ASTRONOVA, INC., 10-Q filed on 9/9/2019
Quarterly Report
v3.19.2
Document and Entity Information - shares
6 Months Ended
Aug. 03, 2019
Sep. 03, 2019
Document and Entity Information [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Aug. 03, 2019  
Document Fiscal Year Focus 2020  
Document Fiscal Period Focus Q2  
Entity Registrant Name AstroNova, Inc.  
Entity Central Index Key 0000008146  
Current Fiscal Year End Date --01-31  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Accelerated Filer  
Trading Symbol ALOT  
Entity Shell Company false  
Entity Small Business true  
Entity Emerging Growth Company false  
Title of 12(b) Security Common Stock  
Security Exchange Name NASDAQ  
Entity Address, State or Province RI  
Entity Common Stock, Shares Outstanding   7,049,735
v3.19.2
Condensed Consolidated Balance Sheets - USD ($)
$ in Thousands
Aug. 03, 2019
Jan. 31, 2019
CURRENT ASSETS    
Cash and Cash Equivalents $ 4,523 $ 7,534
Accounts Receivable, net 20,605 23,486
Inventories, net 36,854 30,161
Prepaid Expenses and Other Current Assets 3,059 1,427
Total Current Assets 65,041 62,608
Property, Plant and Equipment, net 10,910 10,380
Intangible Assets, net 27,493 29,674
Goodwill 12,075 12,329
Deferred Tax Assets, net 3,480 2,928
Right of Use Assets 1,760
Other Assets 921 1,064
TOTAL ASSETS 121,680 118,983
CURRENT LIABILITIES    
Accounts Payable 9,403 5,956
Accrued Compensation 2,700 5,023
Other Liabilities and Accrued Expenses 3,285 2,911
Current Portion of Long-Term Debt 5,024 5,208
Revolving Credit Facility 3,500 1,500
Current Liability – Royalty Obligation 2,000 1,875
Current Liability – Excess Royalty Payment Due 647 1,265
Deferred Revenue 321 373
Income Taxes Payable 554
Total Current Liabilities 26,880 24,665
NON CURRENT LIABILITIES    
Long-Term Debt, net of current portion 10,295 12,870
Royalty Obligation, net of current portion 8,964 9,916
Lease Liabilities, net of current portion 1,364
Deferred Tax Liabilities 504 40
Other Long-Term Liabilities 1,585 1,717
TOTAL LIABILITIES 49,592 49,208
SHAREHOLDERS' EQUITY    
Common Stock, $0.05 Par Value, Authorized 13,000,000 shares; Issued 10,315,550 shares and 10,218,559 shares at August 3, 2019 and January 31, 2019, respectively 516 511
Additional Paid-in Capital 55,121 53,568
Retained Earnings 51,180 49,511
Treasury Stock, at Cost, 3,279,831 and 3,261,672 shares at August 3, 2019 and January 31, 2019, respectively (33,454) (32,997)
Accumulated Other Comprehensive Loss, net of tax (1,275) (818)
TOTAL SHAREHOLDERS' EQUITY 72,088 69,775
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 121,680 $ 118,983
v3.19.2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares
Aug. 03, 2019
Jan. 31, 2019
Statement of Financial Position [Abstract]    
Common Stock, Par Value $ 0.05 $ 0.05
Common Stock, Shares Authorized 13,000,000 13,000,000
Common Stock, Shares Issued 10,315,550 10,218,559
Treasury Stock, Shares 3,279,831 3,261,672
v3.19.2
Condensed Consolidated Statements of Income - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended 6 Months Ended
Aug. 03, 2019
Jul. 28, 2018
Aug. 03, 2019
Jul. 28, 2018
Income Statement [Abstract]        
Revenue $ 33,468 $ 33,807 $ 69,649 $ 65,294
Cost of Revenue 21,491 20,408 43,433 39,784
Gross Profit 11,977 13,399 26,216 25,510
Operating Expenses:        
Selling and Marketing 6,413 6,397 13,178 12,898
Research and Development 1,785 2,029 3,792 3,721
General and Administrative 2,616 2,808 5,615 5,462
Operating Expenses 10,814 11,234 22,585 22,081
Operating Income 1,163 2,165 3,631 3,429
Other Expense, net (183) (512) (550) (782)
Income before Income Taxes 980 1,653 3,081 2,647
Income Tax Provision 29 459 429 639
Net Income $ 951 $ 1,194 $ 2,652 $ 2,008
Net Income per Common Share—Basic: $ 0.14 $ 0.17 $ 0.38 $ 0.29
Net Income per Common Share—Diluted: $ 0.13 $ 0.17 $ 0.36 $ 0.29
Weighted Average Number of Common Shares Outstanding-Basic 7,021 6,860 6,996 6,825
Weighted Average Number of Common Shares Outstanding-Diluted 7,371 7,083 7,310 6,999
v3.19.2
Condensed Consolidated Statements of Comprehensive Income - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Aug. 03, 2019
Jul. 28, 2018
Aug. 03, 2019
Jul. 28, 2018
Statement of Comprehensive Income [Abstract]        
Net Income $ 951 $ 1,194 $ 2,652 $ 2,008
Other Comprehensive Income (Loss), Net of Taxes and Reclassification Adjustments:        
Foreign Currency Translation Adjustments (81) (349) (253) (618)
Change in Value of Derivatives Designated as Cash Flow Hedge (116) 245 545
Losses (Gains) from Cash Flow Hedges Reclassified to Income Statement (60) (255) (204) (455)
Realized (Gain) Loss on Securities Available for Sale reclassified to income statement (3) 3
Other Comprehensive Income (Loss) (257) (362) (457) (525)
Comprehensive Income $ 694 $ 832 $ 2,195 $ 1,483
v3.19.2
Consolidated Statements of Changes in Shareholders' Equity - USD ($)
$ in Thousands
Total
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Treasury Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Beginning Balance at Jan. 31, 2018 $ 63,647 $ 500 $ 50,016 $ 45,700 $ (32,397) $ (172)
Beginning Balance, Shares at Jan. 31, 2018   9,996,120        
Share-Based Compensation 363   363      
Employee Option Exercises 489 $ 3 574   (88)  
Employee Option Exercises, Shares   53,010        
Restricted Stock Awards Vested, net (40) $ 1 (1)   (40)  
Restricted Stock Awards Vested, net, Shares   16,981        
Common Stock – Cash Dividend—$0.07 per share (480)     (480)    
Net Income 814     814    
Other Comprehensive Loss (163)         (163)
Ending Balance at Apr. 28, 2018 64,630 $ 504 50,952 46,034 (32,525) (335)
Ending Balance, Shares at Apr. 28, 2018   10,066,111        
Beginning Balance at Jan. 31, 2018 63,647 $ 500 50,016 45,700 (32,397) (172)
Beginning Balance, Shares at Jan. 31, 2018   9,996,120        
Net Income 2,008          
Other Comprehensive Loss (525)          
Ending Balance at Jul. 28, 2018 65,488 $ 507 51,877 46,761 (32,960) (697)
Ending Balance, Shares at Jul. 28, 2018   10,136,497        
Beginning Balance at Apr. 28, 2018 64,630 $ 504 50,952 46,034 (32,525) (335)
Beginning Balance, Shares at Apr. 28, 2018   10,066,111        
Share-Based Compensation 466   466      
Employee Option Exercises 183   461   (278)  
Employee Option Exercises, Shares   40,302        
Restricted Stock Awards Vested, net (156) $ 3 (2)   (157)  
Restricted Stock Awards Vested, net, Shares   30,084        
Common Stock – Cash Dividend—$0.07 per share (481)     (481)    
Net Income 1,194     1,194    
Reclassification of Certain Income Tax Effects from Accumulated Other Comprehensive Loss 14     14    
Other Comprehensive Loss (362)         (362)
Ending Balance at Jul. 28, 2018 65,488 $ 507 51,877 46,761 (32,960) (697)
Ending Balance, Shares at Jul. 28, 2018   10,136,497        
Beginning Balance at Jan. 31, 2019 69,775 $ 511 53,568 49,511 (32,997) (818)
Beginning Balance, Shares at Jan. 31, 2019   10,218,559        
Share-Based Compensation 601   601      
Employee Option Exercises 296 $ 1 306   (11)  
Employee Option Exercises, Shares   27,990        
Restricted Stock Awards Vested, net (69) $ 1 (1)   (69)  
Restricted Stock Awards Vested, net, Shares   9,522        
Common Stock – Cash Dividend—$0.07 per share (489)     (489)    
Net Income 1,700     1,700    
Other Comprehensive Loss (200)         (200)
Ending Balance at May. 04, 2019 71,614 $ 513 54,474 50,722 (33,077) (1,018)
Ending Balance, Shares at May. 04, 2019   10,256,071        
Beginning Balance at Jan. 31, 2019 $ 69,775 $ 511 53,568 49,511 (32,997) (818)
Beginning Balance, Shares at Jan. 31, 2019   10,218,559        
Employee Option Exercises, Shares 38,975          
Net Income $ 2,652          
Other Comprehensive Loss (457)         (457)
Ending Balance at Aug. 03, 2019 72,088 $ 516 55,121 51,180 (33,454) (1,275)
Ending Balance, Shares at Aug. 03, 2019   10,315,550        
Beginning Balance at May. 04, 2019 71,614 $ 513 54,474 50,722 (33,077) (1,018)
Beginning Balance, Shares at May. 04, 2019   10,256,071        
Share-Based Compensation 451   451      
Employee Option Exercises 199 $ 1 198      
Employee Option Exercises, Shares   13,821        
Restricted Stock Awards Vested, net (377) $ 2 (2) 0 (377)  
Restricted Stock Awards Vested, net, Shares   45,658        
Common Stock – Cash Dividend—$0.07 per share (493)     (493)    
Net Income 951     951    
Other Comprehensive Loss (257)         (257)
Ending Balance at Aug. 03, 2019 $ 72,088 $ 516 $ 55,121 $ 51,180 $ (33,454) $ (1,275)
Ending Balance, Shares at Aug. 03, 2019   10,315,550        
v3.19.2
Consolidated Statements of Changes in Shareholders' Equity (Parenthetical) - $ / shares
3 Months Ended
Aug. 03, 2019
May 04, 2019
Jul. 28, 2018
Apr. 28, 2018
Statement of Stockholders' Equity [Abstract]        
Cash dividend per share $ 0.07 $ 0.07 $ 0.07 $ 0.07
v3.19.2
Condensed Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
6 Months Ended
Aug. 03, 2019
Jul. 28, 2018
Cash Flows from Operating Activities:    
Net Income $ 2,652 $ 2,008
Adjustments to Reconcile Net Income to Net Cash Provided (Used) by Operating Activities:    
Depreciation and Amortization 3,142 3,088
Amortization of Debt Issuance Costs 25 26
Share-Based Compensation 1,052 829
Deferred Income Tax Provision (67)
Changes in Assets and Liabilities:    
Accounts Receivable 2,754 (2,002)
Inventories (6,872) (1,080)
Income Taxes (2,037) (650)
Accounts Payable and Accrued Expenses 533 (3,679)
Other (237) (221)
Net Cash Provided (Used) by Operating Activities 1,012 (1,748)
Cash Flows from Investing Activities:    
Proceeds from Sales/Maturities of Securities Available for Sale 1,511
Honeywell Asset Purchase and License Agreement—TSA Agreement Payment (400)
Additions to Property, Plant and Equipment (1,538) (848)
Net Cash Provided (Used) by Investing Activities (1,538) 263
Cash Flows from Financing Activities:    
Net Cash Proceeds from Common Shares Issued Under Employee Benefit Plans and Employee Stock Option Plans, Net of Payment of Minimum Tax Withholdings 50 477
Borrowings under Revolving Credit Facility 2,000 3,000
Repayment under Revolving Credit Facility (1,500)
Payment of Minimum Guarantee Royalty Obligation (875) (875)
Principal Payments of Long-Term Debt (2,788) (2,908)
Dividends Paid (982) (961)
Net Cash Provided (Used) by Financing Activities (2,595) (2,767)
Effect of Exchange Rate Changes on Cash and Cash Equivalents 110 24
Net Decrease in Cash and Cash Equivalents (3,011) (4,228)
Cash and Cash Equivalents, Beginning of Period 7,534 10,177
Cash and Cash Equivalents, End of Period 4,523 5,949
Supplemental Disclosures of Cash Flow Information:    
Cash Paid During the Period for Interest 352 329
Cash Paid During the Period for Income Taxes, Net of Refunds 2,469 1,639
Schedule of Non-Cash Financing Activities:    
Value of Shares Received in Satisfaction of Option Exercise Price $ 11 $ 366
v3.19.2
Business and Basis of Presentation
6 Months Ended
Aug. 03, 2019
Business and Basis Of Presentation [Abstract]  
Business and Basis of Presentation
Note 1 
 Business and Basis of Presentation
Overview
Headquartered in West Warwick, Rhode Island, AstroNova, Inc. leverages its expertise in data visualization technologies to design, develop, manufacture and distribute a broad range of specialty printers and data acquisition and analysis systems. Our products are employed around the world in a wide range of applications in the aerospace, apparel, automotive, avionics, chemical, computer peripherals, communications, distribution, food and beverage, general manufacturing, packaging and transportation industries. In the United States, the Company has factory-trained direct field salespeople located in major cities from coast to coast. We also have direct field sales or service centers in Canada, China, Denmark, France, Germany, India, Malaysia, Mexico, Singapore, Spain and the United Kingdom staffed by our own employees and dedicated third-party contractors. Additionally, we utilize over 150 independent dealers and representatives selling and marketing our products in over 50 countries.
The business consists of two segments, Product Identification (PI) and Test & Measurement (T&M). The Product Identification segment offers a variety of hardware and software products and associated supplies that allow customers to mark, track and enhance the appearance of their products. PI includes specialty printing systems and supplies sold under the QuickLabel
®
, TrojanLabel
®
and GetLabels
brand names. PI products are used in industrial and commercial product packaging, branding and labeling applications to print custom labels, packaging materials and corresponding visual content
in-house
digitally. The Test & Measurement segment includes systems sold under the AstroNova
®
brand name as well as the Company’s line of aerospace flight deck printers. Products sold under the AstroNova brand enable our customers to acquire and record visual and electronic signal data from local and networked data streams and sensors. The recorded data is processed and analyzed and then stored and presented in various visual output formats. In the aerospace market, the Company has a long history of using its data visualization technologies to provide networking systems and high-resolution light-weight flight deck and cabin printers.
Unless otherwise indicated, references to “AstroNova,” the “Company,” “we,” “our,” and “us” in this Quarterly Report on
Form 10-Q
refer to AstroNova, Inc. and its consolidated subsidiaries.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles and reflect all adjustments consisting of normal recurring adjustments which, in the opinion of management, are necessary for a fair presentation of the results of the interim periods included herein. These financial statements do not include all disclosures associated with annual financial statements and, accordingly, should be read in conjunction with the Company’s Annual Report on Form
10-K
for the fiscal year ended January 31, 2019.
The presentation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported and disclosed in the condensed consolidated financial statements and accompanying notes. Some of the more significant estimates relate to revenue recognition, the allowances for doubtful accounts, inventory valuation, income taxes, impairment of long-lived assets and goodwill, share-based compensation, accrued expenses, lease accounting and warranty reserves. Management’s estimates are based on the facts and circumstances available at the time estimates are made, historical experience, risk of loss, general economic conditions and trends, and management’s assessments of the probable future outcome of these matters. Consequently, actual results could differ from those estimates.
Results of operations for the interim periods presented herein are not necessarily indicative of the results that may be expected for the full year.
Certain amounts in the prior year financial statements have been reclassified to conform to the current year’s presentation.
Principles of Consolidation
The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions are eliminated in consolidation.
v3.19.2
Summary of Significant Accounting Policies Update
6 Months Ended
Aug. 03, 2019
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies Update
Note 2
 Summary of Significant Accounting Policies Update
The accounting polices used in preparing the condensed consolidated financial statements in this
Form 10-Q
are the same as those used in preparing the Consolidated Financial Statements for the year ended January 31, 2019, except for the change resulting from the adoption of Accounting Standard Codification Topic 842 (“ASC 842”), Leases. See Note 11 for further details related to the new lease accounting policy as a result of this adoption.
Recently Adopted Accounting Pronouncements
Leases
In February 2019, the Company adopted the guidance issued by the Financial Accounting Standards Board (“FASB”) related to leases. See Note 11 for further details related to this adoption, including policy and expanded disclosure requirements.
Recent Accounting Standards Not Yet Adopted
Internal-Use
Software
In August 2018, the FASB issued ASU
2018-15,
“Intangibles—Goodwill and
Other—Internal-Use
Software (Subtopic
350-40):
Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” ASU
2018-15
reduces complexity for the accounting for costs of implementing a cloud computing service arrangement and aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain
internal-use
software (and hosting arrangements that include an internal use software license). This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 (Q1 fiscal 2021 for AstroNova), with early adoption permitted. Implementation should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is currently evaluating the impact this new guidance will have on its consolidated financial statements.
Fair Value Measurement
In August 2018, the FASB issued ASU
2018-13,
“Fair Value Measurement (Topic 820), Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement.” ASU
2018-13
modifies the disclosure requirements for fair value measurements by removing, modifying or adding certain disclosures. This ASU is effective for annual periods beginning after December 15, 2019 including interim periods within those fiscal years (Q1 fiscal 2021 for AstroNova), with early adoption permitted. The provisions of ASU
2018-13
relating to changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. The remaining provisions should be applied retrospectively to all periods presented upon their effective date. The Company is currently evaluating the impact this new guidance will have on its consolidated financial statements and related disclosures.
No other new accounting pronouncements, issued or effective during the six months of the current year, have had or are expected to have a material impact on our consolidated financial statements.
v3.19.2
Revenue Recognition
6 Months Ended
Aug. 03, 2019
Revenue from Contract with Customer [Abstract]  
Revenue Recognition
Note 3
 Revenue Recognition
We derive revenue from the sale of (i) hardware, including digital color label printers and specialty OEM printing systems, portable data acquisition systems and airborne printers used in the flight deck and cabin of military, commercial and business aircraft, (ii) related supplies required in the operation of the hardware, (iii) repairs and maintenance of hardware and (iv) service agreements.
 
 
Revenues disaggregated by primary geographic markets and major product types are as follows:
Primary geographical markets:
 
  
Three Months Ended
  
Six Months Ended
 
(In thousands) 
August 3,
2019
  
July 28,
2018
  
August 3,
2019
  
July 28,
2018
 
United States
 $20,648  $19,977  $42,640  $39,210 
Europe
  7,473   7,885   15,349   15,719 
Asia
 
 
2,218
 
 
 
2,537
 
 
 
5,667
 
 
 
3,976
 
Canada
  1,389   1,648   2,905   3,094 
Central and South America
  1,325   1,102   2,213   2,156 
Other
  415   658   875   1,139 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total Revenue
 $33,468  $33,807  $69,649  $65,294 
  
 
 
  
 
 
  
 
 
  
 
 
 
Major product types:
 
  
Three Months Ended
  
Six Months Ended
 
(In thousands) 
August 3,
2019
  
July 28,
2018
  
August 3,
2019
  
July 28,
2018
 
Hardware
 $12,437  $12,914  $25,355  $24,891 
Supplies
  18,080   17,883   37,808   34,584 
Service and Other
  2,951   3,010   6,486   5,819 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total Revenue
 $33,468  $33,807  $69,649  $65,294 
  
 
 
  
 
 
  
 
 
  
 
 
 
Contract Assets and Liabilities
We normally do not have contract assets, which are primarily unbilled accounts receivable that are conditional on something other than the passage of time. Our contract liabilities, which represent billings in excess of revenue recognized, are related to advanced billings for purchased service agreements and extended warranties and were $321,000 and $373,000 at August 3, 2019 and January 31, 2019, respectively, and are recorded as deferred revenue in the condensed consolidated balance sheet. The decrease in the deferred revenue balance during the six months ended August 3, 2019 is primarily due to approximately $412,000 of revenue recognized during the period that was included in the deferred revenue balance at January 31, 2019, offset by cash payments received in advance of satisfying performance obligations.
Contract Costs
We recognize an asset for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year. We have determined that certain costs related to obtaining sales contracts for our aerospace printer products meet the requirement to be capitalized. These costs are deferred and amortized based on the forecasted number of units sold over the estimated benefit term, which was estimated to be approximately 10 years. The balance of these contract assets at January 31, 2019 was $903,000. During the six month ended August 3, 2019, amortization of these incremental direct costs were $54,000 and the balance of deferred incremental direct costs net of accumulated amortization at August 3, 2019 was $848,000, of which $109,000 is reported in other current assets and $739,000 is reported in other assets in the accompanying condensed consolidated balance sheet. The remaining contract costs are expected to be amortized over the estimated remaining period of benefit, which we currently estimate to be approximately 7 years.
v3.19.2
Net Income Per Common Share
6 Months Ended
Aug. 03, 2019
Earnings Per Share [Abstract]  
Net Income Per Common Share
Note
4
 Net Income Per Common Share
Basic net income per share is calculated by dividing net income by the weighted average number of shares outstanding during the period. Diluted net income per share is calculated by dividing net income by the weighted average number of shares and, if dilutive, common equivalent shares, determined using the treasury stock method for stock options, restricted stock awards and restricted stock units outstanding during the period. A reconciliation of the shares used in calculating basic and diluted net income per share is as follows:
 
  
Three Months Ended
  
Six Months Ended
 
  
August 3,

2019
  
July 28,

2018
  
August 3,

2019
  
July 28,

2018
 
Weighted Average Common Shares Outstanding – Basic
  7,020,890   6,859,532   6,995,679   6,824,532 
Effect of Dilutive Options, Restricted Stock Awards and Restricted Stock Units
  350,312   222,976   313,862   174,946 
  
 
 
  
 
 
  
 
 
  
 
 
 
Weighted Average Common Shares Outstanding – Diluted
  7,371,202   7,082,508   7,309,541   6,999,478 
  
 
 
  
 
 
  
 
 
  
 
 
 
For the three and six months ended August 3, 2019, the diluted per share amounts do not reflect common equivalent shares outstanding of 11,560 and 218,466
,
respectively. For the three and six months ended July 28, 2018, the diluted per share amounts do not reflect common equivalent shares outstanding of 273,275 and 340,575
,
respectively. These outstanding common equivalent shares were not included due to their anti-dilutive effect.
v3.19.2
Intangible Assets
6 Months Ended
Aug. 03, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets
Note 5
 Intangible Assets
Intangible assets are as follows:
 
 
 
 
August 3, 2019
 
 
January 31, 2019
 
(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
 
 
$(1,872)
 
$
 
 
$1,228
 
 
$3,100
 
 
$(1,723)
 
$
 
 
$1,377
 
RITEC:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Customer Contract Relationships
 
 
2,830
 
 
 
(900)
 
 
 
 
 
1,930
 
 
 
2,830
 
 
 
(725)
 
 
 
 
 
2,105
 
Non-Competition
Agreement
 
 
950
 
 
 
(776)
 
 
 
 
 
174
 
 
 
950
 
 
 
(681)
 
 
 
 
 
269
 
TrojanLabel:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Existing Technology
 
 
2,327
 
 
 
(883)
 
 
86
 
 
 
1,530
 
 
 
2,327
 
 
 
(711)
 
 
140
 
 
 
1,756
 
Distributor Relations
 
 
937
 
 
 
(249)
 
 
30
 
 
 
718
 
 
 
937
 
 
 
(200)
 
 
56
 
 
 
793
 
Honeywell:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Customer Contract Relationships
 
 
27,243
 
 
 
(5,330)
 
 
 
 
 
21,913
 
 
 
27,243
 
 
 
(3,869)
 
 
 
 
 
23,374
 
Intangible Assets, net
 
$37,387
 
 
$(10,010)
 
$116
 
 
$27,493
 
 
$37,387
 
 
$(7,909)
 
$196
 
 
$29,674
 
 
 
 
 
 
 
 
 
 
There were no impairments to intangible assets during the periods ended August 3, 2019 and July 28, 2018. With respect to the acquired intangibles included in the table above, amortization expense of $1.1 million and $1.0 million has been included in the condensed consolidated statements of income for the three months ended August 3, 2019 and July 28, 2018, respectively. Amortization expense of $2.1 million and $2.0 million related to the above acquired intangibles has been included in the condensed consolidated statement of income for the six months ended August 3, 2019 and July 28, 2018, respectively.
Estimated amortization expense for the next five fiscal years is as follows:
 
                     
(In thousands)
 
Remaining
2020
  
2021
  
2022
  
2023
  
2024
 
Estimated amortization expense
 $2,101  $4,073  $3,985  $3,981  $3,977 
 
 
 
 
 
 
 
 
 
 
 
v3.19.2
Inventories
6 Months Ended
Aug. 03, 2019
Inventory Disclosure [Abstract]  
Inventories
Note 6 
 Inventories
Inventories are stated at the lower of cost
(first-in, 
first-out)
and net realizable value and include material, labor and manufacturing overhead. The components of inventories are as follows:
 
(In thousands)
 
August 3, 2019
  
January 31, 2019
 
Materials and Supplies
 $21,763  $17,517 
Work-In-Process
  1,581   1,633 
Finished Goods
  18,563   15,688 
  
 
 
  
 
 
 
   41,907   34,838 
Inventory Reserve
  (5,053)  (4,677
  
 
 
  
 
 
 
  $36,854  $30,161 
  
 
 
  
 
 
 
v3.19.2
Revolving Line of Credit
6 Months Ended
Aug. 03, 2019
Debt Disclosure [Abstract]  
Revolving Line of Credit
Note 7 
 Revolving Line of Credit
The Company has a $10.0 million revolving line of credit under its existing Credit Agreement with Bank of America. Revolving credit loans may be borrowed, at the Company’s option, in U.S. Dollars or, subject to certain conditions, Euros, British Pounds, Canadian Dollars or Danish Kroner. Amounts borrowed under the revolving credit facility bear interest at a rate
per annum
equal to, at the Company’s 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 the Company’s 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 the Company’s consolidated leverage ratio.
During the second quarter of fiscal 2020, $
2.0
 million was drawn on the revolving credit facility. 
During fiscal 2019, $3.0 million was drawn on the revolving credit facility, of which $1.5 million was repaid. At August 3, 2019, $3.5 million remains outstanding on the revolving line of credit. The outstanding balance bears interest at a weighted average annual rate of 5.71% and $24,000 and $43,000 of interest has been incurred on this obligation and included in other expense in the accompanying condensed consolidated income statement for the three and six month periods ended August 3, 2019, respectively. As of August 3, 2019, there is $6.5 million available for borrowing under the revolving credit facility.
The Company is required to pay a commitment fee on the undrawn portion of the revolving credit facility at the rate of 0.25%
per annum
.
v3.19.2
Debt
6 Months Ended
Aug. 03, 2019
Debt Disclosure [Abstract]  
Debt
Note 8 
 Debt
Long-term debt in the accompanying condensed consolidated balance sheets is as follows:
 
(In thousands)
 
  August 3, 2019  
  
   January 31, 2019  
 
USD Term Loan (3.75% as of August 3, 2019 and 4.02% as of January 31, 2019); maturity date of November 30, 2022
 $9,750  $11,250 
USD Term Loan (3.75% as of August 3, 2019 and 4.02% as of January 31, 2019); maturity date of January 31, 2022
  5,704   6,992 
  
 
 
  
 
 
 
  $15,454  $18,242 
Debt Issuance Costs, net of accumulated amortization
  (135)  (164
Current Portion of Term Loans
  (5,024)  (5,208
  
 
 
  
 
 
 
Long-Term Debt
 $10,295  $12,870 
  
 
 
  
 
 
 
The schedule of required principal payments remaining during the next five years on long-term debt outstanding as of August 3, 2019 is as follows:
 
(In thousands)
   
Fiscal 2020
 $2,420 
Fiscal 2021
  5,208 
Fiscal 2022
  5,576 
Fiscal 2023
  2,250 
Fiscal 2024
  —    
  
 
 
 
  $15,454 
  
 
 
 
v3.19.2
Derivative Financial Instruments and Risk Management
6 Months Ended
Aug. 03, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments and Risk Management
Note 9 
 Derivative Financial Instruments and Risk Management
The Company has entered into a cross-currency interest rate swap to manage the interest rate risk and foreign currency exchange risk associated with the floating-rate foreign currency-denominated term loan borrowing by our Danish Subsidiary and an interest rate swap to manage the interest rate risk associated with the variable rate term loan borrowing by the Company. Both swaps have been designated as cash flow hedges of floating-rate borrowings.
The cross-currency interest rate swap agreement utilized by the Company effectively modifies the Company’s exposure to interest rate risk and foreign currency exchange rate risk by converting the Company’s floating-rate debt denominated in U.S. Dollars on our Danish subsidiary’s books to a fixed-rate debt denominated in Danish Kroner for the term of the loan, thus reducing the impact of interest-rate and foreign currency exchange rate changes on future interest expense and principal repayments. This swap involves the receipt of floating rate amounts in U.S. Dollars in exchange for fixed-rate interest payments in Danish Kroner, as well as exchanges of principal at the inception spot rate, over the life of the term loan.
The interest rate swap agreement utilized by the Company on its term loan effectively modifies the Company’s exposure to interest rate risk by converting the Company’s floating-rate debt to fixed-rate debt for the next
five
years, thus reducing the impact of interest-rate changes on future interest expense. This swap involves the receipt of floating rate amounts in U.S. Dollars in exchange for fixed rate payments in U.S. dollars over the life of the term loan.
The following table summarizes the notional amount and fair value of the Company’s derivative instrument:
 
    
August 3, 2019
  
January 31, 2019
 
Cash Flow Hedges
(In thousands)
 
Balance Sheet Classification
 
Outstanding

Notional

Amount
  
Fair
Value of

Liability
  
Outstanding

Notional

Amount
  
Fair
Value of

Liability
 
Cross-currency interest rate swap
 Other Long-
Term Liabilities
 $ 5,400  $ 388  $ 6,329  $ 600 
Interest rate swap
 Other Long-
Term Liabilities/
Other Assets
 $ 9,750  $ (107 $ 11,250  $ 85 
 
The following table presents the impact of the Company’s derivative instruments in our condensed consolidated financial statements
for the three and six months ended August 
3
,
2019
and July 
28
,
2018
:
 
  
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)
 
August 3,
2019
  
July 28,
2018
  
August 3,
2019
  
July 28,
2018
 
Swap contracts
 $(147 $315  Other Income (Expense) $77  $327 
  
 
 
  
 
 
    
 
 
  
 
 
 
 
  
Six Months Ended
 
  
Amount of Gain (Loss)
Recognized in OCI
on Derivative
  
Location of
Gain (Loss)
Reclassified
from Accumulated
OCI into Income
(Effective Portion)
 
Amount of Gain (Loss)
Reclassified from
Accumulated OCI
into Income
 
Cash Flow Hedge
(In thousands)
 
August 3,
2019
  
July 28,
2018
  
August 3,
2019
  
July 28,
2018
 
Swap contracts
 $2  $698  Other Income (Expense) $262  $583 
  
 
 
  
 
 
    
 
 
  
 
 
 
 
At August 3, 2019, the Company expects to reclassify approximately $0.2 million of net gains on the swap contracts from accumulated other comprehensive loss to earnings during the next 12 months due to changes in foreign exchange rates and the payment of variable interest associated with the floating-rate debt.
v3.19.2
Royalty Obligation
6 Months Ended
Aug. 03, 2019
Royalty Obligation Disclosure [Abstract]  
Royalty Obligation
Note 10 
 Royalty Obligation
In fiscal 2018, AstroNova, Inc. entered into an Asset Purchase and License Agreement with Honeywell International, Inc. (“Honeywell”) to acquire an exclusive, perpetual, world-wide license to manufacture Honeywell’s narrow-format flight deck printers for two aircraft families along with certain inventory used in the manufacturing of the licensed printers. The purchase price included a guaranteed minimum royalty payment of $15.0 million, to be paid over ten years, based on gross revenues from the sales of the printers, paper and repair services of the licensed products. The royalty rates vary based on the year in which they are paid or earned and product sold or service provided, and range from single-digit to mid double-digit percentages of gross revenue.
The guaranteed minimum royalty payment obligation was recorded at the present value of the minimum annual royalty payments using a present value factor of 2.8%, which is based on the estimated
after-tax
cost of debt for similar companies. As of August 3, 2019, the Company had paid an aggregate of $2.5 million of the guaranteed minimum royalty obligation. At August 3, 2019, the current portion of the outstanding guaranteed minimum royalty obligation of $2.0 million is to be paid over the next twelve months and is reported as a current liability and the remainder of $9.0 million is reported as a long-term liability on the Company’s condensed consolidated balance sheet. In addition to the guaranteed minimum royalty payments, the Company also incurred excess royalty expense of $0.1 million and $0.7 million, respectively, for the three and six month periods ended August 3, 2019 and $0.9 and $1.3 million, respectively, for the three and six month periods ended July 28, 2018 which is included in cost of revenue in the Company’s consolidated statements of income. A total of $0.6 million of excess royalty is payable and reported as a current liability on the Company’s condensed consolidated balance sheet at August 3, 2019.
v3.19.2
Leases
6 Months Ended
Aug. 03, 2019
Leases [Abstract]  
Leases
Note 11 
 Leases
Policy
On February 1, 2019 the Company adopted ASC 842, Leases. This new guidance requires a lessee to recognize assets and liabilities on the balance sheet for all leases, with the result being the recognition of a right of use (ROU) asset and a lease liability. The lease liability is equal to the present value of the minimum lease payments for the term of the lease, including any optional renewal periods determined to be reasonably certain to be exercised, using a discount rate determined at lease commencement. This discount rate is the rate implicit in the lease, if known; otherwise, the incremental borrowing rate for the expected lease term is used. The Company’s incremental borrowing rate approximates the rate the Company would have to pay to borrow on a collateralized basis over a similar term at lease inception. The value of the ROU asset is equal to the initial measurement of the lease liability plus any lease payments made to the lessor at or before the commencement date and any unamortized initial direct costs incurred by the lessee, less any unamortized lease incentives received.
There are two types of leases, operating leases and finance leases. Lease classification is determined at lease commencement. All of the Company’s leases are classified as operating leases. Operating lease expense is recognized on a straight-line basis over the lease term and included in general and administrative expense on the condensed consolidated statement of income. For operating leases, ROU assets are classified in other long-term assets, short-term lease liabilities are classified in other current liabilities, and long-term lease liabilities are classified in other long-term liabilities on the condensed consolidated balance sheet. On the cash flow statement, payments for operating leases are classified as operating activities.
The Company enters into lease contracts for certain of its facilities at various locations worldwide. At inception of a contract, the Company determines whether the contract is or contains a lease. If the Company has a right to obtain substantially all of the economic benefits from the use of the identified asset and the right to direct the use of the asset, then the contract contains a lease. Several of the Company’s lease contracts include options to extend the lease term and Company includes the renewal options for these leases in the determination of the ROU asset and lease liability when the likelihood of renewal is determined to be reasonably certain.
In addition, several of our lease agreements include non-lease components for items such as common area maintenance and utilities which are accounted for separately from the lease component.
 
Adoption Method and Impact
The Company applied ASC 842 to all leases in effect at February 1, 2019 and adopted the accounting standard using the
non-comparative
transition option, which does not require the restatement of prior years. Comparative information has not been adjusted and continues to be reported under the previous accounting guidance. The Company has elected the package of practical expedients, which allows entities to not reassess (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs. The Company has made an accounting policy election to apply the short-term exception, which does not require the capitalization of leases with terms of 12 months or less. On February 1, 2019, the Company recognized $2.0 million of ROU assets and lease liabilities on its consolidated balance sheet. The adoption did not have a material impact on the Company’s results of operations or cash flows.
Disclosure
Our leases have remaining lease terms of 1 to 12 years, some of which include options to extend the lease term for periods up to 5 years when it is reasonably certain the Company will exercise such options.
The company leases office space from an affiliate. This lease is classified as an operating lease with annual rental payments of approximately $64,000 and $66,000 in fiscal 2020 and 2021, respectively.
Balance sheet and other information related to our leases is as follows:
 
Operating Leases
(In thousands)
 
Balance Sheet Classification
 
August 3,
2019
 
Lease Assets
 Right of Use Assets $1,760 
Lease Liabilities – Current
 Other Liabilities and Accrued Expenses  405 
Lease Liabilities – Long Term
 Lease Liabilities  1,364 
 
Lease cost information is as follows:
 
    
Three Months Ended
  
Six Months Ended
 
Operating Leases
(In thousands)
 
Statement of Income Classification
 
August 3,
2019
  
August 3,
2019
 
Operating Lease Costs
 General and Administrative Expense $118  $210 
 
Maturities of operating lease liabilities are as follows:
 
(In thousands)
 
August 3,
2019
 
2020
 $189 
2021
  393 
2022
  327 
2023
  277 
2024
  262 
 
(In thousands)
 
August 3,
2019
 
Thereafter
  561 
Total Lease Payments
  2,009 
Less: Imputed Interest
  (240)
Total Lease Liabilities
 $1,769 
 
As of August 3, 2019, the weighted-average remaining lease term and weighted-average discount rate for our operating leases are 6.1 years and 4.02%, respectively. We calculated the weighted-average discount rate using incremental borrowing rates, which equal the rates of interest that we would pay to borrow funds on a fully collateralized basis over a similar term.
 
Supplemental cash flow information related to leases is as follows:
 
  
Three Months Ended
  
Six Months Ended
 
(In thousands)
 
August 3,
2019
  
August 3,
2019
 
Cash paid for amounts included in the measurement of lease liabilities:
        
Operating cash flows for operating leases
 $98  $198 
 
As previously disclosed in our fiscal year 2019 Annual Report on Form
10-K
and under the previous lease accounting standard, future minimum operating lease commitments that had initial or remaining
non-cancelable
lease terms in excess of one year at January 31, 2019 were as follows:
 
(In thousands)
   
2020
 $574 
2021
  520 
2022
  387 
2023
  294 
2024
  273 
Thereafter
  568 
  
 
 
 
  $2,616 
  
 
 
 
v3.19.2
Accumulated Other Comprehensive Loss
6 Months Ended
Aug. 03, 2019
Equity [Abstract]  
Accumulated Other Comprehensive Loss
Note 12 
 Accumulated Other Comprehensive Loss
The changes in the balance of accumulated other comprehensive loss (AOCL) by component are as follows:
 
(In thousands)
 
Foreign Currency
Translation
Adjustments
  
Cash
Flow
Hedges
  
Total
 
Balance at January 31, 2019
 $(852) $34  $(818)
Other Comprehensive Loss before reclassification
  (253)     (253)
Amounts reclassified from AOCL to Earnings
     (204)  (204)
  
 
 
  
 
 
  
 
 
 
Other Comprehensive Loss
  (253)  (204)  (457)
  
 
 
  
 
 
  
 
 
 
Balance at August 3, 2019
 $(1,105) $(170) $(1,275)
  
 
 
  
 
 
  
 
 
 
 
The amounts presented above in other comprehensive loss are net of taxes except for translation adjustments associated with our German and Danish subsidiaries.
v3.19.2
Share-Based Compensation
6 Months Ended
Aug. 03, 2019
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Share-Based Compensation
Note 13 
 Share-Based Compensation
We have one equity incentive plan from which we are authorized to grant equity awards, the AstroNova, Inc. 2018 Equity Incentive Plan (the “2018 Plan”). The 2018 Plan provides for, among other things, the issuance of awards, including incentive stock options, non-qualified stock options, stock appreciation rights, time or performance-based restricted stock unit (PSUs), restricted stock units (RSUs) and restricted stock awards (RSAs). At the annual meeting of shareholders, on June 4, 2019, the 2018 Plan was amended to increase the number of shares of the Company’s common stock available for issuance by
300,000
,
bringing the total number of shares available for issuance under the 2018 Plan from 
650,000 
to 
950,000, 
plus an additional number of shares equal to the number of shares subject to awards granted under previous equity incentive plans that are forfeited, cancelled, satisfied without the issuance of stock, otherwise terminated (other than by exercise), or, for shares of stock issued pursuant to any unvested award, reacquired by the Company at not more than the grantee’s purchase price (other than by exercise). Under the 2018 Plan, all awards to employees generally have a minimum vesting period of one year. Options granted under the 2018 Plan must be issued at an exercise price of not less than the fair market value of the Company’s common stock on the date of grant and expire after ten years. As of August 3, 2019, 163,475 unvested shares of restricted stock and options to purchase an aggregate of 146,000 shares were outstanding under the 2018 Plan.
In addition to the 2018 Plan, we previously granted equity awards under our 2015 Equity Incentive Plan (the “2015 Plan”) and our 2007 Equity Incentive Plan (the “2007 Plan”). Both the 2007 Plan and the 2015 Plan have expired and no new awards may be issued under either, but outstanding awards will continue to be governed by those plans. As of August 3, 2019, 1,007 unvested shares of restricted stock and options to purchase an aggregate of 382,845 shares were outstanding under the 2007 Plan and 27,527 unvested shares of restricted stock and options to purchase an aggregate of 194,650 shares were outstanding under the 2015 Plan.
On January 31, 2019, the compensation committee of the Company’s board of directors adopted an Amended and Restated
Non-Employee
Director Annual Compensation Program (the “New Program”), which became effective as of February 1, 2019 and supersedes the prior program. Pursuant to the New Program, beginning with fiscal 2020, each
non-employee
director will automatically receive a grant of restricted stock on the date of their
re-election
to the Company’s board of directors. The number of whole shares to be granted will be equal to the number calculated by dividing the stock component of the director compensation amount determined by the compensation committee for that year by the fair market value of our stock on that day. The value of the restricted stock award for fiscal 2020 is $60,000. To account for the partial year beginning on February 1, 2019 and continuing through the 2019 annual meeting, and thereby provide for the alignment of the timing of annual grants of restricted stock under the New Program with the election of directors at the annual meeting, a total of 4,340 shares of restricted stock were granted to the non-employee directors on February 1, 2019. A total of 11,560 shares were awarded to the
non-employee
directors as
compensation
 under the New Program in the second quarter of fiscal 2020. Other than the shares granted on February 1, 2019, which vested on June 1, 2019, shares of restricted stock granted under the New Program will become vested on the first anniversary of the date of grant, conditioned upon the recipient’s continued service on the Board through that date.
In March 2019, the Company granted 45,374 RSUs and 52,248 PSUs to certain key employees.
Share-based compensation expense was recognized as follows:
 
 
 
 
Three Months Ended
 
 
Six Months Ended
 
(In thousands)
 
August 3,
2019
 
 
July 28,
2018
 
 
August 3,
2019
 
 
July 28,
2018
 
Stock Options
 
$127
 
 
$200
 
 
$339
 
 
$356
 
Restricted Stock Awards and Restricted Stock Units
 
 
320
 
 
 
263
 
 
 
704
 
 
 
467
 
Employee Stock Purchase Plan
 
 
4
 
 
 
3
 
 
 
9
 
 
 
6
 
Total
 
$451
 
 
$466
 
 
$1,052
 
 
$829
 
Stock Options
There were no stock options granted during the six months ended August 3, 2019. The fair value of stock options granted during the six months ended July 28, 2018 were estimated using the following assumptions:
 
  
Six Months Ended
 
  
July 28,
2018
 
Risk Free Interest Rate
  2.6
Expected Volatility
  39.4
Expected Life (in years)
  9.0 
Dividend Yield
  1.5
The weighted average fair value per share for options granted was $7.42 and $7.41 during the three and six month periods ended July 28, 2018, respectively.
 
Aggregated information regarding stock option activity for the six months ended August 3, 2019 is summarized below:
 
  
Number of
Options
  
Weighted Average
Exercise Price
 
Outstanding at January 31, 2019
  771,145  $14.30 
Granted
      
Exercised
  (38,975)  11.65 
Forfeited
  (8,275)  16.72 
Canceled
  (400)  6.22 
  
 
 
  
 
 
 
Outstanding at August 3, 2019
  723,495  $14.42 
  
 
 
  
 
 
 
Set forth below is a summary of options outstanding at August 3, 2019:
 
 
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
 
 
 
62,081
 
 
$7.94
 
 
 
2.5
 
 
 
62,081
 
 
$7.94
 
 
 
2.5
 
$
 
10.01
-
15.00
 
 
 
424,814
 
 
$13.63
 
 
 
6.3
 
 
 
336,794
 
 
$13.66
 
 
 
5.9
 
$
15.01
-
20.00
 
 
 
236,600
 
 
$17.53
 
 
 
8.4
 
 
 
112,795
 
 
$17.08
 
 
 
8.1
 
 
 
 
 
 
 
 
723,495
 
 
$14.42
 
 
 
6.7
 
 
 
511,670
 
 
$13.72
 
 
 
6.0
 
As of August 3, 2019, there was approximately $1.1 million of unrecognized compensation expense related to stock options which is expected to be recognized over a weighted average period of approximately 2.0 years.
Restricted Stock Units (RSUs) and Restricted Stock Awards (RSAs)
Aggregated information regarding RSU and RSA activity for the six months ended August 3, 2019 is summarized below:
 
  
RSAs & RSUs
  
Weighted Average
Grant Date Fair Value
 
Outstanding at January 31, 2019
  133,667  $13.99 
Granted
  113,522   20.16 
Vested
  (55,180)  16.62 
Forfeited
      
  
 
 
  
 
 
 
Outstanding at August 3, 2019
  192,009  $16.88 
  
 
 
  
 
 
 
As of August 3, 2019, there was approximately $2.9 million of unrecognized compensation expense related to RSUs and RSAs which is expected to be recognized over a weighted average period of 1.9 years.
Employee Stock Purchase Plan
AstroNova has an Employee Stock Purchase Plan allowing eligible employees to purchase shares of common stock at a 15% discount from fair value on the first or last day of an offering period, whichever is less. A total of 247,500 shares were reserved for issuance under this plan. During the six months ended August 3, 2019 and July 28, 2018, there were 2,796 and 2,342 shares, respectively, purchased under this plan. As of August 3, 2019, 31,057 shares remain available.
v3.19.2
Income Taxes
6 Months Ended
Aug. 03, 2019
Income Tax Disclosure [Abstract]  
Income Taxes
Note 14 
 Income Taxes
The Company’s effective tax rates for the period are as follows:
 
  
Three Months
Ended
  
Six Months
Ended
 
Fiscal 2020
  3.0  13.9
Fiscal 2019
  27.8  24.1
The Company determines its estimated annual effective tax rate at the end of each interim period based on full-year forecasted
pre-tax
income and facts known at that time. The estimated annual effective tax rate is applied to the
year-to-date 
pre-tax
income at the end of each interim period with the cumulative effect of any changes in the estimated annual effective tax rate being recorded in the fiscal quarter in which the change is determined. The tax effect of significant unusual items is reflected in the period in which they occur.
During the three months ended August 3, 2019, the Company recognized an income tax expense of approximately $29,000.
The effective tax rate in this period was directly impacted by 1) a significant reduction in forecasted operating results for our fiscal 2020 as compared to operating results forecasted at the end of our first quarter of fiscal 2020 and 2) a $
135,000 tax benefit arising from windfall tax benefits related to the Company’s stock. During the three months ended July 28, 2018, the Company recognized an income tax expense of approximately $459,000. The effective tax rate in this period was directly impacted by an $82,000 benefit arising from windfall tax benefits related to the Company’s stock.
During the six months ended August 3, 2019, the Company recognized an income tax expense of approximately $429,000. The effective tax rate in this period was directly impacted by 1) a $53,000 tax benefit related to the expiration of the statute of limitations on a previously uncertain tax position and 2) a $232,000 tax benefit arising from windfall tax benefits related to the Company’s stock. During the six months ended July 28, 2018, the Company recognized an income tax expense of approximately $639,000. The effective tax rate in this period was directly impacted by a $112,000 tax benefit arising from windfall tax benefits related to the Company’s stock and a $78,000 tax benefit related to the expiration of the statute of limitations on a previously uncertain tax position.
The Company maintains a valuation allowance on some of its 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.
Unrecognized tax benefits represent the difference between tax positions taken or expected to be taken in a tax return and the benefits recognized for financial reporting purposes. As of August 3, 2019, the Company’s cumulative unrecognized tax benefits totaled $592,000 compared to $618,000 as of January 31, 2019. Besides the expiration of the statute of limitations on a previously uncertain tax position, there were
no
other developments affecting unrecognized tax benefits during the quarter ended August 3, 2019.
v3.19.2
Segment Information
6 Months Ended
Aug. 03, 2019
Segment Reporting [Abstract]  
Segment Information
Note 15 
 Segment Information
AstroNova reports two segments: Product Identification and Test & Measurement (T&M). The Company evaluates segment performance based on the segment profit before corporate expenses.
Summarized below are the Revenue and Segment Operating Profit for each reporting segment:
 
  
Three Months Ended
  
Six Months Ended
 
  
Revenue
  
Segment Operating Profit
  
Revenue
  
Segment Operating Profit
 
(In thousands)
 
August 3,
2019
  
July 28,
2018
  
August 3,
2019
  
July 28,
2018
  
August 3,
2019
  
July 28,
2018
  
August 3,
2019
  
July 28,
2018
 
Product Identification
 $22,144  $21,769  $2,224  $2,159  $45,735  $41,722  $5,110  $3,820 
T&M
  11,324   12,038   1,555   2,814   23,914   23,572   4,136   5,071 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total
 $33,468  $33,807   3,779   4,973  $69,649  $65,294   9,246   8,891