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
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ACT OF 1934
For the quarterly period ended May 4, 2002
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OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-13200
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Astro-Med, Inc.
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(Exact name of registrant as specified in its charter)
Rhode Island 05-0318215
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
600 East Greenwich Avenue, West Warwick, Rhode Island 02893
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(Address of principal executive offices) (Zip Code)
(401) 828-4000
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(Registrant's telephone number, including area code)
________________________
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X . No ___ .
---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock, $.05 Par Value - 4,268,143 shares
(excluding treasury shares) as of June 3, 2002
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ASTRO-MED, INC.
INDEX
Page No.
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Part I. Financial Information:
Consolidated Balance Sheets -
May 4, 2002 and January 31, 2002................................. 3
Consolidated Statements of Income -
Three-Months Ended May 4, 2002 and May 5, 2001................... 4
Consolidated Statements of Cash Flows -
Three-Months Ended May 4, 2002 and May 5, 2001................... 5
Notes to Consolidated Financial Statements -
May 4, 2002...................................................... 6-8
Management's Discussion and Analysis of Financial
Condition and Results of Operations.............................. 9-11
Item 3. Quantitative and Qualitative Disclosures
about Market Risk......................................... 12
Part II. Other Information.......................................... 12
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Part I. FINANCIAL INFORMATION
ASTRO-MED, INC.
CONSOLIDATED BALANCE SHEETS
May 4, January 31,
ASSETS 2002 2002
---- ----
(Unaudited)
CURRENT ASSETS
Cash and Cash Equivalents ................... $ 2,725,927 $ 2,569,721
Securities Available for Sale ............... 3,213,554 3,340,874
Accounts Receivable, Net .................... 8,092,248 9,173,568
Inventories ................................. 9,714,762 10,243,182
Prepaid Expenses and Other Current Assets.... 2,541,277 2,229,660
------------ ------------
Total Current Assets ................... 26,287,768 27,557,005
PROPERTY, PLANT AND EQUIPMENT 23,777,669 23,458,303
Less Accumulated Depreciation ............... (15,907,293) (15,478,613)
------------ ------------
7,870,376 7,979,690
OTHER ASSETS
Goodwill .................................... 2,310,798 2,310,798
Amounts Due from Officers ................... 480,314 480,314
Other ....................................... 100,719 76,422
------------ ------------
2,891,831 2,867,534
------------ ------------
$ 37,049,975 $ 38,404,229
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable ............................ $ 2,703,750 $ 3,325,133
Accrued Compensation ........................ 1,251,068 1,114,490
Accrued Expenses ............................ 1,471,301 1,637,826
Current Maturities of Long-Term Debt ........ 12,559 24,755
------------ ------------
Total Current Liabilities .............. 5,438,678 6,102,204
DEFERRED INCOME TAXES ......................... 949,602 876,867
SHAREHOLDERS' EQUITY
Preferred Stock, $10 Par Value,
Authorized 100,000 Shares, None Issued .... - -
Common Stock, $.05 Par Value, Authorized
13,000,000 Shares, Issued, 5,165,798 and
5,165,027 Shares, respectively ............ 258,290 258,251
Additional Paid-In Capital .................. 5,639,234 5,636,570
Retained Earnings ........................... 30,950,745 31,753,694
Treasury Stock, at Cost (897,895 Shares) .... (5,860,609) (5,860,609)
Accumulated Other Comprehensive Loss ........ (325,965) (362,748)
------------ ------------
30,661,695 31,425,158
------------ ------------
$ 37,049,975 $ 38,404,229
============ ============
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ASTRO-MED, INC.
CONSOLIDATED STATEMENTS OF INCOME
Three-Months Ended
------------------
May 4, May 5,
2002 2001
---- ----
(Unaudited)
Net Sales ....................................... $11,377,002 $12,435,979
Cost of Sales ................................... 7,568,577 7,383,886
----------- -----------
Gross Profit .................................... 3,808,425 5,052,093
Costs and Expenses:
Selling, General and Administrative ........... 3,740,254 4,127,067
Research and Development ...................... 1,008,194 908,533
----------- -----------
4,748,448 5,035,600
----------- -----------
Operating Income (Loss) ......................... (940,023) 16,493
Other Income (Expense):
Investment Income ............................. 48,599 85,128
Interest Expense .............................. (461) (1,289)
Other, Net .................................... 85,630 86,763
----------- -----------
133,768 170,602
----------- -----------
Income (Loss) Before Income Taxes ............... (806,255) 187,095
Income Taxes (Benefit) Expense .................. (174,000) 37,420
----------- -----------
Net Income (Loss) ............................... $ (632,255) $ 149,675
=========== ===========
Income(Loss)Per Common Share
- Basic and Diluted .......................... ($0.15) $ 0.04
=========== ===========
Weighted Average Number of Common and Common
Equivalent Shares Outstanding-Basic ........... 4,267,425 4,241,211
=========== ===========
Weighted Average Number of Common and Common
Equivalent Shares Outstanding-Diluted ......... 4,267,425 4,245,088
=========== ===========
Dividends Declared Per Common Share ............. $ 0.04 $ 0.04
=========== ===========
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ASTRO-MED, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three-Months Ended
------------------
May 4, May 5,
2002 2001
---- ----
(Unaudited)
Cash Flows from Operating Activities:
Net Income (Loss) ............................. $ (632,255) $ 149,675
Adjustments to Reconcile Net Income (Loss) to
Net Cash Provided by Operating
Activities:
Depreciation and Amortization ................ 334,950 328,505
Deferred Income Taxes ........................ 72,735 (56,353)
Changes in Assets and Liabilities:
Accounts Receivable ....................... 1,081,320 1,595,701
Inventories ............................... 452,909 (692,708)
Other ..................................... (259,060) 42,657
Accounts Payable and Accrued Expenses ..... (651,330) (1,134,057)
Income Taxes Payable ...................... - 60,311
----------- -----------
Total Adjustments ....................... 1,031,524 144,056
Net Cash Provided by Operating Activities ..... 399,269 293,731
Cash Flows from Investing Activities:
Proceeds from Sales/Maturities of Securities
Available for Sale .......................... 87,249 1,046,612
Additions to Property, Plant and Equipment .... (150,125) (356,546)
----------- -----------
Net Cash Provided (Used) by
Investing Activities ...................... (62,876) 690,066
Cash Flows from Financing Activities:
Principal Payments on Capital Leases .......... (12,196) (11,360)
Proceeds from Common Shares Issued
Under Employee Benefit Plans ................ 2,703 4,266
Dividends Paid ................................ (170,694) (169,208)
----------- -----------
Net Cash Used by Financing Activities ....... (180,187) (176,302)
Net Increase in Cash and Cash Equivalents ......... 156,206 807,495
Cash and Cash Equivalents, Beginning of Period .... 2,569,721 806,069
----------- -----------
Cash and Cash Equivalents, End of Period .......... $ 2,725,927 $ 1,613,564
=========== ===========
Supplemental Disclosures of Cash Flow
Information:
Cash Paid During the Period for:
Interest .................................. $ 461 $ 1,289
Income Taxes .............................. $ - $ 20,900
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ASTRO-MED, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 4, 2002
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, 2002. Certain reclassifications have been made to
conform to the current period reporting format.
(b) Net income (loss) per common share has been computed and presented
pursuant to the provisions of Statement of Financial Accounting Standards No.
128, Earnings Per Share. Net income (loss) per share is based on the weighted
average number of shares outstanding during the period. Net income (loss) per
share assuming dilution is based on the weighted average number of shares and,
if dilutive, common equivalent shares for stock options outstanding during the
period.
Three-Months Ended
------------------
May 4, May 5,
2002 2001
---- ----
Weighted Average Common Shares
Outstanding - Basic ..................... 4,267,425 4,241,211
Diluted Effect of Options Outstanding ......... - 3,877
Weighted Average Common Shares Outstanding
--------- ---------
- Diluted ............................... 4,267,425 4,245,088
========= =========
For the three-months ended May 4, 2002 and May 5, 2001, the diluted per
share amounts do not reflect options outstanding of 2,078,575 and 1,668,075
respectively, because their effect is anti-dilutive.
(c) Derivative Instruments and Hedging: On February 1, 2001, the Company
adopted Statement of Financial Accounting Standard (SFAS) No. 133, Accounting
for Derivative Instruments and Hedging Activities, as amended by SFAS No. 137,
Accounting for Derivative Instruments and Hedging Activities - Deferral of the
Effective Date of SFAS No. 133, and as amended in June 2000 by SFAS No. 138
Accounting for Certain Derivative Instruments and Certain Hedging Activities -
an Amendment to SFAS No. 133 (combined SFAS No. 133). The statement requires
companies to record derivatives on the balance sheet as assets or liabilities,
measured at fair value. Gains or losses resulting from changes in the values of
those derivatives would be accounted for depending on the use of the derivative
and whether it qualifies for hedge accounting. The adoption of this statement
did not have a material impact on the Company's results of operations or
financial position.
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ASTRO-MED, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(d) Revenue Recognition: The majority of the Company's product sales are
recorded at the time of shipment and when persuasive evidence of an arrangement
exists, the seller's price to the buyer is fixed or determinable and
collectibility is reasonably assured. Provisions are made at the time the
related revenue is recognized for the cost of any installation obligations. When
other significant obligations remain after products are delivered, revenue is
recognized only after such obligations are fulfilled.
(e) Long-Lived Assets: The Company adopted SFAS No. 141, Business
Combinations and SFAS No. 142, Goodwill and Other Intangible Assets, as of
February 1, 2002. SFAS No. 141 requires that the purchase method of accounting
be used for all business combinations initiated after June 30, 2001. SFAS No.
142 changes the accounting for goodwill from an amortization method to an
impairment-only approach. Management is currently in the process of conducting
the first step of the impairment reviews of its goodwill and expects to complete
the assessments no later than the second quarter of fiscal year 2003, in
accordance with provisions of the standard. If it is determined that any
goodwill is impaired during this initial process, management will immediately
begin the process to determine the impairment loss before the end of this fiscal
year in accordance with provisions of the standard. Also, under SFAS No. 142,
amortization of goodwill to earnings is discontinued and the carrying value of
goodwill will be evaluated for impairment on at least an annual basis. The
impact of discontinuing the amortization of goodwill on the first quarter of
last year would have resulted in net income increasing by $31,000 and no change
to the income per share amount.
The Company adopted SFAS No. 143, Accounting for Asset Retirement
Obligations as of February 1, 2002. SFAS No. 143 requires the fair value of a
liability for an asset retirement obligation to be recognized in the period in
which it is incurred if a reasonable estimate of fair value can be made. The
associated asset retirement costs are capitalized as part of the carrying amount
of the long-lived asset. The adoption of this Statement by the Company did not
have an impact on its financial statements.
The Company adopted SFAS No. 144, Accounting for the Impairment or Disposal
of Long-Lived Assets, which supersedes SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of, and
the accounting and reporting provisions of Accounting Principles Board (APB) No.
30 as of February 1, 2002. SFAS No. 144 addresses the financial accounting and
reporting for the impairment or disposal of long-lived assets The adoption of
this Statement by the Company did not have an impact on its financial
statements.
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ASTRO-MED, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 2 - COMPREHENSIVE INCOME
The Company's total comprehensive income (loss) is as follows.
Three-Months Ended
------------------
May 4, May 5,
Comprehensive Income (Loss): 2002 2001
---- ----
Net Income (Loss) ...................................... $(632,255) $ 149,675
--------- ---------
Other Comprehensive Income (Loss):
Foreign currency translation adjustments,
net of tax ................................. 76,855 (71,390)
Unrealized gain on securities:
Unrealized holding gain (loss)
arising during the period, net
of tax ..................................... (40,072) 22,498
Reclassification adjustment for gain
included in net income, net of tax ......... - 625
--------- ---------
Other Comprehensive Income (Loss) ...................... 36,783 (48,267)
--------- ---------
Comprehensive Income (Loss) ............................ $(595,472) $ 101,408
========= =========
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:
May 4, January 31,
2002 2002
---- ----
Materials and Supplies ...... $ 5,378,201 $ 5,850,797
Work-In-Process ............. 1,097,090 961,279
Finished Goods .............. 3,239,471 3,431,106
----------- -----------
$ 9,714,762 $10,243,182
=========== ===========
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ASTRO-MED, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations:
- ---------------------
Three-Months Ending May 4, 2002 vs. Three-Months Ending May 5, 2001
Sales in the first quarter were $11,377,000, a 9% decrease from the prior
year's first quarter sales of $12,436,000. Notwithstanding the lower shipments
in the quarter, new orders reached $12.7 million which represents a 2% increase
over last year and an 8% improvement over the fourth quarter new order rate. As
a consequence the Company will carry an unusually large backlog into the future.
Domestic sales were $8,422,000, down 7% from $9,041,000 for the first quarter of
the prior fiscal year. Sales through the Company's international channels were
$2,955,000, down 13% over previous year's first quarter sales of $3,395,000.
Gross profit dollars were $3,808,000, which generated a margin yield of
33.5% for the quarter as compared to a margin yield last year of 40.6%. Factors
contributing to this quarter's results include lower sales, a change in sales
mix and unabsorbed manufacturing overhead variances.
Operating expenses in the quarter were $4,748,000. Selling and general
administrative spending declined 9% from last year to $3,740,000. Spending
reductions in personnel, advertising, travel, commissions and the elimination of
goodwill amortization account for the decrease.
Research and development funding rose 11% from the prior year to
$1,008,000. This increase can be attributed to personnel costs.
The Company's operations have historically been aggregated into a single
reporting segment based on certain similarities in the nature and
characteristics of the products and services and the lack of the availability of
the financial information at the product group level. The Company has evolved to
the point where it can now place additional emphasis on the financial
information generated at the product group level. Consequently, the Company will
report three reporting segments consistent with its sales product groups: Test &
Measurement (T&M); QuickLabel Systems (QLS) and Grass-Telefactor (G-T). As a
result, the Company has restated the prior years segment data to present all
periods on a comparable basis. The Company evaluates segment performance based
on the segment profit (loss) before corporate and financial administration
expenses.
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ASTRO-MED, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations (continued):
- ---------------------------------
Three-Months Ending May 4, 2002 vs. Three-Months Ending May 5, 2001
Summarized below are the sales and segment operating profit (loss) for each
reporting segment:
Segment
Sales Operating Profit
----- ----------------
May 4, May 5, May 4, May 5,
2002 2001 2002 2001
---- ---- ---- ----
T&M $ 2,685,000 $ 3,018,000 $ (75,000) $ 101,000
QLS 5,258,000 4,894,000 (31,000) 257,000
G-T 3,434,000 4,524,000 (147,000) 410,000
----------- ----------- --------- ---------
Total $11,377,000 $12,436,000 (253,000) 768,000
=========== ===========
Corporate Expenses 687,000 752,000
--------- ---------
Operating Income (Loss) (940,000) 16,000
Other Income (Expenses) 134,000 171,000
--------- ---------
Income Before Income Taxes (806,000) 187,000
Income Taxes Expense (Benefit) (174,000) 37,000
--------- ---------
Net Income (Loss) $(632,000) $ 150,000
========= =========
T&M's product sales were $2,685,000, down 11% from the $3,018,000 of the
previous year. This decrease is attributed to declining Everest sales resulting
from the shift in defense spending from testing and research to the fight
against terrorism. T&M's segment profit (loss) margin declined to (2.8%) in the
quarter from 3.3% in the previous year. The decline in T&M's margin is
attributed to the lower sales volume.
QLS's sales increased to $5,258,000, a 7% increase over the $4,894,000 of
sales reported in the first quarter of the previous year. This increase is
attributed to the growth in printer and media sales. QLS's first quarter segment
profit (loss) margin declined to (0.6%) down from 5.3% in the previous year. The
decline in margin is attributed to the change in sales mix within the group.
G-T sales in the quarter were $3,434,000, down 24% from $4,524,000 reported
in the first quarter of the previous year. The lower sales is traceable
primarily to continued delays in capital appropriations by hospitals in our
clinical markets, as well as lower spending levels on supplies by research
customers of biomedical applications. The G-T segment operating profit (loss)
margin declined to (4.3%) in the first quarter from 9.1% in the previous year.
The decline in margin is attributed to the lower sales volume.
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ASTRO-MED, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Financial Condition:
- -------------------
The Company's Statements of Cash Flows for the three-months ending May 4,
2002 and May 5, 2001 are included on page 5. Net cash flow provided by operating
activities for the current quarter were $399,000 versus $294,000 in the first
quarter of the previous year.
Cash and securities available for sale at the end of the first quarter
totaled $5,939,000, up slightly from $5,911,000 at year-end.
The accounts receivable collection cycle improved by six days decreasing to
56 days sales outstanding at the end of the quarter as compared to the 62 days
outstanding at year-end.
Inventory declined to $9,715,000 from the year-end level as the Company
curtailed purchases early in the first quarter. As a result, inventory turns
improved to 2.4 times from 2.3 times at year-end.
Capital expenditures were $150,000 in the quarter ended May 4, 2002 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 $171,000 or $0.04 per
common share.
Critical Accounting Policies, Commitments and Certain Other Matters:
- -------------------------------------------------------------------
In the Company's Form 10-K for the year ended January 31, 2002, the
Company's most critical accounting policies and estimates upon which our
financial status depends were identified as those relating to revenue
recognition, warranty claims, bad debt, customer returns, inventories and
long-lived assets. We considered the disclosure requirements of Financial
Release ("FR") 60 ("FR-60") regarding critical accounting policies and FR-61
regarding liquidity and capital resources, certain trading activities and
related party/certain other disclosures, and concluded that nothing materially
changed during the quarter that would warrant further disclosure under these
releases.
Safe Harbor Statement
- ---------------------
This document contains forward-looking statements based on current
expectations that involve a number of risks and uncertainties. Factors which
could cause actual results to differ materially from those anticipated include,
but are not limited to, general economic, financial and business conditions;
declining demand in the test and measurement markets, especially defense and
aerospace; competition in the specialty printer industry; ability to develop
market acceptance of the QLS color printer products and effective design of
customer required features; competition in the data acquisition industry;
competition in the neurophysiology industry; the impact of changes in foreign
currency exchange rates on the results of operations; the ability to
successfully integrate acquisitions; the business abilities and judgment of
personnel and changes in business strategy.
-11-
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
----------------------------------------------------------
Astro-Med, Inc.'s exposure to market risk has not changed materially from its
exposure at January 31, 2002 as set forth in Item 7A in Astro-Med, Inc.'s Form
10K for the fiscal year ended January 31, 2002.
PART II. OTHER INFORMATION
Item 4. Results of Votes of Security Holders
An Annual Meeting of Shareholders of the registrant was held May 14, 2002.
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 4,133,027 20,426
Everett V. Pizzuti 4,133,227 20,226
Jacques V. Hopkins 4,136,978 16,475
Hermann Viets 4,137,978 15,475
Graeme MacLetchie 4,138,152 15,301
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
None.
(b) Reports on Form 8-K:
None.
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, 2002 By /s/ A. W. Ondis, Chairman
----------------------------------
A. W. Ondis, Chairman
(Principal Executive Officer)
Date: June 7, 2002 By /s/ Joseph P. O'Connell
----------------------------------
Joseph P. O'Connell, Vice
President and Treasurer
(Principal Financial Officer)
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