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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended July 31, 2004

OR

For the transition period from              to             

Commission file number 0-13200

Astro-Med, Inc.

(Exact name of registrant as specified in its charter)

(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 by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act)    Yes  ¨.    No  x.

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 - 5,309,691 shares

(excluding treasury shares) as of August 20, 2004

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ASTRO-MED, INC.

INDEX

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Part I. FINANCIAL INFORMATION

ASTRO-MED, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

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ASTRO-MED, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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ASTRO-MED, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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ASTRO-MED, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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ASTRO-MED, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

July 31, 2004

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) The accompanying condensed 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 consisting of normal recurring 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, 2004. Certain reclassifications have been made to conform to the current period reporting format.

(b) 10% Stock Dividend: On April 19, 2004, the Company declared a 10% stock dividend that was distributed to shareholders on May 26, 2004. An amount equal to the fair value of the additional shares was transferred from Retained Earnings to Additional Paid in Capital and Common Stock as of the declaration date. All income per share and weighted average share amounts for all periods have been restated to reflect the impact of the 10% stock dividend.

(c) Net income 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 per share is based on the weighted average number of shares outstanding during the period. Net income 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.

For the three-months ended July 31, 2004 and August 2, 2003, the diluted per share amounts do not reflect options outstanding of 252,450 and 889,130, respectively. These outstanding options were not included in the weighted average common shares outstanding because the exercise price of the option was greater than the average market price.

For the six-months ended July 31, 2004 and August 2, 2003, respectively, the diluted per share amounts do not reflect options outstanding of 252,450 and 1,121,725, respectively. These outstanding options were not included in the weighted average common shares outstanding because the exercise price of the option was greater than the average market price or their effect was anti-dilutive.

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ASTRO-MED, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

July 31, 2004

As permitted by Statement on Financial Standards (SFAS) No. 123, “Accounting for Stock-Based Compensation,” the Company accounts for its stock-based compensation under the intrinsic value method in accordance with Accounting Principles Board (APB) Opinion No. 25 “Accounting for Stock Issued to Employees”. Had compensation cost for the Company’s stock-based compensation plans been determined based on the fair value at the grant dates consistent with the method set forth under SFAS No. 123, the Company’s net income and net income per share would have changed to the pro forma amounts indicated below:

The fair value of each option granted was estimated on the grant date using the Black-Scholes option-pricing model.

(c) 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 or training obligations. When a sale arrangement involves training or installation the deliverables in the arrangement are evaluated to determine whether they represent separate units of accounting. This evaluation occurs at inception of the arrangement and as each item in the arrangement is delivered. The total fee from the arrangement is allocated to each unit of accounting based on its relative fair value. Fair value for each element is established generally based on the sales price charged when the same or similar element is sold separately. Revenue is recognized when revenue recognition criteria for each unit of accounting are met. When other significant obligations remain after products are delivered, revenue is recognized only after such obligations are fulfilled.

NOTE 2 – COMPREHENSIVE INCOME

The Company’s total comprehensive income is as follows:

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ASTRO-MED, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

July 31, 2004

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:

NOTE 4 – INCOME TAXES

An income tax expense of $339,000 and $200,000 were recorded for the three-months ending July 31, 2004 and August 2, 2003, respectively. The effective tax rate for the three-months ending July 31, 2004 and August 2, 2003 were 36% and 20%, respectively. For the six-months ending July 31, 2004, a $228,000 income tax benefit was incurred as a result of the recording of 1) an income tax expense on the current year’s income of $711,000 which is equal to an effective rate of 36% and 2) a $939,000 one-time non-cash tax benefit recorded in the first quarter of the current fiscal year related to the release of the valuation allowance on the net deferred tax asset that was established in fiscal year 2003. In fiscal year 2003, as required by SFAS 109 “Accounting for Income Taxes”, the Company established a full valuation allowance on its net deferred tax asset as a result of the uncertainty as to whether these deferred tax assets would “more likely than not” be realized in the future. Based on the facts and circumstances at that time, it was determined that a full valuation allowance was required and it was stated that until an appropriate level of profitability could be sustained no tax benefits would be realized. As of the first quarter of fiscal year 2005, Management believes that an appropriate level of profitability has been established and maintained and it is more likely than not the deferred tax assets will be realized in the future. Management made this determination based on a review of the facts and circumstances as of May 1, 2004. This review consisted of an analysis of the Company’s performance, the market environment in which the Company currently operates, the length of carryforward periods, the existing sales backlog and the future sales projections.

For the six months ending August 2, 2003, an income tax expense of $232,000 was recorded which equaled a 15% effective tax rate. The effective tax rate for the six-months ending August 2, 2003 reflected the favorable impact of the net operating loss carryforward and the utilization of certain other deferred tax assets which were fully reserved. The effective income tax rates used in the interim condensed financial statements are estimates of the full year’s rates.

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ASTRO-MED, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

July 31, 2004

NOTE 5 – SEGMENT INFORMATION

Summarized below are the sales and segment operating profit for each reporting segment for three-months ended July 31, 2004 and August 2, 2003:

Summarized below are the sales and segment operating profit (loss) for each reporting segment for the six-months ended July 31, 2004 and August 2, 2003:

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ASTRO-MED, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 6 – PRODUCT WARRANTY LIABILITY

Changes in the Company’s product warranty liability during the period ending July 31, 2004 and August 2, 2003, respectively are as follows:

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ASTRO-MED, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Business Overview

This section should be read in conjunction with the Condensed Consolidated Financial Statements of the Company included elsewhere herein and the Company’s January 31, 2004 Form 10-K.

Astro-Med, Inc. is a multi-national enterprise, which designs, develops, manufactures, distributes and services a broad range of products that acquire, store, analyze and present data in multiple formats. The Company organizes its structure around a core set of competencies, including research and development, manufacturing, service, marketing and distribution. It markets and sells its products and services through the following three business segments:

Test and Measurement Product Group (T&M) represents a suite of telemetry recorder products sold to the aerospace and defense industries, as well as portable data acquisition recorders, which offer diagnostic and test functions to a wide range of manufacturers, including paper, energy, automotive and steel fabrication.

QuickLabel Systems Product Group (QLS) offers hardware, software and media products that create digital images, store the images and present the images in color or non-color formats on a broad range of media substrates.

Grass-Telefactor Product Group (G-T) encompasses diagnostic and monitoring products that serve the clinical neurophysiology markets as well as a range of biomedical instrumentation products and supplies focused on the life sciences markets.

The Company markets and sells its products and services globally through a diverse distribution structure of sales personnel, manufacturing representatives and dealers that deliver a full complement of branded products and services to customers in several markets.

In the first six-months of fiscal year 2005, the Company’s sales grew 4% from last year. The growth was dominated by shipments in QLS and T&M product groups where sales increments of 17% and 10% respectively were realized. Our Grass-Telefactor sales volume declined 16% during this time frame. QuickLabel’s customers continued to respond positively to color printer systems as an effective solution to product identification, product control (barcode) and product promotion (color) needs. The T&M product group’s strong sales performance is a result of the increased demand for the Portable Dash 18 and 8x Data Recorders. The Grass-Telefactor product group sales were impacted by the cyclical Long-term Epilepsy Monitoring (LTM) sales, and seasonal delays of clinical and research product purchases in the 2^nd quarter of the current fiscal year.

Results of Operations

Three-Months Ending July 31, 2004 vs. Three-Months Ending August 2, 2003

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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 July 31, 2004 vs. Three-Months Ending August 2, 2003

Sales in the quarter were $13,990,000, approximately flat with the prior year’s second quarter sales of $14,023,000. Hardware and software system sales decreased 7% over the prior year’s second quarter. Supplies and media sales increased 10% over the prior year. Domestic sales were $9,804,000, up less than 1% from $9,729,000 for the second quarter of the prior fiscal year. Sales through the Company’s international channels were $4,186,000, down 3% over previous the year’s second quarter sales of $4,294,000.

Gross profit dollars were $5,920,000 which generated a margin yield of 42.3% for the quarter as compared to a margin yield in last year’s second quarter of 41.5%. The higher gross profit percentage in the second quarter can be attributed to the better margins in the QuickLabel product group resulting from product mix and the completion and delivery of a non-recurring engineering development contract.

Operating expenses in the quarter were $5,003,000. Selling and general administrative (SGA) spending increased 3% from last year to $4,037,000. Research & Development spending increased 7% from last year to $966,000. The increase in research & development spending can be attributed to an increase in personnel.

An income tax expense of $339,000 and $200,000 was recorded for the three-months ending July 31, 2004 and August 2, 2003, respectively. The effective tax rate for the three-months ending July 31, 2004 and August 2, 2003 was 36% and 20%, respectively. The effective tax rate for the three-months ending August 2, 2003 reflected the favorable impact of a net operating loss carryforward and the utilization of certain other deferred tax assets which were fully reserved.

The Company reports three reporting segments consistent with its sales product groups: Test & Measurement (T&M), QuickLabel Systems (QLS) and Grass-Telefactor (G-T). The Company evaluates segment performance based on the segment profit (loss) before corporate and financial administration expenses.

Summarized below are the sales and segment operating profit for each reporting segment for three-months ended July 31, 2004 and August 2, 2003:

T&M’s sales were $2,639,000, down 15% from the $3,120,000 in the second quarter of the previous year. This decrease in T&M’s sales can be attributed to delays in Everest Telemetry Workstation orders tempered by an increase in Dash 18 and Dash 8X Recorder sales. T&M’s segment profit margin declined to 9% in the quarter from 11% in the previous year as result of the leverage lost on the previous year’s higher sales.

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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 July 31, 2004 vs. Three-Months Ending August 2, 2003

QLS’s sales increased to $7,271,000, a 19% increase over the $6,104,000 of sales reported in the second quarter of the previous year. Printer and media sales increased 34% and 12%, respectively. Excluding the impact of a non-recurring engineering development contract, printer sales increased 18%. This increase in QLS’s printer sales can be attributed to the sales generated from the 4100Xe and the 8100Xe printers. QLS’s second quarter segment operating profit margin improved to 15% up from 12% in the previous year. The increase in margin is attributed to the higher sales volume, the non-recurring engineering development contract and lower manufacturing costs.

G-T sales in the quarter were $4,080,000, down 15% from $4,799,000 reported in the second quarter of the previous year. The lower sales are traceable to lower Long-term Epilepsy Monitoring (LTM) sales, as well as clinical and research instrumentation product sales. The G-T segment operating profit margin decreased to 8% in the second quarter from 13% in the previous year. The decrease can be attributed to the lower sales.

Six-Months Ending July 31, 2004 vs. Six-Months Ending August 2, 2003

Sales for the first six-months of the current year were $28,232,000, a 4% increase over the $27,237,000 from the first six-months of the prior year. Hardware and software system sales were flat with the prior year. Supplies and media sales increased 9% over the prior year. Domestic sales were $19,684,000, up 3% from $19,090,000 for the six-months of the prior fiscal year. Sales through the Company’s international channels were $8,548,000, up 5% over previous year’s six-months sales of $8,147,000. Excluding the favorable impact of foreign exchange rates, international sales were flat with the prior year.

Gross profit dollars were $11,714,000, which generated a margin yield of 41.5% for the six-months of the current year as compared to a margin yield for the first six-months of last year of 39.9%. The higher margin percentage for the first six-months of this year can be attributed to the change in sales mix and the completion and delivery on a non-recurring engineering development contract and lower manufacturing costs.

Operating expenses for the six-months were $9,861,000. Selling and general administrative spending was up 4% from last year to $7,938,000. The increase in selling and general administrative spending can be attributed to the increase in personnel costs and increases in advertising and tradeshow expenses.

Research and development funding increased 8% from the prior year to $1,924,000. This increase can be attributed primarily to the increase in personnel costs.

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ASTRO-MED, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Results of Operations (continued):

Six-Months Ending July 31, 2004 vs. Six-Months Ending August 2, 2003

For the six-months ending July 31, 2004, a $228,000 income tax benefit was incurred as a result of 1) an income tax expense on the current year’s income of $711,000 which is equal to an effective rate of 36% and 2) a $939,000 one-time non-cash tax benefit recorded in the first quarter of the current fiscal year related to the release of the valuation allowance on the net deferred tax asset that was established in fiscal year 2003. In fiscal year 2003, as required by SFAS 109 “Accounting for Income Taxes”, the Company established a full valuation allowance on its net deferred tax asset as a result of the uncertainty as to whether these deferred tax assets would “more likely than not” be realized in the future. Based on the facts and circumstances at that time, it was determined that a full valuation allowance was required and it was stated that until an appropriate level of profitability could be sustained no tax benefits would be realized. As of the first quarter of fiscal year 2005, Management believes that an appropriate level of profitability has been established and maintained and it is more likely than not the deferred tax assets will be realized in the future. Management made this determination based on a review of the facts and circumstances as of May 1, 2004. This review consisted of an analysis of the Company’s performance, the market environment in which the Company currently operates, the length of carryforward periods, the existing sales backlog and the future sales projections.

For the six months ending August 2, 2003, an income tax expense of $232,000 was recorded which equaled a 15% effective tax rate. The effective tax rate for the six-months ending August 2, 2003 reflected the favorable impact of the net operating loss carryforward and the utilization of certain other deferred tax assets which were fully reserved. The effective income tax rates used in the interim condensed financial statements are estimates of the full year’s rates.

The Company reports three reporting segments consistent with its sales product groups: Test & Measurement (T&M); QuickLabel Systems (QLS) and Grass-Telefactor (G-T). The Company evaluates segment performance based on the segment profit (loss) before corporate and financial administration expenses.

Summarized below are the sales and segment operating profit (loss) for each reporting segment for the six-months ended July 31, 2004 and August 2, 2003: