| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
1, 2021
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| Large accelerated filer | ☐ | Accelerated filer | ||||
Non-accelerated filer | Smaller reporting company | ☒ | ||||
| Emerging growth company | ☐ | |||||
7,231,068.
EXPLANATORY NOTE
Page No. | ||||||||
Part I. | Financial Information | |||||||
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Item 1. | ||||||||
8-20 | ||||||||
Item 2. | 20-29 | |||||||
Item 3. | ||||||||
| 30 | |||||||
Item 4. | ||||||||
| 30 | |||||||
Part II. | ||||||||
Item | 30 | |||||||
Item 1A. | 30 | |||||||
Item 2. | 30-31 | |||||||
Item 6. | 32 | |||||||
| 33 | |||||||
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Item 1. | Financial Statements |
| May 2, 2020 | January 31, 2020 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash and Cash Equivalents | $ | 11,091 | $ | 4,249 | ||||
Accounts Receivable, net | 18,473 | 19,784 | ||||||
Inventories, net | 32,557 | 33,925 | ||||||
Prepaid Expenses and Other Current Assets | 2,489 | 2,193 | ||||||
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Total Current Assets | 64,610 | 60,151 | ||||||
Property, Plant and Equipment, net | 11,377 | 11,268 | ||||||
Intangible Assets, net | 24,328 | 25,383 | ||||||
Goodwill | 11,988 | 12,034 | ||||||
Deferred Tax Assets, net | 5,073 | 5,079 | ||||||
Right of Use Assets | 1,553 | 1,661 | ||||||
Other Assets | 1,071 | 1,088 | ||||||
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TOTAL ASSETS | $ | 120,000 | $ | 116,664 | ||||
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| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
CURRENT LIABILITIES | ||||||||
Accounts Payable | $ | 4,282 | $ | 4,409 | ||||
Accrued Compensation | 2,893 | 2,700 | ||||||
Other Accrued Expenses | 3,697 | 4,711 | ||||||
Revolving Credit Facility | 11,500 | 6,500 | ||||||
Current Portion of Long-Term Debt | 6,602 | 5,208 | ||||||
Current Liability – Royalty Obligation | 2,000 | 2,000 | ||||||
Current Liability – Excess Royalty Payment Due | 586 | 773 | ||||||
Deferred Revenue | 375 | 466 | ||||||
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Total Current Liabilities | 31,935 | 26,767 | ||||||
Long-Term Debt, net of current portion | 6,334 | 7,715 | ||||||
Royalty Obligation, net of current portion | 7,550 | 8,012 | ||||||
Lease Liabilities, net of current portion | 1,199 | 1,279 | ||||||
Deferred Tax Liabilities | 378 | 435 | ||||||
Other Long-Term Liabilities | 1,042 | 1,081 | ||||||
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TOTAL LIABILITIES | 48,438 | 45,289 | ||||||
SHAREHOLDERS’ EQUITY | ||||||||
Common Stock, $0.05 Par Value, Authorized 13,000,000 shares; Issued 10,371,704 shares and 10,343,610 shares at May 2, 2020 and January 31, 2020, respectively | 518 | 517 | ||||||
AdditionalPaid-in Capital | 56,656 | 56,130 | ||||||
Retained Earnings | 49,233 | 49,298 | ||||||
Treasury Stock, at Cost, 3,287,271 and 3,281,701 shares at May 2, 2020 and January 31, 2020, respectively | (33,531 | ) | (33,477 | ) | ||||
Accumulated Other Comprehensive Loss, net of tax | (1,314 | ) | (1,093 | ) | ||||
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TOTAL SHAREHOLDERS’ EQUITY | 71,562 | 71,375 | ||||||
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TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 120,000 | $ | 116,664 | ||||
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May 1, 2021 | January 31, 2021 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash and Cash Equivalents | $ | 11,414 | $ | 11,439 | ||||
Accounts Receivable, net | 15,249 | 17,415 | ||||||
Inventories, net | 29,474 | 30,060 | ||||||
Prepaid Expenses and Other Current Assets | 2,072 | 1,807 | ||||||
Total Current Assets | 58,209 | 60,721 | ||||||
Property, Plant and Equipment, net | 12,124 | 12,011 | ||||||
Intangible Assets, net | 20,496 | 21,502 | ||||||
Goodwill | 12,730 | 12,806 | ||||||
Deferred Tax Assets | 5,944 | 5,941 | ||||||
Right of Use Assets | 1,302 | 1,389 | ||||||
Other Assets | 1,251 | 1,103 | ||||||
TOTAL ASSETS | $ | 112,056 | $ | 115,473 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
CURRENT LIABILITIES | ||||||||
Accounts Payable | $ | 5,639 | $ | 5,734 | ||||
Accrued Compensation | 2,951 | 2,852 | ||||||
Other Liabilities and Accrued Expenses | 3,448 | 3,939 | ||||||
Current Liability – Royalty Obligation | 2,000 | 2,000 | ||||||
Current Portion of Long-Term Debt | 813 | 5,326 | ||||||
Current Liability – Excess Royalty Payment Due | — | 177 | ||||||
Deferred Revenue | 330 | 285 | ||||||
Income Taxes Payable | 260 | 655 | ||||||
Total Current Liabilities | 15,441 | 20,968 | ||||||
Long-Term Debt, net of current portion | 8,884 | 7,109 | ||||||
Royalty Obligation, net of current portion | 5,711 | 6,161 | ||||||
Long-Term Debt – PPP Loan | 4,422 | 4,422 | ||||||
Lease Liabilities, net of current portion | 983 | 1,065 | ||||||
Other Long-Term Liabilities | 680 | 681 | ||||||
Deferred Tax Liabilities | 402 | 384 | ||||||
TOTAL LIABILITIES | 36,523 | 40,790 | ||||||
SHAREHOLDERS’ EQUITY | ||||||||
Common Stock, $0.05 Par Value, Authorized 13,000,000 shares; Issued 10,479,139 shares and 10,425,094 shares at May 1, 2021 and January 31, 2021, respectively | 524 | 521 | ||||||
Additional Paid-in Capital | 58,576 | 58,049 | ||||||
Retained Earnings | 50,678 | 50,085 | ||||||
Treasury Stock, at Cost, 3,312,687 and 3,297,058 shares at May 1, 2021 and January 31, 2021, respectively | (33,796 | ) | (33,588 | ) | ||||
Accumulated Other Comprehensive Loss, net of tax | (449 | ) | (384 | ) | ||||
TOTAL SHAREHOLDERS’ EQUITY | 75,533 | 74,683 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 112,056 | $ | 115,473 | ||||
| Three Months Ended | ||||||||
| May 2, 2020 | May 4, 2019 | |||||||
Revenue | $ | 30,919 | $ | 36,181 | ||||
Cost of Revenue | 20,064 | 21,942 | ||||||
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Gross Profit | 10,855 | 14,239 | ||||||
Operating Expenses: | ||||||||
Selling and Marketing | 5,925 | 6,765 | ||||||
Research and Development | 1,940 | 2,007 | ||||||
General and Administrative | 2,327 | 2,999 | ||||||
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Operating Expenses | 10,192 | 11,771 | ||||||
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Operating Income | 663 | 2,468 | ||||||
Other Expense, net | (349 | ) | (368 | ) | ||||
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Income Before Income Taxes | 314 | 2,100 | ||||||
Income Tax (Benefit) Provision | (118 | ) | 400 | |||||
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Net Income | $ | 432 | $ | 1,700 | ||||
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Net Income Per Common Share—Basic: | $ | 0.06 | $ | 0.24 | ||||
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Net Income Per Common Share—Diluted: | $ | 0.06 | $ | 0.23 | ||||
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Weighted Average Number of Common Shares Outstanding: | ||||||||
Basic | 7,073 | 6,971 | ||||||
Diluted | 7,105 | 7,248 | ||||||
Three Months Ended | ||||||||
May 1, 2021 | May 2, 2020 | |||||||
Revenue | $ | 29,078 | $ | 30,919 | ||||
Cost of Revenue | 18,190 | 20,064 | ||||||
Gross Profit | 10,888 | 10,855 | ||||||
Operating Expenses: | ||||||||
Selling and Marketing | 6,092 | 5,925 | ||||||
Research and Development | 1,717 | 1,940 | ||||||
General and Administrative | 2,344 | 2,327 | ||||||
Operating Expenses | 10,153 | 10,192 | ||||||
Operating Income | 735 | 663 | ||||||
Other Expense, net | 369 | 349 | ||||||
Income Before Income Taxes | 366 | 314 | ||||||
Income Tax Benefit | (227 | ) | (118 | ) | ||||
Net Income | $ | 593 | $ | 432 | ||||
| Net Income per Common Share—Basic: | $ | 0.08 | $ | 0.06 | ||||
| Net Income per Common Share—Diluted: | $ | 0.08 | $ | 0.06 | ||||
Weighted Average Number of Common Shares Outstanding: | ||||||||
Basic | 7,145 | 7,073 | ||||||
Diluted | 7,265 | 7,105 | ||||||
| Three Months Ended | ||||||||
| May 2, 2020 | May 4, 2019 | |||||||
Net Income | $ | 432 | $ | 1,700 | ||||
Other Comprehensive Loss, Net of Taxes | ||||||||
Foreign Currency Translation Adjustments | (142 | ) | (172 | ) | ||||
Change in Value of Derivatives Designated as Cash Flow Hedge | (46 | ) | 116 | |||||
(Gains) Losses from Cash Flow Hedges Reclassified to Income Statement | (33 | ) | (144 | ) | ||||
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Other Comprehensive Loss | (221 | ) | (200 | ) | ||||
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Comprehensive Income | $ | 211 | $ | 1,500 | ||||
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Three Months Ended | ||||||||
May 1, 2021 | May 2, 2020 | |||||||
Net Income | $ | 593 | $ | 432 | ||||
Other Comprehensive Loss, Net of Taxes: | ||||||||
Foreign Currency Translation Adjustments | (81 | ) | (142 | ) | ||||
Change in Value of Derivatives Designated as Cash Flow Hedge | — | (46 | ) | |||||
Loss (Gain) from Cash Flow Hedges Reclassified to Income Statement | 16 | (33 | ) | |||||
Other Comprehensive | (65 | ) | (221 | ) | ||||
Comprehensive Income | $ | 528 | $ | 211 | ||||
| Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Total Shareholders’ Equity | |||||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||||||||
Balance February 1, 2019 | 10,218,559 | $ | 511 | $ | 53,568 | $ | 49,511 | $ | (32,997 | ) | $ | (818 | ) | $ | 69,775 | |||||||||||||
Share-Based Compensation | — | — | 601 | — | — | — | 601 | |||||||||||||||||||||
Employee Option Exercises | 27,990 | 1 | 306 | — | (11 | ) | — | 296 | ||||||||||||||||||||
Restricted Stock Awards Vested, net | 9,522 | 1 | (1 | ) | — | (69 | ) | — | (69 | ) | ||||||||||||||||||
Cash Dividend—$0.07 per share | — | — | — | (489 | ) | — | — | (489 | ) | |||||||||||||||||||
Net Income | — | — | — | 1,700 | — | — | 1,700 | |||||||||||||||||||||
Other Comprehensive Loss | — | — | — | — | — | (200 | ) | (200 | ) | |||||||||||||||||||
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Balance May 4, 2019 | 10,256,071 | $ | 513 | $ | 54,474 | $ | 50,722 | $ | (33,077 | ) | $ | (1,018 | ) | $ | 71,614 | |||||||||||||
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| Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Total Shareholders’ Equity | |||||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||||||||
Balance February 1, 2020 | 10,343,610 | $ | 517 | $ | 56,130 | $ | 49,298 | $ | (33,477 | ) | $ | (1,093 | ) | $ | 71,375 | |||||||||||||
Share-Based Compensation | — | — | 495 | — | — | — | 495 | |||||||||||||||||||||
Employee Option Exercises | 4,456 | — | 32 | — | — | — | 32 | |||||||||||||||||||||
Restricted Stock Awards Vested, net | 23,638 | 1 | (1 | ) | — | (54 | ) | — | (54 | ) | ||||||||||||||||||
Cash Dividend—$0.07 per share | — | — | — | (497 | ) | — | — | (497 | ) | |||||||||||||||||||
Net Income | — | — | — | 432 | — | — | 432 | |||||||||||||||||||||
Other Comprehensive Loss | — | — | — | — | — | (221 | ) | (221 | ) | |||||||||||||||||||
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Balance May 2, 2020 | 10,371,704 | $ | 518 | $ | 56,656 | $ | 49,233 | $ | (33,531 | ) | $ | (1,314 | ) | $ | 71,562 | |||||||||||||
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ASTRONOVA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
| Three Months Ended | ||||||||
| May 2, 2020 | May 4, 2019 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net Income | $ | 432 | $ | 1,700 | ||||
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: | ||||||||
Depreciation and Amortization | 1,568 | 1,584 | ||||||
Amortization of Debt Issuance Costs | 12 | 13 | ||||||
Share-Based Compensation | 495 | 601 | ||||||
Changes in Assets and Liabilities: | ||||||||
Accounts Receivable | 1,220 | 1,439 | ||||||
Inventories | 1,237 | (2,001 | ) | |||||
Income Taxes | (90 | ) | 263 | |||||
Accounts Payable and Accrued Expenses | (1,140 | ) | (2,796 | ) | ||||
Other | (314 | ) | 184 | |||||
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Net Cash Provided by Operating Activities | 3,420 | 987 | ||||||
Cash Flows from Investing Activities: | ||||||||
Additions to Property, Plant and Equipment | (626 | ) | (586 | ) | ||||
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Net Cash Used by Investing Activities | (626 | ) | (586 | ) | ||||
Cash Flows from Financing Activities: | ||||||||
Net Cash Proceeds from Employee Stock Option Plans | 6 | 270 | ||||||
Net Cash Proceeds from Share Purchases under Employee Stock Purchase Plan | 26 | 26 | ||||||
Net Cash Used for Payment of Taxes Related to Vested Restricted Stock | (54 | ) | (69 | ) | ||||
Borrowings under Revolving Credit Facility | 5,000 | — | ||||||
Payment of Minimum Guarantee Royalty Obligation | (500 | ) | (375 | ) | ||||
Principal Payments of Long-Term Debt | — | (1,578 | ) | |||||
Dividends Paid | (497 | ) | (489 | ) | ||||
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Net Cash Provided (Used) by Financing Activities | 3,981 | (2,215 | ) | |||||
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Effect of Exchange Rate Changes on Cash and Cash Equivalents | 67 | 49 | ||||||
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Net Increase (Decrease) in Cash and Cash Equivalents | 6,842 | (1,765 | ) | |||||
Cash and Cash Equivalents, Beginning of Period | 4,249 | 7,534 | ||||||
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Cash and Cash Equivalents, End of Period | $ | 11,091 | $ | 5,769 | ||||
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Supplemental Disclosures of Cash Flow Information: | ||||||||
Cash Paid During the Period for Interest | $ | 124 | $ | 110 | ||||
Cash Paid During the Period for Income Taxes, Net of Refunds | $ | 128 | $ | 142 | ||||
Schedule ofNon-Cash Financing Activities: | ||||||||
Value of Shares Received in Satisfaction of Option Exercise Price | $ | — | $ | 11 | ||||
Common Stock | Additional Paid-in | Retained | Treasury | Accumulated Other Comprehensive | Total Shareholders’ | |||||||||||||||||||||||
Shares | Amount | Capital | Earnings | Stock | Income (Loss) | Equity | ||||||||||||||||||||||
| Balance January 31, 2020 | 10,343,610 | $ | 517 | $ | 56,130 | $ | 49,298 | $ | (33,477 | ) | $ | (1,093 | ) | $ | 71,375 | |||||||||||||
| Share-Based Compensation | — | — | 495 | — | — | — | 495 | |||||||||||||||||||||
Employee Option Exercises | 4,456 | — | 32 | — | — | — | 32 | |||||||||||||||||||||
Restricted Stock Awards Vested, net | 23,638 | 1 | (1 | ) | — | (54 | ) | — | (54 | ) | ||||||||||||||||||
Common Stock – Cash Dividend - $0.07 per | — | — | — | (497 | ) | — | — | (497 | ) | |||||||||||||||||||
Net Income | — | — | — | 432 | — | — | 432 | |||||||||||||||||||||
Other Comprehensive Loss | — | — | — | — | — | (221 | ) | (221 | ) | |||||||||||||||||||
Balance May 2, 2020 | 10,371,704 | $ | 518 | $ | 56,656 | $ | 49,233 | $ | (33,531 | ) | $ | (1,314 | ) | $ | 71,562 | |||||||||||||
Common Stock | Additional Paid-in | Retained | Treasury | Accumulated Other Comprehensive | Total Shareholders’ | |||||||||||||||||||||||
Shares | Amount | Capital | Earnings | Stock | Income (Loss) | Equity | ||||||||||||||||||||||
| Balance January 31, 2021 | 10,425,094 | $ | 521 | $ | 58,049 | $ | 50,085 | $ | (33,588 | ) | $ | (384 | ) | $ | 74,683 | |||||||||||||
Share-Based Compensation | — | — | 478 | — | — | — | 478 | |||||||||||||||||||||
Employee Option Exercises | 5,746 | — | 52 | — | — | — | 52 | |||||||||||||||||||||
Restricted Stock Awards Vested, net | 48,299 | 3 | (3 | ) | — | (208 | ) | — | (208 | ) | ||||||||||||||||||
Net Income | — | — | — | 593 | — | — | 593 | |||||||||||||||||||||
Other Comprehensive Loss | — | — | — | — | — | (65 | ) | (65 | ) | |||||||||||||||||||
Balance May 1, 2021 | 10,479,139 | $ | 524 | $ | 58,576 | $ | 50,678 | $ | (33,796 | ) | $ | (449 | ) | $ | 75,533 | |||||||||||||
| �� | ||||||||||||||||||||||||||||
Three Months Ended | ||||||||
May 1, 2021 | May 2, 2020 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net Income | $ | 593 | $ | 432 | ||||
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: | ||||||||
Depreciation and Amortization | 1,425 | 1,568 | ||||||
Amortization of Debt Issuance Costs | 25 | 12 | ||||||
Share-Based Compensation | 478 | 495 | ||||||
Changes in Assets and Liabilities: | ||||||||
Accounts Receivable | 2,165 | 1,220 | ||||||
Inventories | 568 | 1,237 | ||||||
Income Taxes | (387 | ) | (90 | ) | ||||
Accounts Payable and Accrued Expenses | (552 | ) | (1,140 | ) | ||||
Other | (406 | ) | (314 | ) | ||||
Net Cash Provided by Operating Activities | 3,909 | 3,420 | ||||||
Cash Flows from Investing Activities: | ||||||||
Additions to Property, Plant and Equipment | (544 | ) | (626 | ) | ||||
Net Cash Used for Investing Activities | (544 | ) | (626 | ) | ||||
Cash Flows from Financing Activities: | ||||||||
Net Cash Proceeds from Employee Stock Option Plans | 34 | 6 | ||||||
Net Cash Proceeds from Share Purchases under Employee Stock Purchase Plan | 18 | 26 | ||||||
Net Cash Used for Payment of Taxes Related to Vested Restricted Stock | (208 | ) | (54 | ) | ||||
Borrowings under Revolving Credit Facility | — | 5,000 | ||||||
Payment of Minimum Guarantee Royalty Obligation | (500 | ) | (500 | ) | ||||
Proceeds from Long-Term Debt Borrowings | 10,000 | — | ||||||
Payoff of Long-Term Debt | (12,576 | ) | — | |||||
Principal Payments on Long-Term Debt | (187 | ) | — | |||||
Dividends Paid | — | (497 | ) | |||||
Net Cash Provided by (Used) for Financing Activities | (3,419 | ) | 3,981 | |||||
Effect of Exchange Rate Changes on Cash and Cash Equivalents | 29 | 67 | ||||||
Net Increase (Decrease) in Cash and Cash Equivalents | (25 | ) | 6,842 | |||||
Cash and Cash Equivalents, Beginning of Period | 11,439 | 4,249 | ||||||
Cash and Cash Equivalents, End of Period | $ | 11,414 | $ | 11,091 | ||||
Supplemental Disclosures of Cash Flow Information: | ||||||||
Cash Paid During the Period for Interest | $ | 115 | $ | 124 | ||||
Cash Paid During the Period for Income Taxes, Net of Refunds | $ | 131 | $ | 128 | ||||
industries
2021.
2021.
Fair Value Measurement
Recent Accounting Standards Not Yet Adopted
Reference Rate Reform
In March 2020, the FASB issued ASU2020-04, “Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” ASU2020-04 provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued. The amendments are effective for all entities as of March 12, 2020 through December 31, 2022. We are currently in the process of evaluating the impact of the transition from LIBOR to an alternative reference rate, but we do not expect that to have a material impact on our consolidated financial statements.
| Three Months Ended | ||||||||
| (In thousands) | May 2, 2020 | May 4, 2019 | ||||||
United States | $ | 19,789 | $ | 21,992 | ||||
Europe | 7,450 | 7,875 | ||||||
Canada | 1,428 | 1,516 | ||||||
Asia | 1,009 | 3,450 | ||||||
Central and South America | 954 | 888 | ||||||
Other | 289 | 460 | ||||||
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Total Revenue | $ | 30,919 | $ | 36,181 | ||||
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Three Months Ended | ||||||||
| (In thousands) | May 1, 2021 | May 2, 2020 | ||||||
United States | $ | 16,693 | $ | |||||
Europe | 8,599 | 7,450 | ||||||
Canada | 1,546 | 1,428 | ||||||
Asia | 1,085 | 1,009 | ||||||
Central and South America | 760 | 954 | ||||||
Other | 395 | 289 | ||||||
Total Revenue | $ | 29,078 | $ | 30,919 | ||||
| Three Months Ended | ||||||||
| (In thousands) | May 2, 2020 | May 4, 2019 | ||||||
Hardware | $ | 8,914 | $ | 12,918 | ||||
Supplies | 19,118 | 19,727 | ||||||
Service and Other | 2,887 | 3,536 | ||||||
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Total Revenue | $ | 30,919 | $ | 36,181 | ||||
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Three Months Ended | ||||||||
| (In thousands) | May 1, 2021 | May 2, 2020 | ||||||
Hardware | $ | 7,647 | $ | 8,914 | ||||
Supplies | 18,211 | 19,118 | ||||||
Service and Other | 3,220 | 2,887 | ||||||
Total Revenue | $ | 29,078 | $ | 30,919 | ||||
2021.
| Three Months Ended | ||||||||
| May 2, 2020 | May 4, 2019 | |||||||
Weighted Average Common Shares Outstanding – Basic | 7,073,278 | 6,970,914 | ||||||
Effect of Dilutive Options, Restricted Stock Awards and Restricted Stock Units | 31,365 | 277,412 | ||||||
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Weighted Average Common Shares Outstanding – Diluted | 7,104,643 | 7,248,326 | ||||||
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Three Months Ended | ||||||||
May 1, 2021 | May 2, 2020 | |||||||
Weighted Average Common Shares Outstanding – Basic | 7,144,697 | 7,073,278 | ||||||
Effect of Dilutive Options, Restricted Stock Awards and Restricted Stock Units | 120,632 | 31,365 | ||||||
Weighted Average Common Shares Outstanding – Diluted | 7,265,329 | 7,104,643 | ||||||
| May 2, 2020 | January 31, 2020 | |||||||||||||||||||||||||||||||
| (In thousands) | Gross Carrying Amount | Accumulated Amortization | Currency Translation Adjustment | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Currency Translation Adjustment | Net Carrying Amount | ||||||||||||||||||||||||
Miltope: | ||||||||||||||||||||||||||||||||
Customer Contract Relationships | $ | 3,100 | $ | (2,098 | ) | $ | — | $ | 1,002 | $ | 3,100 | $ | (2,021 | ) | $ | — | $ | 1,079 | ||||||||||||||
RITEC: | ||||||||||||||||||||||||||||||||
Customer Contract Relationships | 2,830 | (1,156 | ) | — | 1,674 | 2,830 | (1,076 | ) | — | 1,754 | ||||||||||||||||||||||
Non-Competition Agreement | 950 | (918 | ) | — | 32 | 950 | (871 | ) | — | 79 | ||||||||||||||||||||||
TrojanLabel: | ||||||||||||||||||||||||||||||||
Existing Technology | 2,327 | (1,136 | ) | 68 | 1,259 | 2,327 | (1,053 | ) | 78 | 1,352 | ||||||||||||||||||||||
Distributor Relations | 937 | (320 | ) | 22 | 639 | 937 | (297 | ) | 27 | 667 | ||||||||||||||||||||||
Honeywell: | ||||||||||||||||||||||||||||||||
Customer Contract Relationships | 27,243 | (7,521 | ) | — | 19,722 | 27,243 | (6,791 | ) | — | 20,452 | ||||||||||||||||||||||
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Intangible Assets, net | $ | 37,387 | $ | (13,149 | ) | $ | 90 | $ | 24,328 | $ | 37,387 | $ | (12,109 | ) | $ | 105 | $ | 25,383 | ||||||||||||||
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May 1, 2021 | January 31, 2021 | |||||||||||||||||||||||||||||||
(In thousands) | Gross Carrying Amount | Accumulated Amortization | Currency Translation Adjustment | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Currency Translation Adjustment | Net Carrying Amount | ||||||||||||||||||||||||
Miltope: | ||||||||||||||||||||||||||||||||
Customer Contract Relationships | $ | 3,100 | $ | (2,342 | ) | $ | — | $ | 758 | $ | 3,100 | $ | (2,284) | $ | — | $ | 816 | |||||||||||||||
RITEC: | ||||||||||||||||||||||||||||||||
Customer Contract Relationships | 2,830 | (1,507 | ) | — | 1,323 | 2,830 | (1,423 | ) | — | 1,407 | ||||||||||||||||||||||
TrojanLabel: | ||||||||||||||||||||||||||||||||
Existing Technology | 2,327 | (1,497 | ) | 186 | 1,016 | 2,327 | (1,405 | ) | 196 | 1,118 | ||||||||||||||||||||||
Distributor Relations | 937 | (422 | ) | 84 | 599 | 937 | (396 | ) | 89 | 630 | ||||||||||||||||||||||
Honeywell: | ||||||||||||||||||||||||||||||||
Customer Contract Relationships | 27,243 | (10,443 | ) | — | 16,800 | 27,243 | (9,712 | ) | — | 17,531 | ||||||||||||||||||||||
Intangible Assets, net | $ | | $ | ) | $ | 270 | $ | 20,496 | $ | 34,437 | $ | (15,220 | ) | $ | 285 | $ | 21,502 | |||||||||||||||
2, 2020.
| (In thousands) | Remaining 2021 | 2022 | 2023 | 2024 | 2025 | |||||||||||||||
Estimated amortization expense | $ | 3,018 | $ | 3,964 | $ | 3,957 | $ | 3,960 | $ | 3,392 | ||||||||||
(In thousands) | Remaining 2022 | 2023 | 2024 | 2025 | 2026 | |||||||||||||||
Estimated amortization expense | $ | 2,968 | $ | 3,976 | $ | 4,075 | $ | 3,420 | $ | 3,026 | ||||||||||
| (In thousands) | May 2, 2020 | January 31, 2020 | ||||||
Materials and Supplies | $ | 20,793 | $ | 20,151 | ||||
Work-In-Process | 1,684 | 1,408 | ||||||
Finished Goods | 16,781 | 17,992 | ||||||
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| 39,258 | 39,551 | |||||||
Inventory Reserve | (6,701 | ) | (5,626 | ) | ||||
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| $ | 32,557 | $ | 33,925 | |||||
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(In thousands) | May 1, 2021 | January 31, 2021 | ||||||
Materials and Supplies | $ | 19,553 | $ | 20,265 | ||||
Work-In-Process | 1,989 | 2,076 | ||||||
Finished Goods | 16,641 | 16,371 | ||||||
| 38,183 | 38,712 | |||||||
Inventory Reserve | (8,709 | ) | (8,652 | ) | ||||
| $ | 29,474 | $ | 30,060 | |||||
At May 2, 2020, Agreement and Debt
At May 2, 2020, $11.5 million was drawn on the revolving line of credit. The outstanding balance bears interest at a weighted average annual rate of 2.52% In addition to certain other fees and $73,000 and $19,000 of interest has been incurred on this obligation and included in other expense in the accompanying condensed consolidated income statement for the three-month periods ended May 2, 2020 and May 4, 2019, respectively. At May 2, 2020, there was $6.0 million available for borrowing under the revolving credit facility. Pursuantexpenses that we are required to pay to the terms of the Fourth Amendment to our Credit Agreement, whichLender, we and Bank of America entered into in December 2019, the aggregate amount available for borrowings under the revolving line of credit will decrease to $10.0 million at the end of the third quarter of fiscal year 2021.
We are required to pay a commitment fee on the undrawn portion of the revolving credit facility atthat varies within a range of 0.15% and 0.30%
See Note 17–Subsequent Events–Letter Agreementproperty, (b) net cash proceeds from certain issuances of equity, (c) net cash proceeds from certain issuances of additional debt and (d) net cash proceeds from certain extraordinary receipts.
intoterm loan that is repaid may be reborrowed.
Note 8 –our owned real property in West Warwick, Rhode Island.
| (In thousands) | May 2, 2020 | January 31, 2020 | ||||||
USD Term Loan (2.24% as of May 2, 2020 and 3.03% as of January 31, 2020); maturity date of November 30, 2022 | $ | 8,250 | $ | 8,250 | ||||
USD Term Loan (2.24% as of May 2, 2020 and 3.03% as of January 31, 2020); maturity date of January 31, 2022 | 4,784 | 4,784 | ||||||
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| $ | 13,034 | $ | 13,034 | |||||
Debt Issuance Costs, net of accumulated amortization | (98 | ) | (111 | ) | ||||
Current Portion of Term Loans | (6,602 | ) | (5,208 | ) | ||||
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Long-Term Debt | $ | 6,334 | $ | 7,715 | ||||
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(In thousands) | May 1, 2021 | January 31, 2021 | ||||||
USD Term Loan (2.60% as of May 1, 2021); maturity date of September 30, 2025 | $ | 9,813 | $ | — | ||||
USD Term Loan (4.65% as of January 31, 2021) maturity date of June 15, 2022 | — | 12,576 | ||||||
| $ | 9,813 | $ | 12,576 | |||||
Debt Issuance Costs, net of accumulated amortization | (116 | ) | (141 | ) | ||||
Current Portion of Term Loans | (813 | ) | (5,326 | ) | ||||
Long-Term Debt | $ | 8,884 | $ | 7,109 | ||||
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(In thousands) | ||||
Fiscal 2022, remainder | $ | 563 | ||
Fiscal 2023 | 1,000 | |||
Fiscal 2024 | 1,000 | |||
Fiscal 2025 | 1,250 | |||
Fiscal 2026 | 6,000 | |||
| $ | 9,813 | |||
We
| May 2, 2020 | January 31, 2020 | |||||||||||||||||||||||
| Cash Flow Hedges | Fair Value Derivatives | Fair Value Derivatives | ||||||||||||||||||||||
(In thousands) | Notional Amount | Asset | Liability | Notional Amount | Asset | Liability | ||||||||||||||||||
Cross-currency Interest Rate Swap | $ | 4,489 | $ | — | $ | 192 | $ | 4,489 | $ | — | $ | 250 | ||||||||||||
Interest Rate Swap | $ | 8,250 | $ | — | $ | 202 | $ | 8,250 | $ | — | $ | 96 | ||||||||||||
the underlying exposures.
| Amount of Gain (Loss) Recognized in OCI on Derivative | Location of Gain (Loss) Reclassified from Accumulated OCI into Income (Expense) | Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Expense) | ||||||||||||||||||
Cash Flow Hedge (In thousands) | May 2, 2020 | May 4, 2019 | May 2, 2020 | May 4, 2019 | ||||||||||||||||
Swap Contracts | $ | (58 | ) | $ | 149 | Other Income (Expense | ) | $ | 43 | $ | 185 | |||||||||
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2, 2020:
Three Months Ended | ||||||||||||||||||||
Amount of Gain (Loss) Recognized in OCI on Derivative | Location of Gain (Loss) Reclassified from Accumulated OCI into Income | Amount of Gain (Loss) Reclassified from Accumulated OCI into Income | ||||||||||||||||||
Cash Flow Hedge (In thousands) | May 1, 2021 | May 2, 2020 | May 1, 2021 | May 2, 2020 | ||||||||||||||||
| Swap contracts | $ | — | $ | (58 | ) | Other Expense | $ | (20 | ) | $ | 43 | |||||||||
1, 2021.
Operating Leases (In thousands) | Balance Sheet Classification | May 2, 2020 | January 31, 2020 | |||||||
Lease Assets | Right of Use Assets | $ | 1,553 | $ | 1,661 | |||||
Lease Liabilities – Current | Other Accrued Expenses | 391 | 416 | |||||||
Lease Liabilities – Long Term | Lease Liabilities | 1,199 | 1,279 | |||||||
Operating Leases (In thousands) | Balance Sheet Classification | May 1, 2021 | January 31, 2021 | |||||||||
Lease Assets | Right of Use Assets | $ | 1,302 | $ | 1,389 | |||||||
Lease Liabilities – Current | Other Liabilities and Accrued Expenses | 366 | 372 | |||||||||
Lease Liabilities – Long Term | Lease Liabilities | 983 | 1,065 | |||||||||
| Three Months Ended | ||||||||||
Operating Leases (In thousands) | Statement of Income Classification | May 2, 2020 | May 4, 2019 | |||||||
Operating Lease Costs | General and Administrative Expense | $ | 120 | $ | 92 | |||||
Three Months Ended | ||||||||||
Operating Leases (In thousands) | Statement of Income Classification | May 1, 2021 | May 2, 2020 | |||||||
| Operating Lease Costs | General and Administrative Expense | $ | 136 | $ | 120 | |||||
(In thousands) | May 2, 2020 | |||
2021 | $ | 305 | ||
2022 | 348 | |||
2023 | 298 | |||
2024 | 272 | |||
2025 | 168 | |||
Thereafter | 391 | |||
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Total Lease Payments | 1,782 | |||
Less: Imputed Interest | (192 | ) | ||
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Total Lease Liabilities | $ | 1,590 | ||
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(In thousands) | May 1, 2021 | |||
2022, remaining | $ | 279 | ||
2023 | 317 | |||
2024 | 290 | |||
2025 | 182 | |||
2026 | 162 | |||
Thereafter | 267 | |||
Total Lease Payments | 1,497 | |||
Less: Imputed Interest | (148 | ) | ||
Total Lease Liabilities | $ | 1,349 | ||
| Three Months Ended | ||||||||
(In thousands) | May 2, 2020 | May 4, 2019 | ||||||
Cash paid for amounts included in the measurement of lease liabilities: | $ | 106 | �� | $ | 100 | |||
Three Months Ended | ||||||||
(In thousands) | May 1, 2021 | May 2, 2020 | ||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
Operating cash flows for operating leases | $ | 92 | $ | 106 | ||||
(In thousands) | Foreign Currency Translation Adjustments | Cash Flow Hedges | Total | |||||||||
Balance at January 31, 2020 | $ | (985 | ) | $ | (108 | ) | $ | (1,093 | ) | |||
Other Comprehensive Loss before reclassification | (142 | ) | (46 | ) | (188 | ) | ||||||
Amounts reclassified from AOCL to Earnings | — | (33 | ) | (33 | ) | |||||||
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Other Comprehensive Loss | (142 | ) | (79 | ) | (221 | ) | ||||||
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Balance at May 2, 2020 | $ | (1,127 | ) | $ | (187 | ) | $ | (1,314 | ) | |||
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(In thousands) | Foreign Currency Translation Adjustments | Cash Flow Hedges | Total | |||||||||
Balance at January 31, 2021 | $ | (275 | ) | $ | (109 | ) | $ | (384 | ) | |||
Other Comprehensive Loss before reclassification | (81 | ) | — | (81 | ) | |||||||
Amounts reclassified from AOCL to Earnings | — | 16 | 16 | |||||||||
Other Comprehensive Income (Loss) | (81 | ) | 16 | (65 | ) | |||||||
Balance at May 1, 2021 | $ | (356) | $ | (93 | ) | $ | (449 | ) | ||||
1, 2021.
| Three Months Ended | ||||||||
| (In thousands) | May 2, 2020 | May 4, 2019 | ||||||
Stock Options | $ | 133 | $ | 212 | ||||
Restricted Stock Awards and Restricted Stock Units | 357 | 384 | ||||||
Employee Stock Purchase Plan | 5 | 5 | ||||||
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Total | $ | 495 | $ | 601 | ||||
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2021
2020 $ 105 $ 133 370 357 3 5 $ 478 $ 495
2, 2020.
| Number of Options | Weighted Average Exercise Price | |||||||
Outstanding at January 31, 2020 | 679,044 | $ | 14.46 | |||||
Granted | — | — | ||||||
Exercised | (800 | ) | 7.36 | |||||
Forfeited | (48,374 | ) | 12.83 | |||||
Canceled | (1,400 | ) | 7.36 | |||||
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Outstanding at May 2, 2020 | 628,470 | $ | 14.61 | |||||
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Number of Options | Weighted Average Exercise Price | |||||||
Outstanding at January 31, 2021 | 622,083 | $ | 14.63 | |||||
Granted | 0 | 0 | ||||||
Exercised | (3,775 | ) | 8.84 | |||||
Forfeited | (14,015 | ) | 14.96 | |||||
Canceled | 0 | 0 | ||||||
Outstanding at May 1, 2021 | 604,293 | $ | 14.66 | |||||
| Outstanding | Exercisable | |||||||||||||||||||||||
Range of Exercise prices | Number of Shares | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Life | Number of Shares | Weighted- Average Exercise Price | Weighted Average Remaining Contractual Life | ||||||||||||||||||
$5.00-10.00 | 42,281 | $ | 7.98 | 2.0 | 42,281 | $ | 7.98 | 2.0 | ||||||||||||||||
$10.01-15.00 | 364,464 | $ | 13.63 | 5.5 | 319,166 | $ | 13.65 | 5.3 | ||||||||||||||||
$15.01-20.00 | 221,725 | $ | 17.48 | 7.5 | 128,871 | $ | 16.92 | 7.1 | ||||||||||||||||
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| 628,470 | $ | 14.61 | 6.0 | 490,318 | $ | 14.02 | 5.5 | |||||||||||||||||
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1, 2021:
Outstanding | Exercisable | |||||||||||||||||||||||
Range of Exercise prices | Number of Shares | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Life | Number of Shares | Weighted- Average Exercise Price | Weighted Average Remaining Contractual Life | ||||||||||||||||||
$5.00-10.00 | 37,244 | $ | 7.97 | 1.2 | 37,244 | $ | 7.97 | 1.2 | ||||||||||||||||
$10.01-15.00 | 349,299 | $ | 13.62 | 4.6 | 337,299 | $ | 13.61 | 4.5 | ||||||||||||||||
$15.01-20.00 | 217,750 | $ | 17.47 | 6.6 | 165,492 | $ | 17.21 | 6.4 | ||||||||||||||||
| 604,293 | $ | 14.66 | 5.1 | 540,035 | $ | 14.32 | 4.9 | |||||||||||||||||
(RSAs)
| RSUs, PSUs & RSAs | Weighted Average Grant Date Fair Value | |||||||
Outstanding at January 31, 2020 | 134,634 | $ | 16.79 | |||||
Granted | 197,131 | 7.94 | ||||||
Vested | (23,638 | ) | 13.00 | |||||
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Outstanding at May 2, 2020 | 308,127 | $ | 11.42 | |||||
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RSAs & RSUs | Weighted Average Grant Date Fair Value | |||||||
Outstanding at January 31, 2020 | 197,413 | $ | 9.96 | |||||
Granted | 124,096 | 14.26 | ||||||
Vested | (48,299 | ) | 10.26 | |||||
Forfeited | 0 | 0 | ||||||
Outstanding at May 1, 2021 | 273,210 | $ | 11.86 | |||||
First Quarter Ended | ||||
Fiscal 2022 | (62.0 | )% | ||
Fiscal 2021 | (37.6 | )% | ||
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We maintain a valuation allowance on some of our deferred tax assets in certain jurisdictions. A valuation allowance is required when, based upon an assessment of various factors, including recent operating loss history, anticipated future earnings, and prudent and reasonable tax planning strategies, it is more likely than not that some portion of the deferred tax assets will not be realized.
IRS audit.
| Three Months Ended | ||||||||||||||||
| Revenue | Segment Operating Profit (Loss) | |||||||||||||||
(In thousands) | May 2, 2020 | May 4, 2019 | May 2, 2020 | May 4, 2019 | ||||||||||||
PI | $ | 22,380 | $ | 23,591 | $ | 3,146 | $ | 2,886 | ||||||||
T&M | 8,539 | 12,590 | (156 | ) | 2,581 | |||||||||||
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Total | $ | 30,919 | $ | 36,181 | 2,990 | 5,467 | ||||||||||
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Corporate Expenses | 2,327 | 2,999 | ||||||||||||||
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Operating Income | 663 | 2,468 | ||||||||||||||
Other Expense, Net | (349 | ) | (368 | ) | ||||||||||||
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Income Before Income Taxes | 314 | 2,100 | ||||||||||||||
Income Tax (Benefit) Provision | (118 | ) | 400 | |||||||||||||
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Net Income | $ | 432 | $ | 1,700 | ||||||||||||
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Three Months Ended | ||||||||||||||||
Revenue | Segment Operating Profit (Loss) | |||||||||||||||
(In thousands) | May 1, 2021 | May 2, 2020 | May 1, 2021 | May 2, 2020 | ||||||||||||
Product Identification | $ | 23,098 | $ | 22,380 | $ | 2,729 | $ | 3,146 | ||||||||
T&M | 5,980 | 8,539 | 350 | (156 | ) | |||||||||||
Total | $ | 29,078 | $ | 30,919 | 3,079 | 2,990 | ||||||||||
Corporate Expenses | 2,344 | 2,327 | ||||||||||||||
| �� | ||||||||||||||||
Operating Income | 735 | 663 | ||||||||||||||
Other Expense, Net | 369 | 349 | ||||||||||||||
Income Before Income Taxes | 366 | 314 | ||||||||||||||
Income Tax Benefit | (227 | ) | (118 | ) | ||||||||||||
Net Income | $ | 593 | $ | 432 | ||||||||||||
Assets and Liabilities Recorded at Fair Value on a Recurring Basis
The following tables provide a summary of the financial liabilities that are measured at fair value as of May 2, 2020 and January 31, 2020:
Liabilities measured at fair value: | Fair value measurement at May 2, 2020 | Fair value measurement at January 31, 2020 | ||||||||||||||||||||||||||||||
| (In thousands) | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||
Cross-Currency Interest Rate Swap Contract (included in Other Long-Term Liabilities) | $ | — | $ | 192 | $ | — | $ | 192 | $ | — | $ | 250 | $ | — | $ | 250 | ||||||||||||||||
Interest Rate Swap Contract (included in Other Long-Term Liabilities) | — | 202 | — | 202 | — | 96 | — | 96 | ||||||||||||||||||||||||
Earnout Liability (included in Other Long-Term Liabilities) | — | — | — | — | — | — | 14 | 14 | ||||||||||||||||||||||||
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Total Liabilities | $ | — | $ | 394 | $ | — | $ | 394 | $ | — | $ | 346 | $ | 14 | $ | 360 | ||||||||||||||||
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We use the market approach to measure fair value of our derivative instruments. Derivative instruments were measured at fair value using readily observable market inputs, such as quotations on interest rates and foreign exchange rates, and are classified as Level 2 because they areover-the-counter contracts with a bank counterparty that are not traded in an active market.
| May 2, 2020 | ||||||||||||||||||||
| Fair Value Measurement | Carrying Value | |||||||||||||||||||
(In thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Long-Term Debt and related current maturities | $ | — | $ | — | $ | 13,227 | $ | 13,227 | $ | 13,034 | ||||||||||
| January 31, 2020 | ||||||||||||||||||||
| Fair Value Measurement | Carrying Value | |||||||||||||||||||
(In thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Long-Term Debt and related current maturities | $ | — | $ | — | $ | 13,258 | $ | 13,258 | $ | 13,034 | ||||||||||
May 1, 2021 | ||||||||||||||||||||
Fair Value Measurement | ||||||||||||||||||||
(In thousands) | Level 1 | Level 2 | Level 3 | Total | Carrying Value | |||||||||||||||
Long-Term debt and related current maturities | $ | — | $ | — | $ | 9,821 | $ | 9,821 | $ | 9,813 | ||||||||||
January 31, 2021 | ||||||||||||||||||||
Fair Value Measurement | ||||||||||||||||||||
(In thousands) | Level 1 | Level 2 | Level 3 | Total | Carrying Value | |||||||||||||||
Long-Term debt and related current maturities | $ | — | $ | — | $ | 12,586 | $ | 12,586 | $ | 12,576 | ||||||||||
Note 17 – Subsequent Events
Payroll Protection Program Loan
On May 6, 2020, we entered into a loan agreement with, and executed a promissory note in favor of Greenwood Credit Union (“Greenwood”) pursuant to which we borrowed $4.4 million (the “ PPP Loan”) from Greenwood pursuant to the Paycheck Protection Program (“PPP”) administered by the United States Small Business Administration (the “SBA”) and authorized by the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), enacted on March 27, 2020.
The terms of the PPP Loan were subsequently revised in accordance with the provisions of the Paycheck Protection Flexibility Act of 2020 (the “PPP Flexibility Act”) which was enacted on June 5, 2020.
The PPP Loan, which will mature on the fifth anniversary of the date on which we submit our request for forgiveness with respect to the PPP Loan, is unsecured and bears interest at a rate of 1.0% per annum. The PPP Loan may be prepaid at any time without penalty. The Loan Agreement and Promissory Note include customary provisions for a loan of this type, including prohibitions on our payment of dividends or repurchase of shares of our stock while the PPP Loan remains outstanding. The Loan Agreement and Promissory Note also include events of default relating to, among other things, payment defaults, breaches of the provisions of the Loan Agreement or the Promissory Note, and cross-defaults on other loans.
Subject to the limitations and conditions set forth in the CARES Act, the PPP Flexibility Act, and the regulations and guidance provided by the SBA with respect to the PPP, a portion of the PPP Loan in an amount up to the amount of the PPP Loan proceeds that we spend on payroll, rent, utilities and interest on certain debt during the twenty-four-week period following incurrence of the PPP Loan, may be forgiven under the PPP. The amount of the PPP Loan to be forgiven in respect of rent, utilities and interest on certain debt will be capped at 40% of the forgiven amount, with the remaining forgiven amount allocated to payroll costs. We intend to utilize the proceeds of the PPP Loan in a manner which will enable us to qualify for forgiveness of the PPP Loan. However, no assurance can be provided that all or any portion of the PPP Loan will be forgiven.
Letter Agreement with Bank of America
On June 22, 2020, we entered into a Letter Agreement with Bank of America, N.A. Pursuant to that agreement, Bank of
America agreed to waive compliance with certain financial covenants in our Credit Agreement related to our consolidated leverage ratio and consolidated EBITDA (as defined in the Credit Agreement) for the measurement period ending May 2, 2020. The Letter Agreement imposes an additional financial covenant that requires us to have, as of June 30, 2020, consolidated EBITDA of not less than $9.5 million on a trailing twelve-months basis, and to report our compliance with such covenant on or before August 15, 2020. The Letter Agreement provides that such covenant will not be tested until August 15, 2020 and we do not expect to be in compliance with the covenants at the time, hence constituting an immediate event of default under the Credit Agreement. However, we and Bank of America are actively negotiating the terms of an amendment to restructure the Credit Agreement that would provide for mutually acceptable revised financial and operational covenants and other mutually acceptable revised terms and we both fully expect that amendment to be executed prior to August 15, 2020. The effect of the Letter Agreement therefore is to give both parties sufficient time to complete the relevant documentation and also enable us to execute the amendment by that deadline.
Item 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
AstroNova is2021.
In fiscal 2018,
crashed. In March 2019, all major civil aviation authorities worldwide grounded the Boeing 737 MAX aircraft for safety reasons. In April 2019, Boeing reduced the number of 737 MAX aircraft produced per month from 52 to 42, and in January 2020, Boeing ceased production of the 737 MAX completely. Although, at this time it is not known when the Boeing 737 MAX will be certified to return to service by the various civil aviation authorities, onOn May 27, 2020, in anticipation of thisan eventual certification, Boeing announced that it would Once
On March 11, 2020, the World Health Organization declaredCOVID-19, a respiratory illness caused by a novel coronavirus,require our printers to be apandemic. COVID-19 has spread throughoutinstalled prior to delivery. Though we have noted that some airlines are now ordering new 737 MAX aircraft again, and we have seen slight increases in orders for future delivery, the United States and the resteffect of the worldimproving outlook and has impacted all major marketsits timing remains unknown. The precipitous decline in which we, our customers, our suppliers and our other business partners conduct business. Governments in affected regions have, and we expect that they will continue to implement safety precautions including quarantines, travel restrictions, business closures, cancellations of public gatherings and any other measures as they deem necessary. Many organizations and individuals, including us and our employees are taking additional steps to avoid or reduce infection, including limiting travel and working from home when possible. These measures are disrupting normal business operations both inside and outside of affected areas and have had significant negative impacts on businesses and financial markets worldwide.
Due to theCOVID-19 pandemic, global air travel demand has precipitously declined, and resultant reduction in the number of flights scheduled by airlines caused by the pandemic has been sharply curtailed.begun to recover, but order demand from airlines for new deliveries of most aircraft models remains far below
TheCOVID-19 pandemic has also had an adverse impact onstringent quality requirements the sales of our Product Identification hardware products due to travel restrictions, because, in most, cases customers preferin-person demonstrations of these printers at their production sites prior to placing orders with usmarket requires, and those visits have been severely limited. Additionally, the widespread cancellation of trade shows, which traditionally provided an effective forum for customers to consider our products, has also had an adverse impact. A greater reliance on remote video demonstrations, sample deliveries and digital marketing has proven effective in obtaining sales, but at a lower level than traditional methods. We expect that, while our customers’ acceptance of remote methods in their buying processes may have changed permanently, the degree to which that will prove to be the case once the currentCOVID-19 crisis has abated is unknown. Despite favorable market reception to our recently refreshed and expanded product lines, we expect that the level of hardware sales will remain lower until it is possible for our direct sales force and distributors to travel to visit customers and attend and present products at trade shows. The same dynamic has also affected our Test and Measurement product lines.
Shortly after theCOVID-19 crisis began, we experienced a somewhat greater demand for ink, toner, media and parts supplies that are used in our digital label printers. In addition to the strong demand from our food & beverage customers, we have also seen increased demand coming from customers selling products that have experienced higher demand as a result of the COVID-19 crisis, such as, certain medical, janitorial and sanitation related products. We do not know how long this trend will continue. However, although we have had to occasionally extend our lead times because of some temporary labor shortages, we have been able to adjustrapidly increase production and satisfyas demand returns, the decline in revenue has adversely impacted our customer demands successfully, and being a reliable supplier is one of the characteristics on which we compete.
Since theCOVID-19 pandemic began to impact us in early March, we have closely monitored the government and health authority recommendations applicable to us and have made modifications to our operations including requiring mostnon-production related team members to work remotely. While some inefficiencies related to remote work have occurred, overall effectiveness and productivity has been satisfactorily maintained. At the same time we have maintained sufficient capacity and employment levels in our manufacturing facilities located in West Warwick, Rhode Island, as well as in our manufacturing facilities in Canada and Germany to satisfy customer demand and related contractual commitments, despite a higher than normal level of absenteeism due to the ancillary impacts of the pandemic. We believe that as a result of a variety of heightened cleaning and sanitization standards, as well as several new health and safety protocols, procedures and workplace modifications implemented to safeguard our team members, the incidence ofCOVID-19 disease among our employees has thus far been limited. We know of only one case ofCOVID-19 among our teammates, and that individual returned to work, after completing the required quarantine period. Though the government mandatedCOVID-19 restrictions have begun to lessen in Rhode Island where our main production and office is located , if theCOVID-19 crisis were to worsen it could have further material adverse impacts on our ability to maintain workforce levels, productivity and output. As a result, we are maintaining current precautions for the near-term.
In response to theCOVID-19 pandemic and related economic dislocation, we are pursuing a variety of expense reduction and cash preservation initiatives. In connection with that effort, on April 27, 2020, our board of directors decided to suspend our quarterly cash dividend beginning with the second quarter of our fiscal year 2021. We have also reduced our direct labor staffing levels modestly in response to theCOVID-19 crisis, while maintaining levels sufficient to compensate for inefficiencies and disruptions resulting from the implementation ofCOVID-19-related health and safety protocols and, in our Product Identification supplies business, to satisfy customer demand. Many of the expenses related to our aerospace product lines cannot be easily reduced because of the continued need to support our existing customers and to provide the required sales, engineering, quality, and regulatory compliance and audit activities (among others) necessary to support the demanding regulatory requirements for these product lines. We continue to monitor and examine our overall and product line-specific cost structures and customer demand patterns, and as time progresses and the near and longer-term business outlook becomes clearer, we may make additional adjustments to employment levels.
In addition to the reductions in demand for many of our products and the workforce impacts caused by theCOVID-19 pandemic, we have also experienced some limited and temporary difficulties in obtaining raw materials and components for our products. These difficulties have had no meaningful negative impact on our production efficiency or our ability to satisfy customer requirements. However, more extensive and disruptive impacts may be experienced in the future, depending on how theCOVID-19 pandemic and its impacts on the economy evolve.
Disruptions in the capital markets as a result of theCOVID-19 outbreak have also adversely affected us, primarily because the bank lending market on which we depend has become more risk averse, leading to reduced availability of capital, higher loan pricing and less favorable terms. While we are currently negotiating the terms of an amendment to restructure our current credit facility with Bank of America, there can be no assurance that we will be successful in that negotiation or that the terms of any such restructured credit facility will be acceptable. If the negative impacts of theCOVID-19 pandemic continue for a prolonged period, or become worse, and we need additional liquidity, it could have a material adverse impact on our access to capital and financial position.
(Dollars in thousands) | May 2, 2020 | As a % of Revenue | May 4, 2019 | As a % of Revenue | % Change Over Prior Year | |||||||||||||||
Product Identification | $ | 22,380 | 72.4 | % | $ | 23,591 | 65.2 | % | (5.1 | )% | ||||||||||
T&M | 8,539 | 27.6 | % | 12,590 | 34.8 | % | (32.2 | )% | ||||||||||||
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Total | $ | 30,919 | 100.0 | % | $ | 36,181 | 100.0 | % | (14.5 | )% | ||||||||||
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(Dollars in thousands) | May 1, 2021 | As a % of Revenue | May 2, 2020 | As a % of Revenue | % Change Compared to Prior Year | |||||||||||||||
Product Identification | $ | 23,098 | 79.4 | % | $ | 22,380 | 72.4 | % | 3.2 | % | ||||||||||
T&M | 5,980 | 20.6 | % | 8,539 | 27.6 | % | (30.0 | )% | ||||||||||||
Total | $ | 29,078 | 100.0 | % | $ | 30,919 | 100.0 | % | (6.0 | )% | ||||||||||
data recorders in the T&M product group.
period costs.
The Company
2021.
| Three Months Ended | ||||||||||||||||
| Revenue | Segment Operating Profit (Loss) | |||||||||||||||
(In thousands) | May 2, 2020 | May 4, 2019 | May 2, 2020 | May 4, 2019 | ||||||||||||
Product Identification | $ | 22,380 | $ | 23,591 | $ | 3,146 | $ | 2,886 | ||||||||
T&M | 8,539 | 12,590 | (156 | ) | 2,581 | |||||||||||
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Total | $ | 30,919 | $ | 36,181 | 2,990 | 5,467 | ||||||||||
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Corporate Expenses | 2,327 | 2,999 | ||||||||||||||
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Operating Income | 663 | 2,468 | ||||||||||||||
Other Expense, Net | (349 | ) | (368 | ) | ||||||||||||
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Income Before Income Taxes | 314 | 2,100 | ||||||||||||||
Income Tax (Benefit) Provision | (118 | ) | 400 | |||||||||||||
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Net Income | $ | 432 | $ | 1,700 | ||||||||||||
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Three Months Ended | ||||||||||||||||
Revenue | Segment Operating Profit (Loss) | |||||||||||||||
(In thousands) | May 1, 2021 | May 2, 2020 | May 1, 2021 | May 2, 2020 | ||||||||||||
Product Identification | $ | 23,098 | $ | 22,380 | $ | 2,729 | $ | 3,146 | ||||||||
T&M | 5,980 | 8,539 | 350 | (156 | ) | |||||||||||
Total | $ | 29,078 | $ | 30,919 | 3,079 | 2,990 | ||||||||||
Corporate Expenses | 2,344 | 2,327 | ||||||||||||||
Operating Income | 735 | 663 | ||||||||||||||
Other Expense, Net | 369 | 349 | ||||||||||||||
Income Before Income Taxes | 366 | 314 | ||||||||||||||
Income Tax Benefit | (227 | ) | (118 | ) | ||||||||||||
Net Income | $ | 593 | $ | 432 | ||||||||||||
Total current quarter revenue
were primarily due to lower period and operating costs, along with slightly better sales mix.
Conditions have deteriorated in the credit markets generally and in the bank financing market specifically, and the availability of credit has been reduced as a result of lending institutions taking a more conservative posture in response to the risks introduced by theCOVID-19 pandemic. Because of the deterioration of our financial condition due to the decline in 737MAX-related revenue andCOVID-19 impacts, our first quarter operating results caused us to violate a financial covenant in our Credit Agreement with Bank of America. Specifically, under the terms of our current Credit Agreement we are obligated to maintain, as of the end of each fiscal quarter, a minimum EBITDA (as defined in the agreement) of $9.5 million on a trailing twelve-months basis and a maximum consolidated leverage ratio of 3.0 to 1.0. Our actual EBITDA was below the required level for the period ended May 2, 2020. However, on June 22,
If for any reason we are unable to reach agreement with Bank of America on the restructuringimpact of the Credit Agreement or secure alternative financing on acceptable terms prior to August 15, 2020, and the Letter Agreement were not extended or otherwise modified to eliminate any failure by us to comply with its terms or the terms of the Credit Agreement, Bank of America would have the right to declare a default, accelerate all
Under the terms of the Letter Agreement, we are also not permitted to request any additional borrowings under the revolving line of credit through August 15, 2020, and we will not be permitted to request any such additional borrowings thereafter unless we are in compliancedirectors suspended our quarterly cash dividend beginning with the Credit Agreement. The Letter Agreement also prohibits us from making any dividend or stock repurchase payments or other restricted payments through August 15, 2020, and we will be permitted to make restricted payments thereafter only in compliance with the Credit Agreement.
During the firstsecond quarter of the currentour fiscal year we borrowed an additional $5.0 million on our revolving credit facility, and at2021.
The terms of the PPP Loan were subsequently revised in accordance with the provisions of the Paycheck Protection Flexibility Act of 2020 (the “PPP Flexibility Act”), which was enacted on June 5, 2020.
We believe that our obtaining the PPP Loan and suspending the payment of dividends on our common stock were instrumental in our ability to successfully negotiate the A&R Credit Agreement.
As a result of the impact of theCOVID-19 pandemic, our customers may also experience liquidity pressure and be unable to pay us for products on a timely basis. During the first quarter we experienced a limited number of casesassociated accrued interest) in which certain of our aerospace customers failed to pay us on a timely basis and we increased our reserves for potential losses on those accounts. We also wrote off a small receivable from an airline that has declared bankruptcy. If the impact of theCOVID-19 crisis continues for a prolonged period of time or worsens, we may experience further similar, but more material adverse impacts on our results and financial condition.
Our backlog decreased 2.8% fromyear-end to $25.9 million at the end of the first quarter of fiscal 2021.
Indebtedness
We andthe current year. Whether our wholly owned Danish subsidiaries, ANI ApS and TrojanLabel ApS (collectively, the “Parties”), are parties to a credit agreement (“Credit Agreement”) with Bank of America, N.A. The Credit Agreement and its subsequent amendments through fiscal 2019 providedapplication for a secured credit facility consisting of a term loan to ANI ApS in the principal amount of $9.2 million, a term loan to us in the principal amount of $15.0 million and a $10.0 million revolving credit facility. On December 9, 2019, the Parties entered into a Fourth Amendment (the “Fourth Amendment”) to the Credit Agreement. The Fourth Amendment amended the Credit Agreement to, among other things, (i) increase the aggregate amount available to us for borrowings under the revolving line of credit from $10.0 million to $17.5 million through the third quarter of fiscal 2021 and (ii) modify the financial covenants with which we must comply thereunder by excluding certain capital expenditures from the calculation of our consolidated fixed charge coverage ratio, providing that the minimum consolidated fixed charge coverage ratio covenantforgiveness will be suspended through the second quarter of fiscal 2021,granted and adding a minimum consolidated EBITDA covenant commencing with the fourth quarter of fiscal 2020 and continuing through the second quarter of fiscal 2021.
See Note 17 of the condensed consolidated financial statements included in this Quarterly Report on Form10-Q for a discussion of the letter agreement we entered into with Bank of America on June 22, 2020, which, among other things, suspends our access to the revolving line of credit under the Credit Agreement on the terms described therein.
Both term loans bear interest at a rate per annum equal to the LIBOR rate plus a margin that varies within a range of 1.0% to 1.5% based on our consolidated leverage ratio.
In connection with our entry into the Credit Agreement, ANI ApS entered into a hedging agreement to manage the variable interest rate risk and currency risk associated with its payments in respect to the term loan. Under this combined arrangement, payments of principal and interest with respect to approximately $8.9 million of the principal of the term loan will be made in Danish Kroner, and interest on such principalwhat amount will be payable at a fixed rate of 0.67% per annum for the entire term, subject only to potential changes based on our consolidated leverage ratio. Additionally, we entered into a hedging agreement to manage the variable interest rate risk associated with our payments with respect to the $15.0 million term loan. Under this combined arrangement, interest will be payable at a fixed rate of 2.04% per annum for the entire term, plus an incremental margin of 1.0% to 1.5%, based on our consolidated leverage ratio.
Revolving credit loans may be borrowed, at our option, in U.S. Dollars or,is subject to certain conditions, Euros, British Pounds, Canadian Dollars or Danish Kroner. Amounts borrowed underan application to, and approval by, the revolving credit facility bear interest at a rate per annum equal to, at our option, either (a) the LIBOR rate (or, in the case of revolving credit loans denominated in a currency other than U.S. Dollars, the applicable quoted rate), plus a margin that varies within a range of 1.0% to 1.5% based on our consolidated leverage ratio, or (b) a fluctuating reference rate equal to the highest of (i) the federal funds’ rate plus 0.50%, (ii) Bank of America’s publicly announced prime rate or (iii) the LIBOR rate plus 1.00%, plus a margin that varies within a range of 0.0% to 0.5% based on our consolidated leverage ratio. We are required to pay a commitment fee on the undrawn portion of the revolving credit facility at the rate of 0.25% per annum. Outstanding borrowings under the revolving credit line during fiscal 2020 bear interest at a weighted average annual rate of 2.52%SBA and we paid $73,000 of interest expense for revolving credit line borrowings for the three months ended May 2, 2020.
The obligations of ANI ApS in respect of the $9.2 million term loan are guaranteed by us and TrojanLabel ApS. Our obligations in respect of the $15.0 million term loan, revolving credit facility and its guarantee in respect of the ANI ApS term loan are secured by substantially all of our assets (including a pledge of a portion of the equity interests we hold in ANI ApS and our wholly owned German subsidiary, AstroNova GmbH),may also be subject to certain exceptions.
The Lender is entitled to accelerate repayment offurther requirements in any regulations and guidelines the loans and to terminate its revolving credit commitment under the Credit Agreement upon the occurrence of any of various customary events of default.
The Parties must comply with various customary financial andnon-financial covenants under the Credit Agreement.
We would not comply with certain financial covenants in the amended Credit Agreement if Bank of America had not agreed to waive compliance with those covenants pursuant to the Letter Agreement we entered into with Bank of America on June 22, 2020. We and Bank of America are actively negotiating the terms of an amendment to restructure the Credit Agreement that would provide for mutually acceptable revised financial and operational covenants and other mutually acceptable revised terms; however, no assurance can be given that we will succeed in this effort. If we are successful in negotiating the terms of this amendment, we expect the amended Credit Agreement to provide for, among other things, substantial changes to the structure of the credit facility as it relates to the loans currently outstanding thereunder that were borrowed by AstroNova, Inc.’s subsidiary TrojanLabel ApS. We expect that all loans under the amended Credit Agreement would be direct obligations of AstroNova, Inc. We also expect that the amended Credit Agreement would prohibit our paying dividends on or repurchasing our capital stock and making certain other restricted payments.
SBA may adopt.
2021.
Our The decline in the accounts receivable balance and days sales outstanding in the first quarter of the current year is largely due to the
The net increased cash position at May 2, 2020 primarily resulted from the contribution from cash provided by operations of $3.4 million, along with the $5.0 million borrowing under our revolving line of credit. This increase was slightly offset by payments of the guaranteed royalty obligation under the Honeywell Agreement of $0.2 million and $0.5 million, respectively, and cash used to acquire property, plant and equipment of $0.6 million, and payment of our quarterly dividend of $0.5 million.
2021.
Item 3. |
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Item 4. |
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We have not experienced any material impact to our internal controls over financial reporting despite the fact that most of ournon-production employees are working remotely due to theCOVID-19 pandemic. We are continually monitoring and assessing theCOVID-19 situation with respect to our internal controls to minimize the potential impact on their design and operational effectiveness.
Item 1A. |
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This section augments and updates certain risk factors disclosed in Item 1A of Part I of our Annual Report on Form10-K for the year ended January 31, 2020 (the “Annual Report”). We are providing the following information regarding changes that have occurred to the previously disclosed risk factors in our Annual Report onForm 10-K.
The ongoingCOVID-19 pandemic has adversely affected and will likely continue to adversely affect our revenues, results of operations and financial condition.
Our business has been and will likely continue to be materially adversely affected by the widespread outbreak of contagious disease, including the recent outbreak of respiratory illness caused by a novel coronavirus known asCOVID-19.COVID-19 has been declared by the World Health Organization to be a “pandemic” and has spread to many of the countries in which we, our customers, our suppliers and our other business partners do business. National, state and local governments in affected regions have implemented and may continue to implement safety precautions, including quarantines, travel restrictions, business closures, cancellations of public gatherings and other measures. Other organizations and individuals are taking additional steps to avoid or reduce infection, including limiting travel and staying home from work. These measures are disrupting normal business operations both inside and outside of affected areas and have had significant negative impacts on businesses and financial markets worldwide.
We continue to monitor our operations and government recommendations and have made modifications to our normal operations because of theCOVID-19 outbreak, including requiring mostnon-production related team members to work remotely. We have maintained a substantial portion of our manufacturing operational capacity at our manufacturing facilities located in West Warwick, Rhode Island, as well as our manufacturing facilities in Canada and Germany, at this time, and we have instituted heightened cleaning and sanitization standards and several health and safety protocols and procedures to safeguard our team members. However, we have experienced a number of adverse impacts as a result of theCOVID-19 outbreak, including reductions in demand for our products, delays and cancellations of orders for our products, difficulties in obtaining raw materials and components for our products, shortages of labor to manufacture our products, inefficiencies caused by remote workers’ difficulties in performing their normal work outputs, closures of the facilities of some of our suppliers and customers, and delays in collecting accounts receivable.
While it is not possible at this time to estimate the full scope of the impact thatCOVID-19 will have on our business, customers, suppliers or other business partners, we expect that the continued spread ofCOVID-19, the measures taken by the governments of affected countries, actions taken to protect employees, and the impact of the pandemic on all business activities to further adversely impact our operational capacity and the efficiency of our team members and will continue to materially adversely affect our business, financial condition and/or operating results of operations and financial condition.
The adverse effect ofCOVID-19 on our business has negatively impacted our ability to comply with the covenants governing our credit facility, and disruptions in the credit and capital markets as a result ofCOVID-19 have and may continue towell as adversely affect the terms on which we are able to obtain new financing.
The aerospace industry, which we serve through our aerospace product line, has been significantly disrupted by theCOVID-19 outbreak, both inside and outside of the United States. The decline in air travel has had and will continue to have a material adverse impact on our financial results, the ultimate scope of which we cannot estimate at this time. Should one or morevalue of our airplane OEM manufacturing customers or a significant number of airline customers failcommon stock.
If we are unable to successfully negotiate an amendment to our credit agreement with Bank of America or secure alternative financing, our business and financial condition could be materially adversely affected.
Our credit agreement with Bank of America requires us, among other things, to satisfy certain financial ratios and conditions on an ongoing basis. Specifically, we are required to maintain minimum EBITDA (as definedrisk factors previously disclosed in the credit agreement) of $9.5 millionCompany’s Annual Report on a trailing twelve-months basis and our consolidated leverage ratio is not permitted to exceed 3.0 to 1.0, in each case as of the end of each fiscal quarter. Our actual EBITDA dropped below the required level for such period ended May 2, 2020, primarily as a result of the declines in our revenue attributable to the reduced demand for aircraft cockpit printers
Item 2. |
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| Total Number of Shares Repurchased | Average Price paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares That May Be Purchased Under the Plans or Programs | |||||||||||||
February 1 – February 29 | — | — | — | — | ||||||||||||
March 1 – March 31 | 5,570 | (a)(b) | 6.92 | (a)(b) | — | — | ||||||||||
April 1 – April 30 | — | — | — | — | ||||||||||||
Total Number of Shares Repurchased | Weighted Average Price paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares That May Be Purchased Under the Plans or Programs | |||||||||||||
February 1—February 28 | — | $ | — | — | — | |||||||||||
March 1—March 31, | 15,629 | (a)(b) | $ | 13.32 | (a) (b) | — | — | |||||||||
April 1—April 30 | — | $ | — | — | — | |||||||||||
| (a) |
Executives of the Company delivered |
| (b) | Executives of the Company delivered 8,342 shares of the Company’s common stock toward the satisfaction of taxes due with respect to vesting of restricted shares. The shares delivered were valued at a weighted-average market value of |
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We are providing the following information under this Item 5 in lieuTable of reporting the information under Item 1.01, “Entry Into a Material Definitive Agreement,” of a Current Report on Form8-K with a due date on or after the date hereof:
On June 22, 2020, we entered into a Letter Agreement with Bank of America, N.A. relating to the testing of certain financial covenants included in the credit agreement dated as of February 28, 2017 between us, our wholly owned Danish subsidiaries, ANI ApS and TrojanLabel ApS and Bank of America, as amended to date. Pursuant to that agreement, Bank of America has agreed to waive the testing of the financial covenants set forth in the credit agreement related to our consolidated leverage ratio and consolidated EBITDA (as defined in the credit agreement) for the measurement period ending May 2, 2020. The Letter Agreement requires us to have, as of June 30, 2020, a consolidated EBITDA of not less than $9.5 million on a trailing twelve-months basis, and to report our compliance with such requirement on or before August 15, 2020. The Letter Agreement provides that such covenant will not be tested until August 15, 2020. Under the terms of the Letter Agreement we are not permitted to request any additional borrowings under the revolving line of credit under the credit agreement through August 15, 2020, and we will not be permitted to request any such additional borrowings thereafter unless we are in compliance with the credit agreement. The Letter Agreement also prohibits us from making any dividend or stock repurchase payments or other restricted payments through August 15, 2020, and we will be permitted to make restricted payments thereafter only in compliance with the credit agreement.
The description of the Letter Agreement is qualified in its entirety by reference to the full text of the Letter Agreement, a copy of which is attached hereto as Exhibit 10.3 and is incorporated herein by reference.
Item 6. |
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ASTRONOVA, | ||||||
| INC. (Registrant) | ||||||
| Date: June | By | /s/ Gregory A. Woods | ||||
| Gregory A. Woods, | ||||||
| President and Chief Executive Officer | ||||||
| (Principal Executive Officer) | ||||||
| By | /s/ David S. Smith | |||||
| David S. Smith, | ||||||
| Vice President, Chief Financial Officer and Treasurer | ||||||
| (Principal Accounting Officer and Principal Financial Officer) | ||||||
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