ASTRONOVA, INC., 10-K filed on 4/10/2018
Annual Report
v3.8.0.1
Document and Entity Information - USD ($)
12 Months Ended
Jan. 31, 2018
Mar. 28, 2018
Jul. 28, 2017
Document And Entity Information [Abstract]      
Document Type 10-K    
Amendment Flag false    
Document Period End Date Jan. 31, 2018    
Document Fiscal Year Focus 2018    
Document Fiscal Period Focus FY    
Trading Symbol ALOT    
Entity Registrant Name AstroNova, Inc.    
Entity Central Index Key 0000008146    
Current Fiscal Year End Date --01-31    
Entity Well-known Seasoned Issuer No    
Entity Current Reporting Status Yes    
Entity Voluntary Filers No    
Entity Filer Category Accelerated Filer    
Entity Common Stock, Shares Outstanding   6,799,166  
Entity Public Float     $ 94,686,969
v3.8.0.1
Consolidated Balance Sheets - USD ($)
$ in Thousands
Jan. 31, 2018
Jan. 31, 2017
CURRENT ASSETS    
Cash and Cash Equivalents $ 10,177 $ 18,098
Securities Available for Sale 1,511 6,723
Accounts Receivable, net of reserves of $377 in 2018 and $266 in 2017 22,400 15,702
Inventories 27,609 19,506
Prepaid Expenses and Other Current Assets 2,083 1,394
Total Current Assets 63,780 61,423
PROPERTY, PLANT AND EQUIPMENT    
Land and Improvements 967 967
Buildings and Improvements 12,056 11,266
Machinery and Equipment 29,854 28,145
PROPERTY, PLANT AND EQUIPMENT 42,877 40,378
Less Accumulated Depreciation (33,125) (31,098)
Total Property, Plant and Equipment, net 9,752 9,280
OTHER ASSETS    
Identifiable Intangibles, net 33,633 5,264
Goodwill 13,004 4,521
Deferred Tax Assets 1,829 2,811
Other 315 366
Total Other Assets 48,781 12,962
TOTAL ASSETS 122,313 83,665
CURRENT LIABILITIES    
Accounts Payable 11,808 4,957
Accrued Compensation 2,901 2,936
Other Accrued Expenses 2,414 2,171
Current Portion of Long-Term Debt 5,498  
Current Liability -Royalty Obligation 1,625  
Current Liability -Excess Royalty Payment Due 615  
Income Taxes Payable 684 1,449
Deferred Revenue 367 472
Total Current Liabilities 25,912 11,985
NON CURRENT LIABILITIES    
Long-Term Debt, net of current portion 17,648  
Royalty Obligation, net of current portion 11,760  
Deferred Tax Liabilities 698 11
Other Long Term Liabilities 2,648 1,132
TOTAL LIABILITIES 58,666 13,128
Commitments and Contingencies (See Note 19)
SHAREHOLDERS' EQUITY    
Preferred Stock, $10 Par Value, Authorized 100,000 shares, None Issued
Common Stock, $0.05 Par Value, Authorized 13,000,000 shares; Issued 9,996,120 shares in 2018 and 9,834,906 shares in 2017 500 492
Additional Paid-in Capital 50,016 47,524
Retained Earnings 45,700 44,358
Treasury Stock, at Cost, 3,227,942 shares in 2018 and 2,375,076 shares in 2017 (32,397) (20,781)
Accumulated Other Comprehensive Loss, Net of Tax (172) (1,056)
TOTAL SHAREHOLDERS' EQUITY 63,647 70,537
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 122,313 $ 83,665
v3.8.0.1
Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Thousands
Jan. 31, 2018
Jan. 31, 2017
Statement of Financial Position [Abstract]    
Accounts Receivable, Reserves $ 377 $ 266
Preferred Stock, Par Value $ 10 $ 10
Preferred Stock, Shares Authorized 100,000 100,000
Preferred Stock, Shares Issued 0 0
Common Stock, Par Value $ 0.05 $ 0.05
Common Stock, Shares Authorized 13,000,000 13,000,000
Common Stock, Shares Issued 9,996,120 9,834,906
Treasury Stock, Shares 3,227,942 2,375,076
v3.8.0.1
Consolidated Statements of Income - USD ($)
$ in Thousands
12 Months Ended
Jan. 31, 2018
Jan. 31, 2017
Jan. 31, 2016
Income Statement [Abstract]      
Revenue $ 113,401 $ 98,448 $ 94,658
Cost of Revenue 69,399 58,959 56,500
Gross Profit 44,002 39,489 38,158
Costs and Expenses:      
Selling and Marketing 22,234 18,955 18,249
Research and Development 7,453 6,314 6,945
General and Administrative 8,903 7,939 7,030
Operating Expenses 38,590 33,208 32,224
Operating Income 5,412 6,281 5,934
Other Income (Expense):      
Investment Income 168 78 72
Interest Expense (402)    
Other, Net (21) 246 903
Other Income (Expense)-Net (255) 324 975
Income before Income Taxes 5,157 6,605 6,909
Income Tax Provision 1,871 2,377 2,384
Net Income $ 3,286 $ 4,228 $ 4,525
Net Income Per Common Share-Basic $ 0.48 $ 0.57 $ 0.62
Net Income Per Common Share-Diluted $ 0.47 $ 0.56 $ 0.61
Weighted Average Number of Common Shares Outstanding-Basic 6,911 7,421 7,288
Dilutive Effect of Common Stock Equivalents 104 151 183
Weighted Average Number of Common Shares Outstanding-Diluted 7,015 7,572 7,471
Dividends Declared Per Common Share $ 0.28 $ 0.28 $ 0.28
v3.8.0.1
Consolidated Statements of Comprehensive Income - USD ($)
$ in Thousands
12 Months Ended
Jan. 31, 2018
Jan. 31, 2017
Jan. 31, 2016
Statement of Comprehensive Income [Abstract]      
Net Income $ 3,286 $ 4,228 $ 4,525
Other Comprehensive Income (Loss), net of taxes and reclassification adjustments:      
Foreign currency translation adjustments 870 (65) (269)
Change in value of derivatives designated as cash flow hedge (1,036)    
Gain from cash flow hedges reclassified to income statement 1,048    
Unrealized gain (loss) on securities available for sale 2 (16) (7)
Other Comprehensive Income (Loss) 884 (81) (276)
Comprehensive Income $ 4,170 $ 4,147 $ 4,249
v3.8.0.1
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, 2015 $ 63,511 $ 477 $ 43,600 $ 39,735 $ (19,602) $ (699)
Beginning Balance, Shares at Jan. 31, 2015   9,544,864        
Share-based compensation 1,209   1,209      
Employee option exercises $ 436 $ 5 802   (371)  
Employee option exercises, Shares 93,344 98,734        
Tax benefit of employee stock options $ 65   65      
Restricted stock awards vested, net (49) $ 1 (1)   (49)  
Restricted stock awards vested, net, Shares   22,692        
Dividends paid (2,048)     (2,048)    
Net Income 4,525     4,525    
Other comprehensive income (loss) (276)         (276)
Ending Balance at Jan. 31, 2016 67,373 $ 483 45,675 42,212 (20,022) (975)
Ending Balance, Shares at Jan. 31, 2016   9,666,290        
Share-based compensation 1,019   1,019      
Employee option exercises $ 388 $ 5 834   (451)  
Employee option exercises, Shares 87,107 93,483        
Restricted stock awards vested, net $ (308) $ 4 (4)   (308)  
Restricted stock awards vested, net, Shares   75,133        
Dividends paid (2,082)     (2,082)    
Net Income 4,228     4,228    
Other comprehensive income (loss) (81)         (81)
Ending Balance at Jan. 31, 2017 70,537 $ 492 47,524 44,358 (20,781) (1,056)
Ending Balance, Shares at Jan. 31, 2017   9,834,906        
Share-based compensation 1,583   1,583      
Employee option exercises $ 642 $ 4 913   (275)  
Employee option exercises, Shares 84,025 90,042        
Restricted stock awards vested, net $ (103) $ 4 (4)   (103)  
Restricted stock awards vested, net, Shares   71,172        
Repurchase of Common Stock (11,238)       (11,238)  
Dividends paid (1,944)     (1,944)    
Net Income 3,286     3,286    
Other comprehensive income (loss) 884         884
Ending Balance at Jan. 31, 2018 $ 63,647 $ 500 $ 50,016 $ 45,700 $ (32,397) $ (172)
Ending Balance, Shares at Jan. 31, 2018   9,996,120        
v3.8.0.1
Consolidated Statements of Cash Flows
$ in Thousands, £ in Millions
12 Months Ended
Jan. 31, 2018
USD ($)
Jan. 31, 2017
USD ($)
Jan. 31, 2016
USD ($)
Cash Flows from Operating Activities:      
Net Income $ 3,286 $ 4,228 $ 4,525
Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities:      
Depreciation and Amortization 3,994 2,431 2,065
Amortization of Debt Issuance Costs 34    
Share-Based Compensation 1,583 1,019 1,209
Deferred Income Tax Provision (Benefit) 744 174 (292)
Excess Tax Benefit From Share-Based Compensation     (65)
Gain on Sale of UK Property   (419)  
Changes in Assets and Liabilities, Net of Impact of Acquisitions:      
Accounts Receivable (4,722) (416) (1,285)
Inventories (5,509) (4,659) 600
Accounts Payable and Accrued Expenses 5,207 1,426 151
Income Taxes Payable (801) 2,187 412
Other (92) 982 407
Net Cash Provided by Operating Activities 3,724 6,953 7,727
Cash Flows from Investing Activities:      
Proceeds from Sales/Maturities of Securities Available for Sale 5,539 4,029 9,978
Purchases of Securities Available for Sale (321) (400) (5,192)
Proceeds from Sale of UK Property   474  
Acquisition of RITEC's Aerospace Printer Business     (7,360)
Cash Paid for TrojanLabel Acquisition, net of cash acquired (9,007)    
Cash Paid for Honeywell Asset Purchase and License Agreement (14,873)    
Net Proceeds Received for Sale of Asset Held for Sale     1,698
Payments Received on Line of Credit and Note Receivable 85 256 395
Additions to Property, Plant and Equipment (2,204) (1,238) (3,061)
Net Cash Provided (Used) by Investing Activities (20,781) 3,121 (3,542)
Cash Flows from Financing Activities:      
Net Proceeds from Common Shares Issued Under Employee Benefit Plans and Employee Stock Option Plans, Net of Payment of Minimum Tax Withholdings 539 79 387
Purchase of Treasury Stock (11,238)    
Proceeds from Issuance of Long-Term Debt 24,200    
Change in TrojanLabel Earn Out Liability (1,438)    
Principle Payments on Long-Term Debt (828)    
Payments of Debt Issuance Costs (234)    
Excess Tax Benefit from Share-Based Compensation     65
Dividends Paid (1,944) (2,082) (2,048)
Net Cash (Used) Provided by Financing Activities 9,057 (2,003) (1,596)
Effect of Foreign Exchange Rate Changes on Cash and Cash Equivalents 79 (16) (504)
Net (Decrease) Increase in Cash and Cash Equivalents (7,921) 8,055 2,085
Cash and Cash Equivalents, Beginning of Year 18,098 10,043 7,958
Cash and Cash Equivalents, End of Year 10,177 18,098 10,043
Cash Paid (Received) During the Period for:      
Interest 246    
Income Taxes, Net of Refunds 1,940 (84) 2,257
Schedule of non-cash financing activities:      
Value of Shares Received in Satisfaction of Option Exercise Price $ 275 $ 451 $ 371
v3.8.0.1
Summary of Significant Accounting Policies
12 Months Ended
Jan. 31, 2018
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

Note 1—Summary of Significant Accounting Policies

Basis of Presentation: The accompanying financial data have been prepared by us pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC) and are presented in conformity with U.S. generally accepted accounting principles (U.S. GAAP). Our fiscal year end is January 31. Unless otherwise stated, all years and dates refer to our fiscal year.

Correction of an Accounting Error: The Company has identified an immaterial error in its previously issued financial statements on Form 10-Q for the period ended October 28, 2017. The error related to the recording of the Honeywell asset purchase and license agreement transaction and as a result, both the intangible assets acquired and royalty obligation incurred were understated by $4.7 million at October 28, 2017. The impact of the error also resulted in an overstatement of the Company’s net income of approximately $42,000 for the three and six month periods ended October 28, 2017 related to the additional intangible amortization that should have been recognized during the period. The Company reviewed this accounting error utilizing SEC Staff Accounting Bulletin No. 99, “Materiality” and SEC Staff Accounting Bulletin No. 108, “Effects of Prior Year Misstatements on Current Year Financial Statements” and determined the impact of the error to be immaterial to any prior period’s presentation. The accompanying consolidated financial statements as of January 31, 2018 reflect the correction of the aforementioned immaterial error.

Principles of Consolidation: The consolidated financial statements include the accounts of AstroNova, Inc. and its subsidiaries. All material intercompany accounts and transactions are eliminated in consolidation.

Reclassification: Certain amounts in prior year’s financial statements have been reclassified to conform to the current year’s presentation.

Use of Estimates: The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect these financial statements and accompanying notes. Some of the more significant estimates relate to the allowances for doubtful accounts, inventory valuation, valuation and estimated lives of intangible assets, impairment of long-lived assets, goodwill, income taxes, share-based compensation and warranty reserves. Management’s estimates are based on the facts and circumstances available at the time estimates are made, past 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.

Cash and Cash Equivalents: Highly liquid investments with an original maturity of 90 days or less are considered to be cash equivalents. Similar investments with original maturities beyond three months are classified as securities available for sale. Cash of $3.9 million and $5.1 million was held in foreign bank accounts at January 31, 2018 and 2017, respectively.

Securities Available for Sale: Securities available for sale are carried at fair value based on quoted market prices, where available. The difference between cost and fair value, net of related tax effects, is recorded as a component of accumulated other comprehensive income (loss) in shareholders’ equity.

Inventories: Inventories are stated at the lower of cost (first-in, first-out) or net realizable value and include material, labor and manufacturing overhead.

Property, Plant and Equipment: Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is provided on the straight-line basis over the estimated useful lives of the assets (land improvements—10 to 20 years; buildings and improvements—10 to 45 years; machinery and equipment—3 to 10 years). Depreciation expense was $1.8 million for fiscal 2018; $1.7 million for fiscal 2017 and $1.6 million for 2016.

 

Revenue Recognition: Product revenue is recognized when all of the following criteria have been met: persuasive evidence of an arrangement exists; price to the buyer is fixed or determinable; delivery has occurred and legal title and risk of loss have passed to the customer; and collectability is reasonably assured. Returns and customer credits are infrequent and are recorded as a reduction to revenue. Rights of return are not included in revenue arrangements. Revenue associated with products that contain specific customer acceptance criteria is not recognized before the customer acceptance criteria are satisfied. Revenue is recorded net of any discounts from list price. Amounts billed to customers for shipping and handling fees are included in revenue, while related shipping and handling costs are included in cost of revenue.

The majority of our hardware products contain embedded operating systems and data management software which is included in the purchase price of the equipment. The software is deemed incidental to the systems as a whole as it is not sold or marketed separately and its production costs are minor compared to those of the hardware system. Therefore, the Company’s hardware appliances are considered non-software elements and are not subject to industry-specific software revenue recognition guidance.

Our multiple-element arrangements are generally comprised of a combination of equipment, software, installation and/or training services. Hardware and software elements are typically delivered at the same time and revenue is recognized when all the revenue recognition criteria for each unit are met. Delivery of installation and training services vary based on certain factors such as the complexity of the equipment, staffing availability in a geographic location and customer preferences, and can range from a few days to a few months. Service revenue is deferred and recognized over the contractual period or as services are rendered and accepted by the customer.

We have evaluated the deliverables in our multiple-element arrangements and concluded that they are separate units of accounting if the delivered item or items have value to the customer on a standalone basis and delivery or performance of the undelivered item(s) is considered probable and substantially in our control. We allocate revenue to each element in our multiple-element arrangements based upon their relative selling prices. We determine the selling price for each deliverable based on a selling price hierarchy. The selling price for a deliverable is based on vendor specific objective evidence (VSOE) if available, third-party evidence (TPE) if VSOE is not available, or estimated selling price (ESP) if neither VSOE nor TPE is available. Revenue allocated to each element is then recognized when the basic revenue recognition criteria for that element have been met.

Infrequently, we recognize revenue for non-recurring engineering (NRE) fees for product modification orders upon completion of agreed-upon milestones. Revenue is deferred for any amounts received prior to completion of milestones. Certain of our NRE arrangements include formal customer acceptance provisions. In such cases, we determine whether we have obtained customer acceptance for the specific milestone before recognizing revenue. NRE fees have not been significant in the periods presented herein.

We also receive infrequent requests from customers to hold product purchased from us for the customer’s convenience. Revenue is recognized for such bill and hold arrangements in accordance with the requirements of SEC Staff Accounting Bulletin No. 104 which requires, among other things, the existence of a valid business purpose for the arrangement; the transfer of ownership of the purchased product; a fixed delivery date that is reasonable and consistent with the buyer’s business purpose; the readiness of the product for shipment; the use of customary payment terms; no continuing performance obligation by us; and segregation of the product from our inventories.

Research and Development Costs: We charge costs to expense in the period incurred, and these expenses are presented in the consolidated statement of income. The following costs are included in research and development expense: salaries and benefits, external engineering service costs, engineering related information costs and supplies.

Foreign Currency Translation: The financial statements of foreign subsidiaries and branches are measured using the local currency as the functional currency. Foreign currency-denominated assets and liabilities are translated into U.S. dollars at year-end exchange rates with the translation adjustment recorded as a component of accumulated comprehensive income (loss) in shareholders’ equity. Revenues and expenses are translated at the average monthly exchange rates in effect during the related period. We do not provide for U.S. income taxes on foreign currency translation adjustments associated with our subsidiaries in Germany, Denmark and China since their undistributed earnings are considered to be permanently invested. Our net foreign exchange losses were $0.2 million for both fiscal 2018 and 2017 and $0.3 million in fiscal 2016.

Advertising: The Company expenses advertising costs as incurred. Advertising costs including advertising production, trade shows and other activities are designed to enhance demand for our products and amounted to approximately $1.8 million; $1.6 million and $1.6 million in fiscal 2018, 2017 and 2016, respectively.

Long-Lived Assets: Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. If the projected undiscounted cash flows are less than the carrying value, then an impairment charge would be recorded for the excess of the carrying value over the fair value, as determined by the discounting of future cash flows. For 2018, 2017 and 2016, there were no impairment charges for long-lived assets.

Intangible Assets: Intangible assets include the value of customer and distributor relationships, existing technology and non-competition agreements acquired in connection with business and asset acquisitions and are stated at cost (fair value at acquisition) less accumulated amortization. These intangible assets have a definite life and are amortized over the assets’ useful lives using a systematic and rational basis which is representative of the assets’ use. Intangible assets with a definite life are tested for impairment whenever events or circumstances indicate that the carrying amount of an asset (asset group) may not be recoverable. If necessary, an impairment loss is recognized when the carrying amount of an asset exceeds the estimated undiscounted cash flows used in determining the fair value of the asset. The amount of the impairment loss recorded is calculated by the excess of the asset’s carrying value over its fair value. Fair value is generally determined using a discounted cash flow analysis. For 2018, 2017 and 2016, there were no impairment charges for intangible assets.

Goodwill: Management evaluates the recoverability of goodwill annually or more frequently if events or changes in circumstances, such as declines in revenue, earnings or cash flows, or material adverse changes in the business climate indicate that the carrying value of an asset might be impaired. Goodwill is tested for impairment at the reporting unit level. A reporting unit is an operating segment, or a business unit one level below an operating segment if discrete financial information for that business is prepared and regularly reviewed by segment management. However, components within an operating segment are aggregated as a single reporting unit if they have similar economic characteristics. We determined that each of our operating segments (Product Identification and T&M) represents a reporting unit for purposes of goodwill impairment testing.

The accounting guidance related to goodwill impairment testing allows for the performance of an optional qualitative assessment of whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. Factors that management considers in this qualitative assessment include macroeconomic conditions, industry and market considerations, overall financial performance (both current and projected), changes in management and strategy and changes in the composition or carrying amount of net assets. If this qualitative assessment indicates that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then a quantitative assessment is required for the reporting unit. The quantitative assessment compares the fair value of the reporting unit with its carrying value. We estimate the fair value of our reporting units using the income approach based upon a discounted cash flow model. We believe that this approach is appropriate because it provides a fair value estimate based upon the reporting unit’s expected long-term operating cash flow performance. In addition, the Company uses the market approach, which compares the reporting unit to publicly-traded companies and transactions involving similar business, to support the conclusions based upon the income approach. The income approach requires the use of many assumptions and estimates including future revenue, expenses, capital expenditures, and working capital, as well as discount factors and income tax rates. If the fair value of the reporting unit exceeds the carrying value of the net assets including goodwill assigned to that unit, goodwill is not impaired. If the carrying value of the reporting unit’s net assets including goodwill exceeds the fair value of the reporting unit, then we record an impairment charge based on that difference.

We performed a qualitative assessment for our fiscal 2018 analysis of goodwill. Based on this assessment, management does not believe that it is more likely than not that the carrying values of the reporting units exceed their fair values. Accordingly, no quantitative assessment was performed, as management believes that there are no impairment issues in regards to goodwill at this time.

Income Taxes: We use the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting basis and tax basis of the assets and liabilities and are measured using statutory tax rates that will be in effect when the differences are expected to reverse. The Company’s deferred taxes are presented as non-current in the accompanying consolidated balance sheet. An allowance against deferred tax assets is recognized when it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. At January 31, 2018 and 2017, a valuation allowance was provided for deferred tax assets attributable to certain state R&D credit carryforwards.

AstroNova accounts for uncertain tax positions in accordance with the guidance provided in ASC 740, “Accounting for Income Taxes.” This guidance describes a recognition threshold and measurement attribute for the financial statement disclosure of tax positions taken or expected to be taken in a tax return and requires recognition of tax benefits that satisfy a more-likely-than-not threshold. ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods and disclosure.

In December 2017, the Tax Cuts and Jobs Act (“Tax Act”) was enacted into law, significantly changing income tax law that affects U.S corporations. Key changes included a corporate tax rate reduction from 35% to 21% effective January 1, 2018, expensing of certain qualified property, significant changes to the U.S international tax system such as a one-time transition tax on accumulated foreign earnings, and how foreign earnings are subject to U.S. tax. The Company is required to recognize the effects of the tax law changes in the period of enactment, including the determination of the transition tax and the re-measurement of deferred taxes as well as to re-assess the realizability of the deferred tax assets. Subsequent to the enactment of the Tax Act, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”), which allows companies to record provisional amounts related to the effects of the Tax Act during a measurement period not to extend beyond one year from the enactment date. Due to the timing of the Tax Act and additional guidance and interpretations that may be issued by the U.S. Treasury Department, the Internal Revenue Service and other standard-setting bodies in the future, the Company has not completed its analysis of the income tax effects of the Tax Act. The provisional estimates will be adjusted during the measurement period defined under SAB 118, based upon the Company’s ongoing analysis of its data and tax positions along with new guidance from regulators and interpretations of the law.

Net Income Per Common Share: Basic net income per share is based on the weighted average number of shares outstanding during the period. Diluted net income per share is based on the basic weighted average number of shares and potential common equivalent shares for stock options, restricted stock awards and restricted stock units outstanding during the period using the treasury stock method. In fiscal years 2018, 2017 and 2016, there were 675,600, 459,700 and 425,200, respectively, of common equivalent shares that were not included in the computation of diluted net income per common share because their inclusion would be anti-dilutive.

Allowance for Doubtful Accounts: In circumstances where we are aware of a customer’s inability to meet its financial obligations, an allowance is established. Accounts are individually evaluated on a regular basis and allowances are established to state such receivables at their net realizable value. The remainder of the allowance is based upon historical write-off experience and current market assessments.

Fair Value Measurement: We measure our financial assets at fair value on a recurring basis in accordance with the guidance provided in ASC 820, “Fair Value Measurement and Disclosures,” which defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In addition, ASC 820 establishes a three-tiered hierarchy for inputs used in management’s determination of fair value of financial instruments that emphasizes the use of observable inputs over the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that reflect management’s belief about the assumptions market participants would use in pricing a financial instrument based on the best information available in the circumstances.

The fair value hierarchy is summarized as follows:

 

   

Level 1—Quoted prices in active markets for identical assets or liabilities;

 

   

Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

 

   

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities

Cash and cash equivalents, accounts receivable, accounts payable, accrued compensation, other accrued expenses and income tax payable are reflected in the consolidated balance sheet at carrying value, which approximates fair value due to the short term nature of these instruments.

Share-Based Compensation: Share-based compensation expense is measured based on the estimated fair value of the share-based award when granted and is recognized as an expense over the requisite service period (generally the vesting period of the equity grant). We have estimated the fair value of each option on the date of grant using the Black-Scholes option-pricing model. Our estimate of share-based compensation requires a number of complex and subjective assumptions including our stock price volatility, employee exercise patterns (expected life of the options), the risk-free interest rate and the Company’s dividend yield. The stock price volatility assumption is based on the historical weekly price data of our common stock over a period equivalent to the weighted average expected life of our options. Management evaluated whether there were factors during that period which were unusual and would distort the volatility figure if used to estimate future volatility and concluded that there were no such factors. In determining the expected life of the option grants, the Company has observed the actual terms of prior grants with similar characteristics and the actual vesting schedule of the grant and has assessed the expected risk tolerance of different option groups. The risk-free interest rate is based on the actual U.S. Treasury zero coupon rates for bonds matching the expected term of the option as of the option grant date. The dividend assumption is based upon the prior year’s average dividend yield. No compensation expense is recognized for options that are forfeited for which the employee does not render the requisite service. Our accounting for share-based compensation for restricted stock awards (RSA) and restricted stock units (RSU) is also based on the fair value method. The fair value of the RSUs and RSAs is based on the closing market price of the Company’s common stock on the grant date. Reductions in compensation expense associated with forfeited awards are estimated at the date of grant, and this estimated forfeiture rate is adjusted periodically based on actual forfeiture experience.

In the first quarter of fiscal 2017, the Company prospectively adopted the provisions of ASU 2016-09, and, as such, the cash flow from tax benefits that are a result of tax deductions in excess of the compensation cost recognized for those options (excess tax benefits) is classified with other income tax cash flows as an operating activity for the years ended January 31, 2018 and 2017. Tax deductions from certain stock option exercises are treated as being realized when they reduce tax expense and taxes payable in accordance with relevant tax law.

Derivative Financial Instruments: The Company uses derivative instruments as part of its overall strategy to manage its exposure to market risks primarily associated with fluctuations in foreign currency exchange rates and interest rates. Derivative instruments are recognized as either assets or liabilities in the balance sheet at fair value. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and, further, on the type of hedging relationship. For derivative instruments not designated as hedging instruments, the gain or loss is recognized in the statement of income during the current period. For those derivative instruments that are designated and qualify as hedging instruments, a company must designate the hedging instrument, based upon the exposure being hedged, as a fair value hedge, cash flow hedge, or a hedge of a net investment in a foreign operation.

For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income (OCI) and reclassified into earnings in the same line item associated with the forecasted transaction, and in the same period or periods during which the hedged transaction affects earnings (e.g., in “Interest Expense” when the hedged transactions are interest cash flows associated with floating-rate debt, or “Other, Net” for portions reclassified relating to the remeasurement of the debt). The remaining gain or loss on the derivative instrument in excess of the cumulative change in the present value of future cash flows of the hedged item, if any (i.e., the ineffectiveness portion), or hedge components excluded from the assessment of effectiveness, are recognized in the statement of income during the current period.

Recent Accounting Pronouncements:

Derivatives and Hedging

In August 2017, the Financial Accounting Standards Board (FASB) issued ASU 2017-12, “Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities.” The objective of this new guidance is to improve the financial reporting of hedging relationships by, among other things, eliminating the requirement to separately measure and record hedge ineffectiveness. ASU 2017-12 is effective for public companies for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years (Q1 fiscal 2019 for AstroNova). Early application is permitted using a modified retrospective method effective as of the beginning of the fiscal year. The Company does not believe that the adoption of this guidance will have a material impact on the Company’s consolidated financial statements.

Goodwill

In January 2017, the FASB issued ASU 2017-04, “Intangibles—Goodwill and Other (Topic 350).” ASU 2017-14 simplifies the subsequent measurement of goodwill impairment. The new guidance eliminates the two-step process that required identification of potential impairment and a separate measure of the actual impairment. Goodwill impairment charges, if any, would be determined by reducing the goodwill balance by the difference between the carrying value and the reporting unit’s fair value (impairment loss is limited to the carrying value). This standard is effective for annual or any interim goodwill impairment tests beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company adopted ASU 2017-04 effective February 1, 2017. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

Business Combinations

In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business, which clarifies the definition of a business to assist entities with determining whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The standard introduces a screen for determining when assets acquired are not a business (if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, then under ASU 2017-01, the asset or group of assets is not a business) and clarifies that a business must include, at a minimum, an input and a substantive process that contribute to an output to be considered a business. This standard is effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period, with early adoption permitted in certain circumstances. The Company elected to adopt ASU 2017-01 in the third quarter of the fiscal 2018 as a result of the Honeywell acquisition and has accounted for this transaction as a purchase of an asset in its condensed consolidated financial statements for the period ending January 31, 2018.

 

Statement of Cash Flows

In August 2016, the FASB issued ASU 2016-15, “Classification of Certain Cash Receipts and Cash Payments (Topic 230).” ASU 2016-15 addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice for certain cash receipts and cash payments. The standard is effective for annual reporting periods beginning after December 15, 2017 and interim periods within those years (Q1 fiscal 2019 for AstroNova), with early adoption permitted. The Company does not believe the adoption of this guidance will have a material impact on the Company’s consolidated financial statements.

Revenue Recognition

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” ASU 2014-09 completes the joint effort by the FASB and International Accounting Standards Board to improve financial reporting by creating common revenue recognition guidance for U.S. GAAP and International Financial Reporting Standards. ASU 2014-09 applies to all companies that enter into contracts with customers to transfer goods or services. Under the standard, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The guidance permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (modified retrospective method). We adopted this standard effective February 1, 2018 using the modified retrospective method. The adoption of this guidance will not have a material impact on the Company’s consolidated financial statements.

Leases

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” ASU 2016-02 supersedes current guidance related to accounting for leases and is intended to increase transparency and comparability among organizations by requiring lessees to recognize assets and liabilities in the balance sheet for operating leases with lease terms greater than twelve months. The update also requires improved disclosures to help users of financial statements better understand the amount, timing and uncertainty of cash flows arising from leases. ASU 2016-02 will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years (Q1 fiscal 2020 for AstroNova), with early adoption permitted. At adoption, this update will be applied using a modified retrospective approach. The Company is currently evaluating the effect of this new guidance on the Company’s consolidated financial statements.

No other new accounting pronouncements, issued or effective during the current year, have had or are expected to have a material impact on our consolidated financial statements.

v3.8.0.1
Acquisitions
12 Months Ended
Jan. 31, 2018
Text Block [Abstract]  
Acquisitions

Note 2—Acquisitions

Honeywell Asset Purchase and License Agreement

On September 28, 2017, AstroNova, Inc. entered into an Asset Purchase and License Agreement (the “Honeywell Agreement”) with Honeywell International, Inc. 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. The purchase price consisted of an initial upfront payment of $14.6 million in cash. The Honeywell Agreement also provides for guaranteed minimum royalty payments of $15.0 million, to be paid over the next 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 Company has evaluated this transaction under Accounting Standard Update (ASU) 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business,” and determined that this transaction should be accounted for as an asset acquisition. Refer to Note 1, “Summary of Significant Accounting Policies,” for further details on ASU 2017-01.

The initial upfront payment of $14.6 million was paid at the closing of this transaction using borrowings from the Company’s revolving credit facility under its amended Credit Agreement with Bank of America, N.A. Refer to Note 7, “Revolving Credit Facility” for further details.

The minimum royalty payment obligation of $15.0 million 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. The current portion of the royalty obligation of $1.625 million is to be paid over the next twelve months and is reported as a current liability and the remainder of $11.760 million is reported as a long-term liability on the Company’s consolidated balance sheet at January 31, 2018. In fiscal 2018, the Company incurred $0.6 million in excess royalty expense, which is included in cost of goods sold in the Company’s consolidated statement of income for the year ended January 31, 2018 and reported as a current liability on the Company’s consolidated balance sheet at January 31, 2018.

Transaction costs incurred for this acquisition were $0.3 million and have been included as part of the purchase price.

In connection with the Honeywell Agreement, the Company also entered into a Transition Services Agreement (“TSA”) with Honeywell related to the transfer of the manufacturing and repair of the licensed printers from their current locations to AstroNova’s plant in West Warwick, Rhode Island. Subject to the completion of the terms of the TSA by Honeywell International, the Company may make an additional payment of $0.4 million. In addition, under the terms of the TSA, the Company is required to pay for certain product costs and operating expenses incurred by Honeywell during the period in which product manufacturing is transferred to the Company’s facilities. During 2018, these expenses totaled $1.1 million and are recorded in general and administrative expenses in the Company’s consolidated income statement for the period ended January 31, 2018.

The assets acquired in connection with the acquisition were recorded by the Company at their estimated relative fair values as of the acquisition date as follows:

 

(In thousands)       

Inventory

   $ 1,411  

Identifiable Intangible Assets

     26,843  
  

 

 

 

Total Purchase Price

   $ 28,254  
  

 

 

 

The purchase price, including the initial payment, the minimum royalty payment obligation and the transaction costs, was allocated based on the relative fair value of the assets acquired. The fair value of the intangible assets acquired was estimated by applying the income approach. These fair value measurements are based on significant inputs that are not observable in the market and therefore represent a Level 3 measurement as defined in Accounting Standards Codification (ASC) 820, “Fair Value Measurement and Disclosure.” Key assumptions in estimating the fair value of the intangibles include (1) the remaining life of the intangibles based on the term of the Honeywell Asset Purchase and License Agreement of 10 years, (2) a range of annual earnings projections from $3.9 million – $5.4 million and (3) the Company’s internal rate of return of 21.0%.

The acquired identifiable intangible assets are as follows:

 

(In thousands)    Fair
Value
     Useful Life
(Years)
 

Customer Contract Relationships

   $ 26,843        10  
  

 

 

    

 

Trojan Label

On February 1, 2017, our newly-formed wholly-owned Danish subsidiary, ANI ApS, completed the acquisition of the issued and outstanding equity interests of TrojanLabel ApS (TrojanLabel), a Danish private limited liability company, pursuant to the terms of a Share Purchase Agreement dated January 7, 2017. Based in Copenhagen, Denmark, TrojanLabel was a manufacturer of products including digital color label presses and specialty printing systems for a broad range of end markets. Upon consummation of the acquisition, TrojanLabel became an indirect wholly-owned subsidiary of AstroNova.

The purchase price of this acquisition was 62.9 million Danish Krone (approximately $9.1 million), net of cash acquired of 976,000 Danish Krone (approximately $0.1 million), of which 6.4 million Danish Krone (approximately $0.9 million) was placed in escrow to secure certain post-closing working capital adjustments and indemnification obligations of the sellers. The acquisition was funded using available cash and investment securities.

The sellers of TrojanLabel may be entitled to additional contingent consideration if 80% of specified earnings targets are achieved by the TrojanLabel business during the seven years following the closing, subject to certain closing working capital adjustments and potential offsets to satisfy the sellers’ indemnification obligations. The contingent consideration consists of potential earn-out payments to the sellers of between 32.5 million Danish Krone (approximately $5.0 million) if 80% of the specified earnings targets are achieved, 40.6 million Danish Krone (approximately $5.8 million) if 100% of the specified earnings targets are achieved, and a maximum of 48.7 million Danish Krone (approximately $7 million) if 120% of the specified earnings targets are achieved. The fair value of contingent consideration is re-evaluated each reporting period and changes are adjusted through earnings.

Subsequent to the acquisition, the Company restructured the operating model for the TrojanLabel business such that most of the sales and some of the expenses of the business would be transferred to other legal entities of the Company. This caused the expected earnings targets in the Danish entity, which was the basis upon which the contingent consideration was structured, to become unlikely to be met. As a result, during fiscal 2018, the estimated fair value of the contingent consideration was reduced resulting in the Company recognizing an additional $1.4 million of income for the year which is offset in general and administrative expense on the Company’s Consolidated Income Statement for the period ended January 31, 2018.

Total acquisition-related costs were approximately $0.7 million, of which $0.1 million and $0.6 million are included in the general and administrative expenses in the Company’s consolidated statements of income for the years ending January 31, 2018 and January 31, 2017, respectively. The acquisition was accounted for as a purchase of a business under the acquisition method in accordance with the guidance provided by FASB ASC 805, “Business Combinations.”

The US dollar purchase price of the acquisition has been allocated on the basis of fair value as follows:

 

(In thousands)       

Accounts Receivable

   $ 1,322  

Inventory

     796  

Other Current Assets

     166  

Property, Plant and Equipment

     15  

Identifiable Intangible Assets

     3,264  

Goodwill

     7,388  

Accounts Payable and Other Current Liabilities

     (1,821

Other Liability

     (114

Contingent Liability (Earnout)

     (1,314

Deferred Tax Liability

     (695
  

 

 

 

Total Purchase Price

   $ 9,007  
  

 

 

 

 

The fair value of the intangible assets acquired was estimated by applying the income approach, and the fair value of the contingent consideration liability was estimated by applying the real options method. These fair value measurements are based on significant inputs that are not observable in the market and therefore represent a Level 3 measurement as defined in ASC 820, “Fair Value Measurement and Disclosure.” Key assumptions in estimating the fair value of the intangibles include (1) remaining life of existing technology acquired based on estimate of percentage of revenue from 0% – 100% for each product, (2) the Company’s internal rate of return of 19.0% and (3) a range of earnings projections from $121,000 – $1,070,000. Key assumptions in estimating the fair value of the contingent consideration liability (earnout) include (1) the estimated earnout targets over the next seven years of $407,000–$1,280,000, (2) the probability of success (achievement of the various contingent events) from 1.6%–87.2% and (3) a risk-adjusted discount rate of approximately 1.77%–3.35% used to adjust the probability-weighted earnout payments to their present value. The fair value of the contingent liability is revalued every reporting period based on updated assumptions. Refer above and to Note 20 “Fair Value Measurements” for further details.

Goodwill of $7.4 million, which is not deductible for tax purposes, represents the excess of the purchase price over the estimated fair value assigned to the tangible and identifiable intangible assets acquired and liabilities assumed from TrojanLabel. The goodwill recognized is attributable to synergies which are expected to enhance and expand the Company’s overall product portfolio and opportunities in new and existing markets, future technologies that have yet to be determined and TrojanLabel’s assembled work force. The carrying amount of the goodwill was allocated to the Product Identification segment of the Company.

The following table reflects the fair value of the acquired identifiable intangible assets and related estimated useful lives:

 

(In thousands)    Fair
Value
     Useful Life
(Years)
 

Existing Technology

   $ 2,327        7  

Distributor Relations

     937        10  
  

 

 

    

Total

   $ 3,264     
  

 

 

    

The Existing Technology intangible asset acquired represents the various technologies TrojanLabel has developed related to its series of printing presses, including hardware components of the presses and the software utilized to optimize their performance.

Beginning February 1, 2017, the results of operations for TrojanLabel have been included in the Company’s statement of income for period ended January 31, 2018 and are reported as part of the Product Identification segment. Assuming the acquisition of TrojanLabel had occurred on February 1, 2015, the impact would not have had a material effect on the Company’s results for periods ended January 31, 2017 and 2016, as the acquisition was not considered a significant subsidiary.

RITEC

On June 19, 2015, we completed the acquisition of the aerospace printer product line for civil and commercial aircraft from Rugged Information Technology Equipment Corporation (RITEC) under the terms of an Asset Purchase Agreement dated June 18, 2015. The products of RITEC consist of aerospace printers for use in commercial aircraft sold primarily to aircraft manufacturers, tier one contractors and directly to airlines around the world. Our aerospace printer product line is part of the Test & Measurement (T&M) product group and is reported as part of the T&M segment. The Company began shipment of the RITEC products in the third quarter of fiscal 2016.

The purchase price of the acquisition was $7.4 million which was funded using available cash and investment securities. The Company withheld $0.8 million of the purchase price in escrow for twelve months following the acquisition date to support the sellers’ indemnifications in the event of any breach in the representations, warranties or covenants of RITEC. The Company retained $0.1 million from the escrow, which was recorded as other income in the consolidated statement of income for the period ended January 31, 2017.

The assets acquired consist principally of accounts receivable and certain intangible assets. Acquisition related costs of approximately $0.1 million are included in the general and administrative expenses in the Company’s consolidated statements of income for fiscal year ended 2016. The acquisition was accounted for under the acquisition method in accordance with the guidance provided by FASB ASC 805, “Business Combinations.”

The Company also entered into a Transition Services Agreement, under which RITEC provided transition services and continued to manufacture products in the acquired product line until the Company transitioned the manufacturing to its West Warwick, Rhode Island facility. The TSA concluded in the third quarter of fiscal 2017 and AstroNova purchased the remaining inventory held by RITEC for $0.2 million.

Also as part of the Asset Purchase Agreement, the Company entered into a License Agreement, which grants RITEC certain rights to use the intellectual property acquired by the Company in the design, development, marketing, manufacture, sale and servicing of aerospace printers for aircraft sold to the military end-user market and printers sold to other non-aircraft market segments. RITEC will pay royalties equal to 7.5% of the revenue price on all products sold into the military end-user aircraft market during the first five years of the License Agreement. No royalty revenue was earned or accrued in fiscal 2018 or 2017.

The purchase price of the acquisition has been allocated on the basis of the fair value as follows:

 

(In thousands)       

Accounts Receivable

   $ 50  

Identifiable Intangible Assets

     3,780  

Goodwill

     3,530  
  

 

 

 

Total Purchase Price

   $ 7,360  
  

 

 

 

The fair value of the intangible assets acquired was estimated by applying the income approach. This fair value measurement is based on significant inputs that are not observable in the market and therefore, represent a Level 3 measurement as defined in ASC 820, “Fair Value Measurement and Disclosure.” Key assumptions include (1) a weighted average cost of capital of 15.5%; (2) a range of earnings projections from $0.1-$0.7 million and (3) a range of contract renewal probability from 30%-100%.

Goodwill of $3.5 million, which is deductible for tax purposes, represents the excess of the purchase price over the estimated fair value assigned to the tangible and identifiable intangible assets acquired from RITEC. The carrying amount of the goodwill was allocated to the T&M segment of the Company.

The following table reflects the fair value of the acquired identifiable intangible assets and related estimated useful lives:

 

(In thousands)    Fair
Value
     Useful Life
(Years)
 

Customer Contract Relationships

   $ 2,830        10  

Non-Competition Agreement

     950        5  
  

 

 

    

Total

   $ 3,780     
  

 

 

    

Assuming the acquisition of RITEC occurred on February 1, 2015, the impact on net revenue, net income and earnings per share would not have been material to the Company for the year ended January 31, 2016, as the acquisition was not considered a significant subsidiary.

v3.8.0.1
Intangible Assets
12 Months Ended
Jan. 31, 2018
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets

Note 3—Intangible Assets

Intangible assets are as follows:

 

    January 31, 2018     January 31, 2017  
(In thousands)   Gross
Carrying
Amount
    Accumulated
Amortization
    Currency
Translation
Adjustment
    Net
Carrying
Amount
    Gross
Carrying
Amount
    Accumulated
Amortization
    Net
Carrying
Amount
 

Miltope:

             

Customer Contract Relationships

  $ 3,100     $ (1,438   $ —       $ 1,662     $ 3,100     $ (1,108   $ 1,992  

RITEC:

             

Customer Contract Relationships

    2,830       (461     —         2,369       2,830       (207     2,623  

Non-Competition Agreement

    950       (491     —         459       950       (301     649  

TrojanLabel:

             

Existing Technology

    2,327       (350     313       2,290       —         —         —    

Distributor Relations

    937       (99     130       968       —         —         —    

Honeywell:

             

Customer Contract Relationships

    26,843       (958     —         25,885       —         —         —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Intangible Assets, net

  $ 36,987     $ (3,797   $ 443     $ 33,633     $ 6,880     $ (1,616   $ 5,264  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

There were no impairments to intangible assets during the periods ended January 31, 2018, 2017 and 2016. Amortization expense of $2.2 million; $0.7 million and $0.5 million with regard to acquired intangibles has been included in the consolidated statements of income for years ended January 31, 2018, 2017 and 2016, respectively.

Estimated amortization expense for the next five years is as follows:

 

(In thousands)    2019      2020      2021      2022      2023  

Estimated amortization expense

   $ 4,093      $ 4,165      $ 4,035      $ 3,947      $ 3,943  
v3.8.0.1
Securities Available for Sale
12 Months Ended
Jan. 31, 2018
Investments, Debt and Equity Securities [Abstract]  
Securities Available for Sale

Note 4—Securities Available for Sale

Pursuant to our investment policy, securities available for sale include state and municipal securities with various contractual or anticipated maturity dates ranging from 1 to 13 months. These securities are carried at fair value, with unrealized gains and losses reported as a component of accumulated other comprehensive income (loss), net of taxes, in shareholders’ equity until realized. Realized gains and losses from the sale of available for sale securities, if any, are determined on a specific identification basis. A decline in the fair value of any available for sale security below cost that is determined to be other than temporary will result in a write-down of its carrying amount to fair value. No such impairment charges were recorded for any period presented. All short-term investment securities have original maturities greater than 90 days.

The fair value, amortized cost and gross unrealized gains and losses of the securities are as follows:

 

     Amortized
Cost
     Gross
Unrealized
Gains
     Gross
Unrealized
Losses
     Fair
Value
 
(In thousands)                            

January 31, 2018

           

State and Municipal Obligations

   $ 1,513      $ —        $ (2    $ 1,511  
  

 

 

    

 

 

    

 

 

    

 

 

 

January 31, 2017

           

State and Municipal Obligations

   $ 6,732      $ —        $ (9    $ 6,723  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

The contractual maturity dates of these securities are as follows:

 

     January 31  
     2018      2017  
(In thousands)              

Less than one year

   $ 1,096      $ 3,563  

One to two years

     415        3,160  
  

 

 

    

 

 

 
   $ 1,511      $ 6,723  
  

 

 

    

 

 

 

Actual maturities may differ from contractual dates as a result of revenue or earlier issuer redemptions.

v3.8.0.1
Inventories
12 Months Ended
Jan. 31, 2018
Inventory Disclosure [Abstract]  
Inventories

Note 5—Inventories

The components of inventories are as follows:

 

     January 31  
     2018      2017  
(In thousands)              

Materials and Supplies

   $ 13,715      $ 11,865  

Work-in-Progress

     1,404        1,216  

Finished Goods

     17,210        10,270  
  

 

 

    

 

 

 
     32,329        23,351  

Inventory Reserve

     (4,720      (3,845
  

 

 

    

 

 

 

Balance at January 31

   $ 27,609      $ 19,506  
  

 

 

    

 

 

 

Finished goods inventory includes $2.0 million and $1.6 million of demonstration equipment at January 31, 2018 and 2017, respectively.

v3.8.0.1
Accrued Expenses
12 Months Ended
Jan. 31, 2018
Payables and Accruals [Abstract]  
Accrued Expenses

Note 6—Accrued Expenses

Accrued expenses consisted of the following:

 

     January 31  
     2018      2017  
(In thousands)              

Warranty

   $ 575      $ 515  

Professional Fees

     392        584  

Dealer Commissions

     232        180  

Accrued Payroll & Sales Tax

     191        111  

Product Replacement Cost Reserve

     158        174  

Other

     866        607  
  

 

 

    

 

 

 
   $ 2,414      $ 2,171  
  

 

 

    

 

 

 
v3.8.0.1
Revolving Line of Credit
12 Months Ended
Jan. 31, 2018
Debt Disclosure [Abstract]  
Revolving Line of Credit

Note 7—Revolving Line of Credit

On February 28, 2017, the Company and its wholly owned Danish subsidiaries, ANI ApS and TrojanLabel ApS (together, the “Parties”), entered into a Credit Agreement with Bank of America, N.A. (the “Lender”). The Credit Agreement provided for a term loan to ANI ApS in the principal amount of $9.2 million. The Credit Agreement also provided for a $10.0 million revolving credit facility available to the Company for general corporate purposes. Upon entry into the Credit Agreement, the Company’s prior credit facility with Wells Fargo Bank was terminated. No loans or other amounts were outstanding or owed under that facility at the time of termination.

In connection with the Honeywell Agreement, on September 28, 2017, the Parties entered into a First Amendment to the Credit Agreement with the Lender. The First Amendment amended the existing Credit Agreement to permit the Honeywell Asset Purchase and License Agreement and temporarily increased the amount available for borrowing under the revolving credit facility from $10.0 million to $15.0 million. The initial upfront payment of $14.6 million for the Honeywell Agreement was paid using borrowings under the Company’s revolving credit facility.

On November 30, 2017, the Parties entered into a Second Amendment to the Credit Agreement with the Lender. The Second Amendment provided for a term loan to the Company in the principal amount of $15.0 million, in addition to the revolving credit facility for the Company and the term loan previously borrowed by ANI ApS at the original closing under the Credit Agreement. The proceeds from the term loan were used to repay the entire $14.6 million principal balance of the revolving loans outstanding under the revolving credit facility. The principal amount of the revolving credit facility which had been temporarily increased to $15.0 million was reduced to $10.0 million effective upon closing of Second Amendment and the maturity date was extended to November 30, 2022.

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 Krone. 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.

As of January 31, 2018, there are no borrowings against 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.

v3.8.0.1
Debt
12 Months Ended
Jan. 31, 2018
Debt Disclosure [Abstract]  
Debt

(8) Debt

Long-term debt in the accompanying condensed consolidated balance sheets is as follows:

 

     January 31  
(In thousands)    2018      2017  

USD Term Loan with a rate equal to LIBOR plus a margin of 1.0% to 1.5%, (2.85% as of January 31, 2018), and maturity date of November 30, 2022

   $ 15,000      $ —    

USD Term Loan with a rate equal to LIBOR plus a margin of 1.0% to 1.5%, (3.06% as of January 31, 2018), and maturity date of January 31, 2022

     8,372        —    

Debt Issuance Costs, net of accumulated amortization

     (226      —    

Current Portion of Term Loan

     (5,498      —    
  

 

 

    

 

 

 

Long-Term Debt

   $ 17,648      $ —    
  

 

 

    

 

 

 

The schedule of required principal payments remaining during the next five years on long-term debt outstanding as of January 31, 2018 is as follows:

 

(In thousands)       

Fiscal 2019

   $ 5,498  

Fiscal 2020

     4,840  

Fiscal 2021

     5,208  

Fiscal 2022

     5,576  

Fiscal 2023

     2,250  
  

 

 

 
   $ 23,372  
  

 

 

 

On February 28, 2017, the Parties entered into a Credit Agreement with the Lender. The Parties also entered into a related Security and Pledge Agreement with the Lender. The Credit Agreement provided for a term loan to ANI ApS in the amount of $9.2 million. On November 30, 2017, the Parties entered into a Second Amendment to the Credit Agreement with the Lender. The Second Amendment provided for a term loan to the Company in the principal amount of $15.0 million, in addition to the revolving credit facility for the Company and the term loan previously borrowed by ANI ApS at the original closing under the Credit Agreement. The proceeds from the term loan were used to repay the entire $14.6 million principal balance of the revolving loan outstanding under the revolving credit facility as of that date.

The term loans bear interest at a rate per annum equal to the LIBOR rate plus a margin that varies within a range of 1.0% to 1.5% based on the Company’s consolidated leverage ratio.

In connection with the Credit Agreement, AstroNova and ANI ApS entered into certain hedging arrangements with the Lender to manage the variable interest rate risk and currency risk associated with its payments in respect of the $9.2 million term loan. In connection with the Second Amendment to the Credit Agreement, AstroNova entered into certain hedging arrangements with the Lender to manage the variable interest rate risk and currency exchange risk associated with its payments in respect of the $15.0 million term loan. Refer to Note 9, “Derivative Financial Instruments and Risk Management” for further information about these arrangements.

The Parties must comply with various customary financial and non-financial covenants under the Credit Agreement. The financial covenants consist of a maximum consolidated leverage ratio and a minimum consolidated fixed charge coverage ratio. The Credit Agreement contains limitations, in each case subject to various exceptions and thresholds, on the Company’s and its subsidiaries’ ability to incur future indebtedness, to place liens on assets, to conduct mergers or acquisitions, to sell assets, to alter their capital structure, to make investments and loans, to change the nature of their business, and to prepay subordinated indebtedness. The Credit Agreement permits the Company to pay cash dividends on and repurchase shares of its common stock, subject to certain limitations.

In connection with the May 1, 2017 stock repurchase (refer to Note 12, “Shareholders’ Equity”), the Parties entered into a consent and amendment with the Lender, dated as of May 1, 2017, relating to the Credit Agreement solely for purposes of effecting the stock repurchase. The amendment increased the aggregate amount of certain repurchases of Company equity interests permitted to be made by the Company under the Credit Agreement in the Company’s fiscal year ending January 31, 2018, from $5.0 million to $12.0 million, subject to certain conditions. The amendment prohibited the Company from making other repurchases of Company equity interests under such permission in the fiscal year ending January 31, 2018. The amendment also provides that the aggregate amount paid in cash by the Company to effect the stock repurchase shall not be deducted from the Company’s consolidated EBITDA for the purposes of calculating the consolidated fixed charge coverage ratio covenant to which the Company is subject under the Credit Agreement with respect to any trailing four-fiscal-quarter measurement period through and including the measurement period ending January 31, 2018.

The Lender is entitled to accelerate repayment of the loans and to terminate its revolving credit commitment under the Credit Agreement upon the occurrence of any of various customary events of default, which include, among other events, the following: failure to pay when due any principal, interest or other amounts in respect of the loans, breach of any of the Company’s covenants or representations under the loan documents, default under any other of the Company’s or its subsidiaries’ significant indebtedness agreements, a bankruptcy, insolvency or similar event with respect to the Company or any of its subsidiaries, a significant unsatisfied judgment against the Company or any of its subsidiaries, or a change of control of the Company.

The obligations of ANI ApS in respect of the $9.2 million term loan are guaranteed by the Company and TrojanLabel. The Company’s obligations in respect of the $15.0 million term loan, revolving credit facility and its guarantee in respect of the ANI ApS term loan are secured by substantially all of the assets of the Company (including a pledge of a portion of the equity interests held by the Company in ANI ApS and the Company’s wholly-owned German subsidiary Astro-Med GmbH), subject to certain exceptions.

 

As of January 31, 2018, we believe the Company is in compliance with all of the covenants in the Credit Agreement.

v3.8.0.1
Derivative Financial Instruments and Risk Management
12 Months Ended
Jan. 31, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments and Risk Management

(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 $15.0 million term loan borrowing by the Company. In accordance with the guidance in ASC 815, 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 approximately $8.9 million of 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 Krone 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 Krone, as well as exchanges of principal at the inception spot rate, over the life of the term loan. As of January 31, 2018, the total notional amount of the Company’s cross-currency interest rate swap was $7.8 million and is included in other long term liabilities in the Company’s consolidated balance sheet at January 31, 2018, at its fair value amount of $1.5 million.

The interest rate swap agreement utilized by the Company on the $15.0 million 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. As of January 31, 2018, the total notional amount of the Company’s interest rate swap was $14.3 million and is included in other assets in the Company’s consolidated balance sheet at January 31, 2018 at its fair value amount of $0.1 million.

The following tables present the impact of the derivative instruments in our condensed consolidated financial statements for the years ended January 31, 2018 and 2017:

 

     Years Ended  
     Amount of Gain
(Loss)
Recognized in OCI
on
Derivative
(Effective Portion)
     Location of Gain
(Loss)
Reclassified from
Accumulated OCI into
Income
(Effective Portion)
     Amount of Gain
(Loss)
Reclassified from
Accumulated OCI into
Income
(Effective Portion)
 

Cash Flow Hedge

(In thousands)

   January 31,
2018
    January 31,
2017
        January 31,
2018
    January 31,
2017
 

Swap contracts

   $ (1,330   $ —          Other Income (Expense)      $ (1,344   $ —    
  

 

 

   

 

 

       

 

 

   

 

 

 

The swap contracts resulted in no ineffectiveness for the period ended January 31, 2018, and no gains or losses were reclassified into earnings as a result of the discontinuance of the swap contracts due to the original forecasted transaction no longer being probable of occurring. At January 31, 2018, the Company expects to reclassify approximately $0.2 million of net gains on the swap contracts from accumulated other comprehensive income (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.

v3.8.0.1
Sale of Property
12 Months Ended
Jan. 31, 2018
Property, Plant and Equipment [Abstract]  
Sale of Property

Note 10—Sale of Property

In December of 2016, we sold our Slough UK real estate and related machinery, computers and equipment at that location. Proceeds from the sale amounted to $0.5 million (0.4 million in British Pounds) and a gain of $0.4 million was recognized in other income in the Company’s consolidated statement of income for the period ended January 31, 2017. Our UK branch is currently leasing property for its operations in Maidenhead, UK.

v3.8.0.1
Accumulated Other Comprehensive Loss
12 Months Ended
Jan. 31, 2018
Equity [Abstract]  
Accumulated Other Comprehensive Loss

Note 11—Accumulated Other Comprehensive Loss

The changes in the balance of accumulated other comprehensive loss by component are as follows:

 

(In thousands)    Foreign Currency
Translation
Adjustments
    Unrealized Holding
Gain  (Loss)
on Available for
Sale Securities
    Net
Unrealized
Gain (Losses)
on Cash Flow
Hedges
    Total  

Balance at January 31, 2015

   $ (714   $ 15     $ —       $ (699

Other Comprehensive Loss

     (269     (7     —         (276

Amounts Reclassified to Net Income

     —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Other Comprehensive Loss

     (269     (7     —         (276
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance at January 31, 2016

   $ (983   $ 8       —       $ (975

Other Comprehensive Loss

     (65     (16     —         (81

Amounts Reclassified to Net Income

     —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Other Comprehensive Loss

     (65     (16     —         (81
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance at January 31, 2017

   $ (1,048   $ (8   $ —       $ (1,056

Other Comprehensive Income (Loss) before reclassification

     870       2       (1,036     (164

Amounts reclassified from AOCI to Earnings

     —         —         1,048       1,048  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other Comprehensive Income

     870       2       12       884  
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance at January 31, 2018

   $ (178   $ (6   $ 12     $ (172
  

 

 

   

 

 

   

 

 

   

 

 

 

The amounts presented above in other comprehensive loss are net of taxes except for translation adjustments associated with our German and Danish subsidiaries

v3.8.0.1
Shareholders' Equity
12 Months Ended
Jan. 31, 2018
Equity [Abstract]  
Shareholders' Equity

Note 12—Shareholders’ Equity

During fiscal 2018, 2017 and 2016, certain of the Company’s employees delivered a total of 26,561, 51,531 and 29,939 shares, respectively, of the Company’s common stock to satisfy the exercise price and related taxes for stock options exercised and restricted stock vesting. The shares delivered were valued at a total of $0.4 million, $0.8 million and $0.4 million, respectively, and are included in treasury stock in the accompanying consolidated balance sheets at January 31, 2018, 2017 and 2016. These transactions did not impact the number of shares authorized for repurchase under the Company’s current repurchase program.

On May 1, 2017, the Company entered into a stock repurchase agreement to repurchase 826,305 shares of the Company’s common stock held by a trust established by Albert W. Ondis at a per share price of $13.60, for an aggregate repurchase price of $11.2 million. This stock repurchase was consummated on May 2, 2017 and was funded using existing cash on hand. Following this stock repurchase, the Ondis trust owns 36,000 shares of the Company’s common stock.

April L. Ondis, a director of the Company, is a beneficiary of the trust. The stock repurchase was authorized and approved by the Company’s Audit Committee as a related party transaction. Prior to entering into the agreement, the Company obtained an opinion from an independent investment banking firm that the consideration to be paid by the Company to the trust pursuant to the stock repurchase agreement would be fair to the public stockholders of the Company, other than the trust, from a financial point of view.

As of January 31, 2018, the Company’s Board of Directors has authorized the purchase of up to an additional 390,000 shares of the Company’s common stock on the open market or in privately negotiated transactions.

v3.8.0.1
Share-Based Compensation
12 Months Ended
Jan. 31, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Share-Based Compensation

Note 13—Share-Based Compensation

The Company maintains the following share-based compensation plans:

Stock Plans:

We have one equity incentive plan pursuant to which we grant equity awards – the 2015 Equity Incentive Plan (the “2015 Plan”). Under this plan, the Company may grant incentive stock options, non-qualified stock options, stock appreciation rights, time or performance-based restricted stock units (RSUs), restricted stock awards (RSAs), and other stock-based awards to executives, key employees, directors and other eligible individuals. The 2015 Plan will expire in May 2025. Options granted to employees under the plan vest over four years and expire after ten years. The exercise price of each stock option is established at the discretion of the Compensation Committee; however, all options granted under the 2015 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. The 2015 Plan authorizes the issuance of up to 500,000 shares (subject to adjustment for stock dividends and stock splits), and at January 31, 2018, 15,709 shares were available for grant under the 2015 Plan. Subsequent to January 31, 2018 un-earned performance-based shares under the Management Long Term Incentive Plan and certain other awards were forfeited, which increased the number of shares available for grant to 100,463. In addition, as of January 31, 2018, 3,290 unvested shares of restricted stock granted and options to purchase an aggregate of 554,870 shares were outstanding under our 2007 Equity Incentive Plan (the “2007 Plan”). The 2007 Plan expired in May 2017 and no new awards may be issued under that plan, but outstanding awards will continue to be governed by it.

Under the 2015 Plan, each non-employee director receives an automatic annual grant of ten-year options to purchase 5,000 shares of stock upon the adjournment of each annual shareholders meeting. Each such option is exercisable at the fair market value of the Company’s common stock as of the grant date, and vests immediately prior to the next annual shareholders’ meeting. Accordingly, on May 17, 2017, 30,000 options were issued to the non-employee directors.

The Company has a Non-Employee Director Annual Compensation Program (the “Program”) under which each non-employee director receives an automatic grant of RSAs on the first business day of each fiscal quarter. Under the Program, the number of whole shares to be granted each quarter is equal to 25% of the number calculated by dividing the director compensation amount by the fair market value of the Company’s stock on such day. The director annual compensation amount was $55,000 in fiscal year 2017, is $65,000 in fiscal year 2018 and will be $75,000 in fiscal year 2019. In addition, the Chairman of the Board receives RSAs with an aggregate value of $6,000, and the Chairs of the Audit and Compensation Committees each receive RSAs with an aggregate value of $4,000, also issued in quarterly installments and calculated in the same manner as the directors’ RSA grants. RSAs granted prior to March 30, 2017 become fully vested on the first anniversary of the date of grant. RSAs granted subsequent to March 30, 2017 become vested three months after the date of grant. A total of 28,062 and 11,379 shares were awarded to the non-employee directors as compensation under the Program in fiscal 2018 and 2017, respectively.

In April 2013 (fiscal year 2014), the Company granted options and RSUs to officers (“2014 RSUs”). The 2014 RSUs vested as follows: twenty-five percent vested on the third anniversary of the grant date, fifty percent vested upon the Company achieving its cumulative budgeted net revenue target for fiscal years 2014 through 2016 (the “Measurement Period”), and twenty-five percent vested upon the Company achieving a target average annual ORONA (operating income return on net assets as calculated under the Domestic Management Bonus Plan) for the Measurement Period. The grantee may not sell, transfer or otherwise dispose of more than fifty percent of the common stock issued upon vesting of the 2014 RSUs until the first anniversary of the vesting date. In April 2016, 9,300 of the 2014 RSUs vested, as the Company achieved the targeted average annual ORONA, as defined in the plan, for the Measurement Period and another 9,300 vested as a result of the third year anniversary date of the grant. Additionally, on February 1, 2014, the Company accelerated the vesting of 4,166 of the 2014 RSUs held by Everett Pizzuti in connection with his retirement.

In March 2015 (fiscal year 2016), the Company granted 50,000 options and 537 RSAs to its Chief Executive Officer pursuant to the CEO Equity Incentive Agreement, and 35,000 options to other key employees.

 

In May 2015 (fiscal year 2016), the Company granted an aggregate of 80,000 time-based and 155,000 performance-based RSUs (“2016 RSUs”) to certain officers of the Company. The time-based 2016 RSUs vest in four equal annual installments commencing on the first anniversary of the grant date. The performance-based 2016 RSUs vest over three years based upon the increase in revenue, if any, achieved each fiscal year relative to a three-year revenue increase goal. Performance-based 2016 RSUs that are earned based on organic revenue growth are fully vested when earned, while those earned based on revenue growth via acquisitions vest annually over a three-year period following the fiscal year in which the revenue growth occurs. Any performance-based 2016 RSUs that have not been earned at the end of the three-year performance period will be forfeited. The expense for such shares is recognized in the fiscal year in which the results are achieved, however, the shares are not fully vested until approved by the Compensation Committee in the first quarter of the following fiscal year. Based upon revenue in fiscal 2018, 2017 and 2016, 33,638, 9,025 and 15,810 shares of the performance based RSUs were earned in the first quarter of fiscal 2019, 2018 and 2017, respectively.

In March 2016 (fiscal year 2017), the Company granted 50,000 options and 4,030 RSAs to its Chief Executive Officer pursuant to an Equity Incentive Award Agreement dated as of November 24, 2014 (the “CEO Equity Incentive Agreement”).

In May 2016 (fiscal year 2017) the Company granted 37,000 options to certain key employees. On August 1, 2016 (fiscal year 2017) the Company granted 5,000 options to its Chief Financial Officer.

In March 2017 (fiscal year 2018), the Company granted 50,000 options to the Chief Executive Officer pursuant to the CEO Equity Incentive Agreement. In February and April 2017 the Company granted 52,189 options to certain other key employees. In December 2017, upon election to the Board, the Company granted 5,000 non-qualified options and 675 RSUs to a Board member. In January 2018, the Company granted 50,000 non-qualified options and 15,000 RSUs to the newly appointed Chief Financial Officer.

Share-Based Compensation:

Share-based compensation expense has been recognized as follows:

 

     Years Ended January 31  
             2018                      2017                      2016          
(In thousands)         

Stock Options

   $ 437      $ 321      $ 286  

Restricted Stock Awards and Restricted Stock Units

     1,134        685        912  

Employee Stock Purchase Plan

     12        13        11  
  

 

 

    

 

 

    

 

 

 

Total

   $ 1,583      $ 1,019      $ 1,209  
  

 

 

    

 

 

    

 

 

 

 

Stock Options:

Aggregated information regarding stock options granted under the plans is summarized below:

 

     Number
of Shares
    Weighted-
Average
Exercise
Price Per
Share
 

Options Outstanding, January 31, 2015

     656,011     $ 10.01  

Options Granted

     115,000       13.95  

Options Exercised

     (93,344     7.95  

Options Forfeited

     (5,550     12.75  

Options Cancelled

     (14,181     8.82  
  

 

 

   

 

 

 

Options Outstanding, January 31, 2016

     657,936     $ 11.00  

Options Granted

     122,000       14.82  

Options Exercised

     (87,107     8.73  

Options Forfeited

     (4,250     13.91  

Options Cancelled

     (3,123     8.95  
  

 

 

   

 

 

 

Options Outstanding, January 31, 2017

     685,456     $ 11.96  

Options Granted

     187,189       13.57  

Options Exercised

     (84,025     10.08  

Options Forfeited

     (18,750     14.49  

Options Cancelled

     (24,600     11.76  
  

 

 

   

 

 

 

Options Outstanding, January 31, 2018

     745,270     $ 12.52  
  

 

 

   

 

 

 

Set forth below is a summary of options outstanding at January 31, 2018:

 

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

     154,656      $ 7.82        2.90        154,656      $ 7.82        2.90  

$10.01-15.00

     540,614      $ 13.64        7.68        261,575      $ 13.49        6.66  

$15.01-20.00

     50,000      $ 15.01        8.12        12,500      $ 15.01        8.12  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     745,270      $ 12.52        6.72        428,731      $ 11.49        5.35  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

The fair value of each stock option granted was estimated on the grant date using the Black-Scholes option-pricing model with the following weighted-average assumptions:

 

     Years Ended January 31  
             2018                     2017                     2016          

Risk-Free Interest Rate

     1.9     1.4     1.6

Expected Life (years)

     9       5       5  

Expected Volatility

     39.0     28.3     22.7

Expected Dividend Yield

     2.0     1.9     2.0

The weighted-average estimated fair value of options granted during fiscal 2018, 2017 and 2016 was $4.79, $3.22 and $2.43, respectively. As of January 31, 2018, there was $0.9 million of unrecognized compensation expense related to the unvested stock options granted under the plans. This expense is expected to be recognized over a weighted-average period of 2.7 years.

As of January 31, 2018, the aggregate intrinsic value (the aggregate difference between the closing stock price of the Company’s common stock on January 31, 2018, and the exercise price of the outstanding options) that would have been received by the option holders if all options had been exercised was $1.0 million for all exercisable options and $1.0 million for all options outstanding. The total aggregate intrinsic value of options exercised during 2018, 2017 and 2016 was $0.4 million, $0.6 million, and $0.6 million, respectively

Restricted Stock Units (RSUs) and Restricted Stock Awards (RSAs):

Aggregated information regarding RSUs and RSAs granted under the Plan is summarized below:

 

     RSAs & RSUs      Weighted-Average
Grant Date Fair Value
 

Outstanding at January 31, 2015

     72,245      $ 9.70  

Granted

     246,335        14.05  

Vested

     (22,692      14.02  

Forfeited

     (2,800      10.07  
  

 

 

    

 

 

 

Outstanding at January 31, 2016

     293,088      $ 13.02  

Granted

     24,839        14.89  

Vested

     (75,133      12.05  

Forfeited

     (28,926      11.49  
  

 

 

    

 

 

 

Outstanding at January 31, 2017

     213,868      $ 14.08  

Granted

     43,737        13.78  

Vested

     (71,171      14.12  

Forfeited

     (9,087      14.05  
  

 

 

    

 

 

 

Outstanding at January 31, 2018

     177,347      $ 13.99  
  

 

 

    

 

 

 

As of January 31, 2018, there was $0.6 million of unrecognized compensation expense related to unvested RSUs and RSAs. This expense is expected to be recognized over a weighted average period of 1.08 years.

Employee Stock Purchase Plan (ESPP):

AstroNova’s ESPP allows eligible employees to purchase shares of common stock at a 15% discount from fair market value on the date of purchase. A total of 247,500 shares were initially reserved for issuance under this plan. Summarized plan activity is as follows:

 

     Years Ended January 31  
         2018              2017              2016      

Shares Reserved, Beginning

     45,224        51,600        57,005  

Shares Purchased

     (6,017      (6,376      (5,405
  

 

 

    

 

 

    

 

 

 

Shares Reserved, Ending

     39,207        45,224        51,600  
  

 

 

    

 

 

    

 

 

 
v3.8.0.1
Income Taxes
12 Months Ended
Jan. 31, 2018
Income Tax Disclosure [Abstract]  
Income Taxes

Note 14—Income Taxes

The components of income before income taxes are as follows:

 

     January 31  
     2018      2017      2016  
(In thousands)                     

Domestic

   $ 2,110      $ 4,026      $ 5,982  

Foreign

     3,047        2,579        927  
  

 

 

    

 

 

    

 

 

 
   $ 5,157      $ 6,605      $ 6,909  
  

 

 

    

 

 

    

 

 

 

 

The components of the provision for income taxes are as follows:

 

     January 31  
     2018     2017     2016  
(In thousands)                   

Current:

      

Federal

   $ 592     $ 1,269     $ 1,930  

State

     251       209       470  

Foreign

     284       725       276  
  

 

 

   

 

 

   

 

 

 
     1,127       2,203       2,676  
  

 

 

   

 

 

   

 

 

 

Deferred:

      

Federal

   $ 903     $ 150     $ (402

State

     (25     37       126  

Foreign

     (134     (13     (16
  

 

 

   

 

 

   

 

 

 
     744       174       (292
  

 

 

   

 

 

   

 

 

 
   $ 1,871     $ 2,377     $ 2,384  
  

 

 

   

 

 

   

 

 

 

On December 22, 2017, the President signed the Tax Cuts and Jobs Act (“Tax Act”). The Tax Act, among other things, lowered the U.S. corporate income tax rate from 35% to 21% effective January 1, 2018. Consequently, we wrote down our net deferred tax assets as of January 31, 2018 by $1.0 million to reflect the estimated impact of the Tax Act. Accordingly, we recorded a corresponding provisional net one-time non-cash charge of $1.0 million, related to re-measurement of certain net deferred tax assets using the lower U.S. corporate income tax rate. The Company was capable of reasonably estimating the impact of the reduction to the U.S. Corporate tax rate on the deferred tax balances, however, the estimate may be affected by other aspects of the Tax Act.

The Tax Act taxes certain unrepatriated earnings and profits (E&P) of our foreign subsidiaries. In order to determine the Transition Tax, we must determine, along with other information, the amount of our accumulated post-1986 E&P for our foreign subsidiaries, as well as the non U.S. income tax paid by those subsidiaries on such E&P. We were capable of reasonably estimating the one-time deemed repatriation tax and recorded a provisional expense of $0.1 million.

While we have substantially completed our provisional analysis of the income tax effects of the Tax Act and recorded a reasonable estimate of such effects, the net one-time charge related to the Tax Act may differ, possibly materially, due to, among other things, further refinement of our calculations, changes in interpretations and assumptions that we have made, additional guidance that may be issued by the U.S. Government, and actions and related accounting policy decisions we may take as a result of the Tax Act. We will complete our analysis over a one-year measurement period ending December 22, 2018, and any adjustments during this measurement period will be included in net earnings from continuing operations as an adjustment to income tax expense in the reporting period when such adjustments are determined.

The Company’s effective tax rate for 2018 was 36.3% compared to 36.0% in 2017 and 34.5% in 2016. The increase in 2018 from 2017 is primarily related to provisional Tax Act tax expenses related to the remeasurement of U.S. deferred tax assets and liabilities and the Transition Tax, substantially offset by increased R&D credits resulting from a completed study, a decrease in non-deductible transaction costs, the non-taxable TrojanLabel earn out liability adjustment in TrojanLabel ApS, and a decrease in unrecognized tax benefits. The increase in 2017 from 2016 is primarily related to non-deductible transaction costs and increased unrecognized tax benefits. The provision for income taxes differs from the amount computed by applying the United States federal statutory income tax rate of 32.9% (34% for FY16 and FY17) to income before income taxes. The reasons for this difference were due to the following:

 

     January 31  
     2018     2017     2016  
(In thousands)                   

Income Tax Provision at Statutory Rate

   $ 1,697     $ 2,246     $ 2,349  

U.S Corporate Rate Change

     1,010       —         —    

State Taxes, Net of Federal Tax Effect

     149       162       277  

Transition Tax on Repatriated Earnings

     104       —         —    

Capitalized Transaction Costs

     —         179       —    

Unrecognized State Tax Benefits

     (20     165       (67

Domestic Production Deduction

     (47     (103     (134

Return to Provision Adjustment

     (122     (75     —    

TrojanLabel Earn Out Liability Adjustment

     (316     —         —    

R&D Credits

     (537     (168     (176

Other

     (47     (29     135  
  

 

 

   

 

 

   

 

 

 
   $ 1,871     $ 2,377     $ 2,384  
  

 

 

   

 

 

   

 

 

 

The components of deferred income tax expense arise from various temporary differences and relate to items included in the statement of income. The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and liabilities are as follows:

 

     January 31  
     2018     2017  
(In thousands)             

Deferred Tax Assets:

    

Inventory

   $ 1,648     $ 2,151  

Honeywell Royalty Liability

     3,382       —    

State R&D Credits

     1,161       679  

Share-Based Compensation

     399       546  

Compensation Accrual

     194       281  

Warranty Reserve

     139       192  

Unrecognized State Tax Benefits

     138       241  

Deferred Service Contract Revenue

     84       176  

Foreign Tax Credit

     —         508  

Other

     176       348  
  

 

 

   

 

 

 
     7,321       5,122  

Deferred Tax Liabilities:

    

Intangibles

     3,679       —    

Accumulated Tax Depreciation in Excess of Book Depreciation

     1,028       1,380  

Other

     322       263  
  

 

 

   

 

 

 
     5,029       1,643  
  

 

 

   

 

 

 

Subtotal

     2,292       3,479  

Valuation Allowance

     (1,161     (679
  

 

 

   

 

 

 

Net Deferred Tax Assets

   $ 1,131     $ 2,800  
  

 

 

   

 

 

 

The valuation allowance of $1.2 million at January 31, 2018 and $0.7 million at January 31, 2017 related to state research and development tax credit carryforwards which are expected to expire unused. The valuation allowance increased $0.5 million in 2018 and $0.1 million in 2017 due to the decrease in the Federal tax effect of state taxes from the Federal rate reduction provided for in the Tax Act and the generation of research and development credits in excess of the Company’s ability to currently utilize credits, and the decision to fully reserve for the state tax benefits of all R&D tax credit carryforwards, net of the federal benefit. The Company has reached this conclusion after considering the availability of taxable income in prior carryback years, tax planning strategies, and the likelihood of future state taxable income and credits exclusive of reversing temporary differences and carryforwards in the relevant state jurisdiction.

We believe that it is reasonably possible that some unrecognized tax benefits, accrued interest and penalties could decrease income tax expense in the next year due to either the review of previously filed tax returns or the expiration of certain statutes of limitation. The changes in the balances of unrecognized tax benefits, excluding interest and penalties are as follows:

 

     2018     2017     2016  
(In thousands)                   

Balance at February 1

   $ 708     $ 591     $ 707  

Increases in prior period tax positions

     —         75       —    

Increases in current period tax positions

     55       133       49  

Reductions related to lapse of statute of limitations

     (98     (91     (165
  

 

 

   

 

 

   

 

 

 

Balance at January 31

   $ 665     $ 708     $ 591  
  

 

 

   

 

 

   

 

 

 

If the $0.7 million balance as of January 31, 2018 is recognized, $0.6 million would decrease the effective tax rate in the period in which each of the benefits is recognized and the remainder would be offset by a reversal of deferred tax assets.

During fiscal 2018, 2017 and 2016, the Company recognized an expense of $24,000; an expense of $52,000 and a benefit of $87,000, respectively, related to a change in interest and penalties, which are included as a component of income tax expense in the accompanying statements of income. The Company has accrued potential interest and penalties of $0.4 million and $0.4 million at the end of January 31, 2018 and 2017, respectively.

The Company and its subsidiaries file income tax returns in U.S. federal jurisdictions, various state jurisdictions, and various foreign jurisdictions. The Company is no longer subject to U.S. federal tax examinations for fiscal years ended prior to January 2014.

U.S. income taxes have been provided on deemed repatriated earnings of $5.2 million related to our non-U.S. companies as of January 31, 2018, as a result of the enactment of the Tax Act. The additional net transition tax of $104,000 on the deemed repatriated earnings was recorded as a provisional estimate for fiscal 2018. Before the Tax Act, U.S. income taxes and foreign withholding taxes have not been provided on earnings of $5.2 million that have not been distributed by our non-U.S. companies as of January 31, 2018. Our intention before enactment of the Tax Act was to permanently reinvest these earnings, thereby indefinitely postponing their remittance to the U.S. We are currently evaluating our intention concerning repatriation of foreign earnings in light of the Tax Act.

v3.8.0.1
Nature of Operations, Segment Reporting and Geographical Information
12 Months Ended
Jan. 31, 2018
Segment Reporting [Abstract]  
Nature of Operations, Segment Reporting and Geographical Information

Note 15—Nature of Operations, Segment Reporting and Geographical Information

The Company’s operations consist of the design, development, manufacture and sale of specialty printers and data acquisition and analysis systems, including both hardware and software and related consumable supplies. The Company organizes and manages its business as a portfolio of products and services designed around a common theme of data acquisition and information output. The Company has two reporting segments consistent with its revenue product groups: Product Identification and Test & Measurement (T&M).

The Product Identification segment produces an array of high-technology digital color and monochrome label printers and mini presses, labeling software and consumables for a variety of commercial industries worldwide. AstroNova’s T&M segment produces data acquisition systems used worldwide for a variety of recording, monitoring and troubleshooting applications for many industries including aerospace, automotive, defense, rail, energy, industrial and general manufacturing.

 

Business is conducted in the United States and through foreign affiliates in Canada, Europe, China, Southeast Asia and Mexico. Manufacturing activities are primarily conducted in the United States. Revenue and service activities outside the United States are conducted through wholly-owned entities and, to a lesser extent, through authorized distributors and agents. Transfer prices are intended to produce gross profit margins as would be associated with an arms-length transaction.

On September 28, 2017, AstroNova entered into the Honeywell Agreement to acquire the exclusive perpetual world-wide license to manufacture Honeywell’s narrow format flight deck printers for two aircraft families. Revenue from the sales of these printers is reported as part of our Product Identification segment beginning in the third quarter of fiscal 2018. Refer to Note 2, “Acquisitions,” for further details.

On February 1, 2017, AstroNova completed its acquisition of TrojanLabel. TrojanLabel is reported as part of our Product Identification segment beginning with the first quarter of fiscal 2018. Refer to Note 2, “Acquisitions,” for further details.

On June 19, 2015, AstroNova completed the asset purchase of the aerospace printer product line from RITEC. AstroNova’s aerospace printer product line is part of the T&M product group and is reported as part of the T&M segment. The Company began shipment of the RITEC products in the third quarter of fiscal 2016. Refer to Note 2, “Acquisitions,” for further details.

The accounting policies of the reporting segments are the same as those described in the summary of significant accounting policies herein. The Company evaluates segment performance based on the segment profit before corporate and financial administration expenses.

Summarized below are the Revenue and Segment Operating Profit (both in dollars and as a percentage of Revenue) for each reporting segment:

 

($ in thousands)   Revenue     Segment Operating Profit     Segment Operating Profit as a
% of Revenue
 
    2018     2017     2016         2018             2017             2016           2018         2017         2016    

Product Identification

  $ 81,681     $ 69,862     $ 67,127     $ 10,561     $ 9,821     $ 9,300       12.9     14.1     13.9

T&M

    31,720       28,586       27,531       3,754       4,399       3,664       11.8     15.4     13.3
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 113,401     $ 98,448     $ 94,658       14,315       14,220       12,964       12.6     14.4     13.7
 

 

 

   

 

 

   

 

 

         

 

 

   

 

 

   

 

 

 

Corporate Expenses

          8,903       7,939       7,030        
       

 

 

   

 

 

   

 

 

       

Operating Income

          5,412       6,281       5,934        

Other Income (Expense), Net

          (255)       324       975        
       

 

 

   

 

 

   

 

 

       

Income Before Income Taxes

          5,157       6,605       6,909        

Income Tax Provision

          1,871       2,377       2,384        
       

 

 

   

 

 

   

 

 

       

Net Income

        $ 3,286     $ 4,228     $ 4,525        
       

 

 

   

 

 

   

 

 

       

No customer accounted for greater than 10% of net revenue in fiscal 2018, 2017 and 2016.

Other information by segment is presented below:

 

(In thousands)    Assets  
     2018      2017  

Product Identification

   $ 49,842      $ 30,624  

T&M

     60,579        28,129  

Corporate*

     11,903        24,912  
  

 

 

    

 

 

 

Total

   $ 122,313      $ 83,665  
  

 

 

    

 

 

 

 

* Corporate assets consist principally of cash, cash equivalents and securities available for sale.

 

(In thousands)    Depreciation and
Amortization
     Capital Expenditures  
     2018      2017      2016      2018      2017      2016  

Product Identification

   $ 1,536      $ 885      $ 690      $ 1,497      $ 767      $ 2,284  

T&M

     2,458        1,546        1,375        707        471        777  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 3,994      $ 2,431      $ 2,065      $ 2,204      $ 1,238      $ 3,061  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Geographical Data

Presented below is selected financial information by geographic area:

 

(In thousands)    Revenue      Long-Lived Assets*  
     2018      2017      2016      2018      2017  

United States

   $ 69,796      $ 69,850      $ 68,316      $ 39,432      $ 14,205  

Europe

     29,947        18,848        16,830        3,808        168  

Canada

     5,373        5,008        4,487        145        172  

Asia

     3,808        1,664        1,741        —          —    

Central and South America

     3,402        3,053        2,436        —          —    

Other

     1,075        25        848        —          —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 113,401      $ 98,448      $ 94,658      $ 43,385      $ 14,545  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

* Long-lived assets excludes goodwill assigned to the T&M segment of $4.5 million at both January 31, 2018 and 2017 and $8.5 million assigned to the PI segment at January 31, 2018.
v3.8.0.1
Employee Benefit Plans
12 Months Ended
Jan. 31, 2018
Postemployment Benefits [Abstract]  
Employee Benefit Plans

Note 16—Employee Benefit Plans

Employee Stock Ownership Plan (ESOP):

AstroNova had an ESOP which provided retirement benefits to all eligible employees. Annual contributions of either cash or stock in amounts determined by the Company’s Board of Directors were invested by the ESOP’s Trustees in shares of common stock of AstroNova. The Company did not make contributions to the ESOP in fiscal years 2017 and 2016. On January 23, 2017, the Compensation Committee of the Board of Directors voted to terminate the ESOP. AstroNova is in the process of allocating all shares owned by the ESOP to the participants; once completed, the ESOP will be terminated.

Profit-Sharing Plan:

AstroNova sponsors a Profit-Sharing Plan (the “Plan”) which provides retirement benefits to all eligible domestic employees. The Plan allows participants to defer a portion of their cash compensation and contribute such deferral to the Plan through payroll deductions. The Company makes matching contributions up to specified levels. The deferrals are made within the limits prescribed by Section 401(k) of the Internal Revenue Code.

All contributions are deposited into trust funds. It is the policy of the Company to fund any contributions accrued. The Company’s annual contribution amounts are determined by the Board of Directors. Contributions paid or accrued amounted to $0.5 million in both fiscal 2018 and 2017 and $0.3 million in 2016.

v3.8.0.1
Product Warranty Liability
12 Months Ended
Jan. 31, 2018
Guarantees and Product Warranties [Abstract]  
Product Warranty Liability

Note 17—Product Warranty Liability

AstroNova offers a manufacturer’s warranty for the majority of its hardware products. The specific terms and conditions of warranty vary depending upon the products sold and country in which the Company does business. For products sold in the United States, the Company provides a basic limited warranty, including parts and labor. The Company estimates the warranty costs based on historical claims experience and records a liability in the amount of such estimates at the time product revenue is recognized. The Company regularly assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary. Activity in the product warranty liability, which is included in other accrued expenses in the accompanying consolidated balance sheet, is as follows:

 

     January 31  
     2018     2017     2016  
(In thousands)                   

Balance, beginning of the year

   $ 515     $ 400     $ 375  

Provision for Warranty Expense

     1,294       971       887  

Cost of Warranty Repairs

     (1,234     (856     (862
  

 

 

   

 

 

   

 

 

 

Balance, end of the year

   $ 575     $ 515     $ 400  
  

 

 

   

 

 

   

 

 

 
v3.8.0.1
Concentration of Risk
12 Months Ended
Jan. 31, 2018
Risks and Uncertainties [Abstract]  
Concentration of Risk

Note 18—Concentration of Risk

Credit is generally extended on an uncollateralized basis to almost all customers after review of credit worthiness. Concentration of credit and geographic risk with respect to accounts receivable is limited due to the large number and general dispersion of accounts which constitute the Company’s customer base. The Company periodically performs on-going credit evaluations of its customers. The Company has not historically experienced significant credit losses on collection of its accounts receivable.

Excess cash is invested principally in investment grade government and state municipal securities. The Company has established guidelines relative to diversification and maturities that maintain safety of principal, liquidity and yield. These guidelines are periodically reviewed and modified to reflect changes in market conditions. The Company has not historically experienced any significant losses on its cash equivalents or investments.

During the years ended January 31, 2018, 2017 and 2016, one vendor accounted for 31.3%, 33.2% and 23.7% of purchases, and 26.6%, 42.7% and 16.7% of accounts payable, respectively.

v3.8.0.1
Commitments and Contingencies
12 Months Ended
Jan. 31, 2018
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

Note 19—Commitments and Contingencies

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

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

v3.8.0.1
Fair Value Measurements
12 Months Ended
Jan. 31, 2018
Fair Value Disclosures [Abstract]  
Fair Value Measurements

Note 20—Fair Value Measurements

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

Fair value is applied to our financial assets and liabilities including money market funds, available for sale securities, derivative instruments and a contingent consideration liability relating to an earnout payment on future TrojanLabel operating results.

 

The following tables provide a summary of the financial assets and liabilities that are measured at fair value:

 

Assets measured at fair value:

   Fair value measurement at
January 31, 2018
     Fair value measurement at
January 31, 2017
 
(in thousands)    Level 1      Level 2      Level 3      Total      Level 1      Level 2      Level 3      Total  

Money Market Funds (included in Cash and Cash Equivalents)

   $ 1,798      $ —        $ —        $ 1,798      $ 2      $ —        $ —        $ 2  

State and Municipal Obligations (included in Securities Available for Sale)

     —          1,511        —          1,511        —          6,723        —          6,723  

Swap Contract (include in Other Assets)

     —          101        —          101        —          —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total assets

   $ 1,798      $ 1,612      $ —        $ 3,410      $ 2      $ 6,723      $ —        $ 6,725  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities measured at fair value:

   Fair value measurement at
January 31, 2018
     Fair value measurement at
January 31, 2017
 
(in thousands)    Level 1      Level 2      Level 3      Total      Level 1      Level 2      Level 3      Total  

Swap Contract (included in Other Liabilities)

   $ —        $ 1,513      $ —        $ 1,513      $ —        $ —        $ —        $ —    

Earnout Liability (included in Other Liabilities)

     —          —          15        15        —          —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total liabilities

   $ —        $ 1,513      $ 15      $ 1,528      $