UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES - -- EXCHANGE ACT OF 1934 For the quarterly period ended April 29, 2000 ------------------------------------------------- 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 ---------------------------------------------------------- Astro-Med, Inc. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Rhode Island 05-0318215 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) 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) ------------------------ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X . No . --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, $.05 Par Value - 4,423,086 shares (excluding treasury shares) as of June 7, 2000 ASTRO-MED, INC. INDEX Page No. -------- Part I. Financial Information: Consolidated Balance Sheets - January 31, 2000 and April 29, 2000. ........................ 3 Consolidated Statements of Operations - Three Months Ended May 1, 1999 and April 29, 2000............ 4 Consolidated Statements of Cash Flows - Three Months Ended May 1, 1999 and April 29, 2000............ 5 Notes to Consolidated Financial Statements - April 29, 2000............................................... 6,7 Management's Discussion and Analysis of Financial Condition and Results of Operations.......................... 8-9 Part II. Other Information...................................... 10 -2- Part I. FINANCIAL INFORMATION ASTRO-MED, INC. UNAUDITED CONSOLIDATED BALANCE SHEETS January 31, April 29, ASSETS 2000 2000 ---- ---- (Unaudited) CURRENT ASSETS Cash and Cash Equivalents................... $ 4,035,867 $ 1,288,952 Securities Available for Sale............... 7,211,921 7,520,151 Accounts Receivable, Net.................... 9,270,814 9,388,162 Inventories................................. 11,537,478 12,301,586 Prepaid Expenses and Other Current Assets... 1,926,111 1,986,843 ----------- ----------- Total Current Assets................... 33,982,191 $32,485,694 PROPERTY, PLANT AND EQUIPMENT 20,089,355 20,369,612 Less Accumulated Depreciation............... (12,577,878) (12,914,098) ----------- ----------- 7,511,477 7,455,514 OTHER ASSETS Excess of Cost Over Net Assets Acquired..... 3,153,371 2,897,246 Amounts Due from Officers................... 480,314 480,314 Other....................................... 257,178 241,435 ----------- ----------- 3,890,863 3,618,995 ----------- ----------- $45,384,531 $43,560,203 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts Payable............................ $ 6,379,792 $ 4,633,284 Accrued Compensation........................ 1,710,622 1,459,411 Accrued Expenses............................ 2,324,593 2,753,592 Income Taxes................................ 1,169,234 958,121 Current Maturities of Long-Term Debt........ 60,452 55,333 ----------- ---------- Total Current Liabilities.............. 11,644,693 9,859,741 LONG-TERM DEBT, Less Current Maturities....... 71,588 49,729 DEFERRED INCOME TAXES......................... 447,666 407,283 SHAREHOLDERS' EQUITY Preferred Stock, $10 Par Value, Authorized 100,000 Shares, None Issued.... Common Stock, $.05 Par Value, Authorized 13,000,000 Shares, Issued 5,148,035 and 5,148,691 Shares, Respectively........ 257,402 257,435 Additional Paid-In Capital.................. 5,647,791 5,651,481 Retained Earnings........................... 33,065,454 33,046,555 Treasury Stock, at Cost (729,295 Shares))... (5,268,103) (5,268,103) Accumulated Other Comprehensive Income (Loss) (481,960) (443,918) ----------- ---------- 33,220,584 33,243,450 ----------- ----------- $45,384,531 $43,560,203 =========== =========== -3- ASTRO-MED, INC. UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended ------------------ May 1, April 29, 1999 2000 ---- ---- Net Sales.................................... $10,377,257 $12,374,201 Cost of Sales................................ 6,322,510 7,204,278 ----------- ----------- Gross Profit................................. 4,054,747 5,169,923 Costs and Expenses: Selling, General and Administrative........ 3,688,050 3,907,078 Research and Development................... 881,009 1,093,090 ----------- ----------- 4,569,059 5,000,168 ----------- ----------- Operating Income (Loss)...................... (514,312) 169,755 Other Income (Expense): Investment Income.......................... 171,489 119,416 Interest Expense........................... (4,092) (5,484) Other, Net................................. (14,614) (72,047) ----------- ----------- 152,783 41,885 ----------- ----------- Income (Loss) before Income Taxes............ (361,529) 211,640 Income Taxes................................. (91,000) 53,780 ----------- ----------- Net Income (Loss)............................ $ (270,529) $ 157,860 =========== =========== Income (Loss) Per Common Share-basic......... $(.06) $.04 ==== ===== Income (Loss) Per Common Share-diluted....... $(.06) $.04 ==== ===== Weighted Average Number of Common and Common Equivalent Shares Outstanding-basic........ 4,474,873 4,418,982 ========= ========= Weighted Average Number of Common and Common Equivalent Shares Oustanding-diluted....... 4,474,873 4,479,972 ========= ========= Dividends Declared Per Common Share.......... $.04 $.04 ==== ==== -4- ASTRO-MED, INC. UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended ------------------ May 1, April 29, 1999 2000 ---- ---- Cash Flows from Operating Activities: Net Income (Loss)............................ $ (270,529) $ 157,860 Adjustments to Reconcile Net Loss to Net Cash Provided by Operating Activities: Depreciation and Amortization............. 350,384 367,346 Deferred Income Taxes..................... - (97,873) Other..................................... (159,576) 83,488 Changes in Assets and Liabilities: Accounts Receivable.................... 718,876 (117,348) Inventories............................ (513,347) (764,108) Other.................................. (169,473) 12,499 Accounts Payable and Accrued Expenses.. (420,958) (1,568,719) Income Taxes........................... (44,155) (211,113) --------- ----------- Total Adjustments.................... (238,249) (2,295,828) Net Cash Used by Operating Activities...... (508,778) (2,137,968) Cash Flows from Investing Activities: Proceeds from Sales of Securities Available for Sale......................... 1,891,670 385,241 Purchases of Securities Available for Sale................................... (1,969,034) (693,471) Refund of Purchase Price for Acquisition..... - 225,000 Additions to Property, Plant and Equipment... (356,200) (325,710) ---------- ---------- Net Cash Used by Investing Activities..................... (433,564) (408,940) Cash Flows from Financing Activities: Principle Payments on Capital Leases......... (58,207) (26,978) Proceeds from Common Shares Issued Under Employee Benefit Plans............... 4,316 3,730 Purchases of Treasury Stock.................. (96,313) - Dividends Paid............................... (180,499) (176,759) ---------- ---------- Net Cash Used by Financing Activities...... (330,703) (200,007) Net Decrease in Cash and Cash Equivalents...... (1,273,045) (2,746,915) Cash and Cash Equivalents, Beginning of Period. 4,946,289 4,035,867 ---------- ---------- Cash and Cash Equivalents, End of Period....... $3,673,244 $1,288,952 ========== =========== Supplemental Disclosures of Cash Flow Information: Cash Paid During the Period for: Interest................................. $ 3,155 $ 5,537 Income Taxes............................. $ 45,830 $ 232,823 -5- ASTRO-MED, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS April 29, 2000 Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) The accompanying financial statements have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission, and reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the results of the interim periods presented. These financial statements do not include all disclosures associated with annual financial statements and, accordingly, should be read in conjunction with footnotes contained in the Company's annual report on Form 10-K for the year ended January 31, 2000. (b) Net Income/Loss per common share has been computed and presented pursuant to the provisions of Statement of Financial Accounting Standards No. 128, Earnings Per Share, which was adopted in fiscal 1998. Net income/loss per share is based on the weighted average number of shares outstanding during the period. Net income/loss per share assuming dilution is based on the weighted average number of shares and, if dilutive, common equivalent shares for stock options outstanding during the period. Three Months Ended May 1, April 29, 1999 2000 ---- ---- Weighted Average Common Shares Outstanding-basic....................... 4,474,873 4,418,982 Diluted Effect of Options Outstanding..... - 60,990 Weighted Average Common Shares Outstanding diluted................................. 4,474,873 4,479,972 ========= ========= For the three month's ended April 29, 2000 and May 1, 1999, the diluted per share amounts do not reflect options outstanding of 987,850 and 939,375 respectively, because their effect is anti-dilutive. Note 2 - COMPREHENSIVE INCOME Effective February 1, 1998, the Company adopted Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income". This statement requires presentation of the components of comprehensive income, including the changes in equity from non-owner sources such as unrealized gains (losses) on securities and foreign currency translation adjustments. The Company's total comprehensive income is as follows. -6- Note 2 - COMPREHENSIVE INCOME (continued) Three Months Ended ------------------ May 1, April 29, 1999 2000 ---- ---- Comprehensive Income (Loss): Net Income (Loss) $(270,529) $ 157,860 --------- --------- Other Comprehensive Income (Loss): Foreign currency translation adjustments, net of tax (88,018) (12,413) Unrealized gain(loss) on securities: Unrealized holding gain (loss) arising during the period, net of tax (62,210) 35,102 Reclassification adjustment for gain (loss) included in net income, net of tax 2,148 (1,875) --------- --------- Other Comprehensive Income (Loss): (148,080) 20,814 --------- --------- Comprehensive Income (Loss) $(418,609) $ 178,674 ========= ========= Note 3 - INVENTORIES Inventories are stated at the lower of cost (first-in, first-out) or market and include material, labor and manufacturing overhead. The components of inventories were as follows: January 31, April 29, 2000 2000 ---- ---- Materials and Supplies... $ 5,835,050 $ 6,943,065 Work-In-Process.......... 1,557,734 1,480,681 Finished Goods........... 4,144,694 3,877,840 ----------- ----------- $11,537,478 $12,301,586 =========== =========== Note 4 - Purchase Price Refund During the quarter ended April 29, 2000, the Company received $225,000 that was held in escrow relative to the acquisition of Telefactor Corporation. The amount represents a reduction in purchase price. The purchase price is subject to further post-closing price adjustments, which are currently in negotiation. -7- ASTRO-MED, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS: Sales revenues in the first quarter were $12,374,000, a 19% increase over the prior year's first quarter sales of $10,377,000. Sales from the Company's recent acquisition, Telefactor, contributed to the first quarter increment with sales revenues of $1,408,000. Domestic sales were $8,901,000 an increase of $1,569,000 or 21% over the domestic sales of first quarter of fiscal year 2000. Revenues through the Company's international channels were $3,473,000, an increase of $428,000 or 14% over last year's first quarter export sales. The Company's product groups reported mixed results. QuickLabel Systems (QLS) products led the Company's sales growth in the first quarter with sales of $4,887,000. The QLS sales increase was 19% over last year with exceptional growth through the Company's domestic channels being the prime reason for the increment. Test & Measurement (T & M) sales in the quarter were virtually flat with last year at $3,293,000. Sales of this product group varied by channel with unit growth realized from the Company's domestic and foreign office branches, whereas sales through the Company's international dealer network lagged behind last year. Grass-Telefactor sales in the first quarter were mixed at $4,194,000 as compared to $2,940,000 for the prior year period. Although Telefactor product sales were 11% of the Company's total sales in the quarter, Telefactor sales were lower than expectations. Integration related activities of the Telefactor and Grass Instrument product lines delayed shipments in the quarter. The Grass Instrument's Heritage product line reported 13% growth in unit sales from last year's first quarter. Gross profit dollars were $5,170,000, a 27% increase over last year. The Gross profit margin realized in the quarter was 41.8%, a notable improvement over last year's margin of 39.1%. Product mix and improved margins in each product group account for this quarter's result. Operating Expenses in the quarter were $5,000,000, consuming 40(CENTS) of the sales dollar. Selling and general administrative spending rose 6% from last year to $3,907,000. The increment is due to additions in sales and administration personnel from the Telefactor acquisition. Research and development funding increased 24% from the prior year to $1,093,000, as the Company increased its commitment to new product development by additions in engineering personnel related to the Grass-Telefactor product group. In the quarter, R & D spending was 9% of sales up from last year's run rate of 8%. Operating income in the quarter was $170,000, a $684,000 improvement from last year and provided a 1.4% yield on sales. Other income decreased to $42,000 from last year's $153,000. The result stems from lower interest and dividend income due to a reduced level of investable funds. -8- Net Income in the first quarter was $158,000 equal to 4(CENTS) earnings per share. This compares to a net loss of $271,000, equal to 6(CENTS) loss per share in the prior year's first quarter. FINANCIAL CONDITION: On the balance sheet, total assets were $43,560,000 at the end of the first quarter, lower by 4% from the fiscal year 2000 year-end balance of $45,385,000. Cash and securities available for sale declined $2,439,000 in the quarter to $8,809,000 at quarter's end. The demand placed on the Company's cash balances during the year was traceable to working capital requirements, capital expenditures and cash dividends. Accounts Receivable balances rose 1% to $9,388,000 and reflects 62 days sales outstanding. Inventory dollars rose 7% to $12,302,000 from the year-end level as the Company increased its build of components in anticipation of the new product launch of the Everest and LRU product lines. Capital expenditures were $326,000 in the quarter as the Company purchased machinery and equipment, information technology hardware and software and tools and dies. The Company paid cash dividends in the quarter of $177,000 or 4(CENTS) per common share. The book value per share remained at $7.42, matching the book value per share at fiscal year 2000 year-end. SAFE HARBOR STATEMENT This document contains forward-looking statements based on current expectations that involve a number of risks and uncertainties. The factors that could cause actual results to differ materially include the following: general economic conditions and growth rates in the data acquisition, digital color printing, and neurophysiology markets, including but not limited to the electronic, printing, and medical markets; competitive factors and pricing pressures; changes in product mix; changes in the seasonality of demand patterns; the timely development and acceptance of new products; inventory risks due to shifts in market demand; component constraints and shortages; risk of non-payment of accounts receivable; ramp up and expansion of manufacturing capacity; risks associated with the Euro conversion; and the risks described from time to time in Astro-Med's reports filed with the Securities and Exchange Commission. -9- PART II. OTHER INFORMATION Item 4. Results of Votes of Security Holders An Annual Meeting of Shareholders of the registrant was held May 16, 2000. A proposed increase in the maximum shares under the 1997 Incentive Stock Option Plan of 500,000 to 1,250,000 was presented to shareholders for their approval. Also, shareholders were asked to elect a Board of Directors to serve until the next Annual Meeting of Shareholders or until their successors are elected and qualified. The Company proposed increase in the maximum share under the 1997 Incentive Stock Option Plan was approved by the following vote: For-2,307,026; Against-568,362; Abstain-12,131. In an uncontested election, nominees for directors were elected by the following votes: Name of Nominee Votes Votes for Director For Withheld --------------- ---- -------- Albert W. Ondis 3,859,637 377,082 Everett V. Pizzuti 3,859,637 377,082 Jacques V. Hopkins 3,859,862 376,857 Hermann Viets 3,859,862 376,857 Neil K. Robertson 3,859,862 376,857 Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: None. (b) Reports on Form 8-K: On February 25, 2000 the Company filed Amendment No. 1 to the Form 8-K indicating that under the provisions of Regulation S-K no financial statements were required to be filed with respect to the acquisition of Telefactor Corporation. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ASTRO-MED, INC. (Registrant) Date: June 7, 2000 By ____________________________ A. W. Ondis, Chairman (Principal Executive Officer) Date: June 7, 2000 By ____________________________ Joseph P. O'Connell, Vice President and Treasurer (Principal Financial Officer) -10-