SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

For the fiscal year ended January 31, 20052006

OR

For the transition period from                    to                    

Commission file number 0-13200

Astro-Med, Inc.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (401) 828-4000

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $.05 Par Value

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨    No  x

Indicate by check mark if disclosure of delinquent filersthe registrant is not required to file reports pursuant to Item 405Section 13 or Section 15(d) of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.Act.    Yes  ¨    No  x

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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    x

Indicate by check mark whether the registrant is a large accelerated files, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer    ¨            Accelerated filer    ¨            Non-accelerated filer    x

Indicate by check mark whether the registrant is an accelerated filera shell company (as defined in Rule 12b-2 of the Exchange Act Rule12b-2).Act.):    Yes  ¨    No  x

As of July 31, 2004,30, 2005, the aggregate market value of the voting common equity of the Registrant held by non-affiliates of the Registrant based on the closing price on the NASDAQ Stock Market was $40,040,857.

$39,269,110.

Indicate the number of shares outstanding (excluding treasury shares)

of each of the issuer’s classes of common stock as of March 25, 2005.24, 2006.

Common Stock $0.05 Par Value 5,278,3365,394,877 shares.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Company’s definitive proxy statement for the 20052006 annual meeting of shareholders are incorporated by reference into Part III.

ASTRO-MED, INC.

FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS

ASTRO-MED, INC.

PART I

Item 1.Business

General

Astro-Med, Inc. (the Company) is an enterprise that is strategically structured to design, develop, manufacturedesigns, develops, manufactures and distributedistributes a diverse linebroad range of technology-advanced products and services. The Company is organized around a suite of core competencies including research & development, manufacturing, information technology and administrative management. The Company markets and sells its products and services through three distinct product groups; Test & Measurement (T&M), QuickLabel^® Systems (QuickLabel), and Grass-Telefactor (G-T). T&M develops and manufactures data acquisition instruments that serve the test and measurement market. QuickLabel develops and manufactures colorspecialty printers and consumableelectronic instruments which incorporate advance technologies including both hardware and software. Target markets for products that serveof the product identification market. Grass-Telefactor developsCompany include Aerospace, Automotive, Transportation, Communications, Computer Peripherals, Apparel, Food and manufactures clinical products for electroencephalography (EEGBeverages, Chemicals, Distribution, Life Sciences, and epilepsy monitoring), polysomnography (PSG – Sleep monitoring), biomedical research instrumentation and supplies that serve the life sciences market. General Manufacturing.

The Company’s products are distributed both domestically and internationally through its directown domestic and international sales force in North America and Western Europe and by authorized distributors and agents locateddealers elsewhere in approximately forty countries.the world. Approximately 30% of the Company’s sales in fiscal 20052006 were made outside of the United States.

The Company and its subsidiaries and their representatives may from time to time make written or oral statements, including statements contained in the Company’s filings with the Securities and Exchange Commission (SEC) and in its reports to shareholders which constitute or contain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 or by the SEC in its rules, regulations and releases.

All statements, other than statements of historical facts included in this annual report and the letter to our shareholders distributed in connection with our annual meeting regarding the Company’s financial position and operating and strategic initiatives and addressing industry developments are forward-looking statements. Where, in any forward-looking statement, the Company or its management expresses an expectation or belief as to future results, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement of expectation or belief will result or be achieved or accomplished. 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 demandconditions and those detailed herin under Item 1A, “Risk Factors” and from time to time in other filings with the test and measurement markets, especially defense and aerospace; continued acceptance of the Grass-Telefactor suite of new products by the clinical and research markets: successful expansion of the Test & Measurement ruggedized products in the avionics market; competition in the specialty printer industry; ability to develop market acceptance of the QuickLabel 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 identify attractive acquisition candidates and to successfully effect and integrate acquisitions; the ability to realize any anticipated cost reductions from restructuring and streamlining the business; the business abilities and judgment of personnel and changes in business strategy.SEC.

Narrative Description of Business

Products

Product Overview

The Company develops and manufactures systems that have the ability to acquire, electronic data, process, analyze, store and present theelectronic data in a variety of useable forms. The T&MCompany sells its product under brand names including Astro-Med (T&M), QuickLabel Systems (QuickLabel) and Grass-Telefactor (G-T). Products sold under the Astro-Med brand acquire and record data acquisition systems record scientific signals and print the output onto charts or electronic media. TheProducts sold under the QuickLabel color printer systems and consumable productsSystems brand create product and packaging labels and tags in one or many colors. TheProducts sold under the Grass-Telefactor

products brand electronically capture and record neurological data that is used to diagnose epilepsy or to study sleep disorders. The Company supplies a range of products that include the hardware, software and consumables to customers who are in a variety of industries.

Products sold under the Astro-Med brand include Toughwriter page printers and Tough Switches for use in passenger and military aircraft. These and other similar products are ruggedized and comply with rigorous MIL-STD specifications for operation under extreme environmental conditions. The Company’s Toughwriters will be used in the new Boeing 787 and Airbus A380, as well as the C-17 and C-130 military cargo planes.

T&M Products

Other products sold under the Astro-Med brand include the Everest, a telemetry workstation used widely in the aerospace industry to monitor and track space vehicles, aircraft, and missiles under test. The Everest ranges in price from $18,000 to $35,000 depending on features and options selected.

The Company’s T&M products are a comprehensive line of data recording instruments for the aerospace, automotive, pulp and paper, metal mill, transportation and manufacturing industries. These recording solutions provide customers with a complete record of their data, whether they are troubleshooting a process, performing preventative maintenance or gathering mission critical data. The ruggedized products include printers and Ethernet switches designed to withstand the rigors of airborne and other military and avionic applications.

Using cutting edge technologies, T&M products are designed to handle customer’s ever-changing requirements now and into the future.

Telemetry Recorders

The Everest Telemetry-Recorder Workstation is the flagship product of T&M’s line of telemetry recorders. Designed for the unique requirements of the aerospace and defense industries, the Everest provides engineers with vital data on test products during pre-flight checkout and flight tests. Intended to seamlessly integrate into off-the-shelf telemetry systems, the Everest is used to test fighter planes, missiles, helicopters, satellites and commercial aircraft. During flight test, the Everest provides engineers with real-time access to data to allow them to make split second decisions and prevent costly retesting. After flight test, data from the Everest is available in both paper and digital formats, allowing engineers to analyze data faster than ever before.

The Everest product line was expanded in fiscal 2005 with new products designed to address the changing needs of flight test and other aerospace customers. The new Vdis Visual space Software, which will be introduced in fiscal 2006, will give customers the real-time visual display of the Everest on the PC. The Real-Chart NP (network printer) provides a continuous feed, real-time strip chart printout in a small form factor. Both of these products have the same host control protocol and Ethernet digital data input as the Everest, making it easier to integrate multiple systems together. With the addition of these products, Astro-Med now offers engineers display and recording capability in a variety of different formats.

brand Dash Series Data Acquisition Recorders

The Company’s Dash Series recordersconstitute a family of portable electronic data acquisition systems which are used as maintenance and troubleshooting toolsinstruments for pulp, paper, and papermetal mills, power plants, transportation test centers, steel mills, automotive R&D & D centers and manufacturing plants. With downtime costing these facilities tens of thousands of dollars per day,Included in the Dash Series data acquisition recorders can pay for themselves by preventing a single outage. Completely self-contained in rugged aluminum cases,are the Dash Series data acquisition recorders are ideally suited for use in harsh environments where computer-based or other systems will not perform.

The Dash 2EZ, Dash 8X, Dash 8HF, Dash 8XPM and the Dash 18 representand they range in price from $3,500 to $20,000 depending on model and features and options selected.

Products sold under the Company’s Dash series of data acquisition recorders. The Dash 2EZ is the latest data acquisition recorder to be introduced and expands the Company’s reach into the handheld data recording market. With a touchscreen display, built-in chart recorder and integral data acquisition in a system weighing seven pounds, the Dash 2EZ is the ideal handheld troubleshooting tool.

The Dash series recorders are continuously improved and upgraded using the latest available technology. Recent enhancements include upgrades to Windows XP, Gbit Ethernet, USB 2.0 and DVD+-RW, making it easier than ever for a customer to interface these recorders with a PC.

Ruggedized Products

T&M’s productsQuickLabel System brand include a linefamily of ruggedized products designed for military and commercial applications. The ToughWriter series are ruggedized, flightworthy cockpit printers used to print weather maps, communications and other flight critical information. The ToughWriter series meets MIL-STD requirements for

shock, vibration and temperature, making it ideal for use on both commercial and military aircraft. Versions with multiple Ethernet ports and other interfaces and various mounting configurations are available, making the ToughWriter series compatible with most military and commercial cockpits.

The ToughSwitch is an eight port, ruggedized Ethernet switch that also meets MIL-STD requirements for shock, vibration and temperature. Designed to withstand the rigors of commercial/military aviation and the harsh environments of the battlefield, the ToughSwitch is ideally suited for applications where standard or industrial grade hubs will not survive, including airborne, shipboard and other military applications.

QuickLabel Products

The Company’s QuickLabel Systems product group provides a complete system for producing “the labels that you want when you need them.” QuickLabel’s flagship products, the digital color label printers and itsincluding the Vivo!, the first electrophotographic roll-to-roll printer, the QLS-4100 XE, the QLS-8100 XE, the QLS-2000, the QLS-3000 thermal transfer label printers, as well as a line of entry-level barcode/single-colormonochrome thermal transfer digital label printers including the Pronto! Series which total four models which are used by manufacturers and producers to print short runs of custom labels in-house. QuickLabel’s printing supplies and label creation software are integral parts of the printing system that enhance output quality and user experience.

Digital Color Label Printers

bar code labels.

QuickLabel digital color label printers are sold via a direct sales force throughout the US, Canada, and Western Europe, and serviced by a factory-trained, direct technical support staff. In the rest of the world, QuickLabel uses a broad network of dealers to sell and support its products. QuickLabel’s unique labeling solutions are aimed at label printing applications in which product packaging requires frequent content changes. QuickLabel digital color label printers fill a critical need in environments which require on-demand flexibility to package multiple product variations, and to add value to the product itself, as in private labeling, to produce OEM packaging, and to customize virtually any product. Industries that require instant label production flexibility include food and beverage, foodservice distribution, grocery retailing, chemical and sanitary supplies, pharmaceutical and medical products, personal care products, advertising specialties, tire manufacturing, and apparel, among others.

Custom QuickLabel, digital color label printers are designed to print color graphics, text, barcodes, and any other label content directly from a computer onto pressure-sensitive labels and non-adhesive rollstock packaging materials. The Company’s current line of CMYK process-color label printers include the wide-format QLS-8100 Xe model and the standard-width QLS-4100 Xe model. Both printers incorporate Ribbon Ration^™, the Company’s patented technology for economizing thermal transfer ribbon. The Company’s new QLS-3000 Xe model, introduced in the first quarter of fiscal 2006, produces labels in CMY process-color or up to three spot colors. These printers are aimed to serve the in-house label production needs of the general packaging market.

The QLS-3001 Xe and QLS-2001 Xe printers, which will be introduced in the first quarter of fiscal 2006, are aimed at the apparel market and are designed to produce double-sided and single-sided hang tags and care labels. These systems are sold to apparel applications by Avery Dennison under the terms of an exclusive distribution agreement.

Barcode/Single Color Label Printers

QuickLabel’s barcode printer family, known as the Pronto! series, serves the needs of two groups of users: businesses that require simple automatic identification for products and shipments, and businesses that are taking the first step into in-house custom label printing.

Each Pronto! printer model offers a special value to price ratio. The Pronto! 500 printer, due to be released in fiscal 2006, is a high-speed, high-throughput printer aimed at applications that require rapid processing of variable information as well as fast print speed. The Pronto! 472+ printer is a moderate speed, moderate duty, moderately priced printer aimed at traditional barcode label printing applications. The Pronto! 474 printer is designed to satisfy the desire for high-resolution label printing at an entry-level price. The Pronto! 843 printer serves the demand for wide format label printing.

QuickLabel Printing Services

QuickLabel uses its own digital label printers to produce revenue as a commercial “quick print” operation. QuickLabel printers are used by the Company just as a customer might use them: to fulfill orders for “short runs” of custom printed labels rapidly, without waiting for printing plates to be made. QuickLabel fulfills orders for long-run label printing services with its five commercial flexographic printing and converting presses.

QuickLabel Software

Custom QuickLabelcreation software package, is an integral part of the QuickLabel printing system, and was designed by the same team of engineers who designed the digital label printers. The latest generation of QuickLabel’s proprietary user-friendly label creation software offers significant new tools for simplifying label creation and for controlling and enhancing label output. The Company’s patented MicroCell^® half-toning algorithms have been improved in this latest version of the software, so that printers driven by Custom QuickLabel now render process-color print quality that more closely approximates digital artwork.

Consumables: Printing Supplies

QuickLabel’sQuickLabel digital label printers generate revenue through label, tag, and thermal transfer ribbon and toner cartridge consumables sales. The Company engineers and manufactures certain unique printing supplies especially for use in optimizing the performance of the QuickLabel brand of digital label printers. The

Products sold under the Grass-Telefactor brand include systems, instruments and software products to detect, amplify, and display the electrical activity of the human brain commonly called electroencephalography (EEG). EEG data is used by clinicians to diagnose epilepsy and other neurological conditions including sleep apnea.

Included in the Grass-Telefactor line of products are the Comet, the Aura, the wireless Aura PSG, and the Beehive. These systems are all operated under the Twin software system, a Windows-based multi-module software program developed by the Company over the past six years. Included also manufactures industry-standard printing supplies that meetis a line of amplifiers, electrodes, transducers and stimulators used by clinicians and researchers.

Products sold under the requirements of all other major brands of desktopGrass-Telefactor brand are sold to hospitals, sleep centers and tabletop label printers. QuickLabel has a specially trained sales staff to sell printing supplies.

Grass-Telefactor Products

The Grass-Telefactor Product Group offers a range of instrumentation and supplies for clinical and biomedical research applications. Grass-Telefactor enjoys a reputation built on over 70 years of innovative technology, thoughtful design and high quality manufacturing.clinics. All Grass-Telefactor products which are used worldwideconnected to the human body are controlled by universities, medical centersthe Food and companies engaged in a variety of clinical and research activities.

Clinical Products:

The clinical product line includes in-lab, in-hospital, and ambulatory integrated systems for clinical EEG and PSG, epilepsy diagnosis and surgery, critical care and intraoperative neuromonitoring. These products offer a variety of features including networking, database and report generation capabilities in addition to powerful data acquisition and analysis tools. Grass-Telefactor utilizes a Windows^®-based product line which includes the highly successful Beehive^® Millennium used for long-term epilepsy monitoring, the Comet^® digital EEG system and the Comet^® digital PSG system.

The newest instrumentation introduced by Grass-Telefactor includes an all-new, very compact, amplifier which allows both tethered and ambulatory recording. The new Beehive^® Horizon long-term epilepsy monitoring system allows the patient to disconnect from the system for a period of time without loss of data. The amplifier runs off an internal battery and records data to a CompactFlash memory card. Likewise, the AURA24^™ Ambulatory EEG System permits 24 hours of ambulatory recording for in-home or in-hospital use. The new SleepTrek^® Portable Sleep Screener is designed to assist the clinician in the diagnosis of sleep-disordered breathing.

The latest software enhancements include Fully-Automated Sleep Staging which will stage an all-night sleep study in less than one minute, where it normally took a sleep technician hours of work, and the Neuromonitoring software, which allows seizure detection in the OR/ICU.

Grass-Telefactor also offers the widest range of accessory instruments designed for use with these clinical products, including Nurse Alarm Systems, Digital Video/Audio equipment, etc.Drug Administration (FDA).

Research Products:

The research neurophysiological recording instrumentation includes world-renowned Stimulators, Amplifiers, Amplifier Systems, Neurodata Acquisition Systems, Data Acquisition and Analysis Software for use in a very wide range of applications. Grass-Telefactor’s commitment to high quality and reliability have made these instruments the neurophysiologists’ workhorse for data acquisition and analysis.

The newest high performance Amplifiers and Stimulator include new touch-pad controls and very compact packaging. The digital controls permit precise measurements. The new GrassLab Software is intended for research applications in cardiology, physiology, pharmacology, neurology, neurophysiology and other life science fields.

Accessory and Consumable Products:

A complete line of electrodes, electrode application products, transducers, and accessories is also available. With over 70 years experience in electrode design and manufacture, we can boast that these are the finest electrodes in the world. Genuine Grass Precious Metal Electrodes are precision handcrafted in an exclusive 12-step manufacturing process. The result is superior quality that assures the customer of reliable, accurate recordings. They are the gold standard of electrodes.

The Clinical and Research Supplies and Accessories use e-commerce to reach the market through the Grass-Telefactor Online Store, www.grass-telefactor.com.

Technology

The core technologies of the Company relate to (1) acquiring data, (2) conditioning the data, (3) displaying the data on hard copy, monitor, or electronic storage media, and finally (4) analyzing the data. All three-product groups of the Company—T&M, QuickLabel and G-T use these technologies to provide turnkey solutions to a variety of industrial and medical markets.

The Company is continually improving the performance and functionality of core technologies, enabling the Company to lead the competition with innovative products.

Patents and Copyrights

The Company holds a number of product patents in the United States and in foreign countries. It has filed applications for other patents that are pending. The Company has patents covering its T&M recording products as well as several patents for its QuickLabel dual sided label printers and four-color label printers. The Company considers its patents to be important, but does not believe that its business is materially dependent on them. The Company copyrights its extensive software and registers its trademarks.

Manufacturing and Supplies

The Company designs its products and manufactures many of the component parts. The balance of the parts isare produced to the Company’s specifications by suppliers. Raw materials required for the manufacture of products, including parts produced to the Company’s specifications, are generally available from numerous suppliers.

However, the Company does obtain certain components of our products and certain finished products from sole sources.

Product Development

The Company has maintained an active program of product research and development since its inception. During fiscal 2006, 2005 2004 and 2003,2004, the Company incurred costs of $4.0 million, $3.7$4.0 million, and $4.1$3.7 million, respectively, on Company-sponsored product development. The Company is committed to product development as a requisite to its growth and expects to continue its focus on research and development efforts in fiscal 2006.2007.

Marketing and Competition

The Company competes worldwide in many markets including clinical and research medicine, aerospace, automotive and general manufacturing. The Company retains a competitive position in its respective markets by virtue of proprietary technology, product reputation, delivery, technical assistance and service to customers.

The Company markets its products worldwide by advertising and promotion using major national and international trade journals, scientific meetings and trade shows, direct mailing campaigns, and the internet.

The products are sold by direct field sales persons as well as independent dealers and representatives. In the United States, the Company has direct field sales people located in major cities from coast to coast specializing in either T&M’s&M Recorders and Data Acquisitions systems, QuickLabel’sQuickLabel Color Label printers and media systems, or G-T Neurological Instrumentation products. Additionally, the Company has direct field sales and service centers in Canada, England, France, Germany, Italy and Holland. In the remaining parts of the world, the Company utilizes approximately 80 independent dealers and representatives selling and marketing its products in 40 countries.

The Company has a number of competitors in each of the three products groups and markets that it serves. In the T&M area, the Company feels that it leads the field in Data Acquisition Recorders. It competes with the Gould Instrument Division of SPX Technologies and Western Graphtec, the U.S. subsidiary of Graphtec, a Japanese company.

Technologies.

In the Color Label Printer product group,field, the Company believes it leads the world in color printing using the thermal transfer printing technology. The Company introduced the very first thermal transfer color printers late in 1995 and1995. The Company believes it is the first to this date faces only one nominal competitor.introduce an electrophotgraphic roll-to-roll color label printer

The Grass-Telefactor products of the Company are devoted to clinical applications in EEG, PSG, and Long Term Epilepsy Monitoring (LTM). There are about fourteen companies that compete in one or more of the three modalities (EEG, PSG, LTM), but none are the clear leader. The Company feels it offers superior products based upon its long history and pioneering efforts in the field since 1935. The Company, unlike most of its competitors, designs, manufactures and produces complete systems including transducers, amplifiers, sensors, and Windows-based application software. Additionally, the Company produces a range of life science products for the research market. Many of the latter products eventually find their way into clinical applications.

No single customer accounted for 10% of the Company’s net sales in any of the last three fiscal years. The Company’s products were sold to approximately 5,000 customers.

International Sales

In fiscal 2006, 2005 2004 and 2003,2004, net sales to customers in various geographic areas outside the United States, specificallyprimarily in Canada and Western Europe, amounted to $17.6 million, $17.0 million, and $16.3 million, and $13.0 million, respectively.

Order Backlog

The Company’s backlog fluctuates regularly. It consists of a blend of orders for end user customers as well as original equipment manufacturer customers. Manufacturing is geared to forecasted demands and applies a rapid turn cycle to meet customer expectations. Accordingly, the amount of order backlog does not indicate future sales trends. The Company’s backlog at January 31, 2006 and 2005 was $5.6 million and 2004 was $3.1 million, and $4.3 million, respectively.

Other Information

The Company’s business is not seasonal in nature; however, the Company’s sales are impacted by the size and complexity of the transactions, and as such,which can cause fluctuations in sales from quarter to quarter.

Most of the Company’s products are generally warranted for one year against defects in materials or workmanship. Warranty expenses have generally averaged approximately $323,000$357,000 a year for the Company’s last five fiscal years.

As of January 31, 2005,2006, the Company employed approximately 361375 persons. The Company is generally able to satisfy its employment requirements. No employees are represented by a union. The Company believes that employee relations are good.

Item 1A.Risk factors

Investing in our common stock involves a degree of risk. The risks and uncertainties described below are not the only risks facing our Company. Additional risks and uncertainties may also impair our business operations. If any of the following risks actually occur, our business, financial condition or results of operations would likely suffer.

Astro-Med competes in highly competitive markets which are likely to become more competitive. The markets for our products are characterized by rapidly changing technology, evolving industry standards and frequent new product introductions. Current competitors or new market entrants may develop new products with features that could adversely affect the competitive position of our products. We may not be successful in selecting, developing, manufacturing and marketing new products or enhancing our existing products or in responding effectively to technological changes, new standards or product announcements by competitors. The timely availability of new products and enhancements, and their acceptance by customers are important to our future success. Delays in such availability or a lack of market acceptance could have an adverse effect on our business. Additionally, there may be technological innovation that eliminates or reduces the needs for our products.

Astro-Med could incur liabilities as a result of installed product failures due to design or manufacturing defects. Our products may have defects despite testing internally or by current or potential customers. These defects could result in product returns or recalls and loss or delay in market acceptance which could have a material adverse effect on our business, operating results, or financial condition.

Astro-Med sells a significant portion of its products internationally. We sell our products worldwide through several foreign locations and distributors. Our worldwide operations are subject to the risks normally associated with foreign operations including, but not limited to:

International sales, which are both direct and indirect sales to customers outside the U.S. accounted for approximately 30% of our sales in fiscal 2006. We anticipate that international sales will continue to account for a significant portion of our revenue. We invoice our customers in various currencies. Occasionally we use rate protection agreements or derivative agreements to hedge any foreign currency exposure. Accordingly, we may be exposed to exchange losses based upon currency exchange rate fluctuations, which losses could have a material adverse effect on our operating results.

Astro-Med depends on the ongoing service of its senior management and ability to attract and retain other key personnel. Our success depends to a significant degree upon the continuing contributions of key management, sales, marketing, research and development and manufacturing personnel, many of whom we would have difficulty replacing. We believe that our future success will depend in large part upon our ability to attract and retain highly skilled engineers and management, sales and marketing personnel. Failure to attract and retain key personnel could have a material adverse effect on our business, operating results, or financial position.

Astro-Med cannot provide any assurance that current laws, or any laws enacted in the future, will not have a material adverse effect on our business. Our operations are subject to laws, rules, regulations, including environmental regulations, government policies and other requirements in each of the jurisdictions in which we conduct business. Changes in laws, rules, regulations, policies or requirements could result in the need to modify our products and could affect the demand for our products, which may have an adverse impact on our future operating results. In addition, we must comply with new regulations restricting our ability to include lead and certain other substances in our products. If we do not comply with applicable laws, rules and regulations we could be subject to costs and liabilities and our business may be adversely impacted.

Astro-Med relies on sole source suppliers that may result in product delays or price increases. We currently obtain certain components of our products and certain finished products from sole sources. In the future, our suppliers may not be able to meet our demand for components and products in a timely and cost effective manner. Our inability to secure and qualify alternative sources of supply in a timely manner may disrupt our ability to fulfill customer orders.

Astro-Med spends a significant amount of time and effort related to the development of our Ruggedized and Color Printer products. Failure to develop these products and markets as anticipated could adversely affect our growth.

Astro-Med will be relocating the Braintree, MA manufacturing facility during fiscal 2007. Failure to effectively execute the relocation plan could cause potential disruptions to our business.

Item 1B.Unresolved Staff Comments

None

Item 2.Properties

The following table sets forth information regarding the Company’s principal owned properties, all of which are included in the consolidated balance sheet appearing elsewhere in this report.

The Company also leases facilities in eightseven locations. The following information pertains to each location:

During fiscal 2006 the Company entered into an agreement with Hanover R.S. Limited Partnership for the sale of the manufacturing facility in Braintree, MA. As a result of this agreement the Company will need to relocate this manufacturing facility to a location to be determined.

The Company believes its facilities are well maintained, in good operating condition and generally adequate to meet its needs for the foreseeable future.

Item 3.Legal Proceedings

There are no pending or threatened legal proceedings against the Company believed to be material to the financial position or results of operations of the Company.

Item 4.Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of the Company’s security holders, through solicitation of proxies or otherwise, during the last quarter of the period covered by this report.

PART II

Item 5.Market for the Registrant’s Common Stock, Related Stockholder’s Matters and Issuer Purchases of Equity Securities

The Company’s common stock trades on The NASDAQ Stock Market under the symbol ALOT. The following table sets forth dividend data and the range of high and low closing prices, as furnished by NASDAQ, for the periods indicated.

The Company had approximately 344331 shareholders of record as of March 25, 2005,24, 2006, which does not reflect shareholders with beneficial ownership in shares held in nominee name.

Shareholder Services

Shareholders of Astro-Med, Inc. who desire information about the Company are invited to contact the Investor Relations Department, Astro-Med, Inc., 600 East Greenwich Avenue, West Warwick, RI 02893 or call (401) 828-4000. Visit our Investor Relations website at WWW.ASTRO-MEDINC.COM. We make available free of charge on our Internet website our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. These filings are also accessible on the SEC’s website at http://www.sec.gov.

Dividend Policy

The Company began a program of paying annual cash dividends in the second quarter of fiscal 1992. The Company anticipates that it will continue to pay cash dividends on an annuala quarterly basis. The Company has paid a dividend for 5458 consecutive quarters.

During fiscal 2007 the Company announced its intention to increase the annual dividend by twenty-five percent.

Stock Repurchases

On August 16, 2004, the Company announced that its Board of Directors had approved the repurchase of 600,000 shares of common stock. This is an ongoing authorization without any expiration date.

DuringThe Company made no purchases of its common stock pursuant to this authority during the fourth quarter of fiscal 2005, the Company made the following repurchases of its common stock:2006.

Item 6.Selected Financial Data

(Dollars in Thousands, Except Per Share Amounts)

Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

Astro-Med 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 three business segments including:

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. In addition, T&M also includes a suite of ruggedized printer products designed for military and commercial applications to be used to print weather maps, communications and other flight critical information.

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

Grass-Telefactor Product Group (G-T) centers on 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 our respective markets.

The Company’s growth strategy centers on product innovation made possible by research and development initiatives, as well as acquisitions that strategically fit into existing core businesses. Research and development activities are funded by the Company at approximately 7% of annual sales.

The Company’s continued success in increasing its product revenues will be dependent on the Company’s ability to introduce new and/or enhanced product lines each year. The Company seeksattempts to have approximately 45% of annual hardware sales generated by products developed or acquired within the past three years.

The Company improved its liquidity position during the year by effectively managing its working capital, generating cash from operations and realizing proceeds from the exercise of employee stock options.

To ensure its continued growth and profitability in fiscal 2006,2007, the Company will increase its capital investment in: personnel by adding salespersons in underserved markets, productivity by increasing manufacturing capabilities through the acquisition of new equipment, such as a label press, thermal transfer ribbon processing machinery, metal fabrication equipment and electronic circuit board automatic test equipment; distribution by expanding our global dealer organization; and information technology by providing hardware and software tools that improve the knowledge and efficiency of our employee population.

Results of Operations

Fiscal 2006 compared to Fiscal 2005

The Company’s sales in fiscal 2006 were $59.3 million, up from the prior year’s sales of $56.0 million. Domestic sales of $41.7 million increased 7% from the prior year sales of $38.9 million. The increase results from a mixed performance by the product groups. QuickLabel System domestic sales were healthy during the year increasing 7.5% over the prior year sales as demand for the Company’s consumables remained strong. G-T domestic sales were also healthy during the year increasing 9%, as sales of the LTM (long term monitoring), sleep and Electrode consumable products each experienced growth over the prior year. T&M domestic sales were flat with the prior year as sales growth in Ruggedized and Dash Series products were tempered by sales declines in the Everest Series products as the aerospace telemetry market continues to decline. Sales through the Company’s international channels were $17.6 million, representing a 3% increase from the prior year sales of $17.0 million. Similar to the domestic channel the increase was the result of a mixed performance by the product groups. T&M international sales were 15% ahead of the prior year due to increased sales within Ruggedized products. However, the T&M international channel also experienced sales declines within the Everest series. G-T international sales experienced a 12% increase over the prior year as a result of an increase in sleep system sales. QLS international sales were essentially flat with the prior year as a 4% increase in consumable sales was offset by lower hardware sales. The impact of foreign exchange rate changes during the year was nominal when compared to the prior year.

The Company’s gross profit was $24.7 million, an increase of $1.7 million over the prior year’s gross profit of $23.0 million. This year’s gross profit margin of 41.6% was slightly higher than the prior year’s gross margin of 41.2%. This slight increase was the result of favorable product mix.

Operating expenses grew 5% to $21.5 million. Specifically, selling, general and administrative (SG&A) expenses increased 6% to $17.5 million, representing 29% of sales which was consistent with the prior year’s 29% of sales. The increased SG&A spending is the result of selling and marketing initiatives which include additional selling personnel of $0.4 million, an increase in travel and trade show expenses of $0.2 million and an increase in commissions of $0.3 million related to the higher sales, as well as an increase in G&A staffing. Research & Development (R&D) expenses of $4.0 million were flat with the prior year. This level of spending represents 6.8% of sales which was slightly lower than the prior year’s level of 7.2%.

Investment income in fiscal 2006 was $0.3 million, down from $0.4 million in fiscal 2005. The decrease in investment income during fiscal year 2006 was attributable to a change in the composition of our underlying

investment portfolio and resulting yields. Other expense, net was $0.1 million as compared to last fiscal year’s other expense, net of $0.2 million. The change of $0.1 million was the result of the change in foreign exchange rates.

The Company recorded tax expense of $0.9 million and $0.1 million in fiscal 2006 and 2005, respectively. For the twelve months ended January 31, 2006, an income tax expense of $0.9 million was recognized as a result of income tax expense of $1.2 million on the current year’s pretax income of $3.4 million and a $0.3 million non-cash tax benefit recorded in the third quarter of fiscal 2006 due to the reversal of tax reserves related to the favorable resolution of certain income tax examinations. For the twelve months ended January 31, 2005 an income tax expense of $0.1 million was recorded as a result of income tax expense of $1.0 million on the current year’s pretax income of $2.8 million and a $0.9 million one-time non-cash tax benefit recorded in the first quarter of fiscal 2005 related to the release of the valuation allowance on the net deferred tax asset that was established in fiscal 2003.

The Company reports three segments that mirror the Company’s sales product groups (i.e., T&M, QuickLabel and G-T). The Company evaluates segment performance based on the operating segment’s profit before corporate and financial administration expenses.

The following table summarizes selected financial information by segment:

The operating results of each segment are summarized as follows:

T&M’s sales increased 3.5% in fiscal 2006 to $11.5 million from $11.1 million in the previous year. The increase is traceable to sales growth within the Dash Series products which were up 15.1% over the prior year and the Ruggedized products which were up 130.0%. These increases were offset by lower shipments of the Everest product line which was down 41% from the prior year. Customers in the Company’s aerospace markets have continued to delay capital purchases due to limited appropriations for workstation telemetry recorder products. T&M’s segment operating profit was $0.3 million in fiscal 2006. This result compares favorably to the prior year’s segment operating loss of $0.2 million. The current year’s improvement is due to higher sales volume and better margins. T&M selling expenses were consistent with the prior year.

Sales of the QuickLabel Systems products increased 4.5% in fiscal 2006 to $29.7 million from $28.4 million in the prior year. This year’s sales growth was driven by a 10.3% increase in QLS consumable products. The sales growth of the consumables products was shared between the Company’s labels and tags, up 17.1% and, ribbons, up 4.4% from the prior year. However, the growth in QLS consumables was tempered by lower QLS Hardware sales. The QLS Product Group segment operating profit was $2.9 million during fiscal 2006. This

result compares unfavorably to the prior year’s segment operating profit of $3.8 million. The lower segment operating profit on increased sales was due to higher personnel costs, investment in marketing campaigns and increased manufacturing and R&D expenses on the development of the new VIVO color printer.

G-T’s sales increased 10.0% in fiscal 2006 to $18.1 million from $16.5 million in the prior year. The product group’s higher sales were due to increases within LTM products, which were up 29%, increases within sleep products, which were up 33.0% and an increase in the product group’s consumable sales which were up 22.1%. G-T’s operating profit increased 61.4% in fiscal 2006 to $2.9 million from $1.8 million in the prior year. This year’s segment operating profit was driven by higher sales volume and product mix, as well as decreased spending within R&D for this product group.

Fiscal 2005 compared to Fiscal 2004

The Company’s sales in fiscal 2005 were $56.0 million, up from the prior year’s sales of $55.8 million. Domestic sales of $38.9 million declined 1% from the prior year sales of $39.5 million. The nominal decline was an outgrowth of a mixed performance by the product groups. Domestic QuickLabel System sales were healthy during the year increasing 15% over the prior year sales as demand for the Company’s printer systems and consumables remained strong. Domestic G-T sales were down from the prior year by 17%, as sales of the LTM (long term monitoring) products and legacy products in the clinical markets were below last year’s sales. However, sales of the Company’s new Comet product line increased 35% from the prior year in both the EEG (electroencephalographic) and PSG (sleep) applications. Domestic T&M sales were lower by 7% from the previous year as customers in our aerospace markets deferred buying decisions on workstation telemetry recorders until fiscal 2006. However, the product group’s portable suite of recorders, i.e. Dash series, increased 18% over the prior year. Sales through the Company’s international channels were $17.0 million, representing a 4% increase from the prior year. However, excluding the favorable impact from foreign exchange via the weak dollar, international sales for fiscal 2005 were 2% lower than the prior year. In a similar profile to the domestic channel, the results in the international channel were down due to lower volume of G-T LTM product sales. Shipments of QuickLabel Systems products grew year over year, whereas T&M product sales volume were flat with the prior year.

The Company’s gross profit was $23.0 million, essentially flat with the prior year’s gross profit of $23.0 million. This year’sFiscal 2005 gross profit margin of 41.2% also matched the prior year’s gross profit margin of 41.2% on comparable sales volume.

Operating expenses grew 6% to $20.5 million. Specifically, selling, general and administrative (SG&A) expenses increased 5% to $16.4 million, representing 29% of sales as compared to the prior year’s 28% of sales. The increased SG&A spending is confined to selling and marketing initiatives which include additional selling personnel of $0.2 million, an increase in trade show expenses of $0.1 million, an expansion of the Company’s advertising formats of $0.1 million and foreign exchange increases of $0.3 million. Research & Development (R&D) expenses increased 10% from last year to $4.0 million. This level of spending represents 7.1% of sales and a 50 basis pointspoint increment from the previous year’s level of 6.6%. The increase is traceable to additional engineering personnel of $0.1 million, outside engineering services of $0.1 million and prototype parts of $0.1 million.

Interest income in fiscal 2005 was $0.4 million, up significantly from $0.2 million in fiscal 2004. The increase in interest income during fiscal year 2005 is attributable to a higher yield on the investment portfolio and

higher average cash balances available for a full year in fiscal 2005 from the cash generated in the second half of fiscal 2004. Other expense, net was $0.2 million as compared to last fiscal year’s other expense, net of $0.1 million. The increase of $0.1 million was the result of additional unrealized losses on intercompany balances driven by the change in foreign exchange rates.

The Company recorded tax expense of $0.1 million and $0.6 million in fiscal 2005 and 2004, respectively. For the twelve months ending January 31, 2005, an income tax expense of $0.1 million was recognized as a result of income tax expense of $1.0 million on the current year’s pretax income of $2.8 million and a $0.9

million one-time non-cash tax benefit recorded in the first quarter of fiscal 2005 related to the release of the valuation allowance on the net deferred tax asset that was established in fiscal 2003.

The Company reports three segments that mirror the Company’s sales product groups (i.e., T&M, QuickLabel and G-T). The Company evaluates segment performance based on the operating segment’s profit before corporate and financial administration expenses.

The following table summarizes selected financial information by segment:

The operating results of each segment are summarized as follows:

T&M’s sales declined 5% in fiscal 2005 to $11.1 million from $11.6 million in the previous year. The decrease is traceable to lower shipments of the Everest product line, down 21%. Customers in the Company’s aerospace markets have delayed capital purchases due to limited appropriations for workstation telemetry recorder products. Sales of the Company’s Dash series portable recorder products were quite strong, increasing 11% from the previous year. Ruggedized product sales were up 6% from the previous year, whereas consumable product sales were lower by 11% from the prior year sales. A segment operating loss of $0.2 million was realized in the T&M product group in fiscal 2005. This result compares unfavorably to the prior year’s segment operating profit of $0.8 million. The current year’s result is due to lower sales volume and mix of $0.4 million, unabsorbed manufacturing costs of $0.1 million and higher R&D expenses of $0.4 million.

Sales of the QuickLabel Systems products increased 12% from the previous year to $28.4 million. This year’s sales growth was driven by double-digit sales increases in both printer systems and consumable products. The growth in the printer systems was dominated by demand for the Company’s 4100XE and 8100XE color printers with a sales increase of 46% from the last year’s sales volume. The sales growth of the consumables products was shared between the Company’s suite of ribbon product lines where combined sales growth was up 14% from the previous year. The QLS Product Group improved its segment operating profit by 27% to $3.8 million from the prior year’s operating profit of $3.0 million. The segment operating profit margin also improved

to 13.2% from the previous year’s segment operating profit margin of 11.7%. This year’s improved segment operating profit and related profit margin is traceable to sales growth and improved gross profit margins.

G-T’s sales declined 13% from the prior year to $16.5 million. The product group’s lower sales was due to the decline in shipments of LTM products, which were down 49%, as well as a customer shift to the Company’s lower priced Comet products in the EEG and PSG diagnostic and monitoring modalities. Sales growth of G-T’s consumable products continued in fiscal 2005, increasing 7% from the prior year. G-T’s operating profit declined 33% in fiscal 2005 to $1.8 million from $2.7 million in the prior year. This year’s segment operating profit margin was 10.9%, down 340 basis points from the previous year’s segment operating profit margin of 14.3%. The lower profit and related margin is due exclusively to the lower G-T sales reported in fiscal 2005.

Fiscal 2004 compared to Fiscal 2003

The Company’s sales in fiscal 2004 were $55.8 million, up from the prior year’s sales of $49.2 million. Domestic sales of $39.5 million grew 9.1% as demand for the Company’s hardware systems drove the growth with an increase of 15.6% over the prior year. This hardware growth was especially strong in the digital printer and biomedical instrumentation product lines, up 53.5% and 34.4%, respectively. Domestic consumable sales were flat with the prior year at $15.1 million. However, color ribbon and label sales increased 6.9% from the previous year with demand for label products driving the growth with its increase of 14.4% over last year. Sales through the international channel were especially strong in fiscal 2004 as sales reached $16.3 million, an increase of 25.4% from the prior year. The sales increase related to exchange rate fluctuations was 13.1% or $1.7 million. Sales volume of the Company’s hardware systems were particularly strong, up 36.8%, as demand for the data recorders, digital printers and biomedical instrumentation products all posted significant double digit growth rates in fiscal 2004. International sales of consumable products also increased 12.3% during the year with the primary drivers being growth of the Company’s color ribbon and label product lines.

Gross profit increased 27.1% to $23.0 million in fiscal 2004 from $18.1 million in fiscal 2003. The Company’s gross profit margin improved to 41.2% from 36.8%. The $4.9 million increase in gross profit was attributed to $3.3 million from higher sales volume, $0.5 million from product mix, and $1.1 million from better manufacturing overhead absorption and lower manufacturing costs.

Selling, general and administrative spending (SG&A) increased 5.4% to $15.7 million from $14.9 million. The $0.8 million increase in SG&A expenses can be attributed to $0.3 million higher sales commissions, $0.1 million increase in trade show and marketing expenses and $0.4 million from increases in foreign exchange rates. Research & Development (R&D) expenses decreased to $3.7 million in fiscal 2004 from $4.1 million in fiscal 2003. R&D as a percentage of sales decreased to 6.6% in this fiscal year as compared 8.3% in the prior year. The decrease in R&D spending can be attributed to the workforce reduction that took place in fiscal 2003. At the end of fiscal 2003, the Company implemented an organizational restructuring in an effort to reduce costs and streamline operations. The restructuring included workforce reductions in all areas of the Company and a significant curtailment of its Pennsylvania research facility. The Company eliminated 28 employees or approximately 8% of its workforce. In fiscal 2003, the Company recorded $0.5 million of restructuring and impairment charges. These charges included $0.4 million of severance and related termination benefit costs and a $0.1 million charge to write-down the value of equipment used at the research facility. During fiscal 2004 and 2003, a total of $349,000 of severance and related termination benefit costs were paid. The remaining $15,000 of severance and related termination benefits were reversed in fiscal 2004 as certain estimates differed from the actual amounts.

Interest income in fiscal 2004 was $202,000 up slightly from $198,000 in fiscal 2003. The increase in interest income during fiscal year 2004 can be attributed to the increase in the portfolio being tempered by lower yields on investments. Other expense, net was $63,000 as compared to last fiscal year’s other income, net of $136,000. Fiscal 2003 benefited from $145,000 of favorable foreign exchange gains while fiscal 2004 resulted in a $2,000 foreign exchange gain.

The Company recorded tax expense of $0.6 million and $0.8 million for fiscal 2004 and 2003, respectively. As a result of a review undertaken at January 31, 2003 of our cumulative loss position at that date, management concluded that it was appropriate to establish a full valuation allowance for its net deferred tax assets. The fiscal 2004 and 2003 provision includes a full valuation allowance for the Company’s deferred tax assets. The fiscal 2004 income tax provision includes the favorable impact of the net operating loss carryforwards and the utilization of certain other deferred tax assets that were previously fully reserved.

Liquidity and Capital Resources

The Company expects to finance its future working capital needs, capital expenditures and acquisition requirements through internal funds. To the extent the Company’s capital and liquidity requirements are not satisfied internally, the Company may utilize a $3.5 million unsecured bank line of credit, all of which is currently available. Borrowings under this line of credit bear interest at the bank’s prime rate.

The Company’s Statements of Cash Flows for the three years endingended January 31, 2006, 2005 2004 and 20032004 are included on page 29.30. Net cash flow provided by operating activities in fiscal year 20052006 was $3.4$2.4 million. The net cash flow provided by operations is attributed to the positive cash flow generated from the net income of $2.7$2.6 million during the year and depreciation of $1.2 million. Cash flow from operating activities was adversely affected by a reduction$1.3 million increase in accounts receivable. This increase was primarily due to the record quarterly sales level achieved in the Company’s days sales outstanding equaling $0.5 million.

fourth quarter.

Net cash flow used by investing activities was $1.4$3.4 million, which was mostly the result of the purchase of property, plant and equipment of $1.1$1.0 million and a net increase in the Company’s portfolio of investment securities of $2.4 million. TheseProperty, plant and equipment purchases included machinery and equipment of $0.5 million, information technology of $0.2$0.3 million, building improvements of $0.2$0.1 million and tools and dies of $0.1 million and other of $0.1 million

million.

Net cash flow used by financing activities was $0.8$0.6 million in fiscal 2005.2006. During the year the Company repurchased approximately $0.5 million of common stock and paid dividends of $0.8 million. Also during the current year, the Company generated $0.5$0.3 million in cash through the exercise of employee stock options.

Dividends paid for fiscal 2006, 2005, 2004, and 20032004 were $0.8, million, $0.7$0.8 million and $0.7 million in each year, respectively. The Company’s annual dividend per share was $0.16 in all three years. Since the inception of the common stock buy back program in fiscal 1997, the Company has repurchased 990,651994,035 shares of its common stock. At January 31, 2005,2006, the Company has the Board of Directors’ authorization to purchase an additional 550,973547,589 shares of the Company’s common stock in the future.

Management plans to conduct a broad evaluation of its current enterprise resource planning (ERP) system to ensure the Company’s Information Technology (IT) systems are appropriate to support the growth, profitability and internal control requirements of a multi-national company.

Contractual Obligations, Commitments and Contingencies

The Company hashad a contingent obligation relating to the 1999 Telefactor acquisition that requiresrequired the Company to pay additional consideration to the sellersseller if certain sales amounts are achieved during the 72 months following the closing of the transaction. The purchase and sales agreement contains a clause which willwould require the Company to pay additional purchase price of up to $3,000,000 if certain sales levels are achieved. The earnout provision is effective over a period of 72 months and expiresexpired in December 2005. At January 31, 2005 with no additional consideration was owed to the sellers.

On June 17, 2005, the Company entered into an agreement with Hanover R.S. Limited Partnership, a Texas limited partnership (the “Purchaser”) for the sale of approximately 24.692 acres of land located in Braintree, Massachusetts owned by the Company (the “Property”) for the purchase price of $6,100,000 to be paid in cash at the closing. The sale of the Property was subject to a 90 day feasibility period which ended on September 17, 2005, during which time the Purchaser could inspect the property and terminate the sale due to any adverse conditions discovered on the Property. With the successful completion of the feasibility period, the Purchaser has 16 months to obtain final zoning and site plan approval from all state and local governmental entities for use of the Property as a multi-family residential rental property, subject to two 30 day extensions exercisable at the option of the Purchaser upon payment to the Company of $25,000 per extension.

Upon execution of the agreement, $250,000 of earnest money was placed in escrow pending completion of the sale and an additional $250,000 was placed in escrow at the expiration of the feasibility period. Following the feasibility period, all such earnest money is forfeited by the Purchaser in the event that the sale is not completed due to a breach by the Purchaser.

As of January 31, 2006 the Purchaser has placed a total of $500,000 in escrow pending the completion of the sale. This amount is recorded as both an Other Current Asset and a Deposit on Pending Sale on the balance sheet of the Company. In the event that this transaction is completed, the Company would recognize an estimated pre-tax gain of approximately $5,400,000 to $5,600,000.

A summary of the Company’s contractual obligations and commitments as of January 31, 20052006 is as follows:

Purchase obligations include amounts committed under legally enforceable contracts or purchase orders for goods and services with defined terms as to price, quantity, delivery and termination liability.

The Company is subject to contingencies, including legal proceedings and claims arising out of its businesses that cover a wide range of matters, including, among others, contract and employment claims, workers compensation claims, product liability, warranty and modification, adjustment or replacement of component parts of units sold.

The Company provides accruals for direct costs associated with the estimated resolution of contingencies at the earliest date at which it is deemed probable that a liability has been incurred and the amount of such liability can be reasonably estimated. Costs accrued have been estimated and are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies and outcomes. While it is impossible to ascertain the ultimate legal and financial liability with respect to contingent liabilities, including lawsuits, the Company believes that the aggregate amount of such liabilities, if any, in excess of amounts provided or covered by insurance, will not have a material adverse effect on the consolidated financial position or results of operations of the Company. It is possible, however, that future results of operations for any particular future period could be materially affected by changes in our assumptions or strategies related to these contingencies or changes out of the Company’s control.

Critical Accounting Policies

The Company’s discussion and analysis of its financial condition and results of operations are based upon the Company’s Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States. (See the Notes to the Consolidated Financial Statements included elsewhere herein.) Certain of the Company’s accounting policies require the application of judgment in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. The Company periodically evaluates the judgments and estimates used for its critical accounting policies to ensure that such judgments and estimates are reasonable for its interim and year-end reporting requirements. These judgments and estimates are based on the Company’s historical experience, current trends and information available from other sources, as appropriate. If different conditions result from those assumptions used in the Company’s judgments, the results could be materially different from the Company’s estimates. The Company’s critical accounting policies include:

Revenue Recognition:  The majority of the Company’s product sales are recorded at the time of shipment, when legal title has transferred and risk of loss passes to the customer, when persuasive evidence of an arrangement exists, the seller’s price to the buyer is fixed or determinable and collectibility is reasonably assured

in accordance with the requirements in Staff Accounting Bulletin (“SAB”) 104, “Revenue Recognition in Financial Statements.” When a sale arrangement involves training or installation, the deliverables in the arrangement are evaluated to determine whether they represent separate units of accounting in accordance with SAB 104 and EITF 00-21, “Revenue Arrangements With Multiple Deliverables”. 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. All of the Company’s equipment contains embedded operating systems and data management software which is included in the purchase price of the equipment. The software is deemed incidental to the systems as a whole as it is not sold separately or marketed separately and its production costs are minor as compared to those of the hardware system. Returns and customer credits are infrequent and are recorded as a reduction to sales. Rights of return are not included in sales arrangements. Revenue associated with products that contain specific customer acceptance criteria is not recognized before the customer acceptance criteria are satisfied. Discounts from list prices are recorded as a reduction to sales. Amounts billed to customers for shipping and handling fees are included in sales while related shipping and handling costs are included in cost of sales.

Warranty Claims and Bad Debts:  Provisions for the estimated costs for future product warranty claims and bad debts are recorded in cost of sales and selling, general and administrative expense, respectively, at the time a sale is recorded. The amounts recorded are generally based upon historically derived percentages while also factoring in any new business conditions that might impact the historical analysis such as new product introduction for warranty and bankruptcies of particular customers for bad debts. The Company also periodically evaluates the adequacy of its reserves for warranty and bad debts recorded in its consolidated balance sheet as a further test to ensure the adequacy of the recorded provisions. Warranty claims can extend far into the future and bad debt analysis often involves subjective analysis of a particular customer’s ability to pay. As a result, significant judgment is required by the Company in determining the appropriate amounts to record and such judgments may prove to be incorrect in the future. The Company believes that its procedures for estimating such amounts are reasonable and historically have not resulted in material adjustments in subsequent periods when the estimates are adjusted to the actual amounts.

Customer Returns:  Customer returns are recorded on an actual basis throughout the year and also include an estimate at the end of each reporting period for future customer returns related to sales recorded prior to the end of the period. The Company generally estimates customer returns based upon its historical experience while making adjustments for any changes in business conditions. The Company believes that its principles for estimating such amounts are reasonable and historically have not resulted in material adjustments in subsequent periods when the estimates are adjusted to actual experience.

Inventories:  Inventories are stated at the lower of cost (first-in, first-out) or market. The Company records provisions to write-down obsolete and excess inventory to its estimated net realizable value. The process for evaluating obsolete and excess inventory consists of the Company analyzing the inventory supply on hand and estimating the net realizable value of the inventory based on historical experience, current business conditions and anticipated future sales. The Company believes that its procedures for estimating such amounts are reasonable and historically have not resulted in material adjustments in subsequent periods when the estimates are adjusted to the actual.actual experience.

Income taxes:  The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards (SFAS) No. 109, Accounting for Income Taxes. This SFAS requires that deferred income taxes be determined based on estimated future tax effects of differences between the tax and book bases of assets and liabilities considering the provisions of enacted tax laws. The Company has historically had prepaid incomedeferred tax assets due principally to the unfavorable tax consequences of recording expenses for required book reserves for such things as, bad debts, inventory valuation, and warranty that cannot be deducted for income tax purposes until such expenses are actually paid.paid or losses realized. The Company’s deferred tax liabilities consist of

favorable tax consequences associated with accelerated depreciation methods for tax purposes. SFAS No. 109 requires that a valuation allowance be established when it is “more likely than not” that all or a portion of deferred tax assets will not be realized. A review of all available positive and negative evidence must be considered, including the Company’s performance, the market environment in which the Company operates, length of carryforward periods, existing sales backlog and future sales projections. The Company had previously provided valuation allowances only for future tax benefits resulting from certain foreign losses. In fiscal 2003, as required by SFAS No. 109, 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 2005, the Company believed that an appropriate level of profitability had been established and maintained and that it is more likely than not the deferred tax assets willwould be realized in the future.future except for possible future tax benefits from the utilization of net operating loss carryforwards attributable to the Company’s Italian subsidiary. The Company 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 the carryforward periods, the existing sales backlog and the future sales projections.

Long-Lived Asset and Goodwill:  The impairment of Long-livedlong-lived assets to be held and used are reviewed for impairment in accordance with SFAS No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets” whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. Measurement of an impairment loss for long-lived assets that management expects to hold and use is based on the fair value of the asset. Goodwill impairment reviews are performed in accordance with the provisions of SFAS No. 142, “Goodwill and Other Intangible Assets”. Management evaluates the recoverability of goodwill annually or more frequently if events or changes in circumstances, such as declines in sales, earnings or cash flows, or material adverse changes in the business climate, indicate that the carrying value of an asset might be impaired. Goodwill is considered to be impaired when the net book value of a segment exceeds its estimated fair value. Fair values are established using a discounted cash flow methodology. The determination of discounted cash flows is based on the long-range planning forecast.

NewRecent Accounting Pronouncements

In May 2005, the FASB issues SFAS No. 154, “Accounting for Changes and Error Corrections”. This Statement changes the requirements for the accounting for and reporting of a change in accounting principle. It requires retrospective application to prior periods’ financial statements of changes in accounting principle, unless it is impracticable to determine either the period specific effects or the cumulative effect of the change. This Statement applies to all voluntary changes in accounting principle. It also applies to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. When a pronouncement includes specific transition provisions, those provisions should be followed. This Statement is effective for the Company with the first quarter of fiscal 2007. It is not expected to have an impact on our consolidated financial position or results of operations.

In December 2004, the FASB issued SFAS No. 123 (Revised 2004), “Share-Based Payment” (“SFAS 123-R”123R”), which replaces SFAS No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”) and supercededsuperseded APB Opinion No. 25, “Accounting for Stock Issued to Employees.” SFAS 123-RNo. 123R requires companies to measure compensation costs for share-based payments to employees, including stock options, at fair value and expense such compensation over the service period beginning withperiod. For the first interim or annual period after June 15, 2005. The pro forma disclosure previouslyCompany, this is effective February 1, 2006.

As permitted underby SFAS 123 willNo. 123R, until January 31, 2006, the Company accounted for share-based payments to employees using APB Opinion No. 25’s intrinsic value method and, as such, generally recognized no longer be an alternative to financial statement recognition. Under

compensation expense for employee stock options. Accordingly, the adoption of SFAS 123-R, companies must determine the appropriateNo. 123R’s fair value model to be used for valuing share-based payments, the amortization method for compensation expense and the transition method to be used at the date of adoption. The transition methods include prospective and retroactive adoption options. Management is evaluating the requirements of SFAS 123-R.

In December 2004, the FASB issued FSP FAS 109-1, “Application of FAS No. 109 “Accounting for Income Tax, to the Tax Deduction on Qualified Production Activities Provided by the Americans Jobs Creation Act of 2004”. FSP FAS No. 109-1 clarifies SFAP 109’s guidance that applies to the new tax deduction for qualified domestic production activities. FSP No. 109-1 became effective upon issuance and we believe that this pronouncement will have an insignificant impact on the Company’s results of operations, although it will have no impact on the Company’s overall financial position. Effective February 1, 2006, we adopted SFAS No. 123R using the modified prospective basis. This method requires us to apply the provisions of SFAS No. 123R to any awards that are unvested on the effective ratedate and to any new awards. Under this method, we will not be required to restate prior periods. Compensation expense for the unvested awards will be recognized over the remaining service period using the compensation expense calculated for our pro forma disclosures under SFAS No. 123, adjusted for estimated forfeitures. The pro forma earnings impact of stock-based compensation expense on our results of operations for the years 2006, 2005 and 2004 is described in Note 1 of Notes to Consolidated Financial Statements of this report. It is important to note that such pro forma disclosures are not necessarily indicative of the potential impact of recognizing compensation expense for share-based payments under SFAS No. 123R in future periods.

Our adoption of SFAS No. 123R is expected to result in compensation expense that will reduce diluted net income per share by approximately $0.03 to $0.05 per share in fiscal 2006.

In December 2004,2007. This estimated range does not include any stock-based awards our Board of Directors may grant in fiscal 2007. Also, our estimate of future stock-based compensation expense will be affected by our stock price and a number of complex and subjective valuation assumptions, and the FASB issued FSP FAS 109-2, “Accounting and Disclosure Guidance forrelated tax impact, as well as the Foreign Repatriation Provision withinnumber of stock based awards our Board of Directors may grant in the American Jobs Creation Act of 2004”. FSP FAS 109-2 provides implementation guidance relatedfuture. These valuation assumptions include, but are not limited to, the repatriation provisionvolatility of the American Jobs Creation Act of 2004. Atour stock price and employee stock option behaviors. As such, our actual share-based compensation expense may differ materially from this time we are evaluating the impact this pronouncement will have on the Company.estimated range.

Item 7A.Quantitative and Qualitative Disclosures about Market Risk

Foreign Exchange Risk

The Company’s financial results are affected by changes in foreign currency exchange rates or weak economic conditions in the foreign markets in which products are sold. The Company’s primary currency exposures are European Common Currency (Euro), British Pound, and Canadian Dollar. At January 31, 2005,2006, the Company’s investment in foreign assets was $2.6$3.6 million. An overall unfavorable change in foreign exchange rates of 10% would have resulted in an additional net loss of approximately $0.1 million and a $0.3$0.2 million reduction in shareholders’ equity as a result of the impact on the cumulative translation adjustment.

The Company, on occasion, utilizes foreign exchange option contracts to minimize its exposure associated with unfavorable changes in foreign exchanges rates on certain foreign denominated receivables. At January 31, 2005,2006, the Company did not have any open contracts. The functional currencies of the Company’s foreign affiliates are their respective local operating currencies, which are translated for consolidated financial reporting purposes into U.S. dollars.

Item 8.Financial Statements and Supplementary Data

The consolidated financial statements required under this item are submitted as a separate section of this report on the pages indicated at Item 15(a)(1). The supplementary data regarding annual results of operations is set forth in the following table.

QUARTERLY FINANCIAL DATA (Unaudited)

(Dollars in Thousands, Except Per Share Amounts)

Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None

Item 9A.Controls and Procedures

As required by Rule 13a-15 under the Exchange Act of 1934, the Company carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this report. This evaluation was carried out under the supervision and with the participation

of the Company’s management, including the Company’s Chairman of the Board and Chief Executive Officer and the Company’s Chief Financial Officer. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective as of the end of the period covered by this report.

There have been no significant changes in the Company’s internal control over financial reporting during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to affect, the Company’s internal control over financial reporting.

The Company will initiate activities related to the assessment of its internal control environment in preparation for the compliance requirements of Section 404 of the Sarbanes-Oxley Act of 2002. In its assessment management will use the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework. Management is required to disclose its assessment of the effectiveness of the Company’s internal controls and have its outside auditors attest such assessment by the fiscal year ending January 31, 2007.2008.

PART IIIItem 9B.Other Information

Nothing to report

PART III

Item 10.Directors and Executive Officers of the Registrant

The response to this item is incorporated by reference to the Company’s definitive proxy statement for the 20052006 annual meeting of shareholders.

The following is a list of the names and ages of, and the positions and offices presently held by, all executive officers of the Company. All officers serve at the pleasure of the Board of Directors.

All of the persons named above have held the positions identified since January 31, 1985, except as indicated below.

Mr. Ondis has been a Director and Chief Executive Officer since 1969. He was previously President and the Chief Financial Officer (Treasurer) of the Company from 1969 to 1985.

Mr. Pizzuti was previously a Vice President of the Company functioning as Chief Operating Officer since 1971.

Mr. O’Connell joined the Company in 1996. He previously held senior financial management positions with Cherry Tree Products Inc., IBI Corporation and Dennison Manufacturing Company. Mr. O’Connell is also Assistant Secretary of the Company.

Mr. Chatten joined the Company in December 1999 as President of Grass-Telefactor Product Group. Prior to that, Mr. Chatten was founder and President of Telefactor Corporation which was acquired by Astro-Med in December 1999.

Mr. Deeb has held the position identified since 1987. In 1985, he was named General Manager—Media Products after having been Vice President and General Manager since 1981 of a business sold by the Company in 1984.

Mr. Sullivan was appointed Vice President and Chief Technology Officer in 2000. He is an electronic engineer and has been with the Company since 1983.

Mr. Petrarca was appointed Vice President of Instrument Manufacturing in November 1998. He has previously held positions as General Manager of Manufacturing, Manager of Grass Operations and Manager of Grass Sales. He has been with the Company since 1980.

Mr. McGuinness joined the Company in 2004. He previously held financial management positions with Paramount Cards, Inc., Nortek, Inc., The Monitor Company, and KPMG LLP. He is a certified public accountant.

Code of Ethics

The Company has adopted a Code of Ethics which applies to all directors, officers and employees of the Company, including the Chief Executive Officer (“CEO”), Chief Operating Officer (“COO”), Chief Financial Officer (“CFO”) (who is both the principal financial and accounting officer) and Controller, as supplemented by a Code of Ethical Conduct for the Chief Executive Officer and Senior Financial Officers, which meets the requirements of a “code of ethics” as defined in Item 406 of Regulation S-K. The Company will provide a copy of the Codes to shareholders, without charge, upon request directed to the Investor Relations Contact listed on the Company’s website, WWW.ASTRO-MEDINC.COM, under the headings “Investor Relations – Corporate Governance”. The Company has posted the Codes on the Company’s website under “Investor Relations – Corporate Governance” and to disclose any amendment to, or waiver of, a provision of the Codes for the CEO, COO, CFO, Controller or persons performing similar functions by posting such information on its website.website and filing a Form 8-K as required under the rules of the NASDAQ Stock Market.

Item 11.Executive Compensation

The response to this item is incorporated by reference to the Company’s definitive proxy statement for the 20052006 annual meeting of shareholders.

Item 12.Security Ownership of Certain Beneficial Owners and Management

The response to this item is incorporated by reference to the Company’s definitive proxy statement for the 20052006 annual meeting of shareholders.

Equity Compensation Plan Information

The following table sets forth information about the Company’s equity compensation plans as of January 31, 2005:2006:

(2)

Includes 286,055235,155 shares under the Astro-Med, Inc. 1997 Incentive Stock Option Plan, 415,030390,030 shares under the Astro-Med, Inc. 1998 Non-Qualified Stock Option Plan and 3,300 shares reserved for issuance under the Astro-Med, Inc. Non-Employee Director Stock Option Plan.

Additional information regarding these equity compensation plans is contained in Note 5 to the Company’s Consolidated Financial Statements included in Item 15 hereto.

Item 13.Certain Relationships and Related Transactions

The response to this item is incorporated by reference to the Company’s definitive proxy statement for the 20052006 annual meeting of shareholders.

Item 14.Principal Accountant Fees And Services

The information required by this item is incorporated herein by reference to the Company’s definitive proxy statement for the 20052006 annual meeting of shareholders.

PART IV

Item 15.Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)(1)Financial Statements:

The following consolidated financial statements of Astro-Med, Inc. and subsidiaries are incorporated by reference in Item 8:

All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore, have been omitted.

(a)(3)Exhibits:

Exhibit Number
(10.1)		Astro-Med, Inc. 1989 Non-Qualified Stock Option Plan, as amended, filed as Exhibit 4.3 to Registration Statement on Form S-8, Registration No. 333-32317 and incorporated by reference herein. (a)
(10.2)		Astro-Med, Inc. 1989 Incentive Stock Option Plan, as amended, filed as Exhibit 28 to Registration Statement on Form S-8, Registration No. 333-43700, and incorporated by reference herein. (a)
(10.3)		Astro-Med, Inc. 1993 Incentive Stock Option Plan filed as Exhibit 4.3 to Registration Statement on Form S-8, Registration No. 333-24127, and incorporated by reference herein. (a)

Exhibit Number
(10.4)		Astro-Med, Inc. Non-Employee Director Stock Option Plan filed as Exhibit 4.3 to Registration Statement on Form S-8, Registration No. 333-24123, and incorporated by reference herein. (a)
(10.5)		Astro-Med, Inc. 1997 Incentive Stock Option Plan, as amended, filed as Exhibit 4.3 to Registration Statements on Form S-8, Registration Nos. 333-32315, 333-93565 and 333-44414, and incorporated by reference herein. (a)
(10.6)		Astro-Med, Inc. 1998 Non-Qualified Stock Option Plan, as amended, filed as Exhibit 4.3 to Registration Statement on Form S-8, Registration Nos. 333-62431 and 333-63526, and incorporated by reference herein.
(10.7)		Employment Agreement between Astro-Med, Inc. and John B. Chatten dated as of December 14, 1999(a).
(10.8)		Astro-Med, Inc. Management Bonus Plan (Group III) (filed as Exhibit 10.8 to the Company’s Annual Report on Form 10-K for the year ended January 31, 2003 and by this reference incorporated herein. (a)
(13)		Letter to Shareholders accompanying the Annual Report.
(21)		List of Subsidiaries of the Company.
(23.1)		Consent of Independent Auditors.Grant Thornton LLP
(23.2)		Consent of Ernst & Young LLP
(31.1)		Certification of Chief Executive Officer Pursuant to Rule 13a-14(a).
(31.2)		Certification of Chief Financial Officer Pursuant to Rule 13a-14(a).
(32.1)		Certification of Chief Executive Officer Pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(32.2)		Certification of Chief Financial Officer Pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

On March 23, 2005, the Company filed a Current Report on Form 8-K announcing the fiscal 2005 fourth quarter consolidated revenue and earnings.

On January 13, 2005, the Company filed a Current Report on Form 8-K announcing the Company made a presentation at the Seventh Annual Needham Growth Conference.

On November 16, 2004, the Company filed a Current Report on Form 8-K announcing the fiscal 2005 third quarter consolidated revenue and earnings.

On November 15, 2004, the Company filed a Current Report on Form 8-K announcing the appointment of John D. McGuinness to the position of Corporate Controller.

On November 5, 2004, the Company filed a Current Report on Form 8-K announcing preliminary projections for the fiscal 2005 third quarter revenue and earnings.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors of

Astro-Med, Inc.

We have audited the accompanying consolidated balance sheet of Astro-Med, Inc. and subsidiaries (the “Company”) as of January 31, 2006, and the related consolidated statements of operations, comprehensive income and changes in shareholders’ equity, and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Astro-Med, Inc. and subsidiaries as of January 31, 2006, and the results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Our audit was conducted for the purpose of forming an opinion on the basic consolidated financial statements taken as a whole. Schedule II is presented for purposes of additional analysis and is not a required part of the basic consolidated financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic consolidated financial statements as of and for the year ended January 31, 2006 and, in our opinion, is fairly stated in all material aspects in relation to the basic consolidated financial statements taken as a whole.

/s/    GRANT THORNTON LLP

Boston, Massachusetts

March 24, 2006

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders of

Astro-Med, Inc.

We have audited the accompanying consolidated balance sheetssheet of Astro-Med, Inc. as of January 31, 2005, and 2004, and the related consolidated statements of operations, comprehensive income (loss) and changes in shareholders’ equity, and cash flows for each of the threetwo years in the period ended January 31, 2005. Our audits also included the financial statement schedule listed in the Index at Item 15(a). as it relates to the two years ended January 31, 2005. These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and schedule referred to above present fairly, in all material respects, the consolidated financial position of Astro-Med, Inc. at January 31, 2005, and 2004, and the consolidated results of its operations and its cash flows for each of the threetwo years in the period ended January 31, 2005, in conformity with U.S. generally accepted accounting principles.

ASTRO-MED, INC.

CONSOLIDATED BALANCE SHEETS

As of January 31, 2006 and 2005

The accompanying notes are an integral part of these financial statements.

ASTRO-MED, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended January 31, 2006, 2005 and 2004