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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
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EXCHANGE ACT OF 1934
For the quarterly period ended August 03, 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)
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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 - 4,268,577 shares
(excluding treasury shares) as of August 23, 2002
ASTRO-MED, INC.
INDEX
Page No.
--------
Part I. Financial Information:
Consolidated Balance Sheets -
August 3, 2002 and January 31, 2002 .............................. 3
Consolidated Statements of Operations -
Three-Months Ended August 3, 2002 and August 4, 2001 ............. 4
Consolidated Statements of Operations -
Six-Months Ended August 3, 2002 and August 4, 2001 ............... 5
Consolidated Statements of Cash Flows -
Six-Months Ended August 3, 2002 and August 4, 2001 ............... 6
Notes to Consolidated Financial Statements -
August 3, 2002 .................................................... 7-10
Management's Discussion and Analysis of Financial
Condition and Results of Operations .............................. 11-14
Part II. Other Information .......................................... 15
-2-
Part I. FINANCIAL INFORMATION
ASTRO-MED, INC.
CONSOLIDATED BALANCE SHEETS
August 3, January 31,
ASSETS 2002 2002
---- ----
(Unaudited)
CURRENT ASSETS
Cash and Cash Equivalents ........................ $ 3,562,561 $ 2,569,721
Securities Available for Sale .................... 3,133,664 3,340,874
Accounts Receivable, Net ......................... 8,349,502 9,173,568
Inventories, Net ................................. 9,130,704 10,243,182
Prepaid Expenses and Other Current Assets ........ 2,450,873 2,229,660
----------- -----------
Total Current Assets ........................ 26,627,304 27,557,005
PROPERTY, PLANT AND EQUIPMENT ...................... 23,965,465 23,458,303
Less Accumulated Depreciation .................... (16,258,667) (15,478,613)
----------- -----------
7,706,798 7,979,690
OTHER ASSETS
Goodwill ......................................... 2,310,798 2,310,798
Amounts Due from Officers ........................ 480,314 480,314
Other ............................................ 92,915 76,422
----------- -----------
$37,218,129 $38,404,229
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable ................................. $ 2,375,356 $ 3,325,133
Accrued Compensation ............................. 1,384,629 1,114,490
Accrued Expenses ................................. 1,697,218 1,637,826
Current Maturities of Long-Term Debt ............. 2,096 24,755
----------- -----------
Total Current Liabilities ................... 5,459,299 6,102,204
DEFERRED INCOME TAXES .............................. 1,029,166 876,867
SHAREHOLDERS' EQUITY
Preferred Stock, $10 Par Value,
Authorized 100,000 Shares, None Issued ......... - -
Common Stock, $.05 Par Value, Authorized
13,000,000 Shares, Issued, 5,166,472
5,165,027 Shares, respectively ................. 258,324 258,251
Additional Paid-In Capital ....................... 5,641,519 5,636,570
Retained Earnings ................................ 30,935,742 31,753,694
Treasury Stock, at Cost (897,895 Shares) ......... (5,860,609) (5,860,609)
Accumulated Other Comprehensive Loss ............. (245,312) (362,748)
----------- -----------
$37,218,129 $38,404,229
=========== ===========
-3-
ASTRO-MED, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
Three-Months Ended
------------------------
August 3, August 4,
2002 2001
----------- -----------
Net Sales ........................................ $12,922,466 $12,131,706
Cost of Sales .................................... 8,067,771 7,365,737
----------- -----------
Gross Profit ..................................... 4,854,695 4,765,969
Costs and Expenses:
Selling, General and Administrative ............ 3,863,849 4,156,183
Research and Development ....................... 950,009 928,920
----------- -----------
4,813,858 5,085,103
----------- -----------
Operating Income(Loss) 40,837 (319,134)
Other Income (Expense):
Investment Income .............................. 49,666 79,858
Interest Expense ............................... (130) (1,471)
Other, Net ..................................... 108,336 (1,825)
----------- -----------
157,872 76,562
----------- -----------
Income (Loss) before Income Taxes ................ 198,709 (242,572)
(Provision) Benefit for Income Taxes ............. (42,567) 48,514
----------- -----------
Net Income (Loss) ................................ $ 156,142 $ (194,058)
=========== ===========
Net Income (Loss) Per Common
Share-basic and diluted ....................... $ 0.04 $ (0.05)
=========== ===========
Weighted Average Number of Common
Shares Outstanding - basic ..................... 4,267,970 4,264,406
=========== ===========
Weighted Average Number of Common and Common
Equivalent Shares Outstanding - diluted ........ 4,297,488 4,264,406
=========== ===========
Dividends Declared Per Common Share .............. $ 0.04 $ 0.04
=========== ===========
-4-
ASTRO-MED, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
Six-Months Ended
------------------------
August 3, August 4,
2002 2001
----------- -----------
Net Sales ........................................ $24,304,271 $24,567,716
Cost of Sales .................................... 15,640,155 14,749,650
----------- -----------
Gross Profit ..................................... 8,664,116 9,818,066
Costs and Expenses:
Selling, General and Administrative ............ 7,605,514 8,283,265
Research and Development ....................... 1,958,203 1,837,454
----------- -----------
9,563,717 10,120,719
Operating Loss ................................... (899,601) (302,653)
Other Income (Expense):
Investment Income .............................. 98,265 164,986
Interest Expense ............................... (591) (2,760)
Other, Net ..................................... 193,962 84,937
----------- -----------
291,636 247,163
----------- -----------
Loss before Income Taxes ......................... (607,965) (55,490)
Benefit for Income Taxes ......................... 131,433 11,096
----------- -----------
Net Loss ......................................... $ (476,532) $ (44,394)
=========== ===========
Net Loss Per Common
Share-basic and diluted ........................ $ (0.11) $ (0.01)
=========== ==========
Weighted Average Number of Common
Shares Outstanding - basic ..................... 4,267,698 4,252,809
=========== ==========
Weighted Average Number of Common and Common
Equivalent Shares Outstanding - diluted ........ 4,267,698 4,252,809
=========== ==========
Dividends Declared Per Common Share .............. $ 0.08 $ 0.08
=========== ==========
-5-
ASTRO-MED, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six-Months Ended
------------------------
August 3, August 4,
2002 2001
----------- -----------
Cash Flows from Operating Activities:
Net Loss ....................................... $ (476,532) $ (44,394)
Adjustments to Reconcile Net Loss to Net Cash
Provided by Operating Activities:
Depreciation and Amortization ............... 646,753 749,040
Other ....................................... 158,625 (160,524)
Changes in Assets and Liabilities:
Accounts Receivable ...................... 824,066 2,335,119
Inventories .............................. 1,075,147 (930,069)
Other .................................... (179,569) (34,849)
Accounts Payable and Accrued Expenses .... (620,246) (995,422)
----------- -----------
Total Adjustments ...................... 1,904,976 963,295
Net Cash Provided by Operating Activities .. 1,428,244 918,901
Cash Flows from Investing Activities:
Proceeds from Sales/Maturities of Securities
Available for Sale ........................... 459,850 2,200,044
Purchases of Securities Available
for Sale ..................................... (250,600) (896,101)
Additions to Property, Plant and Equipment ..... (285,597) (563,990)
----------- -----------
Net Cash Provided (Used) by Investing
Activities .............................. (76,347) 739,953
Cash Flows from Financing Activities:
Principle Payments on Capital Leases ........... (22,659) (26,775)
Proceeds from Common Shares Issued
Under Employee Benefit Plans ................. 5,022 8,282
Dividends Paid ................................. (341,420) (339,781)
----------- -----------
Net Cash Used by Financing Activities ...... (359,057) (358,274)
Net Increase in Cash and Cash Equivalents ........ 992,840 1,300,580
Cash and Cash Equivalents, Beginning of Period. .. 2,569,721 806,069
----------- -----------
Cash Equivalents, End of Period ................ $3,562,561 $ 2,106,649
=========== ===========
Supplemental Disclosures of Cash Flow
Information:
Cash Paid During the Period for:
Interest ................................. $ 591 $ 2,760
Income Taxes ............................. $ - $ 89,319
-6-
ASTRO-MED, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 3, 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 Six-Months Ended
-------------------- --------------------
August 3, August 4, August 3, August 4,
2002 2001 2002 2001
--------- --------- --------- ---------
Weighted Average Common Shares
Outstanding-basic 4,267,970 4,264,406 4,267,698 4,252,809
Diluted Effect of Options
Outstanding 29,518 - - -
--------- --------- --------- ---------
Weighted Average Common Shares
Outstanding - diluted 4,297,488 4,264,406 4,267,698 4,252,809
========= ========= ========= =========
For the three-months ended August 4, 2001, the diluted per share amount does not
reflect options outstanding of 1,687,450 because their effect is anti-dilutive.
For the six-months ended August 3, 2002 and August 4, 2001, respectively, the
diluted per share amounts do not reflect options outstanding of 2,077,575 and
1,687,450, 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.
-7-
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. 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 for the three-months ending August 4, 2001 would have
resulted in the net loss decreasing by $31,000 and a net loss per share of four
cents. The impact of discontinuing the amortization of goodwill for the
six-months ending August 4, 2001 would have resulted in the net loss and net
loss per share amount of $44,394 and a one cent loss, respectively, becoming net
income and a net income per share of $17,600 and zero cents, respectively. In
accordance with the provisions of this statement, the Company has completed the
goodwill impairment reviews and it has been determined that the goodwill is not
impaired. As a result, the adoption of this statement by the Company did not
have a material impact on the financial statements.
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.
-8-
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 Six-Months Ended
-------------------- --------------------
August 3, August 4, August 3, August 4,
2002 2001 2002 2001
--------- --------- --------- ---------
Comprehensive Income (Loss):
Net Income (Loss)................. $ 156,142 $(194,058) $(476,532) $ (44,394)
--------- --------- --------- ---------
Other Comprehensive Income (Loss):
Foreign currency translation
adjustments, net of tax ........ 70,332 (22,190) 147,187 (93,580)
Unrealized gain (loss)
in securities:
Unrealized holding gain (loss)
arising during the period,
net of tax ................... 16,038 (17,823) (23,934) 4,674
Reclassification adjustment
for (gain) loss included in
net income, net of tax........ (5,817) - (5,817) 625
--------- --------- --------- ---------
Other Comprehensive Income (Loss)... 80,553 (40,013) 117,436 (88,281)
Comprehensive Income (Loss)......... $ 236,695 $(234,071) $(359,096) $(132,675)
========= ========= ========= =========
Note 3 - INVENTORIES
Inventories, net of reserves 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:
August 3, January 31,
2002 2002
--------- ----------
Materials and Supplies ..... $4,803,136 $ 5,850,797
Work-In-Process ............ 989,026 961,279
Finished Goods ............. 3,338,542 3,431,106
---------- -----------
$9,130,704 $10,243,182
========== ===========
-9-
ASTRO-MED, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 4 - Segment Information
Summarized below are the sales and segment operating profit (loss) for each
reporting segment for three-months ended August 3, 2002 and August 4,2001:
Segment
Operating
Sales Profit(Loss)
----- ------------
August 3, August 4, August 3, August 4,
2002 2001 2002 2001
----------- ----------- --------- --------
T&M $ 3,327,000 $ 2,970,000 $ 308,000 $ 62,000
QLS 5,629,000 4,758,000 144,000 86,000
G-T 3,966,000 4,404,000 423,000 297,000
----------- ----------- --------- --------
Total $12,922,000 $12,132,000 875,000 445,000
=========== ===========
Corporate Expenses 834,000 764,000
--------- --------
Operating Income (Loss) 41,000 (319,000)
Other Income (Expenses) 158,000 77,000
--------- --------
Income (Loss) Before
Income Taxes 199,000 (242,000)
Income Taxes Provision (Benefit) 43,000 (48,000)
--------- ----------
Net Income (Loss) $ 156,000 $(194,000)
========= =========
Summarized below are the sales and segment operating profit (loss) for each
reporting segment for the six-months ended August 3, 2002 and August 4, 2001:
Segment
Sales Operating (Loss)
----- ----------------
August 3, August 4, August 3, August 4,
2002 2001 2002 2001
----------- ----------- --------- ----------
T&M $ 6,014,000 $ 5,988,000 $ 223,000 $ 187,000
QLS 10,889,000 9,653,000 79,000 315,000
G-T 7,401,000 8,927,000 323,000 744,000
----------- ----------- --------- ----------
Total $24,304,000 $24,568,000 625,000 1,246,000
=========== ===========
Corporate Expenses 1,525,000 1,549,000
--------- ----------
Operating Loss (900,000) (303,000)
Other Income (Expenses) 292,000 247,000
--------- ----------
Loss Before Income Taxes (608,000) (56,000)
Income Tax Benefit (131,000) (12,000)
---------- -----------
Net Loss $(477,000) $ (44,000)
========= ==========
-10-
ASTRO-MED, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations:
Three-Months Ending August 3, 2002 vs. Three-Months Ending August 4, 2001
Sales in the quarter were $12,922,000, a 7% increase from the prior year's
sales of $12,132,000. Domestic sales were $9,331,000, up 6% from $8,796,000 for
the second quarter of the prior fiscal year. Sales through the Company's
international channels were $3,591,000, up 8% over previous year's second
quarter sales of $3,336,000.
Gross profit dollars were $4,855,000, which generated a margin yield of
37.6% for the quarter as compared to a margin yield last year of 39.3%. The
lower margin percentage in the second quarter can be attributed to the change in
sales mix.
Operating expenses in the quarter were $4,814,000. Selling and general
administrative spending declined 7% from last year to $3,864,000. Spending
reductions in personnel, advertising, travel, commissions and the elimination of
goodwill amortization account for the decrease.
Research and development funding rose 2% from the prior year to $950,000.
This increase can be attributed to personnel costs.
Other income (expense) increased primarily as a result of higher foreign
exchange gains and a $24,700 gain on the sale of certain securities, partially
offset by lower investment income.
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.
T&M's product sales were $3,327,000, up 12% from the $2,970,000 of the
previous year. This increase in T&M's sales can be attributed to strong demand
for the Dash 18 recorder and slightly higher Everest sales. T&M's segment profit
margin improved to 9% in the quarter from 2% in the previous year. The
improvement in T&M's margin is attributed to a higher sales volume with higher
margins and lower operating expenses.
QLS's sales increased to $5,629,000, an 18% increase over the $4,758,000 of
sales reported in the second quarter of the previous year. Printer and media
sales increased 8% and 24%, respectively. The increase in printer sales can be
attributed to the shipments of the newly introduced 4100X color printer. The
increase in QLS's media sales can be attributed to higher demand driven, in
part, by a larger installed base of QLS products. QLS's second quarter segment
profit margin improved to 3% up from 2% in the previous year. The increase in
margin is attributed to the higher sales volume, partially offset by lower
margins resulting from the change in sales mix and the lower operating expenses.
-11-
ASTRO-MED, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations (continued):
Three-Months Ending August 3, 2002 vs. Three-Months Ending August 4, 2001
G-T sales in the quarter were $3,966,000, down 10% from $4,404,000 reported
in the second quarter of the previous year. The decline in sales can be
attributed to lower sales in our long-term monitoring product line and lower
spending by research customers on biomedical applications, partially offset by
the increase in the G-T's Aurora product sales. The G-T segment operating profit
margin increased to 11% in the second quarter from 7% in the previous year. The
increase in margin is attributed to the lower operating expenses.
Six-Months Ending August 3, 2002 vs. Six-Months Ending August 4, 2001
Sales for the first six-months of the current year were $24,304,000, a 1%
decrease from the prior year's sales of $24,568,000. Domestic sales were
$17,752,000, down less than 1% from $17,837,000 for the six-months of the prior
fiscal year. Sales through the Company's international channels were $6,552,000,
down 3% over previous year's six-months sales of $6,731,000.
Gross profit dollars were $8,664,000, which generated a margin yield of
35.6% for the six-months of the current year as compared to a margin yield last
year of 40.0%. The lower margin percentage for the first six-months of this year
can be attributed to the change in sales mix.
Operating expenses in the quarter were $9,564,000. Selling and general
administrative spending declined 8% from last year to $7,606,000. Spending
reductions in personnel, advertising, travel, commissions and the elimination of
goodwill amortization account for the decrease.
Research and development funding rose 7% from the prior year to $1,958,000.
This increase can be attributed primarily to personnel costs.
Other income (expense) increased primarily as a result of higher foreign
exchange gains, partially offset by lower investment income.
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.
-12-
Results of Operations (continued):
Six-Months Ending August 3, 2002 vs. Six-Months Ending August 4, 2001
T&M's product sales were $6,014,000, up less than 1% from the $5,988,000 of
the previous year. T&M sales were essentially flat with the prior year as a
result of the strong demand for the Dash 18 experienced so far this year being
offset by the soft first quarter Everest sales. The soft Everest sales in the
first quarter resulted from the shift in defense spending (i.e., the shift from
testing and research to the fight against terrorism). T&M's segment profit
margin increased to 4% in the quarter from 3% in the previous year. The increase
in T&M's margin is attributed to the lower operating expenses.
QLS's sales increased to $10,889,000, a 13% increase over the $9,653,000 of
sales reported in the first six-months of the previous year. This increase is
attributed to the 20% growth in media sales. QLS's segment profit margin
declined to 1% in the first six-months, down from 3% in the previous year. The
decline in margin is primarily attributed to the change in sales mix within the
group.
G-T sales decreased to $7,401,000, down 17% from $8,927,000 reported in the
first six-months of the previous year. The decline in sales can be attributed to
lower sales in our long-term monitoring product line and lower spending by
research customers on biomedical applications, partially offset by the increase
in the G-T's Aurora product sales. The G-T segment operating profit margin
declined to 4% for the first six-months of this year from 8% in the previous
year. The decline in margin is attributed to the change in sales mix which were
partially offset by lower operating expenses.
Financial Condition:
The Company's Statements of Cash Flows for the six-month ending August 3,
2002 and August 4, 2001 are included on page 6. Net cash flow provided by
operating activities for the six-months ending August 3, 2002 and August 4, 2001
were $1,428,000 versus $919,000 of the previous year.
Cash and securities available for sale at the end of the second quarter
totaled $6,696,000, up from $5,911,000 at year-end. This balance increased
primarily as a result of the company lowering its accounts receivable and
inventory balances significantly since year-end. The accounts receivable
collection cycle improved by eight days decreasing to 52 net days sales
outstanding at the end of the quarter as compared to the 60 days outstanding at
year-end. Inventory declined to $9,131,000 from the year-end with the higher
level of sales and better inventory control. As a result, inventory turns
improved to 2.9 times from 2.3 times at year-end.
Capital expenditures were $286,000 for the six-months ended August 3, 2002
as the Company purchased machinery and equipment, information technology
hardware and software and tools and dies.
The Company paid cash dividends for the six months ending August 3, 2002
$341,000 or $0.08 per common share.
-13-
ASTRO-MED, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
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.
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.
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
The following exhibits are filed as part of this report on Form 10-Q:
99.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
99.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K:
On June 28, 2002, the Company filed a Form 8-K indicating that the Audit
Committee of the Board of Directors of Astro-Med, Inc. dismissed the Company's
independent auditors, Arthur Andersen LLP.
On July 9, 2002, the Company filed a From 8-K indicating that the Audit
Committee of the Board of Directors of Astro-Med, Inc. engaged the services of
Ernst & Young as its new independent auditors.
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: August 28, 2002 By /s/ A. W. Ondis
--------------------------------
A. W. Ondis, Chairman
(Principal Executive Officer)
Date: August 28, 2002 By /s/ Joseph P. O'Connell
--------------------------------
Joseph P. O'Connell, Vice
President and Treasurer
(Principal Financial Officer)
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