Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
[ X ] Quarterly report under Section 13 or 15(d) of the Securities Ex-
change Act of 1934
For the quarter ended October 31, 2012
[ ] Transition report under Section 13 or 15(d) of the Securities Ex-
change Act of 1934
For the transition period from ___________ to ___________
Commission File Number: 000-05378
GEORGE RISK INDUSTRIES, INC.
(Exact name of small business issuer as specified in its charter)
Colorado 84-0524756
(State of incorporation) (IRS Employers Identification No.)
802 South Elm St.
Kimball, NE 69145
(Address of principal executive offices) (Zip Code)
(308) 235-4645
(Registrant's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ]
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares of the Registrant's Common Stock outstanding, as of
December 14, 2012 was 5,036,525.
Transitional Small Business Disclosure Format: Yes [ X ] No [ ]
GEORGE RISK INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
The unaudited financial statements for the three and six month period
ended October 31, 2012, are attached hereto.
GEORGE RISK INDUSTRIES, INC.
BALANCE SHEETS
October 31, April 30,
2012 2012
------------ ------------
(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 5,460,000 $ 5,773,000
Investments and securities 20,862,000 20,280,000
Accounts receivable:
Trade, net of $1,996 and $5,789
doubtful account allowance 1,659,000 1,669,000
Other 1,000 1,000
Note receivable, current 3,000 4,000
Inventories 2,258,000 2,351,000
Prepaid expenses 49,000 141,000
Deferred current income taxes 3,000 119,000
------------ ------------
Total Current Assets $30,295,000 $30,338,000
Property and Equipment, net, at cost 766,000 771,000
Other Assets
Investment in Limited Land Partnership,
at cost 228,000 228,000
Projects in process 29,000 44,000
Note receivable 3,000 5,000
Other 1,000 1,000
------------ ------------
Total Other Assets $ 261,000 $ 278,000
TOTAL ASSETS $31,322,000 $31,387,000
============ ============
GEORGE RISK INDUSTRIES, INC.
BALANCE SHEETS
October 31, April 30,
2012 2012
------------ ------------
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable, trade $ 119,000 $ 96,000
Dividends payable 717,000 589,000
Accrued expenses:
Payroll and related expenses 253,000 212,000
Income tax payable 226,000 246,000
------------ ------------
Total Current Liabilities $ 1,315,000 $ 1,143,000
Long-Term Liabilities
Aircraft ownership deposit payable 4,000 5,000
Deferred income taxes 113,000 124,000
------------ ------------
Total Long-Term Liabilities $ 117,000 $ 129,000
Stockholders' Equity
Convertible preferred stock, 1,000,000
shares authorized, Series 1-noncumulative,
$20 stated value, 25,000 shares authorized,
4,100 issued and outstanding 99,000 99,000
Common stock, Class A, $.10 par value,
10,000,000 shares authorized, 8,502,881
shares issued and outstanding 850,000 850,000
Additional paid-in capital 1,736,000 1,736,000
Accumulated other comprehensive income 462,000 278,000
Retained earnings 30,222,000 30,603,000
Treasury stock, 3,465,856 and 3,460,282
shares, at cost (3,479,000) (3,451,000)
------------ ------------
Total Stockholders' Equity $29,890,000 $30,115,000
TOTAL LIABILITES AND STOCKHOLDERS' EQUITY $30,322,000 $31,387,000
============ ============
GEORGE RISK INDUSTRIES, INC.
INCOME STATEMENTS
Three months Six months Three months Six months
ended ended ended ended
October 31, October 31, October 31, October 31,
2012 2012 2011 2011
---------------------------------------------------
Net Sales $ 2,569,000 $ 5,111,000 $ 2,559,000 $ 5,158,000
Less: cost of goods sold (1,289,000) (2,645,000) (1,362,000) (2,554,000)
------------ ------------ ------------ ------------
Gross Profit $ 1,280,000 $ 2,466,000 $ 1,197,000 $ 2,604,000
Operating Expenses:
General and
administrative 215,000 417,000 202,000 408,000
Selling 433,000 858,000 421,000 762,000
Engineering 21,000 38,000 14,000 29,000
Rent paid to related
parties 11,000 23,000 11,000 23,000
------------ ------------ ------------ ------------
Total Operating Expenses $ 680,000 $ 1,336,000 $ 648,000 $ 1,222,000
Income From Operations 600,000 1,130,000 549,000 1.382,000
Other Income (Expense)
Other 6,000 19,000 4,000 12,000
Dividend and interest
income 163,000 366,000 149,000 341,000
Gain (loss) on
investments 94,000 (57,000) (99,000) 280,000
Gain (loss) on sale
of assets 0 0 12,000 12,000
------------ ------------ ------------ ------------
$ 263,000 $ 328,000 $ 66,000 $ 645,000
Income Before Provisions
for Income Tax 863,000 1,458,000 615,000 2,027,000
Provisions for Income Tax
Current expense (235,000) (456,000) (211,000) (503,000)
Deferred tax benefit
(expense) (35,000) 27,000 10,000 (318,000)
------------ ------------ ------------ ------------
Total Income Tax Expense $ (270,000) $ (429,000) $ (201,000) $ (821,000)
Net Income $ 593,000 $ 1,029,000 $ 414,000 $ 1,206,000
============ ============ ============ ============
Cash Dividends
Common Stock ($0.28
per share) $(1,411,000) $(1,411,000)
Common Stock ($0.23
per share) $(1,160,000) $(1,160,000)
Income Per Share of Common Stock:
Basic $0.12 $0.20 $0.08 $0.24
Assuming Dilution $0.12 $0.20 $0.08 $0.24
Weighted Average Number of
Common Shares Outstanding:
Basic 5,037,348 5,039,949 5,045,746 5,047,055
Diluted 5,057,848 5,060,449 5,066,246 5,067,555
GEORGE RISK INDUSTRIES, INC.
STATEMENTS OF COMPREHENSIVE INCOME
Three months Six months Three months Six months
ended ended ended ended
October 31, October 31, October 31, October 31,
2012 2012 2011 2011
----------------------------------------------------
Net Income $ 593,000 $ 1,029,000 $ 414,000 $ 1,206,000
------------ ------------ ------------ ------------
Other Comprehensive Income, net of tax
Unrealized gain (loss) on securities:
Unrealized holding
gains (losses) arising
during period 313,000 (142,000) (395,000) (959,000)
Reclassification adjustment
for (gains) losses included
in net income (96,000) 458,000 127,000 13,000
Income tax expense related
to other comprehensive
income (91,000) (132,000) 112,000 395,000
------------ ------------ ------------ ------------
Other Comprehensive
Income $ 126,000 $ 184,000 $ (156,000) $ (551,000)
Comprehensive Income $ 719,000 $ 1,213,000 $ 258,000 $ 655,000
============ ============ ============ ============
GEORGE RISK INDUSTRIES, INC.
STATEMENTS OF CASH FLOWS
Six months Six months
ended ended
October 31, October 31,
2012 2011
---------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 1,029,000 $ 1,206,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 86,000 76,000
(Gain) loss on sale of investments 57,000 (280,000)
(Gain) loss on sales of assets 0 (12,000)
Reserve for bad debts (4,000) 24,000
Reserve for obsolete inventory (3,000) 22,000
Deferred income taxes (27,000) 318,000
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable 14,000 (208,000)
Inventories 95,000 (236,000)
Prepaid expenses 92,000 169,000
Other receivables 0 (1,000)
Increase (decrease) in:
Accounts payable 23,000 (7,000)
Accrued expenses 41,000 10,000
Income tax payable (20,000) 37,000
------------ ------------
Net cash provided by (used in) operating
activities $ 1,383,000 $ 1,118,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Other assets manufactured 15,000 (115,000)
Proceeds from sale of assets 0 20,000
(Purchase) of property and equipment (81,000) (201,000)
Proceeds from sale of marketable securities 78,000 155,000
(Purchase) of marketable securities (400,000) (442,000)
(Loans) made to employees 0 (2,000)
Collections of loans to employees 3,000 3,000
(Purchase) of treasury stock (28,000) (32,000)
------------ ------------
Net cash provided by (used in) investing
activities $ (413,000) $ (614,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid (1,283,000) (1,055,000)
------------ ------------
Net cash provided by (used in) financing
activities $(1,283,000) $(1,055,000)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS $ (313,000) $ (551,000)
Cash and cash equivalents, beginning of
period $ 5,773,000 $ 5,254,000
------------ ------------
Cash and cash equivalents, end of period $ 5,460,000 $ 4,703,000
============ ============
Supplemental Disclosure of Cash Flow
Information
Cash payments for:
Income taxes $ 473,000 $ 465,000
Interest expense $ 0 $ 0
Cash receipts for:
Income taxes $ 0 $ 0
GEORGE RISK INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2012
Note 1 Unaudited Interim Financial Statements
The accompanying financial statements have been prepared in accordance
with the instructions for Form 10-Q and do not include all of the information
and footnotes required by generally accepted accounting principles for com-
plete financial statements. It is suggested that these condensed financial
statements be read in conjunction with the financial statements and notes
thereto included in the Company's April 30, 2012 annual report on Form 10-K.
In the opinion of management, all adjustments, consisting only of normal re-
curring adjustments considered necessary for a fair presentation, have been
included. Operating results for any quarter are not necessarily indicative
of the results for any other quarter or for the full year.
Note 2 Marketable Securities
The Company has investments in publicly traded equity securities as well
as certain state and municipal debt securities. These securities are class-
ified as available-for-sale securities, and are reported at fair value.
Refer to Note 7, Fair Value Measurements, for additional information on the
fair value measurements for all assets and liabilities, including invest-
ments, that are measured at fair value in these financial statements. Avail-
able -for-sale investments in debt securities mature between November 2012
and June 2042. The Company uses the average cost method to determine the
cost of securities sold and the amount reclassified out of accumulated other
comprehensive income into earnings. Unrealized gains and losses are excluded
from earnings and reported separately as a component of stockholder's equity.
Dividend and interest income are accrued as earned.
As of October 31, 2012, investments available-for-sale consisted of the
following:
Gross Gross
Cost Unrealized Unrealized Fair
Basis Gains Losses Value
------------ ------------ ------------ ------------
Municipal bonds $ 9,681,000 $ 384,000 $ (35,000) $10,030,000
Corporate bonds $ 354,000 $ 42,000 $ (1,000) $ 395,000
Equity securities $ 8,805,000 $ 596,000 $ (192,000) $ 9,209,000
Money markets/CDs $ 1,228,000 $ -- $ -- $ 1,228,000
------------ ------------ ------------ ------------
Total $20,068,000 $ 1,022,000 $ (228,000) $20,862,000
In accordance with US GAAP, the Company evaluates all marketable
securities for other-than temporary declines in fair value, which are defined
as when the cost basis exceeds the fair value for approximately one year.
The Company also evaluates the nature of the investment, cause of impairment
and number of investments that are in an unrealized position. When an other-
than-temporary decline is identified, the Company will decrease the cost of
the marketable security to the new fair value and recognize a real loss. The
investments are periodically evaluated to determine if impairment changes are
required. As a result of this standard, management did not record any im-
pairment losses for the quarter ended October 31, 2012, but did record im-
pairment losses of $20,000 for the six months ended October 31, 2012. As for
the corresponding periods last year, management recorded impairment losses of
$66,000 for both the quarter and six months ended October 31, 2011.
The following table shows the investments with gross unrealized losses
that are not deemed to be other-than-temporarily impaired, aggregated by
investment category and length of time that individual securities have been
in a continuous unrealized loss position, at October 31, 2012.
Less than 12 months 12 months or greater Total
----------------------- --------------------- ---------------------
Fair Unrealized Fair Unrealized Fair Unrealized
Value Loss Value Loss Value Loss
...........................................................................
Municipal bonds
$ 866,000 $ (5,000) $ 739,000 $ (30,000) $ 1,605,000 $ (35,000)
Corporate bonds
$ 51,000 $ (1,000) $ -- $ -- $ 51,000 $ (1,000)
Equity securities
$1,942,000 $ (117,000) $ 841,000 $ (75,000) $ 2,783,000 $ (192,000)
----------- ------------ ----------- ---------- ------------ ------------
Total
$2,859,000 $ (123,000) $1,580,000 $(105,000) $ 4,439,000 $ (228,000)
Municipal Bonds
---------------
The unrealized losses on the Company's investments in municipal bonds were
caused by interest rate increases. The contractual terms of these invest-
ments do not permit the issuer to settle the securities at a price less than
the amortized cost of the investment. Because the Company has the ability to
hold these investments until a recovery of fair value, which may be maturity,
the Company does not consider these investments to be other-than-temporarily
impaired at October 31, 2012.
Corporate Bonds
---------------
The Company's unrealized loss on investments in corporate bonds relates to
several bonds. The contractual term of these investments do not permit the
issuer to settle the security at a price less than the amortized cost of the
investment. Because the Company has the ability to hold these investments
until a recovery of fair value, which may be maturity, the Company does not
consider these investments to be other-than-temporarily impaired at October
31, 2012.
Marketable Equity Securities
----------------------------
The Company's investments in marketable equity securities consist of a wide
variety of companies. Investments in these companies include growth, growth
income, and foreign investment objectives. Management has evaluated the in-
dividual holdings, and because of the recent decline in the stock market,
does not consider these investments to be other-than-temporarily impaired at
October 31, 2012.
Note 3 Inventories
At October 31, 2012, inventories consisted of the following:
Raw Materials $ 1,638,000
Work in Process 480,000
Finished Goods 308,000
------------
$ 2,426,000
Less: allowance for obsolete inventory (168,000)
------------
Net Inventories $ 2,258,000
============
Note 4 Business Segments
The following is financial information relating to industry
segments:
For the quarter ended
October 31,
2012 2011
---------------------------
Net revenue:
Security alarm products 2,246,000 2,238,000
Other products 323,000 321,000
------------ ------------
Total net revenue $ 2,569,000 $ 2,559,000
Income from operations:
Security alarm products 525,000 480,000
Other products 75,000 69,000
------------ ------------
Total income from operations $ 600,000 $ 549,000
Identifiable assets:
Security alarm products 3,400,000 3,130,000
Other products 1,234,000 1,328,000
Corporate general 26,688,000 24,753,000
------------ ------------
Total assets $31,322,000 $29,211,000
Depreciation and amortization:
Security alarm products 6,000 6,000
Other products 34,000 26,000
Corporate general 4,000 7,000
------------ ------------
Total depreciation and amortization $ 44,000 $ 39,000
Capital expenditures:
Security alarm products 11,000 0
Other products 34,000 16,000
Corporate general 0 17,000
------------ ------------
Total capital expenditures $ 45,000 $ 33,000
Note 5 Earnings per Share
Basic and diluted earning per share, assuming convertible preferred
stock was converted for each period presented, are:
For the three months ended October 31, 2012
-------------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- -----------
Net Income $ 593,000
===========
Basic EPS $ 593,000 5,037,348 $ 0.12
Effect of dilutive securities:
Convertible preferred stock 0 20,500
----------- ------------- -----------
Diluted EPS $ 593,000 5,057,848 $ 0.12
For the six months ended October 31, 2012
-------------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- -----------
Net Income $1,029,000
===========
Basic EPS $1,029,000 5,039,949 $ 0.20
Effect of dilutive securities:
Convertible preferred stock 0 20,500
----------- ------------- -----------
Diluted EPS $1,029,000 5,060,449 $ 0.20
For the three months ended October 31, 2011
-------------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- -----------
Net Income $ 414,000
===========
Basic EPS $ 414,000 5,045,746 $ 0.08
Effect of dilutive securities:
Convertible preferred stock 0 20,500
----------- ------------- -----------
Diluted EPS $ 414,000 5,066,246 $ 0.08
For the six months ended October 31, 2011
-------------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- -----------
Net Income $1,206,000
===========
Basic EPS $1,206,000 5,047,055 $ 0.24
Effect of dilutive securities:
Convertible preferred stock 0 20,500
----------- ------------- -----------
Diluted EPS $1,206,000 5,067,555 $ 0.24
Note 6 Retirement Benefit Plan
On January 1, 1998, the Company adopted the George Risk Industries, Inc.
Retirement Savings Plan (the "Plan"). The Plan is a defined contribution
savings plan designed to provide retirement income to eligible employees of
the corporation. The Plan is intended to be qualified under Section 401(k)
of the Internal Revenue Code of 1986, as amended. Matching contributions by
the Company of approximately $3,000 were paid during each quarter ending
October 31, 2012 and 20101 Likewise, the Company paid matching contributions
of approximately $6,000 during each six-month period ending October 31, 2012
and 2011. There were no discretionary contributions paid during either the
quarters or six-month periods ending October 31, 2011 and 2010, respectively.
Note 7 Fair Value Measurements
Generally accepted accounting principles in the United States of America
(US GAAP) defines fair value as the price that would be received from selling
an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. When determining the fair value
measurements for assets and liabilities, which are required to be recorded at
fair value, we consider the principal or most advantageous market in which we
would transact and the market-based risk measurements or assumptions that
market participants would use in pricing the asset or liability, such as in-
herent risk, transfer restrictions, and credit risk.
US GAAP establishes a fair value hierarchy that prioritizes the inputs
to valuation techniques used to measure fair value. The hierarchy gives the
highest priority to unadjusted quoted prices in active markets for identical
assets or liabilities (level 1 measurements) and the lowest priority to un-
observable inputs (level 3 measurements). The levels of the fair value
hierarchy under US GAAP are described below:
Level 1 - Valuation is based upon quoted prices for identical in-
struments traded in active markets.
Level 2 - Valuation is based upon quoted prices for similar in-
struments in active markets, quoted prices for identical
or similar instruments in markets that are not active,
and model-based valuation techniques for which all sig-
nificant assumptions are observable in the market.
Level 3 - Valuation is generated from model-based techniques that
use significant assumptions not observable in the market.
These unobservable assumptions reflect our own estimates
of assumptions that market participants would use in
pricing the asset or liability. Valuation techniques
include use of option pricing models, discounted cash
flow models and similar techniques.
Marketable Securities
---------------------
As of October 31, 2012, our investments consisted of money markets and
publicly traded equity securities as well as certain state and municipal debt
securities. Our marketable securities are valued using third-party broker
statements. The value of the majority of securities is derived from quoted
market information. The inputs to the valuation are generally classified as
Level 1 given the active market for these securities, however, if an active
market does not exist, which is the case for municipal and coporate bonds,
the inputs are recorded at Level 2.
Fair Value Hierarchy
--------------------
The following tables set forth our assets and liabilities measured at fair
value on a recurring basis and a non-recurring basis by level within the fair
value hierarchy. As required by US GAAP, assets and liabilities are
classified in their entirety based on the lowest level of input that is
significant to the fair value measurement.
Assets Measured at Fair Value on a Recurring Basis
as of October 31, 2012
---------------------------------------------------
Level 1 Level 2 Level 3 Total
------- ------- ------- -------
Assets:
Money Markets $ 1,228,000 $ -- $ -- $ 1,228,000
Equity Securities $ 9,210,000 $ -- $ -- $ 9,210,000
Municipal and
Corporate Bonds $ -- $10,424,000 $ 0 $10,424,000
------------ ------------ ---------- ------------
Total fair value of
assets measured on a
recurring basis $10,438,000 $10,424,000 $ 0 $20,862,000
============ ============ ========== ============
Note 8 Subsequent Events
On December 6, 2012, the Board of Directors of the Company announced that the
Corporation will make a special cash dividend payment to all persons who are
listed as shareholders of its stock on the books as of December 16, 2012 in
the amount of $.22 per share. This dividend will be paid by December 28,
2012.
GEORGE RISK INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Item 2. Management Discussion and Analysis of Financial Condition and
Results of Operations
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the attached
condensed consolidated financial statements, and with the George Risk
Industries' audited financial statements and discussion for the fiscal year
ended April 30, 2012.
Liquidity and capital resources
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Operating
---------
Net cash decreased $313,000 for the six months ended October 31, 2012, while,
for the same period last year, net cash also decreased $551,000. Accounts
receivable decreased $14,000 for the current six months and increased
$208,000 for the same period last year. The slight decrease in cash flow for
accounts receivable for the current period is a reflection of sales being at
the same level as last year. At October 31, 2012, 70.94% of the receivables
were considered current (less than 45 days) and -0.06% of the total were over
90 days past due. This is in comparison to having 66.31% of the receivables
considered current and 6.17% over 90 days past due at October 31, 2011. In-
ventory decreased $95,000 for the current six months, while it increased
$236,000 for the same period last year. The main reason for the decrease in
cash expenditures towards inventory is that sales have almost the same as
ast year and prices of raw materials have remained constant too. Changes in
prepaid expenses in regards to cash flow decreased by $92,000 for the six
months ending October 31, 2012. Conversely, changes in prepaid expenses in
regards to cash flow also decreased by $169,000 for the six-month ending
October 31, 2011.
For the six months ended October 31, 2012, accounts payable increased
$23,000, and decreased $7,000 for the same period ended October 31, 2011.
The change in cash in regards to accounts payable can vary. It really de-
pends on the time of the month the invoices are due, since the company pays
all invoices within terms. Accrued expenses increased $41,000 for the six
months ended October 31, 2012, and also increased by $10,000 for the same
period last year. The current increase is due to elevated sales commissions.
Income tax payable decreased $20,000 for the six months ending October 31,
2012, while it increased $37,000 for the corresponding period last year.
Investing
---------
As for our investment activities, the Company has spent approximately $81,000
on acquisitions of property and equipment for the current six-month period
and $201,000 was spent during the six months ended October 31, 2011.
Additionally, the Company continues to purchase marketable securities, which
include municipal bonds and quality stocks. Cash spent on purchases of mar-
ketable securities for the six months ended October 31, 2012 was $400,000 and
$442,000 was spent for the corresponding period last year. We use "money
manager" accounts for most stock transactions. By doing this, the Company
gives an independent third party firm, who are experts in this field, per-
mission to buy and sell stocks at will. The Company pays a quarterly service
fee based on the value of the investments. Furthermore, the Company con-
tinues to purchase back its common stock when the opportunity arises. For
the six months ended October 31, 2012, the Company purchased $28,000 worth
of treasury stock and $32,000 worth was bought back for the six months ended
October 31, 2011. We have been actively searching for stockholders that have
been "lost" over the years. The payment of dividends over the last eight
fiscal years has also prompted many stockholders and/or their relatives and
descendants to sell back their stock to the Company. Also, we make purchases
of company stock on the open market when the opportunity arises.
Financing
---------
Cash flows from financing activities decreased by $1,283,000 for the six
months ending October 31, 2012. That figure consists of the payment of
dividends during the second quarter. The company declared a dividend of
$0.28 per share of common stock on September 30, 2012 and these dividends
were paid by October 31, 2012. As for the prior year numbers, net cash used
in financing activities was $1,055,000 for the six months ending October 31,
2011. A dividend of $0.23 per common share was declared and paid during the
second fiscal quarter last year.
The following is a list of ratios to help analyze George Risk Industries'
performance:
For the quarter ended
October 31,
2012 2011
---------------------------
Working capital
(current assets - current liabilities) $ 28,980,000 $ 27,133,000
Current ratio
(current assets / current liabilities) 23.038 28.052
Quick ratio
((cash + investments + AR) / current liabilities)
21.278 25.518
Results of Operations
~~~~~~~~~~~~~~~~~~~~~
Net sales were $2,569,000 for the quarter ended October 31, 2012, which is a
0.4% increase from the corresponding quarter last year. Year-to-date net
sales were $5,111,000 at October 31, 2012, which is a .92% decrease from the
same period last year. The Company's products are tied to the housing market
and the consistency in sales is a result of the Company focusing on gaining
market share in the industry. The Company is accomplishing this by having
excellent customer service and being willing to make many customized parts.
Cost of goods sold was 50.2% of net sales for the quarter ended October 31,
2012 and 53.2% for the same quarter last year. Year-to-date cost of goods
sold percentages were 51.75% for the current six months and 49.5% for the
corresponding six months last year. Management's goal is to keep labor and
other manufacturing expenses within the range of 45 to 50%. But the slight
decrease in sales and the increase in raw materials and wages have kept the
Company just outside of its goal.
Operating expenses were 26.47% of net sales for the quarter ended October 31,
2012 as compared to 25.32 % for the corresponding quarter last year. Year-
to-date operating expenses were 26.14% of net sales for the six months ended
October 31, 2012, while they were 23.69% for the same period last year.
Keeping operating expenses around 30% of net sales, as the company has been
able to achieve over the years, shows that management keeps a close eye on
these expenses from year to year. Income from operations for the quarter
ended October 31, 2012 was at $600,000, which is an 8.5% increase from the
corresponding quarter last year, which had income from operations of
$549,000. Income from operations for the six months ended October 31, 2012
was at $1,130,000, which is an 18.2% decrease from the corresponding six
months last year, which had income from operations of $1,382,000.
Other income and expenses showed gains of $263,000 and $328,000 for the
quarter and six months ended October 31, 2012, respectively. The other in-
come and expense numbers for last year also showed gains of $66,000 for the
quarter and $645,000 for the six months ending October 31, 2011. Dividend
and interest income was up 9.4% for the current quarter and was up 7.33% for
the current six-month period when compared to the same time periods last
year. During the current quarter, there was a $94,000 gain on investments
recorded. Management did not write down any investments during the quarter
ending October 31, 2012, while management wrote down $66,000 worth of in-
vestments for the same quarter last year.
Net income for the quarter ended October 31, 2012 was at $593,000, a 43.2%
increase from the corresponding quarter last year, which showed net income of
$414,000. Net income for the six months ended October 31, 2012 was
$1,029,000, a 14.7% decrease from the same period last year. Net income for
the six months ended October 31, 2011 was $1,206,000. Earnings per common
share for the quarter ended October 31, 2012 were $0.12 per share and $0.20
per share for the year-to-date numbers. EPS for the quarter and six months
ended October 31, 2011 were $0.08 per share and $0.24 per share,
respectively.
New Product Development
~~~~~~~~~~~~~~~~~~~~~~~
The Garage Door Monitor (pt # DM?1) is now on the market and showing good
sales with repeat customers. The DM?1 will monitor when the garage door has
been left open and will automatically shut the door - either by a timed delay
after the door has been opened or closing at a set time every day. Manage-
ment believes this will be a good upsell as many home burglars gain access
through a garage door that is left open or unlocked.
Engineering has completed work on a plastic housing for our very popular
MF-875 flat magnet and new rare earth flat magnet (MMF-875). They are also
looking to complete a design on a 110V Current Controller that would work
with our contact switches to secure the door of a storage unit. This switch
can also turn on the light when the door is opened.
A fuel level monitor is in the engineering stage. Several security companies
from around the world have told us fuel theft is a major problem. They are
looking for a product that will tie into the security system if tanks or
trucks are tampered with.
Other products in engineering include a twist lock for receded steel door
contacts including biased for high security. This will allow the installer
to set a precise gap. We are also continuing work on a wireless pool alarm
and contact switch, a sprinkler controller, and a triple biased high security
switch.
Recently Issued Accounting Pronouncements
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
In December 2011, the FASB issued ASU 2011-11, "Balance Sheet (ASC Topic
210), Disclosures about Offsetting Assets and Liabilities", which requires an
entity to disclose certain information about offsetting and related arrange-
ments to enable users of its financial statements to understand the effect of
those arrangements on its financial position. The Company is required to
apply the amendments in this guidance for annual reporting periods beginning
on or after January 1, 2013, and interim periods within those annual periods.
The Company should provide the disclosures required by those amendments
retrospectively for all comparative periods presented. The Company does not
expect the adoption of this guidance to have material impact on the Company's
consolidated results of operations and financial condition.
Other Information
~~~~~~~~~~~~~~~~~
Management is always open to the possibility to acquire a business that would
complement our existing operations. This would require no outside financing.
The intent is to utilize the equipment, marketing techniques and established
customers to increase sales and profits.
There are no known seasonal trends with any of our products, since we sell to
distributors and OEM manufacturers. The products are tied to the housing
industry and will fluctuate with building trends.
GEORGE RISK INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Item 3. Controls and Procedures
(a) Information required by Item 307
Our Chief Executive Officer and our Chief Financial Officer, after evaluating
the effectiveness of the Company's "disclosure controls and procedures" (as
defined in the Securities Exchange Act of 1934 (Exchange Act) Rules 13a-15(e)
or 15d-15(e)) as of the end of the period covered by this quarterly report,
have concluded that our disclosure controls and procedures are effective
based on their evaluation of these controls and procedures required by para-
graph (b) of Exchange Act Rules 13a-15 or 15d-15.
(b) Information required by Item 308
This disclosure is not yet required.
Item 3A. Controls and Procedures
Evaluation of disclosure controls and procedures:
-------------------------------------------------
Based on their evaluation of our disclosure controls and procedures (as de-
fined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of October
31, 2010, our president and chief executive officer and our chief financial
officer have concluded that our disclosure controls and procedures are
effective such that information required to be disclosed by us in the reports
that we file or submit under the Exchange Act is (i) recorded, processed,
summarized and reported within the time periods specified in the Securities
and Exchange Commission's rules and (ii) accumulated and communicated to our
management, including our chief executive officer and our chief financial
officer, as appropriate to allow timely decisions regarding disclosure. A
control system cannot provide absolute assurance, however, that the ob-
jectives of the control systems are met, and no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud,
if any, within a company have been detected.
Changes in internal controls over financial reporting:
------------------------------------------------------
There was no change in our internal controls over financial reporting that
occurred during the period covered by this report, that has materially
affected, or is reasonably likely to materially affect, our internal con-
trols over financial reporting.
Management's Annual Report on Internal Control over Financial Reporting:
------------------------------------------------------------------------
Our management is responsible for establishing and maintaining adequate in-
ternal control over financial reporting, as such term is defined in Rules
13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control system was
designed to provide reasonable assurance regarding the reliability of finan-
cial reporting and the preparation of financial statements for external pur-
poses, in accordance with generally accepted accounting principles. Because
of inherent limitations, a system of internal control over financial re-
porting may not prevent or detect misstatements. Therefore, even those
systems determined to be effective can provide no reasonable assurance of
achieving their control objectives. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may
become inadequate due to change in conditions, or that the degree of com-
pliance with the policies or procedures may deteriorate.
Our management, including our principal executive officer and principal
accounting officer, conducted an evaluation of the effectiveness of our in-
ternal control over financial reporting using the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) in
Internal Control-Integrated Framework. Based on its evaluation, our manage-
ment concluded that as of October 31, 2012 our internal control over
financial reporting is effective.
This quarterly report does not include an attestation report of the
Corporation's registered public accounting firm regarding internal control
over financial reporting. Management's report was not subject to attestation
by the Corporation's registered public accounting firm pursuant to Section
404(c) of the Sarbanes-Oxley Act of 2002, as amended, that permits the
Corporation to provide only the management's report in this quarterly report.
GEORGE RISK INDUSTRIES, INC.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table provides information relating to the Company's
repurchase of common stock for the first quarter of fiscal year 2013.
Period Number of shares repurchased
-------------------------------------- ----------------------------
August 1, 2012 - August 31, 2012 5,049
September 1, 2012 - September 30, 2012 25
October 1, 2012 - October 31, 2012 500
Item 3. Defaults upon Senior Securities
Not applicable
Item 4. (Removed and Reserved)
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
31. Certifications pursuant to Rule 13a-14(a)
31.1 Certification of the Chief Executive Officer
31.2 Certification of the Chief Financial Officer
32. Certifications pursuant to 18 U.S.C. 1350
32.1 Certification of the Chief Executive Officer
32.2 Certification of the Chief Financial Officer
B. Reports on Form 8-K
No 8-K reports were filed during the quarter ended October 31, 2012.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
George Risk Industries, Inc.
(Registrant)
Date 12-14-2012 By: /s/ Kenneth R. Risk
Kenneth R. Risk
President and Chairman of the Board
Date 12-14-2012 By: /s/ Stephanie M. Risk
Stephanie M. Risk
Chief Financial Officer and Controller
