UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EX-
CHANGE ACT OF 1934
For the quarterly period ended January 31, 2012
[ ] TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EX-
CHANGE ACT OF 1934
For the transition period from ___________ to ____________
Commission File Number: 000-05378
GEORGE RISK INDUSTRIES, INC.
(Exact name of small business issuer as specified in its charter)
Colorado 84-0524756
(State of incorporation) (IRS Employers Identification No.)
802 South Elm St.
Kimball, NE 69145
(Address of principal executive offices) (Zip Code)
(308) 235-4645
(Registrant's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes [ X ] No [ ]
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ]
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares of the Registrant's Common Stock outstanding, as of
March 16, 2012 was 5,042,800.
Transitional Small Business Disclosure Format: Yes [ X ] No [ ]
GEORGE RISK INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
The unaudited financial statements for the three and nine month period
ended January 31, 2012, are attached hereto.
GEORGE RISK INDUSTRIES, INC.
BALANCE SHEETS
January 31, April 30,
2012 2011
------------ ------------
(unaudited)
ASSETS
Current Assets
Cash and cash equivalents $ 5,186,000 $ 5,254,000
Marketable securities (Note 2) 19,735,000 19,512,000
Accounts receivable:
Trade, net of $14,000 and $5,000
doubtful account allowance 1,692,000 1,574,000
Other 1,000 1,000
Note receivable, current 5,000 5,000
Inventories (Note 3) 2,133,000 1,854,000
Prepaid expenses 159,000 151,000
Deferred income taxes 130,000 166,000
------------ ------------
Total Current Assets $29,041,000 $28,517,000
Property and Equipment, net at cost $ 810,000 $ 639,000
Other Assets
Investment in Land Limited Partnership,
at cost 228,000 218,000
Projects in process 24,000 213,000
Note receivable 5,000 1,000
Other 1,000 0
------------ ------------
Total Other Assets $ 258,000 $ 432,000
TOTAL ASSETS $30,109,000 $29,588,000
============ ============
GEORGE RISK INDUSTRIES, INC.
BALANCE SHEETS
January 31, April 30,
2012 2011
------------ ------------
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable, trade $ 59,000 $ 128,000
Dividends payable 589,000 483,000
Accrued expenses
Payroll and other expenses 273,000 212,000
Property taxes 2,000 0
Income tax payable 140,000 36,000
------------ ------------
Total Current Liabilities $ 1,063,000 $ 859,000
Long-Term Liabilities
Aircraft owership deposit payable 5,000 5,000
Deferred income taxes 74,000 53,000
------------ ------------
Total Long-Term Liabilities $ 79,000 $ 58,000
Stockholders' Equity
Convertible preferred stock, 1,000,000
shares authorized, Series 1-noncumulative,
$20 stated value, 25,000 shares authorized,
4,100 issued and outstanding 99,000 99,000
Common stock, Class A, $.10 par value,
10,000,000 shares authorized, 8,502,832
shares issued and outstanding 850,000 850,000
Additional paid-in capital 1,736,000 1,736,000
Accumulated other comprehensive income 133,000 281,000
Retained earnings 29,596,000 29,115,000
Treasury stock, 3,459,312 and 3,451,857
shares, at cost (3,447,000) (3,410,000)
------------ ------------
Total Stockholders' Equity $28,967,000 $28,671,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $30,109,000 $29,588,000
============ ============
GEORGE RISK INDUSTRIES, INC.
INCOME STATEMENTS
(unaudited)
Three months Nine months Three months Nine months
ended ended ended ended
January 31, January 31, January 31, January 31,
2012 2012 2011 2011
---------------------------------------------------
Net Sales $ 2,584,000 $ 7,742,000 $ 2,220,000 $ 6,404,000
Less: cost of goods sold (1,247,000) (3,801,000) (1,119,000) (3,442,000)
------------ ------------ ------------ ------------
Gross Profit $ 1,337,000 $ 3,941,000 $ 1,101,000 $ 2,962,000
Operating Expenses:
General and
administrative 181,000 590,000 184,000 567,000
Selling 411,000 1,173,000 381,000 1,155,000
Engineering 14,000 43,000 22,000 59,000
Rent paid to related
parties 11,000 34,000 11,000 34,000
------------ ------------ ------------ ------------
Total Operating Expenses $ 617,000 $ 1,840,000 $ 598,000 $ 1,815,000
Income From Operations 720,000 2,101,000 503,000 1,147,000
Other Income (Expense)
Other 6,000 18,000 2,000 9,000
Dividend and interest
income 222,000 562,000 216,000 536,000
Gain (loss) on sale of
investments (384,000) (104,000) 97,000 (2,000)
Gain (loss) on sale of
assets 0 13,000 0 0
------------ ------------ ------------ ------------
$ (156,000) $ 489,000 $ 315,000 $ 543,000
Income Before Provisions
for Income Tax 564,000 2,590,000 818,000 1,690,000
Provisions for Income Tax
Current Expense 283,000 786,000 202,000 476,000
Deferred tax expense
(benefit) (155,000) 163,000 (136,000) (192,000)
------------ ------------ ------------ ------------
Total Income Tax Expense 128,000 949,000 66,000 284,000
Net Income $ 436,000 $ 1,641,000 $ 752,000 $ 1,406,000
============ ============ ============ ============
Cash Dividends
Common Stock ($0.23
per share) 0 (1,160,000)
Common Stock ($0.20
per share) 0 (1,013,000)
Income Per Share of Common Stock (Note 5):
Basic $0.09 $0.33 $0.15 $0.28
Diluted $0.09 $0.32 $0.15 $0.28
Weighted Average Number of
Common Shares Outstanding:
Basic 5,043,585 5,045,898 5,054,500 5,059,213
Diluted 5,064,085 5,066,398 5,075,000 5,079,713
GEORGE RISK INDUSTRIES, INC.
STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
Three months Nine months Three months Nine months
ended ended ended ended
January 31, January 31, January 31, January 31,
2012 2012 2011 2011
----------------------------------------------------
Net Income $ 436,000 $ 1,641,000 $ 752,000 $ 1,406,000
------------ ------------ ------------ ------------
Other Comprehensive Income, net of tax
Unrealized gain (loss) on securities:
Unrealized holding
gains (losses) arising
during period 377,000 (582,000) (98,000) 50,000
Reclassification adjustment
for (gains) losses 313,000 327,000 (76,000) 51,000
Income tax expense related
to other comprehensive
income (288,000) 106,000 73,000 (43,000)
------------ ------------ ------------ ------------
Other Comprehensive
Income $ 402,000 $ (149,000) $ (101,000) $ 58,000
Comprehensive Income $ 838,000 $ 1,492,000 $ 651,000 $ 1,464,000
============ ============ ============ ============
GEORGE RISK INDUSTRIES, INC.
STATEMENTS OF CASH FLOWS
(unaudited)
Nine months Nine months
ended ended
January 31, January 31,
2012 2011
----------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 1,641,000 $ 1,406,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 120,000 114,000
(Gain) loss on sale of investments 104,000 2,000
(Gain) loss on sale of assets (13,000) 0
Reserve for bad debts 9,000 10,000
Reserve for obsolete inventory 35,000 8,000
Deferred income taxes 163,000 (192,000)
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable (127,000) (11,000)
Inventories (315,000) 115,000
Prepaid expenses (7,000) 57,000
Income tax overpayment 0 (23,000)
Increase (decrease) in:
Accounts payable (69,000) 0
Accrued expenses 63,000 75,000
Income tax payable 104,000 0
------------ ------------
Net cash provided by (used in) operating
activities $ 1,708,000 $ 1,561,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Other assets manufactured 189,000 (82,000)
Proceeds from sale of assets 20,000 0
(Purchase) of property/equipment (298,000) (44,000)
Proceeds from sale of marketable securities 168,000 1,584,000
(Purchase) of marketable securities (748,000) (762,000)
(Purchase) of long-term investment (10,000) 0
(Loans) made to employees (10,000) 0
Collections of loans to employees 5,000 10,000
(Purchase) of treasury stock (37,000) (59,000)
------------ ------------
Net cash provided by (used in) investing
activities $ (721,000) $ 647,000
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid (1,055,000) (924,000)
------------ ------------
Net cash provided by (used in) financing
activities $(1,055,000) $ (924,000)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS $ (68,000) $ 1,284,000
Cash and cash equivalents, beginning of
period $ 5,254,000 $ 3,641,000
------------ ------------
Cash and cash equivalents, end of period $ 5,186,000 $ 4,925,000
============ ============
Supplemental Disclosure of Cash Flow
Information
Cash payments for:
Income taxes $ 680,000 $ 497,000
Interest expense 0 0
Cash receipts for:
Income taxes 0 0
GEORGE RISK INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 2011
Note 1 Unaudited Interim Financial Statements
The accompanying unaudited financial statements have been prepared in
accordance with the instructions for Form 10-Q and do not include all of the
information and footnotes required by generally accepted accounting prin-
ciples in the United States of America (US GAAP) for complete financia
statements. These financial statements should be read in conjunction with
the financial statements and notes contained in the company's annual report
on Form 10-K for the year ended April 30, 2011. In the opinion of manage-
ment, all adjustments, consisting only of normal recurring adjustments con-
sidered necessary for a fair presentation, have been included. Operating
results for any quarter are not necessarily indicative of the results for any
other quarter or for the full year. We have evaluated subsequent events
through March 16, 2012, the issuance date of these financial statements. The
Company did not have any material, recognizable subsequent events.
Note 2 Marketable Securities
The Company has investments in publicly traded equity securities as well
as certain state and municipal debt securities. These securities are class-
ified as available-for-sale securities, and are reported at fair value.
Refer to Note 7, Fair Value Measurements, for additional information on the
fair value measurements for all assets and liabilities, including invest-
ments, that are measured at fair value in these financial statements. Avail-
able -for-sale investments in debt securities mature between February 2012
and June 2042. The Company uses the average cost method to determine the
cost of securities sold and the amount reclassified out of accumulated other
comprehensive income into earnings. Unrealized gains and losses are excluded
from earnings and reported separately as a component of stockholders'equity.
Dividend and interest income are accrued as earned.
As of January 31, 2012, investments available-for-sale consisted of the
following:
Gross Gross
Cost Unrealized Unrealized Fair
Basis Gains Losses Value
------------ ------------ ------------ ------------
Municipal bonds $ 9,498,000 $ 272,000 $ (70,000) $ 9,700,000
Corporate bonds $ 166,000 $ 10,000 $ 0 $ 176,000
Equity securities $ 6,680,000 $ 368,000 $ (351,000) $ 8,697,000
Money markets and CDs $ 1,162,000 $ 0 $ 0 $ 1,162,000
------------ ------------ ------------ ------------
Total $19,506,000 $ 650,000 $ (421,000) $19,735,000
In accordance with US GAAP, the Company evaluates all marketable
securities for other-than temporary declines in fair value, which are defined
as when the cost basis exceeds the fair value for approximately one year.
The Company also evaluates the nature of the investment, cause of impairment
and number of investments that are in an unrealized position. When an other-
than-temporary decline is identified, the Company will decrease the cost of
the marketable security to the new fair value and recognize a real loss. The
investments are periodically evaluated to determine if impairment changes are
required. As a result of this standard, management recorded impairment
losses of $5,000 for the quarter ended January 31, 2012 and recorded an im-
pairment loss of $71,000 for the nine months ended January 31, 2012. As for
the corresponding periods last year, management did not record an impairment
loss for the quarter, while $11,000 of loss was recorded for the nine months
ended January 31, 2011.
The following table shows the investments with unrealized losses that
are not deemed to be other-than-temporarily impaired, aggregated by invest-
ment category and length of time that individual securities have been in a
continuous unrealized loss position, at January 31, 2012.
Less than 12 months 12 months or greater Total
----------------------- --------------------- ---------------------
Fair Unrealized Fair Unrealized Fair Unrealized
Value Loss Value Loss Value Loss
...........................................................................
Municipal bonds
$ 879,000 $ (6,000) $1,797,000 $ (64,000) $2,676,000 $ (70,000)
Equity securities
$2,676,000 $ (189,000) $1,199,000 $ (162,000) $3,875,000 $ (351,000)
Total
$3,555,000 $ (195,000) $2,996,000 $ (226,000) $6,551,000 $ (421,000)
Municipal Bonds
---------------
The unrealized losses on the Company's investments in municipal bonds were
caused by interest rate increases. The contractual terms of these invest-
ments do not permit the issuer to settle the securities at a price less than
the amortized cost of the investment. Because the Company has the ability to
hold these investments until a recovery of fair value, which may be maturity,
the Company does not consider these investments to be other-than-temporarily
impaired at January 31, 2012.
Marketable Equity Securities
----------------------------
The Company's investments in marketable equity securities consist of a wide
variety of companies. Investments in these companies include growth, growth
income, and foreign investment objectives. The individual holdings have been
evaluated, and due to management's plan to hold onto these investments for an
extended period, the Company does not consider these investments to be other-
than-temporarily impaired at January 31, 2012.
Note 3 Inventories
At January 31, 2012, inventories consisted of the following:
Raw materials $ 1,509,000
Work in process 505,000
Finished goods 287,000
------------
2,301,000
Less: allowance for obsolete inventory (168,000)
------------
Totals $ 2,133,000
Note 4 Business Segments
The following is financial information relating to industry segments:
For the quarter ended
January 31,
2012 2011
---------------------------
Net revenue:
Security alarm products 2,287,000 1,921,000
Other products 297,000 299,000
------------ ------------
Total net revenue $ 2,584,000 $ 2,220,000
Income from operations:
Security alarm products 637,000 435,000
Other products 83,000 68,000
------------ ------------
Total income from operations $ 720,000 $ 503,000
Identifiable assets:
Security alarm products 3,302,000 2,694,000
Other products 1,213,000 974,000
Corporate general 25,594,000 25,060,000
------------ ------------
Total assets $30,109,000 $28,728,000
Depreciation and amortization:
Security alarm products 6,000 6,000
Other products 33,000 25,000
Corporate general 5,000 7,000
------------ ------------
Total depreciation and amortization $ 44,000 $ 38,000
Capital expenditures:
Security alarm products 0 0
Other products 96,000 11,000
Corporate general 0 0
------------ ------------
Total capital expenditures $ 96,000 $ 11,000
Note 5 Earnings per Share
Basic and diluted earning per share, assuming convertible preferred
stock was converted for each period presented, are:
For the three months ended January 31, 2012
-------------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- -----------
Net Income $ 436,000
===========
Basic EPS $ 436,000 5,043,585 $ 0.086
Effect of dilutive securities:
Convertible preferred stock 0 20,500
----------- ------------- -----------
Diluted EPS $ 436,000 5,064,085 $ 0.086
For the nine months ended January 31, 2012
-------------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- -----------
Net Income $1,641,000
===========
Basic EPS $1,641,000 5,045,898 $ 0.325
Effect of dilutive securities:
Convertible preferred stock 0 20,500
----------- ------------- -----------
Diluted EPS $1,641,000 5,066,398 $ 0.323
For the three months ended January 31, 2011
--------------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- -----------
Net Income $ 752,000
===========
Basic EPS $ 752,000 5,054,500 $ 0.149
Effect of dilutive securities:
Convertible preferred stock 0 20,500
----------- ------------- -----------
Diluted EPS $ 752,000 5,075,000 $ 0.148
For the nine months ended January 31, 2011
--------------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- -----------
Net Income $1,406,000
===========
Basic EPS $1,406,000 5,059,213 $ 0.278
Effect of dilutive securities:
Convertible preferred stock 0 20,500
----------- ------------- -----------
Diluted EPS $1,406,000 5,079,713 $ 0.277
Note 6 Retirement Benefit Plan
On January 1, 1998, the Company adopted the George Risk Industries, Inc.
Retirement Savings Plan (the "Plan"). The Plan is a defined contribution
savings plan designed to provide retirement income to eligible employees of
the corporation. The Plan is intended to be qualified under Section 401(k)
of the Internal Revenue Code of 1986, as amended. Matching contributions by
the Company of approximately $3,000 were paid during each quarter ending
January 31, 2012 and 2011. Likewise, the Company paid matching contributions
of $9,000 during the nine-month periods ending January 31, 2012 and 2011.
There were no discretionary contributions paid during either the quarters or
nine-month periods ending January 31, 2012 and 2011, respectively.
Note 7 Fair Value Measurements
Generally accepted accounting principles in the United States of America
(US GAAP) defines fair value as the price that would be received from selling
an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. When determining the fair value
measurements for assets and liabilities, which are required to be recorded at
fair value, we consider the principal or most advantageous market in which we
would transact and the market-based risk measurements or assumptions that
market participants would use in pricing the asset or liability, such as
inherent risk, transfer restrictions, and credit risk.
US GAAP establishes a fair value hierarchy that prioritizes the inputs
to valuation techniques used to measure fair value. The hierarchy gives the
highest priority to unadjusted quoted prices in active markets for identical
assets or liabilities (level 1 measurements) and the lowest priority to un-
observable inputs (level 3 measurements). The levels of the fair value
hierarchy under US GAAP are described below:
Level 1 - Valuation is based upon quoted prices for identical in-
struments traded in active markets.
Level 2 - Valuation is based upon quoted prices for similar in-
struments in active markets, quoted prices for identical
or similar instruments in markets that are not active,
and model-based valuation techniques for which all sig-
nificant assumptions are observable in the market.
Level 3 - Valuation is generated from model-based techniques that
use significant assumptions not observable in the market.
These unobservable assumptions reflect our own estimates
of assumptions that market participants would use in
pricing the asset or liability. Valuation techniques
include use of option pricing models, discounted cash
flow models and similar techniques.
Investments and Marketable Securities
-------------------------------------
As of January 31, 2012, our investments consisted of money markets, CDs,
publicly traded equity securities and certain state and municipal debt
securities. Our investments are valued using third-party broker statements.
The value of the investments is derived from quoted market information. The
inputs to the valuation are classified as Level 1 given the active market for
these securities, however, if an active market does not exist, which is the
case for municipal and corporate bonds, the inputs are recorded as Level 2.
Fair Value Hierarchy
--------------------
The following tables set forth our assets and liabilities measured at fair
value on a recurring basis and a non-recurring basis by level within the fair
value hierarchy. As required by US GAAP, assets and liabilities are
classified in their entirety based on the lowest level of input that is
significant to the fair value measurement.
Assets Measured at Fair Value on a Recurring Basis
as of January 31, 2012
---------------------------------------------------
Level 1 Level 2 Level 3 Total
------- ------- ------- -------
Assets:
Money Markets and CDs $1,162,000 $ 0 $ 0 $ 1,162,000
Equity Securities $8,697,000 $ 0 $ 0 $ 8,697,000
Municipal and Corporate
Bonds $ 0 $9,876,000 $ 0 $ 9,876,000
----------- ----------- ---------- ------------
Total fair value of
assets measured on a
recurring basis $9,859,000 $9,876,000 $ 0 $19,735,000
GEORGE RISK INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Item 2. Management Discussion and Analysis of Financial Condition and
Results of Operations
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the attached con-
densed consolidated financial statements, and with the George Risk
Industries' audited financial statements and discussion for the fiscal year
ended April 30, 2011.
Liquidity and capital resources
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Operating
---------
Net cash decreased $68,000 for the nine months ended January 31, 2012, while,
for the same period last year, net cash increased $1,284,000. Accounts re-
eivable increased $127,000 for the current nine months and increased $11,000
for the same period last year. The increase in cash flow for accounts re-
ceivable is a reflection of increased sales. At January 31, 2012, 64.93% of
the receivables were considered current (less than 45 days) and 2.82% of the
total were over 90 days past due. For comparison, 73.70% of the receivables
were current and 1.55% were past 90 days at January 31, 2011. Inventories
increased $315,000 for the current nine months, and it decreased $115,000 for
the same period last year. The current increase is due to increased sales
and the prices of raw materials have increased. Changes in prepaid expenses
in regards to cash flow increased by $7,000 and decreased by $57,000 for the
nine-month periods ending January 31, 2012 and 2011, respectively. There was
not an income tax overpayment for the nine months ended January 31, 2012,
while there was a $23,000 increase in income tax overpayment for the cor-
responding period last year. Management paid income tax estimates based on
prior year taxable income.
For the nine months ended January 31, 2012, accounts payable decreased
$69,000 while cash flow towards accounts payable did not fluctuate for the
same period ended January 31, 2011. The change in cash in regards to
accounts payable can vary. It really depends on the time of the month the
invoices are due, since the company pays all its invoices within the terms.
Accrued expenses increased $63,000 for the nine months ended January 31,
2012, and these expenses increased $75,000 for the corresponding nine months
last year. The current increase is a result of increased sales commissions
and more employees. Income tax payable increased $104,000 for the nine
months ending January 31, 2012, while there was no payable on the books for
the corresponding period last year.
Investing
---------
As for our investment activities, the Company has spent approximately
$298,000 on acquisitions of property and equipment for the current nine-month
period and $44,000 was spent during the nine months ended January 31, 2011.
Two in-house built molds, valued at $265,000 and previously classified as
projects in process, were completed during the current nine-month period.
Additionally, the Company continues to purchase marketable securities, which
include municipal and corporate bonds and quality stocks. Cash spent on pur-
chases of marketable securities for the nine months ended January 31, 2012
was $748,000 and $762,000 was spent for the corresponding period last year.
In addition, proceeds from the sale of marketable securities for the nine
months ended January 31, 2012 were $168,000 and $1,584,000 for the same
period last year. We use "money manager" accounts for most stock trans-
actions. By doing this, the Company gives an independent third party firm,
who are experts in this field, permission to buy and sell stocks at will.
The Company pays a quarterly service fee based on the value of the invest-
ments. Furthermore, the Company continues to purchase back its common stock
when the opportunity arises. For the nine months ended January 31, 2012, the
Company purchased $37,000 worth of treasury stock and $59,000 worth was
bought back for the nine months ended January 31, 2011. We have been
actively searching for stockholders that have been "lost" over the years.
The payment of dividends over the last seven fiscal years has also prompted
many stockholders and/or their relatives and descendants to sell back their
stock to the Company.
Financing
---------
Cash flows from financing activities decreased by $1,055,000 for the nine
months ending January 31, 2012. That figure consists of the payment of
dividends during the second quarter. The company declared a dividend of
$0.23 per share of common stock on September 30, 2011 and these dividends
were paid by October 31, 2011. As for the prior year numbers, net cash used
in financing activities was $924,000 for the nine months ending January 31,
2011. A dividend of $0.20 per common share was also declared and paid during
the second fiscal quarter last year.
The following is a list of ratios to help analyze George Risk Industries'
performance:
For the quarter ended
January 31,
2012 2011
---------------------------
Working capital
(current assets - current liabilities) $ 27,978,000 $ 26,844,000
Current ratio
(current assets / current liabilities) 27.320 33.978
Quick ratio
((cash + investments+ AR) / current
liabilities) 25.036 30.581
Results of operations
~~~~~~~~~~~~~~~~~~~~~
Net sales were $2,584,000 for the quarter ended January 31, 2012, which is a
16.4% increase from the corresponding quarter last year. Year-to-date net
sales at January 31, 2012 were $7,742,000, which is a 20.9% increase from the
same period last year. Even though the majority of the Company's products
are tied to the housing market, the increase in sales is a result of the
Company focusing on gaining market share in the industry. The Company is
accomplishing this by having excellent customer service and being willing to
make many customized parts. Cost of goods sold was 48.26% of net sales for
the quarter ended January 31, 2012 and 50.41% for the same quarter last year.
Year-to-date cost of goods sold percentages were 49.1% for the current nine
months and 53.75% for the corresponding nine months last year. Management
continues to keep labor and other manufacturing expenses down and strives to
stay in the desired cost of goods sold percentage range of 45 to 50%. Also,
management raised prices at January 1, 2012. The price increase helps in-
crease the gross profit.
Operating expenses were 23.88% of net sales for the quarter ended January 31,
2012 as compared to 26.94% for the corresponding quarter last year. Year-to-
date operating expenses were 23.77% of net sales for the nine months ended
January 31, 2012, while they were 28.34% for the same period last year.
Having relatively the same percentages for operating expenses shows that
management has a good grip on spending habits. Income from operations for
the quarter ended January 31, 2012 was at $720,000, which is a 43.14% in-
crease from the corresponding quarter last year, which had income from oper-
ations of $503,000. Income from operations for the nine months ended January
31, 2012 was at $2,101,000, which is an 83.17% increase from the correspond-
ing nine months last year, which had income from operations of $1,147,000.
Other income and expenses showed a loss of $156,000 and a gain of $489,000
for the quarter and nine months ended January 31, 2012. The numbers for the
corresponding periods last year were gains of $315,000 for the quarter and
$543,000 for the nine-months ending January 31, 2011. Dividend and interest
income was up 2.78% for the quarter and was up 4.85% for the current nine-
month period when comparing to the same time periods last year. During the
current quarter, there was a $384,000 loss on investments recorded. Manage-
ment wrote down $5,000 of impaired investments during the quarter ending
January 31, 2012. There was not a write down of investments for the same
quarter last year. As for the nine months ended January 31, 2012 and 2011,
there were write-downs of $71,000 and $11,000, respectively.
Net income for the quarter ended January 31, 2012 was $436,000, which is a
42.02% decrease from the corresponding quarter last year, which showed a net
gain of $752,000. Net income for the nine months ended January 31, 2012 was
$1,641,000, a 16.71% increase from the same period last year. Net income for
the nine months ended January 31, 2011 was $1,406,000. Earnings per common
share for the quarter ended January 31, 2012 was $0.09 per share and $0.33
per share for the year-to-date numbers. EPS for the quarter and nine months
ended January 31, 2011 was $0.15 per share and $0.28 per share, respectively.
New product information
~~~~~~~~~~~~~~~~~~~~~~~
In response to customer requests, we have modified our 3/4" and 1" recessed
contacts into a shorter and stubby version. This makes for easier install-
ation. Depending on the part number, these are used in steel door or
aluminum and wood doors.
We have also added a service repair connector to our product line. The
weather pack nylon connectors are environmentally sealed to withstand ex-
posure to temperature and moisture. This connector (SRC-12) is an ideal
companion for our great selling HVAC kits and other applications for removal
of equipment for service and repair.
Engineering has completed work on a garage door alert (DM-1) which will
monitor when the garage door has been left open and will automatically shut
the door --either by a timed delay after the garage door has been opened or
closing at a set time every day. Management believes this will be a good up
sell as many home burglars gain access through a garage door that is left
open or unlocked.
Engineering is working on a plastic housing for our very popular MF-875 flat
magnet. They are also looking to complete a design on an 110V Current
Controller which would work with our contact switches to secure the door of
a storage unit and also turn on the light when the door is opened.
Recently issued accounting pronouncements
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
There are no new accounting pronouncements that significantly affect the
Company.
Other Information
~~~~~~~~~~~~~~~~~
Management is always open to the possibility to acquire a business that would
complement our existing operations. This would require no outside financing.
The intent is to utilize the equipment, marketing techniques and established
customers to increase sales and profits.
There are no known seasonal trends with any of our products, since we sell to
distributors and OEM manufacturers. The products are tied to the housing
industry and will fluctuate with building trends.
GEORGE RISK INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Item 3. Controls and Procedures
(a) Information required by Item 307
Our Chief Executive Officer and our Chief Financial Officer, after evaluating
the effectiveness of the Company's "disclosure controls and procedures" (as
defined in the Securities Exchange Act of 1934 (Exchange Act) Rules 13a-15(e)
or 15d-15(e)) as of the end of the period covered by this quarterly report,
have concluded that our disclosure controls and procedures are effective
based on their evaluation of these controls and procedures required by para-
graph (b) of Exchange Act Rules 13a-15 or 15d-15.
(b) Information required by Item 308
This disclosure is not yet required.
Item 3A. Controls and Procedures
Evaluation of disclosure controls and procedures:
-------------------------------------------------
Based on their evaluation of our disclosure controls and procedures (as de-
fined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of Jan-
uary 31, 2011, our president and chief executive officer and our chief finan-
cial officer have concluded that our disclosure controls and procedures are
effective such that information required to be disclosed by us in the reports
that we file or submit under the Exchange Act is (i) recorded, processed,
summarized and reported within the time periods specified in the Securities
and Exchange Commission's rules and (ii) accumulated and communicated to our
management, including our chief executive officer and our chief financial
officer, as appropriate to allow timely decisions regarding disclosure. A
control system cannot provide absolute assurance, however, that the ob-
jectives of the control systems are met, and no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud,
if any, within a company have been detected.
Changes in internal controls over financial reporting:
------------------------------------------------------
There was no change in our internal controls over financial reporting that
occurred during the period covered by this report, that has materially
affected, or is reasonably likely to materially affect, our internal controls
over financial reporting.
Management's Annual Report on Internal Control over Financial Reporting:
------------------------------------------------------------------------
Our management is responsible for establishing and maintaining adequate in-
ternal control over financial reporting, as such term is defined in Rules
13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control system was
designed to provide reasonable assurance regarding the reliability of finan-
cial reporting and the preparation of financial statements for external pur-
poses, in accordance with generally accepted accounting principles. Because
of inherent limitations, a system of internal control over financial re-
porting may not prevent or detect misstatements. Therefore, even those
systems determined to be effective can provide no reasonable assurance of
achieving their control objectives. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may
become inadequate due to change in conditions, or that the degree of com-
pliance with the policies or procedures may deteriorate.
Our management, including our principal executive officer and principal
accounting officer, conducted an evaluation of the effectiveness of our
internal control over financial reporting using the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) in
Internal Control-Integrated Framework. Based on its evaluation, our manage-
ment concluded that as of January 31, 2012 our internal control over
financial reporting is effective.
This quarterly report does not include an attestation report of the Corpor-
ation's registered public accounting firm regarding internal control over
financial reporting. Management's report was not subject to attestation by
the Corporation's registered public accounting firm pursuant to Section
404(c) of the Sarbanes-Oxley Act of 2002, as amended, that permits the Cor-
poration to provide only the management's report in this quarterly report.
GEORGE RISK INDUSTRIES, INC.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table provides information relating to the Company's
repurchase of common stock for the third quarter of fiscal year 2012.
Period Number of shares repurchased
-------------------------------------- ----------------------------
November 1, 2011 - November 30, 2011 1,200
December 1, 2011 - December 31, 2011 200
January 1, 2012 - January 31, 2012 0
Item 3. Defaults upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Securities
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
31. Certifications pursuant to Rule 13a-14(a)
31.1 Certification of the Chief Executive Officer
31.2 Certification of the Chief Financial Officer
32. Certifications pursuant to 18 U.S.C. 1350
32.1 Certification of the Chief Executive Officer
32.2 Certification of the Chief Financial Officer
B. Reports on Form 8-K
No 8-K reports were filed during the quarter ended January 31, 2012.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
George Risk Industries, Inc.
(Registrant)
Date 03-16-2012 By: /s/ Kenneth R. Risk
Kenneth R. Risk
President and Chairman of the Board
Date 03-16-2012 By: /s/ Stephanie M. Risk
Stephanie M. Risk
Chief Financial Officer and Controller