UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended August 2,November 1, 2008

OR

For the transition period from            to            

Commission file number 0-13200

Astro-Med, Inc.

(Exact name of registrant as specified in its charter)

(401) 828-4000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨.

Indicate by check mark whether the registrant is a large accelerated filer or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ¨    Accelerated filer  ¨    Non-accelerated filer  ¨    Smaller reporting company  x

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock, $.05 Par Value – 7,002,8477,008,151 shares

(excluding treasury shares) as of August 29,November 28, 2008

ASTRO-MED, INC.

INDEX

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Part I. FINANCIAL INFORMATION

ASTRO-MED, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

See Notes to unaudited condensed consolidated financial statements.statements (unaudited).

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ASTRO-MED, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

See Notes to unaudited condensed consolidated financial statements.statements (unaudited).

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ASTRO-MED, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

See Notes to unaudited condensed consolidated financial statements.statements (unaudited).

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ASTRO-MED, INC.

NOTES TO UNAUDITEDTHE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

August 2,November 1, 2008

(1) Basis of Presentation

The accompanying financial statements have been prepared by Astro-Med, Inc. (the “Company”), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission, and reflect all adjustments consisting of normal recurring adjustments which, in the opinion of management, are necessary for a fair presentation of the results of the interim periods included herein. Results of operations for the interim periods presented herein are not necessarily indicative of the results that may be expected for the full year. These financial statements do not include all disclosures associated with annual financial statements and, accordingly, should be read in conjunction with footnotes contained in the Company’s annual report on Form 10-K for the year ended January 31, 2008.

(2) Principles of Consolidation

The accompanying condensed consolidated condensed financial statements include the financial statements of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions are eliminated in consolidation.

(3) Net Income Per Common Share

Net income per common share has been computed and presented pursuant to the provisions of Statement of Financial Accounting Standards (SFAS) No. 128, “Earnings Per Share”. Net income per share is based on the weighted average number of shares outstanding during the period. Net income per share assuming dilution is based on the weighted average number of shares and, if dilutive, common equivalent shares for stock options outstanding during the period.

For the three months and sixnine months ended August 2,November 1, 2008, the diluted per share amounts do not reflect options outstanding of 179,600513,667 and 170,763,285,064, respectively. For the three months and sixnine months ended August 4,November 3, 2007, the diluted per share amounts do not reflect options outstanding of 150,200162,400 and 157,300,159,000, respectively. These outstanding options were not included because the exercise price of the options was greater than the average market price of the underlying stock during the periods presented.

(4) 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.

Infrequently, the Company recognizes revenue for non-recurring engineering (NRE) fees for product modification orders upon completion of agreed-upon milestones. Revenue is deferred for any amounts received prior to completion of milestones. Certain of our NRE arrangements include formal customer acceptance provisions. In such cases, the Company determines whether they have obtained customer acceptance for the specific milestone before recognizing revenue.

Infrequently, the Company receives requests from customers to hold product being purchased from the Company for the customers’ convenience. The Company recognizes revenue for such bill and hold arrangements in accordance with the requirements of SAB No. 104 which requires, among other things, the existence of a valid business purpose for the arrangement, the transfer of ownership of the purchased product, the readiness of the product for shipment, the use of customary payment terms, no continuing performance obligation by the Company and segregation of the product from the Company’s inventories.

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ASTRO-MED, INC.

NOTES TO UNAUDITEDTHE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)

August 2,November 1, 2008

(5) Share-Based Compensation

The Company has one equity incentive plan (the “Plan”) under which incentive stock options, non-qualified stock options, restricted stock and other equity based awards may be granted to officers and key employees. To date, only options have been granted under thisthe Plan. Options granted to employees vest over four years. An aggregate of 1,000,000 shares were authorized for awards under the Plan. The exercise price of each stock option will be established at the discretion of the Compensation Committee; however, any incentive stock options granted must be at an exercise price of not less than fair market value at the date of grant. The Plan provides for an automatic annual grant of ten-year options to purchase 5,000 shares of stock to each non-employee director upon the adjournment of each shareholder meeting. Each such option is exercisable at the fair market value as of the grant date and vests immediately prior to the next succeeding annual shareholders meeting. During the second quarter of fiscal 2009, 15,000 options were awarded to non-employee directors pursuant to the Plan. At August 2,November 1, 2008, 895,025 shares under the Plan were available for grant.

The Company has estimated the fair value of each option on the date of grant using the Black-Scholes option-pricing model. The volatility assumption is based on the historical weekly price data of the Company’s common stock over a period equivalent to the weighted average expected life of the Company’s options. Management evaluated whether there were factors during that period which were unusual and would distort the volatility figure if used to estimate future volatility and concluded that there were no such factors. In determining the expected life of the option grants, the Company has observed the actual terms of prior grants with similar characteristics, the actual vesting schedule of the grant, and assessed the expected risk tolerance of different option groups. The risk-free interest rate is based on the actual U.S. Treasury zero coupon rates for bonds matching the expected term of the option as of the option grant date. The risk-free interest rate was 3.13% for all options granted in the second quarter of fiscal 2009.

The fair value of stock options granted during the sixnine months ended August 2,November 1, 2008 and August 4,November 3, 2007 was estimated on the date of grant using the following assumptions:

The fair value per share for options granted were $3.43 and $3.19 during the first quarter of fiscal 2009 and $3.65 during the second quarter of fiscal 2009 compared to $4.81 and $4.79 during the first and second quarters of fiscal 2008. No options were granted during the third quarter of fiscal 2009 and 2008.

Aggregated information regarding the Company’s stock option plansplan as of August 2,and for the nine months ended November 1, 2008 is summarized below:

Share-based compensation expense was recognized as follows:

As of August 2,November 1, 2008, there was $843,561$749,668 of unrecognized compensation expense related to unvested options.

The Company has an Employee Stock Purchase Plan allowing eligible employees to purchase shares of common stock at a 15% discount from fair value on the date of purchase. A total of 247,500 shares were initially reserved for issuance under the Plan.this plan. During the quarters ended August 2,November 1, 2008 and August 4,November 3, 2007, 1,5551,684 and 747764 shares were purchased under the Plan.this plan. During the sixnine months ended August 2,November 1, 2008 and August 4,November 3, 2007, 2,4694,153 and 1,4562,220 shares were purchased under the Plan.this plan. As of August 2,November 1, 2008, 97,72396,039 shares remain available.

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ASTRO-MED, INC.

NOTES TO UNAUDITEDTHE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)

August 2,November 1, 2008

(6) Comprehensive Income (Loss)

The Company’s comprehensive income (loss) is as follows:

(7) Inventories

Inventories are stated at the lower of cost (first-in, first-out) or market and include material, labor and manufacturing overhead. The components of inventories were as follows:

(8) Income Taxes

The Company’s effective tax rates for the periods presented herein are as follows:

The increase in the effective tax rate to 42.0% for the three months ended August 2, 2008 was due to a discrete charge of $59,484 related to the payment of additional state franchise taxes.

Effective February 1, 2007, the Company adopted Financial Accounting Standards Board (“FASB”) Interpretation No. 48 “Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement 109” (“FIN 48”). FIN 48 prescribes a comprehensive model for recognizing, measuring, presenting and disclosing in the financial statements tax positions taken or expected to be taken on a tax return, including a decision whether to file or not to file in a particular jurisdiction. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement.

During the third quarter of fiscal 2009, the Company recognized an income tax expense of approximately $203,000 which included 1) expense of $301,000 on the quarter’s pre-tax income, 2) benefit of $71,000 for the recently passed extension of the R&D tax credit and 3) benefit of $27,000 related to differences between the prior year tax provision and the actual returns as filed. During the third quarter of fiscal 2008, the Company recognized an income tax expense of approximately $346,000 which included 1) expense of $792,000 on the quarter’s pre-tax income, 2) benefit of $167,000 related to the completion of an IRS exam, 3) benefit of $319,000 related to changes in uncertain R&D and foreign tax credit positions and 4) expense of $40,000 related to differences between the prior year tax provision and the actual returns as filed.

During the nine months ended November 1, 2008, the Company recognized an income tax expense of approximately $1,612,000 which included 1) expense of $1,650,500 on the nine month’s pre-tax income, 2) expense of $59,500 related to discrete payment of additional state franchise tax, 3) benefit of $71,000 for the recently passed extension of the R&D tax credit and 4) benefit of $27,000 related to differences between the prior year tax provision and the actual returns as filed. During the nine months ended November 3, 2007, the Company recognized an income tax expense of approximately $1,285,000 which included 1) expense of $1,731,000 on the nine month’s pre-tax income, 2) benefit of $167,000 related to the completion of an IRS exam, 3) benefit of $319,000 related to changes in uncertain R&D and foreign tax credit positions and 4) expense of $40,000 related to differences between the prior year tax provision and the actual returns as filed.

As of August 2,November 1, 2008, the Company had cumulative unrecognized tax benefits of $1,367,985$1,336,972 compared to $1,372,767 as of January 31, 2008. During the third quarter of the current fiscal year, the Company reclassed $423,000 of the $1,336,972 unrecognized tax benefit to a current liability due to the expected settlement of a portion of the uncertain tax positions within the next twelve months. The Company continues to recognize accrued interest and penalties related to unrecognized tax benefits in the income tax provision. As of August 2,November 1, 2008, approximately $40,000$60,000 of interest was accrued.

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ASTRO-MED, INC.

NOTES TO UNAUDITEDTHE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)

August 2,November 1, 2008

(9) Segment Information

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

Summarized below are the Net Sales and Segment Operating Profit for each reporting segment for three months ended August 2, 2008 and August 4, 2007:segment:

Summarized below are the Net Sales and Segment Operating Profit for each reporting segment for the six months ended August 2, 2008 and August 4, 2007:

(10) NewRecent Accounting Pronouncements

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB No. 133”. (“SFAS No. 161”). This statement amends SFAS No. 133 by requiring enhanced qualitative, quantitative and credit-risk disclosures about an entity’s derivative instruments and hedging activities, but does not change SFAS No. 133’s scope or accounting. SFAS 161 is effective for fiscal years, and interim periods within those fiscal years, beginning after November 15, 2008, with earlier adoption permitted. As we do not currently engage in activities accounted for under the provision of SFAS No. 133, the adoption of SFAS No. 161 is not expected to have any impact on our financial statements.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities-Including an amendment of FASB Statement No. 115”, (“SFAS No. 159”). This statement permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. This statement is effective for fiscal years beginning after November 15, 2007. The adoption of SFAS No. 159 had no impact on our financial statements.

In December 2007, the FASB issued SFAS No. 141 (Revised 2007), “Business Combinations” (“SFAS No. 141(R)”). This statement improves the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects. It establishes principles and requirements for how the acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree; recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. This statement is effective for fiscal years beginning after December 15, 2008. This statement is not expected to have any effect on our financial statements until such time as we acquire another entity.a business.

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ASTRO-MED, INC.

NOTES TO UNAUDITEDTHE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)

August 2,November 1, 2008

(11) Securities Available for Sale

Pursuant to our investment policy, securities available for sale may include corporate debt securities, governmental obligations and state and municipal securities with various contractual or anticipated maturity dates, including Auction Rate Securities.auction rate securities. Governmental obligations include U.S. Government and Federal Agency securities. Auction rate securities are a type of long-term state and municipal securitiessecurity issued in the form of variable rate bonds having interest rate resets through a modified Dutch auction, at predetermined short-term intervals, usually every 7, 28 or 35 days.

At August 2,November 1, 2008 the Company had approximately $2,845,175$2,134,977 invested in AAA-rated municipal auction rate securities of which $478,180 is invested in a state-sponsored entity engaged in the business of investing in student loans.securities. Beginning in February 2008, a decrease in liquidity in the global credit markets caused auctions to fail for substantially all of the remaining municipal auction rate securities we held. When these auctions failed to clear, higher interest rates for many of those securities went into effect. However, the principal amounts of those securities have not been considered accessible until a successful auction occurs, a buyer is found outside of the auction process, the issuer calls the security, the issuer repays principal over time from cash flows prior to final maturity, or the security matures according to contractual terms ranging from one to 30 years. The Company’s auction rate securities were acquired through the brokerage service of UBS Financial Services Inc., a subsidiary of UBS AG. On August 8, 2008, UBS Financial Services Inc. agreed to a settlement in principle with the Securities and Exchange Commission and other state regulatory agencies including Massachusetts, New York, Texas and other states, to restore liquidity to all clients who hold actionauction rate securities. All UBS clients who hold auction rate securities will be able to redeem their securities at par value plus interest over a scheduled timeframe. With the exception of one security invested in a state-sponsored entity engaged in the business of investing in student loanloans for $493,100 and one other security for $478,180 referred to above,$488,700, all of the other auction rate securities are classified as current assets at November 1, 2008 and were refunded by UBS subsequent to November 1, 2008.

Based on the current market information available, the remaining auction rate securities are classified as non- current assets as they are scheduled to be refunded by UBS over the next year. The student loan security is scheduled to be refunded within a two-year timeframe.

We continue to classify our auction rate securities, except for the one security for $478,180 noted above, as a current asset based on the market information available.at par value plus interest between 2010 and 2012.

(12) Fair Value

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS No. 157”). SFAS No. 157 clarifies the principle that fair value should be based on the assumptions market participants would use when pricing an asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. Under SFAS No. 157, fair value measurements would be separately disclosed by level within the fair value hierarchy. The provisions of SFAS No. 157 are effective for the fiscal years beginning after November 15, 2007. However, in February 2008, the FASB issued FASB Staff Position No. 157-2, “Effective Date of FASB Statement No. 157” (“FSP 157-2”) that amended SFAS No. 157 to delay the effective date for all non-financial assets and non-financial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (that is, at least annually). FSP 157-2 defers the effective date of SFAS No. 157 to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years for items within the scope. We are currently evaluating the effect, if any, that the adoption of items deferred under FSP 157-2 may have on our financial statements.2008.

Effective February 1, 2008, the Company adopted certain provisions of SFAS No. 157 for its financial assets and liabilities. SFAS No. 157 describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value. In October 2008, the FASB issued FASB Staff Position No.157-3 “Determining the Fair Value of a Financial Asset When the Market for that Asset Is Not Active” (“FSP 157-3”). FSP 157-3 clarified the application of FAS 157 in situations where the market for that financial asset is not active. FSP 157-3 was effective upon issuance, including prior periods for which financial statements had not been issued.

The fair value hierarchy is summarized as follows:

The following table represents the fair value hierarchy for our financial assets (cash equivalents and investments in marketable securities) measured at fair value on a recurring basis as of August 2,November 1, 2008:

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ASTRO-MED, INC.

NOTES TO UNAUDITEDTHE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)

August 2,November 1, 2008

Level 3 assets consist of auction rate securities whose underlying assets are backed by either municipal assets or state-issued student and educational loans. Interest received during a given period is based upon the interest rate determined through the auction process. While we continue to earn interest on our auction rate securities at maximum contractual rates, these investments are not currently trading and therefore do not currently have a readily determinable market value which historically has been their par value. Therefore, the estimated fair value of auction rate securities no longer approximates par value. Accordingly, we recorded an unrealized loss of approximately $54,825$65,023 related to our auction rate securities as of August 2,November 1, 2008, using a discounted cash flow method. We believe this unrealized loss is primarily attributable to the limited liquidity of these investments and have no reason to believe that any of the underlying issuers are presently at risk of default. Management has the intent and the ability to hold these securities for an indefinite period of time and, accordingly, believes that the unrealized loss on its auction rate securities holdings is temporary in nature. The following table provides a summary of changes in fair value of the Company’s auction rate securities as of August 2,for the three and nine months ended November 1, 2008:

During the first quarter of fiscal 2009 the Company’s investment advisor redefined variable rate demand notes as fixed income municipal securities as these investments continue to trade in a liquid market.

(13) Restructuring

The following table summarizes the activity and balances of the reserve established for the Italy and Netherlands restructuring:restructuring approved in the fourth quarter of fiscal 2008:

The Company expects to complete the utilization of the reserve related to this restructuring by the end of fiscal 2009.

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ASTRO-MED, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Business Overview

This section should be read in conjunction with the Condensed Consolidated Financial Statements of the Company included elsewhere herein and the Company’s Form 10-K for the fiscal year ended January 31, 2008.

The Company develops and manufactures systems that have the ability to acquire, process, analyze, store and present electronic data in a variety of useable forms. The Company sells its product under brand names including Astro-Med^® Test & Measurement (T&M), QuickLabel^® Systems (QuickLabel) and Grass^® Technologies (GT). Products sold under the Astro-Med T&M brand acquire and record data and print the output onto charts or electronic media. Products sold under the QuickLabel Systems brand create product and packaging labels and tags in one or many colors. Products sold under the Grass Technologies 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 hardware, software and consumables to customers who are in a variety of industries.

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 factory-trained direct field sales people located in major cities from coast to coast specializing in either T&M Recorders and Data Acquisitions systems, QuickLabel Color Label printers and media systems, or Grass Technologies Neurological Instrumentation products. Additionally, the Company has direct field sales and service centers in Canada, England, France, United Kingdom and Germany. In the remaining parts of the world, the Company utilizes approximately 80 independent dealers and representatives selling and marketing its products in 40 countries.

Products sold under the Astro-Med T&M brand include ToughWriter page printers, ToughSwitches Ethernet switches, Everest recorders and ToughSwitches for use in passenger and military aircraft.Dash series data recorders. ToughWriter ruggedized page printers are used in bothon the cockpitflight deck and in the cabins of aircraft.military and commercial aircraft to print hard copies of airport maps, flight itineraries, weather maps, gate information and ground communications. ToughSwitches are also used in commercial and military vehicles.aircraft and military vehicles to connect multiple computers or Ethernet-compatible devices together. These and other similar products are ruggedized andto comply with rigorous military and commercial flightworthiness standards specifications for operation under extreme environmental conditions. The Company is currently furnishing ToughWriters for the Airbus A380, the Boeing C-17, B-787, B-777, B-747, B-767, and the Lockheed C-130. 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, missiles and missiles under test.other systems in flight. The Everest ranges in price from $18,000 to $35,000 depending on features and options selected.$35,000. The Astro-Med brandCompany’s Dash Series constituteproduct line consists of a family of portable electronic data acquisition systems which arerecorders used as maintenance and troubleshooting instruments forin pulp and paper mills, metal mills, power plants, automotive R & D centers and manufacturing plants. Included in the Dash Series areinclude the Dash 2EZ, Dash 8X, Dash 8HF, Dash 8XPM, Dash 32HF18, Dash 20HF and the Dash 18 and they32HF which range in price from $3,500 (Dash 2EZ+) to $20,000$25,000 (Dash 32HF) depending on model and features and options selected.

Products sold under the QuickLabel System brand include a family of digital color label printers includingdeveloped for short-run, in-house label printing; label and tag substrates and thermal transfer ribbon, toner, and inkjet printing inks developed for use in label printers, and a range of labeling software, accessory products, and printing services which allow QuickLabel Systems sales and support staff to serve customers at virtually every level of their label printing needs. With its broad range of entry-level, mid-range, and high-performance digital label printers, QuickLabel Systems is able to provide its customers a continuous path to upgrade to new products. QuickLabel products are primarily sold to end-user manufacturers, processors, and retailers who package products on a Just-in-Time basis, label products for private label, OEM, or contract packaging customers, or label products in foreign languages for export markets. These end-users can benefit from the time savings and cost-savings of printing their own labels digitally on-demand. Industries that commonly benefit from short-run label printing include apparel, chemicals, cosmetics, electronics, foods and beverages, medical products, and pharmaceuticals, among many other manufactured goods. Current QuickLabel models include the Vivo!, the first electrophotographic label printer developed to print roll-to-roll for in-house label printing; the Zeo!, a lower-duty inkjet printer developed in partnership with Hewlett-Packard; and the QLS-4100 XE, QLS-8100 XE, QLS-2000 and QLS-3000Xe Series of color thermal transfer label printers including the ZEO inkjet printer which was introduced in fiscal 2008, as well as a lineQLS-4100 Xe, QLS-8100 Xe, QLS-2000 Xe and QLS-3000 Xe. The Xe Series of monochromedigital color thermal transfer digital label printers including the Pronto! Series. This Series includes four models used in printing bar code labels. QuickLabel digital color label printers are sold viaunique in the industry in that they can be directly integrated with production line equipment and represent a direct sales force throughout the US, Canadanovel, patented application of multi-color thermal transfer technology, historically only commercialized in single-color barcode label printers. QuickLabel also sells and Western Europe, and serviced by a factory-trained, direct technical support staff. In the restsupports its own Pronto! family of the world, QuickLabel uses a broad network of dealers to sell and support its products. QuickLabel’s unique labeling solutions are aimed atmonochrome/barcode printers which utilize thermal transfer label printing applicationstechnology in which product packaging requires frequent content changes. QuickLabel digital color label printers fill a critical need in environments that 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. Custom QuickLabel, a custom label creation 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 closely approximates digital artwork. QuickLabel digital label printers generate revenue through label, tag, thermal transfer ribbon and toner cartridge consumables sales. The Company engineers and manufactures unique printing supplies especially for use in optimizing the performance of the QuickLabel brand of digital label printers.single color.

Products sold under the Grass Technologies (GT) brand include systems, instrumentsboth capital equipment as well as consumable products. The capital equipment is made up of primary Clinical line selling into the diagnostic markets of electroencephalography (EEG), Epilepsy Monitoring and softwareSleep Disorders. These 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 GT 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 is a line of amplifiers, electrodes, transducers and stimulators used by clinicians and researchers. Products sold under the Grass Technologies brand are sold to hospitals, sleep centers,free standing clinics and doctorsprivate physician offices. The equipment sold to each of these markets is similar in that it consists of amplifying bio signals and capturing them via PC/software for eventual review and reporting. The secondary capital equipment line is sold to the research market involving diagnostic recording systems as well as stimulation units. The customers for the research line typically involve University based biology research centers. The consumable line of products offered by GT are typically utilized with the recording systems outlined above. These products are predominantly made up of electrodes that are used for the purpose of collecting physiological data from patients. All GT clinical products which are connected to the human body are approved by the Food and Drug Administration (FDA).

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ASTRO-MED, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Results of Operations

Three Months Ended August 2,November 1, 2008 vs. Three Months Ended August 4,November 3, 2007

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

Net Sales by product group and current quarter percentage change and percent of Net Salesover prior year for the three months ended August 2,November 1, 2008 and August 4,November 3, 2007 were:

The Company’s current year third quarter sales revenues were $19,784,000 in the second quarter, reaching$17,681,000, representing a record level of quarterly sales and improving on the7.6% decrease as compared to previous year’s sales in the secondthird quarter of $18,694,000 by 5.8%.$19,139,000. Sales through the domestic channels were $13,486,000, up 6.8%$12,654,000, a decline of 7.1% over the prior year. Current year whereasthird quarter international shipments at $6,298,000 grewof $5,027,000 were also down by 3.8%8.9% from the previous year. FavorableA negative impact from foreign exchange rates contributed $443,000$118,000 to the secondthird quarter’s international sales growth.decline.

Hardware sales in the current quarter were $9,863,000, up 3.9%$8,037,000, down 16.5% over the prior year’s third quarter hardware sales of $9,491,000. Growth$9,626,000. The decrease in hardware sales in the current quarter was evident in twoall three product groups, with Test & Measurement down 10.9%, QuickLabel Systems down 33.5 % and Grass Technologies while the Test & Measurement hardware sales were flat with the prior year.down 10.1%.

Consumables sales in the current quarter were $8,561,000,$8,334,000, representing an increase of 8.0% from1.9% over the prior year’s sales of $7,925,000, with each$8,178,000. The slight growth in consumable sales for the current quarter was mainly due to the QuickLabels product group, reporting healthy growthas sales increased 3.4% from prior years. This increase was tempered by a 20.2% and 2.4% decline in their respectivecurrent quarter as compared to prior year third quarter consumable sales for the T&M and GT product lines, as the hardware installed base continues to grow.respectively.

Service and other revenues at $1,360,000of $1,310,000 in the quarter achieved a 6.3% improvement over thewas down 1.9% from prior year’s service and other revenues of $1,278,000. All three product groups reported growth$1,335,000. The decline in their respective service and other sales product lines.

Relative towas shared among the Company’s three product groups, the QuickLabel Systems product group of color and monochrome printing systems dominated the second quarter’s sales with revenues of $10,633,000, up 10.1% from the previous year’s sales of $9,661,000. Also contributing to the quarter’s growth were sales in the Grass Technologies product group, where revenues of $4,661,000 rose 2.8%groups.

Current year third quarter gross profit was $7,647,000, an 8.7% decrease from the prior year’s sales of $4,533,000. Sales revenues from the Company’s Test & Measurement product group were virtually flat at $4,490,000 with the prior year’s sales of $4,500,000.

The Company continued its improvement in gross profit during the second quarter. Gross profit was $8,681,000 in thethird quarter a 10.9% increase from the prior year’s gross profit in the second quarter and a 6.0% increase over the first quarter’s gross profit of $8,188,000.$8,372,000. The results also reflect a gross profit margin improvement during the quarter. The Company achieved aCompany’s gross profit margin of 43.9%43.3% in the current quarter, reflects a 200 basis point improvementnominal decrease from the prior year’s gross profit margin of 41.9% and a nominal improvement over43.7%. The lower gross profit margins for the first quarter’s margin of 43.8% duecurrent quarter can be attributed to better factory absorption and productivity improvements.lower sales volume.

The Company’s current year third quarter spending in the operating accounts offor selling, research & development (R&D) and general and administrative rose 2.8%expenses declined 1.1% from the prior year to $6,752,000.$6,558,000. Specifically, selling & marketing expenses increased 1.6%decreased 2.5% from the previous year due to incrementsthe Italy restructuring and lower travel and entertainment expenses in compensation expense and marketing programs. Research & Development (R&D)the current quarter. R&D expenses in the quarter were $1,199,000,$1,254,000, a 5.6%5.9% increase from the prior year’s secondthird quarter’s spending, but down 2.2% from the first quarter’s expense level.spending. The increased spending in R & D&D is confined to purchases of outside professional engineering services. As a percentage of sales, R&D expenses consumed 6.1%spending was 7.1% in the third quarter of the second quarter’s sales, being consistent withcurrent year as compared to 6.2% in the third quarter of the previous year. General & administrative spending rose 4.5%declined 3.4% from prior year to $1,210,000.$1,140,000. The increased expensedecreased in general and administrative expenditures is duemainly attributed to lower incentive compensation, offset by an increase in professional service fees and insurance costs.fees.

The Company achievedCompany’s income from operations of $1,928,000$1,089,000 in the quarter. This levelcurrent quarter reflects a decrease of profitability improved on the37.3% from prior year’s second quarter’s operating income by 52.8% and reflects an operatingof $1,738,000. Operating margin for the third quarter of 9.7% asthe current year of 6.2% is down compared to the prior year’s 6.8% margin.third quarter margin of 9.1%. The lower operating income and related margins for the third quarter of the current year can be mainly attributed to the lower sales volume during the current quarter.

Other incomeexpense during the secondthird quarter declinedwas $237,000 compared to $61,000 from our prior year level of $214,000. The lower level of other income stems fromof $170,000 in the third quarter of the previous year. The major contributing factor of the current year’s other expense is the $357,000 in losses for foreign currency translation transactions and adjustments due to the continued strengthening of the US dollar. Other expenses were also impacted this quarter by lower investment income higher foreign currency losses and miscellaneous charges.as compared to prior years.

The provision for federal and state income taxes in the secondthird quarter was $835,000,$203,000 reflecting an effective tax rate of 42.0%23.8% as compared to the prior year’s effective tax rate of 40.0%18.2%. This quarter’s expense includes a discrete item relatedan adjustment to the paymenttax provision as a result of additional state franchise taxes.the recent extension of the R&D tax credit as compared to the prior year’s third quarter rate which included the benefits of both a favorable IRS tax examination and favorable changes in uncertain R&D and foreign tax credit positions.

The Company earned $1,154,000$649,000 in net income for the secondthird quarter reflecting a return on sales of 5.8%3.7% and generatinggenerated an EPS of $0.15$0.09 per diluted share. On a comparative basis with the previous year’s secondthird quarter, net income was $886,000$1,562,000 providing a return of 4.7%8.2% on sales and reporting an EPS of $0.12$0.21 per diluted share.

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ASTRO-MED, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Results of Operations (Continued)

Summarized below are the Net Sales and Segment Operating Profit for each reporting segment for the three months ended August 2, 2008 and August 4, 2007:

Test & Measurement - T&M

Sales revenues from the Test & Measurement product group were $4,490,000 for the second quarter, essentially flat with the sales of $4,500,000 for the same period in the prior year. Within the product group, Dash recorder sales were comparable to the prior year and ruggedized products were down due to timing on the avionic printer orders year over year. However, sales of the Everest product line were up significantly from the prior year. Gross Profit margins were up from last year while operating expenses rose 1.8% from the prior year spending level. Segment operating profits were approximately flat with the prior year, while the segment operating profit margins of 19.6% were comparable to the prior year’s margin of 19.7%.

QuickLabel Systems - QLS

Sales revenues from the QuickLabel Systems product group were $10,633,000 in the quarter as compared to $9,661,000 in the prior year’s same quarter. The sales growth of 10.1% over the prior year was distributed among hardware products, up 16.5%, consumable products, up 8.1% and service and other sales, up 4.4%. Gross profit increased over the prior year, while the gross profit margin improved by 230 basis points. Operating expenses rose 6.4% from the previous year as higher personnel costs and compensation related commission expense drove the increased spending. The QLS segment operating profits were up 41.6% over the prior year and reflect a profit margin of 14.3% against the prior year’s segment profit margin of 11.1%.

Grass Technologies - GT

Sales in the quarter were $4,661,000 against $4,533,000 in the prior year’s second quarter. The growth rate of 2.8% was shared among hardware systems up 1.2%, consumable products up 8.5% and service and other revenues up 0.5%. Gross profit was 10.0% while gross profit margins improved as well. Operating expenses were down 1.7% from the previous year’s second quarter spending due to savings realized from the restructuring initiative implemented in the prior year. Segment operating profits were up significantly in the quarter with the segment achieving an operating profit margin of 12.6% as compared to a segment operating profit margin of 7.5% reported in the prior year.

SixNine Months Ended August 2,November 1, 2008 vs. SixNine Months Ended August 4,November 3, 2007

Net Sales by product group percentand current year percentage change and percent of Net Salesover prior year for the sixnine months ended August 2,November 1, 2008 and August 4,November 3, 2007 were:

Net sales for the sixnine month period of the current fiscal year were $38,472,000,$56,152,000, a 9.6%3.5% improvement over the $35,101,000$54,240,000 reported for the first sixnine months of the prior fiscal year. T&MSales through the domestic channels for the first nine months of the current year were $39,177,000, a 2.6% increase from the prior year. International sales of $16,975,000 for the first nine months of the current year reflects a 5.8% increase over prior year. Favorable foreign exchange of $798,000 contributed to the international sales growth. All three segments have reported an increase in sales for the first nine months of the current year as compared to prior year’s sales for the same period.

The Company’s hardware sales grew 2.2% in the first nine months of fiscal 2009 to $26,855,000 with GT hardware sales dominating the growth rate. Consumable sales of $25,254,000 rose 5.2% from the nine month period with QuickLabel media and Grass Technologies’ electrodes and creams products accounting for the increase. Service and other sales revenues for the nine months were $8,450,000, reflecting$4,043,000, an increase of 6.1% over2.3% from the previousprior year with the sales growth traceable to an increase in T&M parts and representing 22.0%repair invoicing.

The Company achieved $24,515,000 in gross profit for the first nine months and generated a gross profit margin of the Company’s total sales for six months. QuickLabel Systems with sales revenues of $20,382,000 for six months grew 9.7%43.7% on sales. This result reflects a 120 basis point improvement over the prior year’s salesgross profit margin of 42.5% and represent 53.0%is due to better factory absorption, product mix and productivity improvements.

Operating expenses in the nine months of the Company’s total salescurrent year for selling, R&D and general and administrative were $20,203,000, representing a 4.0% increase from the prior year. Selling and marketing expenses rose 2.5% from the prior year to $12,927,000 with the increase traceable to personnel costs related to compensation from higher commission expense, wages and advertising costs. R&D spending for the current six months. Grass Technologiesnine months grew by 7.7% to $3,680,000 as compared to the same period in the prior year and represents 6.6% of the current year’s sales revenues were $9,640,000compared to 6.3% of sales in the prior year. The current year increase in R&D spending is primarily attributable to an increase in the procurement of outside software engineering services. General and administrative expense for the first halfnine months of the current year were $3,596,000, a 6.1% increase to from the prior year. The higher spending level in the current year is mainly attributed to an increase in professional service fees.

The Company has earned $4,313,000 in operating income during the first nine months of fiscal year 2009, representingreflecting a 12.6% increase19.1% improvement in operating income over the prior year’s nine month’s operating income. On a margin basis, this year’s operating income reflects an operating margin of 7.7% on sales, for six months and reflecting 25.0%a 100 basis point increase from the prior year’s operating margin of the Company’s total sales for6.7%.

Other income realized during the first sixnine months of the current fiscal year has decreased $632,000 as compared to the other income reported in the previous year. This lower level of other income is a result of higher foreign exchange losses due to the continued strengthening of the US dollar and lower interest income from municipal bonds as compared to the prior year.

The Company has provided federal and state income tax expense of $1,612,000 for the nine month period ended November 1, 2008. This year’s provision reflects an effective tax rate of 37.4%, up from the prior year’s effective tax rate of 30.2%. The increase is the result of the payment of additional discrete state franchise taxes incurred in the current fiscal year, and prior year tax benefits from a favorable IRS tax examination and favorable changes in uncertain R&D and foreign tax credit positions.

Net income earned during the first nine months of the current fiscal year was $2,701,000, lower than the prior year’s net income of $2,969,000 and reflects a return on sales of 4.8% as compared to 5.5% reported for the previous year. This year’s net income resulted in an EPS of $0.36 per diluted share as compared to an EPS of $0.39 per diluted share reported for the prior year’s first nine months. The prior year’s EPS includes $0.06 of benefit related to a favorable IRS tax examination and favorable changes in uncertain R&D and foreign tax credit positions.

-14-

ASTRO-MED, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Results of Operations (Continued)

The Company’s hardware sales grew 13.0% in the first half to $18,819,000 with the Dash, Everest, QuickLabel printer lines and Grass Technologies clinical products responsible for this year’s growth. Consumable sales of $16,919,000 rose 6.9% from the six month period with QuickLabel media and Grass Technologies’ electrodes and creams products accounting for the increase. Service and other sales revenues for the six months were $2,734,000, an increase of 4.4% from the prior year with the sales growth traceable to an increase in parts and repair invoicing.

Relative to Astro-Med’s various channels of distribution, the Company reported domestic sales of $26,524,000, an increase of 7.9% from the previous year’s sales of $24,576,000 and representing 69.0% of the Company’s total sales revenues. International shipments for the six month period increased by 13.5% to $11,948,000 and represent 31.0% of the Company’s total sales revenues. Foreign currency exchange rates had a favorable impact on international sales of $916,000 or 8.7%.Segment Analysis

The Company realized $16,868,000 in gross profit for the first six monthsreports three segments consistent with its sales product groups: Test & Measurement (T&M); QuickLabel Systems (QuickLabel) and generated a gross profit margin of 43.8% on sales. This result reflects a 200 basis point improvement over the prior year’s gross profit margin of 41.8% and is due to better factory absorption, product mix and productivity improvements.

Operating expenses in the six months were $13,645,000, a 6.7% increase in spending in selling, R&D and general and administrative expenses from the prior year. Selling and marketing expenses rose 5.0% from last year to $8,764,000 with the increase traceable to personnel costs related to compensation from higher commission expense. R&D spending grew by 8.6% to $2,425,000 from the prior year’s six months spending. The increase in expenses is confined to an increase in the procurement of outside software engineering services. R&D spending is 6.3% of the current year’s sales and comparable to the spending of 6.4% of sales reported in the prior year. General and administrative expense rose 11.0% from the prior year to $2,456,000 for the first six months. The higher spending level is traceable to an increase in professional service fees.

Grass-Technologies (GT). The Company has earned $3,223,000 in operating income duringevaluates segment performance based on the first six months of fiscal year 2009. This achievement reflects a 71.1% improvement in operating income over the prior year’s first half operating income. On a margin basis, this year’s operating income reflects an operating margin of 8.4% on sales, a 300 basis point increase from the prior year’s operating margin of 5.4%.

Other income realized during the first six months of the current fiscal year was $237,000 as compared to the other income of $463,000 reported in the previous year. This lower level of other income stems from lower interest income (municipal bonds), lower foreign currency gainssegment profit before corporate and lower miscellaneous income than reported in the prior year.

The Company has provided federal and state income tax expense of $1,409,000 for the six month period ended August 2, 2008. This year’s provision reflects an effective tax rate of 40.7%, up slightly from the prior year’s effective tax rate of 40.0%. The increase is the result of the payment of additional discrete state franchise taxes incurred in the current fiscal year.

Net income earned during the first six months of the current fiscal year was $2,051,000, a 45.7% increase over the prior year’s net income of $1,408,000 and reflects a return on sales of 5.3% against 4.0% reported for the previous year. This year’s net income translates into an EPS of $0.27 per diluted share against an EPS of $0.19 per diluted share reported for the prior year’s first six months.financial administration expenses.

Summarized below are the Net Sales and Segment Operating Profit for each reporting segmentsegment: