales vary.
Operating expenses were 28.3% of net sales for the quarter ended October 31,
2001 as compared to 22.8% for the corresponding quarter last year. Year-to-
date operating expenses were 27.3% of net sales for the six months ended
October 31, 2001, while they were 23.0% for the same period last year. The
primary reason for the bigger percentage increase this year is that the ex-
pense entitled "Distributor Volume Rebate" increased by 1.7%. Due to new
discount programs that were implemented at the beginning of fiscal year end
2001, the current quarter and year-to-date figures are not in comparison to
the quarter and year-to-date figures for last year. Also, as sales have de-
creased, management has not decreased wages and staff accordingly, therefore
not causing any layoffs at the present time. Income from operations for the
quarter ended October 31, 2001 was at $716,000, which is a 25.4% decrease from
the corresponding quarter last year, which had income from operations of
$960,000. Income from operations for the six months ended October 31, 2001
was at $1,746,000, which is a 1.3% increase from the corresponding six months
last year, which had income from operations of $1,723,000.
Other income and expenses showed gains of $90,000 and $35,000 for the quarter
and six months ended October 31, 2001, respectively. This is a 15.1% de-
crease for the quarter and an 85.5% decrease for the year-to-date numbers.
The main reason for the losses is that we were urged to sell one of our stock
holdings for a loss during the first quarter and the stock market has not
given us an opportunity to offset this loss by being able to sell holdings
for gains. In turn, net income for the quarter ended October 31, 2001 was at
$469,000, a 24.4% decrease from the corresponding quarter last year, which
showed a net income of $620,000. Net income for the six months ended October
31, 2001 was $817,000, a 28.1% decrease from the same period last year. Net
income for the six months ended October 31, 2000 was $1,137,000. Earnings per
share for the quarter ended October 31, 2001 was $0.08 per share and $0.10
per share for the year-to-date numbers. EPS for the quarter and six months
ended October 31, 2000 was $0.14 per share and $0.19 per share, respectively.
George Risk Industries does have two distinct business segments, security
alarm products and keyboard products that are subject to disclosure under
SFAS No. 131. See the notes to the financial statements in order to examine
the two segments.
New product development at GRI has become very aggressive in order to stay
competitive in the industry. New products recently introduced into the market
include the CC-1 Current Controller for closet and cabinet lighting; the MC25,
a window channel magnet; and an "Under the Carpet" water sensor with probes,
which is the 2600T; the 2808 Absence of Water Sensor; and a Gate Mount Pool
Alarm. We have also added to our line of E-Z Duct Raceway with a new drop
ceiling connector and a junction box. Just introduced, due to customer de-
mand, is the GRI Alarmed Window Bar. This product can be easily removed from
the inside of the residence during an emergency yet provides a visual de-
terrent and an alarm device. New product development includes the Glass Break
sensor, a wireless pool alarm, a new type of water sensing device, and two
new power converters for our ThermStat line. Also, research and development
is investigating the use of a new technology for our existing Hold-Up devices.
This new technology has the capability of being used in most of our existing
sensors. Our new tool & die projects are a terminal box with a tamper and a
5/8" X 1 1/4" Raceway and associated connectors to add to our existing E-Z
Duct series.
In November 2001, GRI bought back 321,000 shares of its stock in a private
transaction. Since we are sitting in a fairly cash heavy position, these
shares will be paid for in full by the end of January 2002. No long or short
term notes will be required. When these shares were repurchased, it brought
the number of shares outstanding down to 5,396,403. This repurchase account-
ed for about 5.6% of the issued and outstanding shares at the time of
purchase.
There are no known seasonal trends with any of GRI's products, since we sell
to distributors and OEM manufacturers. The products are tied to the housing
industry and will fluctuate with building trends.
GEORGE RISK INDUSTRIES, INC.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Securities
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
A. Reports on Form 8-K
No 8-K reports were filed during the quarter ended October 31, 2001.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
George Risk Industries, Inc.
(Registrant)
Date 12-14-2001 By: /s/ Kenneth R. Risk
Kenneth R. Risk
President and Chairman of the Board
By: /s/ Stephanie M. Risk
Stephanie M. Risk
Chief Financial Officer