ASTRONOVA, INC., 10-K filed on 4/13/2021
Annual Report
v3.21.1
Cover Page - USD ($)
12 Months Ended
Jan. 31, 2021
Apr. 09, 2021
Jul. 31, 2020
Cover [Abstract]      
Document Type 10-K    
Amendment Flag false    
Document Period End Date Jan. 31, 2021    
Document Fiscal Year Focus 2021    
Document Fiscal Period Focus FY    
Entity Registrant Name AstroNova, Inc.    
Entity Central Index Key 0000008146    
Current Fiscal Year End Date --01-31    
Entity Voluntary Filers No    
Entity Current Reporting Status Yes    
Entity Interactive Data Current Yes    
Entity Well-known Seasoned Issuer No    
Entity Filer Category Non-accelerated Filer    
Trading Symbol ALOT    
Entity Shell Company false    
Entity Small Business true    
Entity Emerging Growth Company false    
Title of 12(b) Security Common Stock    
Security Exchange Name NASDAQ    
Entity Incorporation, State or Country Code RI    
Entity File Number 0-13200    
Document Annual Report true    
Document Transition Report false    
Entity Tax Identification Number 05-0318215    
Entity Address, Address Line One 600 East Greenwich Avenue    
Entity Address, City or Town West Warwick    
Entity Address, Postal Zip Code 02893    
Entity Address, State or Province RI    
City Area Code 401    
Local Phone Number 828-4000    
Entity Public Float     $ 47,045,000
Entity Common Stock, Shares Outstanding   7,212,977  
ICFR Auditor Attestation Flag false    
v3.21.1
Consolidated Balance Sheets - USD ($)
$ in Thousands
Jan. 31, 2021
Jan. 31, 2020
CURRENT ASSETS    
Cash and Cash Equivalents $ 11,439 $ 4,249
Accounts Receivable, net of reserves of $1,054 in 2021 and $856 in 2020 17,415 19,784
Inventories 30,060 33,925
Prepaid Expenses and Other Current Assets 1,807 2,193
Total Current Assets 60,721 60,151
Property, Plant and Equipment, net 12,011 11,268
Identifiable Intangibles, net 21,502 25,383
Goodwill 12,806 12,034
Deferred Tax Assets, net 5,941 5,079
Right of Use Asset 1,389 1,661
Other 1,103 1,088
TOTAL ASSETS 115,473 116,664
CURRENT LIABILITIES    
Accounts Payable 5,734 4,409
Accrued Compensation 2,852 2,700
Other Accrued Expenses 3,939 4,711
Revolving Credit Facility   6,500
Current Portion of Long-Term Debt 5,326 5,208
Current Liability—Royalty Obligation 2,000 2,000
Current Liability—Excess Royalty Payment Due 177 773
Income Taxes Payable 655  
Deferred Revenue 285 466
Total Current Liabilities 20,968 26,767
NON CURRENT LIABILITIES    
Long-Term Debt, net of current portion 7,109 7,715
Royalty Obligation, net of current portion 6,161 8,012
Long-Term Debt—PPP Loan 4,422  
Lease Liabilities, net of current portion 1,065 1,279
Income Taxes Payable 681 1,081
Deferred Tax Liabilities 384 435
TOTAL LIABILITIES 40,790 45,289
Commitments and Contingencies (See Note 21)
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 10,425,094 shares in 2021 and 10,343,610 shares in 2020 521 517
Additional Paid-in Capital 58,049 56,130
Retained Earnings 50,085 49,298
Treasury Stock, at Cost, 3,297,058 shares in 2021 and 3,281,701 shares in 2020 (33,588) (33,477)
Accumulated Other Comprehensive Loss, net of tax (384) (1,093)
TOTAL SHAREHOLDERS' EQUITY 74,683 71,375
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 115,473 $ 116,664
v3.21.1
Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Thousands
Jan. 31, 2021
Jan. 31, 2020
Statement of Financial Position [Abstract]    
Accounts Receivable, Reserves $ 1,054 $ 856
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 10,425,094 10,343,610
Treasury Stock, Shares 3,297,058 3,281,701
v3.21.1
Consolidated Statements of Income - USD ($)
shares in Thousands, $ in Thousands
12 Months Ended
Jan. 31, 2021
Jan. 31, 2020
Jan. 31, 2019
Income Statement [Abstract]      
Revenue $ 116,033 $ 133,446 $ 136,657
Cost of Revenue 74,673 84,688 82,658
Gross Profit 41,360 48,758 53,999
Costs and Expenses:      
Selling and Marketing 23,301 26,884 26,343
Research and Development 6,206 8,084 7,813
General and Administrative 9,420 11,357 11,123
Operating Expenses 38,927 46,325 45,279
Operating Income 2,433 2,433 8,720
Other Expense:      
Interest Income (Expense), net (955) (682) (731)
Gain (Loss) on Foreign Currency Transactions (590) 448 745
Other, Net 111 67 64
Other Expense, net (254) (1,063) (1,412)
Income before Income Taxes 2,179 1,370 7,308
Income Tax Provision (Benefit) 895 (389) 1,578
Net Income $ 1,284 $ 1,759 $ 5,730
Net Income Per Common Share—Basic $ 0.18 $ 0.25 $ 0.83
Net Income Per Common Share—Diluted $ 0.18 $ 0.24 $ 0.81
Weighted Average Number of Common Shares Outstanding—Basic 7,104 7,024 6,881
Dilutive Effect of Common Stock Equivalents 62 214 203
Weighted Average Number of Common Shares Outstanding—Diluted 7,166 7,238 7,084
v3.21.1
Consolidated Statements of Comprehensive Income - USD ($)
$ in Thousands
12 Months Ended
Jan. 31, 2021
Jan. 31, 2020
Jan. 31, 2019
Statement of Comprehensive Income [Abstract]      
Net Income $ 1,284 $ 1,759 $ 5,730
Other Comprehensive Income (Loss), net of taxes and reclassification adjustments:      
Foreign Currency Translation Adjustments 710 (133) (671)
Change in Value of Derivatives Designated as Cash Flow Hedge (239) 122 622
(Gains) Losses from Cash Flow Hedges Reclassified to Income Statement 193 (264) (600)
Cross-Currency Interest Rate Swap Terminations 45    
Realized Gain on Securities Available for Sale Reclassified to Income Statement     3
Other Comprehensive Income (Loss) 709 (275) (646)
Comprehensive Income $ 1,993 $ 1,484 $ 5,084
v3.21.1
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, 2018 $ 63,647 $ 500 $ 50,016 $ 45,700 $ (32,397) $ (172)
Beginning Balance, Shares at Jan. 31, 2018   9,996,120        
Share-Based Compensation 1,886   1,886      
Employee Option Exercises $ 1,310 $ 7 1,669   (366)  
Employee Option Exercises, Shares 150,125 154,992        
Restricted Stock Awards Vested, net $ (233) $ 4 (3)   (234)  
Restricted Stock Awards Vested, net, Shares   67,447        
Reclassification due to adoption of ASU 2018-02 14     14    
Common Stock—cash dividend (1,933)     (1,933)    
Net Income 5,730     5,730    
Other Comprehensive Income (Loss) (646)         (646)
Ending Balance at Jan. 31, 2019 69,775 $ 511 53,568 49,511 (32,997) (818)
Ending Balance, Shares at Jan. 31, 2019   10,218,559        
Share-Based Compensation 1,775   1,775      
Employee Option Exercises $ 782 $ 3 790   (11)  
Employee Option Exercises, Shares 57,175 65,121        
Restricted Stock Awards Vested, net $ (469) $ 3 (3)   (469)  
Restricted Stock Awards Vested, net, Shares   59,930        
Common Stock—cash dividend (1,972)     (1,972)    
Net Income 1,759     1,759    
Other Comprehensive Income (Loss) (275)         (275)
Ending Balance at Jan. 31, 2020 71,375 $ 517 56,130 49,298 (33,477) (1,093)
Ending Balance, Shares at Jan. 31, 2020   10,343,610        
Share-Based Compensation 1,819   1,819      
Employee Option Exercises $ 104 $ 1 103      
Employee Option Exercises, Shares 1,200 16,487        
Restricted Stock Awards Vested, net $ (111) $ 3 (3)   (111)  
Restricted Stock Awards Vested, net, Shares   64,997        
Common Stock—cash dividend (497)     (497)    
Net Income 1,284     1,284    
Other Comprehensive Income (Loss) 709         709
Ending Balance at Jan. 31, 2021 $ 74,683 $ 521 $ 58,049 $ 50,085 $ (33,588) $ (384)
Ending Balance, Shares at Jan. 31, 2021   10,425,094        
v3.21.1
Consolidated Statements of Changes in Shareholders' Equity (Parenthetical) - $ / shares
12 Months Ended
Jan. 31, 2021
Jan. 31, 2020
Jan. 31, 2019
Statement of Stockholders' Equity [Abstract]      
Cash dividend per share $ 0.28 $ 0.28 $ 0.07
v3.21.1
Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
12 Months Ended
Jan. 31, 2021
Jan. 31, 2020
Jan. 31, 2019
Cash Flows from Operating Activities:      
Net Income $ 1,284 $ 1,759 $ 5,730
Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities:      
Depreciation and Amortization 5,983 6,284 6,152
Amortization of Debt Issuance Costs 75 49 51
Share-Based Compensation 1,819 1,775 1,886
Deferred Income Tax Provision (Benefit) (1,021) (1,638) (1,638)
Changes in Assets and Liabilities:      
Accounts Receivable 2,702 3,594 (1,493)
Inventories 4,247 (3,938) (2,872)
Accounts Payable and Accrued Expenses (57) (2,732) (2,342)
Income Taxes Payable 1,482 (1,773) (151)
Other (970) (156) (318)
Net Cash Provided by Operating Activities 15,544 3,224 5,005
Cash Flows from Investing Activities:      
Proceeds from Sales/Maturities of Securities Available for Sale     1,511
Cash Paid for Honeywell Asset Purchase and License Agreement     (400)
Additions to Property, Plant and Equipment (2,587) (2,906) (2,645)
Net Cash Used by Investing Activities (2,587) (2,906) (1,534)
Cash Flows from Financing Activities:      
Net Proceeds Employee Stock Option Plans 9 654 1,228
Net Cash Proceeds from Share Purchases under Employee Stock Purchase Plan 95 128 82
Net Cash Used for Payment of Taxes Related to Vested Restricted Stock (111) (469) (233)
Net (Repayments)/Borrowings under Revolving Credit Facility (6,500) 5,000 1,500
Payment of Minimum Guarantee Royalty Obligation (2,000) (1,875) (1,625)
Proceeds from Long-Term Debt – PPP Loan 4,422    
Proceeds from Long-Term Debt Borrowings 15,232    
Payoff of Long-Term Debt (11,732)    
Principal Payments on Long-Term Debt (3,958) (5,208) (5,130)
Payments of Debt Issuance Costs (100)    
Dividends Paid (497) (1,972) (1,933)
Net Cash Used by Financing Activities (5,140) (3,742) (6,111)
Effect of Foreign Exchange Rate Changes on Cash and Cash Equivalents (627) 139 (3)
Net Increase (Decrease) in Cash and Cash Equivalents 7,190 (3,285) (2,643)
Cash and Cash Equivalents, Beginning of Year 4,249 7,534 10,177
Cash and Cash Equivalents, End of Year 11,439 4,249 7,534
Supplemental Information:      
Interest 677 531 636
Income Taxes, Net of Refunds $ 446 2,913 3,472
Schedule of non-cash financing activities:      
Value of Shares Received in Satisfaction of Option Exercise Price   $ 11 $ 366
v3.21.1
Summary of Significant Accounting Policies
12 Months Ended
Jan. 31, 2021
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies
Note 1—Summary of Significant Accounting Policies
Basis of Presentation:
The accompanying financial statements and accompanying notes 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.
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. At January 31, 2021 and 2020, $4.6 million and $3.4 million, respectively, was held in foreign bank accounts.
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 leasehold improvements—10 to 45 years; machinery and equipment—3 to 10 years and computer equipment and software—3 to 10 years).
Revenue Recognition:
We recognize revenue in accordance with Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (“Topic 606”).” The core principle of Topic 606 is to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. Topic 606 defines a five step process to recognize revenue and requires more judgment and estimates within the revenue recognition process than required under previous U.S. GAAP, including identifying contracts with customers, identifying performance obligations in the contract, determining and estimating the amount of any variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation and recognizing revenue when the entity satisfies each performance obligation. 
The vast majority of our revenue is generated from the sale of distinct products. Revenue is measured as the amount of consideration we expect to receive in exchange for such products, which is generally at the contractually stated prices, and is recognized when we satisfy a performance obligation by transferring control of a product to a customer. The transfer of control generally occurs at one point in time, upon shipment, when title and risk of loss pass to the customer. Returns and customer credits are infrequent and are recorded as a reduction to revenue. Sales taxes and value added taxes collected concurrently with revenue generating activities are excluded from revenue.
 
Many of the contracts entered into with customers are commonly comprised of a combination of equipment, supplies, installation and/or training services. We determine performance obligations by assessing whether the products or services are distinct from other elements of the contract. In order to be distinct, the product must perform either on its own or with readily available resources and must be separate within the context of the contract.
Most 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. Hardware and software elements are typically delivered at the same time and are accounted for as a single performance obligation for which revenue is recognized at the point in time when ownership is transferred to the customer.
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. The delivery of installation and training services are not assessed to determine whether they are separate performance obligations, as the amounts are not material to the contract.
Shipping and handling activities that occur after control over a product has transferred to a customer are accounted for as fulfillment activities rather than performance obligations, as allowed under a practical expedient provided by Topic 606. The shipping and handling fees charged to customers are recognized as revenue and the related costs are included in cost of revenue at the point in time when ownership of the product is transferred to the customer.
We may perform service at the request of the customer, generally for the repair and maintenance of products previously sold. These services are short in duration and total less than 10% of revenue for the years ended January 31, 2021 and 2020. Revenue is recognized as services are rendered and accepted by the customer. We also provide service agreements on certain of our Product Identification equipment. Service agreements are purchased separately from the equipment and provide for the right to obtain service and maintenance on the equipment for a period of typically one to two years. Accordingly, revenue on these agreements is recognized over the term of the agreements. The portion of service agreement contracts that are uncompleted at the end of any reporting period are included in deferred revenue.
We generally provide warranties for our products. The standard warranty period is typically 12 months for most hardware products except for airborne printers, which typically have warranties that extend for
3-5
years, consistent with industry practice. Such assurance-type warranties are not deemed to be separate performance obligations from the hardware product and costs associated with providing the warranties are accrued in accordance with ASC 450, “Contingencies,” as we have the ability to ascertain the likelihood of the liability and can reasonably estimate the amount of the liability. Our estimate of costs to service the warranty obligations is based on historical experience and expectations of future conditions. To the extent that our experience in warranty claims or costs associated with servicing those claims differ from the original estimates, revisions to the estimated warranty liability are recorded at that time, with an offsetting adjustment to cost of revenue. On occasion, customers request a warranty period longer than our standard warranty. In those instances, in which extended warranty services are separately quoted to the customer, an additional performance obligation is created, and the associated revenue is deferred and recognized as service revenue ratably over the term of the extended warranty period. The portion of service contracts and extended warranty services agreements that are uncompleted at the end of any reporting period are included in deferred revenue.
We recognize an asset for the incremental direct costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year. Costs related to obtaining sales contracts for our aerospace printer products have been capitalized and are being amortized based on the forecasted number of units sold over the estimated benefit term. We apply the practical expedient to expense costs incurred for costs to obtain a contract when the amortization period would have been less than a year. These costs include sales commissions paid to the internal direct sales team as well as to third-party representatives and distributors. Contractual
agreements with each of these parties outline commission structures and rates to be paid. Generally speaking, the contracts are all individual procurement decisions by the customers and do not include renewal provisions and as such the majority of the contracts have an economic life of significantly less than a year.
Accounts Receivables and Allowance for Doubtful Accounts:
Standard payment terms are typically 30 days after shipment but vary by type and geographic location of our customer. Credit is extended based upon an evaluation of the customer’s financial condition. In circumstances where we are aware of a customer’s inability to meet its financial obligations, an allowance is established. The remainder of the allowance established is based on a variety of factors, including the age of amounts outstanding relative to their contractual due date, historical
write-off
experience and current market assessments. Accounts receivable are stated at their estimated net realizable value.
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. Included in our consolidated statements of income was a net transactional foreign exchange gain of $0.6 million in fiscal 2021, and a net transaction foreign exchange loss of $0.4 million in fiscal 2020 and $0.7 million for fiscal 2019.
Advertising:
We
expense 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 $0.9 million; $1.8 million and $1.9 million in fiscal 2021, 2020 and 2019, 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. There were no impairment charges for our long-lived assets in fiscal years 2021, 2020 or 2019.
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. There were no impairment charges for our intangible assets in fiscal years 2021, 2020 or 2019.
Goodwill:
Goodwill represents the excess of the aggregate purchase price over the fair value of the net assets acquired in a purchase business combination. 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. Additionally, we can elect to forgo the qualitative assessment and perform the quantitative test. 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 a blended income and market approach. The income approach is based on a discounted cash flow model and provides a fair value estimate based upon the reporting unit’s expected long-term operating cash flow performance. The market approach, compares the reporting unit to publicly traded companies and transactions involving similar business, and 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 quantitative analysis of the reporting units as of January 31, 2021 and determined that the fair value was in excess of our carrying value and therefore, no goodwill impairment has occurred. See Note 3, “Goodwill,” for further details.
Leases:
On February 1, 2019 we adopted ASC 842, Leases. This guidance requires a lessee to recognize assets and liabilities on the balance sheet for all leases, with the result being the recognition of a right of use (ROU) asset and a lease liability. The lease liability is equal to the present value of the minimum lease payments for the term of the lease, including any optional renewal periods determined to be reasonably certain to be exercised, using a discount rate determined at lease commencement. This discount rate is the rate implicit in the lease, if known; otherwise, the incremental borrowing rate for the expected lease term is used. Our incremental borrowing rate approximates the rate we would have to pay to borrow on a collateralized basis over a similar term at lease inception. The value of the ROU asset is equal to the initial measurement of the lease liability plus any lease payments made to the lessor at or before the commencement date and any unamortized initial direct costs incurred by the lessee, less any unamortized lease incentives received. Several of our lease contracts include options to extend the lease term and we include the renewal options for these leases in the determination of the ROU asset and lease liability when the likelihood of renewal is determined to be reasonably certain.
We enter into lease contracts for certain of our facilities at various locations worldwide. At inception of a contract, we determine whether the contract is or contains a lease. If we have a right to obtain substantially all of the economic benefits from the use of the identified asset and the right to direct the use of the asset, then the contract contains a lease.
There are two types of leases, operating leases and finance leases. Lease classification is determined at lease commencement. We have made an accounting policy election to apply the short-term exception, which does not require the capitalization of leases with terms of 12 months or less. All of our leases are classified as operating leases. Operating lease expense is recognized on a straight-line basis over the lease term and included in general and administrative expense on the consolidated statement of income. ROU assets are classified in other long-term assets, short-term lease liabilities are classified in other current liabilities, and long-term lease liabilities are classified in other long-term liabilities in the consolidated balance sheet. In the statement of cash flow, payments for operating leases are classified as operating activities.
 
In addition, several of our lease agreements include
non-lease
components for items such as common area maintenance and utilities which are accounted for separately from the lease component.
 
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. Our 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, 2021 and 2020, a valuation allowance was provided for deferred tax assets attributable to certain domestic R&D credit carryforwards. In addition, during fiscal 2021, we provided a valuation allowance for deferred tax assets attributable to foreign tax credit carryforwards which would expire unused.
We account 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.
On December 22, 2017, the 2017 Tax Cuts and Jobs Act (“Tax Act”) was enacted into law and the new legislation contains several key tax provisions that affected us, including a
one-time
mandatory transition tax on accumulated foreign earnings and a reduction of the corporate income tax rate to 21% effective January 1, 2018, among others. We are required to recognize the effect of the tax law changes in the period of enactment, such as determining the transition tax, remeasuring our U.S. deferred tax assets and liabilities as well as reassessing the net realizability of our deferred tax assets and liabilities. In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”), which allows us to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. All accounting under SAB 118 was finalized during the quarter ending January 31, 2019 with no material changes from the provisional amounts previously recorded.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law. The legislation had sweeping effects including various types of economic relief for impacted businesses and industries. One such relief provision was the Paycheck Protection Program, which provided short-term cash flow assistance to finance employee payroll and qualified expenses. On May 6, 2020, we entered into a loan agreement with, and executed a promissory note in favor of Greenwood Credit Union (“Greenwood”) pursuant to which we borrowed $4.4 million (the “PPP Loan”). On December 27, 2020 the Consolidated Appropriations Act, 2021, H.R. 133 was signed into law. The legislation permits the deductibility of expenses to the extent that the payment of such expenses results (or is expected to result) in the forgiveness of a loan (covered loan) guaranteed under the Paycheck Protection Program. We have fully utilized the PPP Loan proceeds for qualifying expenses and, subsequent to year end, have applied for forgiveness of the PPP Loan (including all associated accrued interest) in accordance with the terms of the CARES Act, as amended by the PPP Flexibility Act. Consistent with the legislation, we expect to deduct the full $4.4 million of qualified expenses on our 2020 federal tax return.
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 2021, 2020 and 2019, there were 642,623; 202,187 and 326,275, 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.
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.
Self-Insurance:
We are self-insured for U.S. medical and dental benefits for qualifying employees and maintain stop-loss coverage from a third party which limits our exposure to large claims. We record a liability associated with these benefits that includes an estimate of both claims filed and losses incurred but not yet reported based on historical claims experience. In estimating this accrual, we utilize an independent third-party broker to estimate a range of expected losses, which are based on analyses of historical data. Assumptions are closely monitored and adjusted when warranted by changing circumstances. Our liability for self-insured claims is included within accrued compensation in our consolidated balance sheets and was $0.2 million and $0.6 million, as of January 31, 2021 and 2020.
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 several complex and subjective assumptions including our stock price volatility, employee exercise patterns (expected life of the options), the risk-free interest rate and our 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, we have 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 our 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.
Cash flow from 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.
Share-based compensation becomes deductible for determining income taxes when the related award vests, is exercised, or is forfeited depending on the type of share-based award and subject to relevant tax law.
Derivative Financial Instruments:
We occasionally 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 (loss) (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, are recognized in the statement of income during the current period.
Recent Accounting Pronouncements
Recently Adopted:
Fair Value Measurement
In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”)
2018-13,
“Fair Value Measurement (Topic 820), Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement.” ASU
2018-13
modifies the disclosure requirements for fair value measurements by removing, modifying or adding certain disclosures. The provisions of ASU
2018-13
relating to changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. The remaining provisions should be applied retrospectively to all periods presented upon their effective date. We adopted the provisions of this guidance effective February 1, 2020. The adoption of this guidance did not have a material impact on our consolidated financial statements and accompanying disclosures.
Recent Accounting Standards Not Yet Adopted:
Income Taxes
In December 2019, the FASB issued an ASU
2019-12,
“Simplifying the Accounting for Income Taxes,” which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. ASU
2019-12
is effective for fiscal years beginning after December 15, 2020. Early adoption of the standard is permitted, including adoption in interim or annual periods for which financial statements have not yet been issued. Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. We are not electing to early adopt and do not expect the adoption of this guidance to have a material impact on our consolidated financial statements and accompanying disclosures.
No other new accounting pronouncements, issued or effective during fiscal 2021, have had or are expected to have a material impact on our consolidated financial statements.
v3.21.1
Revenue Recognition
12 Months Ended
Jan. 31, 2021
Revenue from Contract with Customer [Abstract]  
Revenue Recognition
Note 2—Revenue Recognition
We derive revenue from the sale of (i) hardware including, digital color label printers and specialty OEM printing systems, portable data acquisition systems and airborne printers used in the flight deck and in the cabin of military, commercial and business aircraft, (ii) related consumable supplies including paper, labels, tags, inks, toners and ribbons, (iii) repairs and maintenance of equipment and (iv) service agreements.
Revenues disaggregated by primary geographic markets and major product types are as follows:
Primary geographical markets:
 
    
Year Ended
 
(In thousands)
  
January 31,
2021
    
January 31,
2020
    
January 31,
2019
 
United States
   $ 70,911      $ 83,671      $ 83,668  
Europe
     29,029        29,617        31,574  
Canada
     5,574        5,719        6,692  
Asia
     5,105        8,316        8,207  
Central and South America
     3,950        4,145        4,147  
Other
     1,464        1,978        2,369  
    
 
 
    
 
 
    
 
 
 
Total Revenue
   $ 116,033      $ 133,446      $ 136,657  
    
 
 
    
 
 
    
 
 
 
Major product types:
 
    
Year Ended
 
(In thousands)
  
January 31,
2021
    
January 31,
2020
    
January 31,
2019
 
Hardware
   $ 34,111      $ 48,959      $ 53,207  
Supplies
     71,772        71,838        71,178  
Service and Other
     10,150        12,649        12,272  
    
 
 
    
 
 
    
 
 
 
Total Revenue
   $ 116,033      $ 133,446      $ 136,657  
    
 
 
    
 
 
    
 
 
 
Contract Assets and Liabilities
We normally do not have contract assets, which are primarily unbilled accounts receivable that are conditional on something other than the passage of time.
Our contract liabilities, which represent billings in excess of revenue recognized, are related to advanced billings for purchased service agreements and extended warranties. Contract liabilities were $285,000 and $466,000 at January 31, 2021 and January 31, 2020, respectively, and are recorded as deferred revenue in the consolidated balance sheet. The decrease in the deferred revenue balance during the period ended January 31, 2021 is primarily due to $466,000 of revenue recognized during the period that was included in the deferred revenue balance at January 31, 2020 offset by cash payments received in advance of satisfying performance obligations.
Contract Costs
We have determined that certain costs related to obtaining sales contracts for our aerospace printer products meet the requirement to be capitalized. These costs are deferred and amortized based on the forecasted number of units sold over the estimated benefit term. The balance of these contract assets at January 31, 2020 was $944,000, of which $59,000 was reported in other current assets and $885,000 was reported in other assets in the consolidated balance sheet. Amortization of incremental direct costs was $26,940 for the period ended
January 31, 2021. The balance of the deferred incremental direct contract costs net of accumulated amortization at January 31, 202
1
is $
917,000
, of which $
36,000
was reported in other current assets and $
881,000
was reported in other assets in the consolidated balance sheet. The contract costs are expected to be amortized over the estimated remaining period of benefit, which we currently estimate to be approximately
5
 years.
v3.21.1
Goodwill
12 Months Ended
Jan. 31, 2021
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill
Note 3—Goodwill
Goodwill by reporting unit is as follows:
 
(In thousands)
  
Product
Identification
 
 
T&M
 
  
Total
 
Balance at January 31, 2019
   $ 7,807     $ 4,522      $ 12,329  
Foreign currency translation
     (295     —          (295
    
 
 
   
 
 
    
 
 
 
Balance at January 31, 2020
   $ 7,512     $ 4,522      $ 12,034
Foreign currency translation
     772       —          772  
    
 
 
   
 
 
    
 
 
 
Balance at January 31, 2021
   $ 8,284     $ 4,522      $ 12,806  
  
 
 
   
 
 
    
 
 
 
 
After consideration of the impact of the decline in the global economy due to the COVID-19 pandemic, coupled with the grounding of the 737 MAX in March, 2019 and the production halt in January, 2020 which negatively impacted revenues and margins in fiscal 2020 and 2021, we elected to forgo the qualitative assessment and instead performed a quantitative goodwill impairment test to determine if the carrying values of the reporting units are greater than the fair values. We utilized a blended income and market approach. The income approach was based upon a discounted cash flow model which we believe provides a fair value estimate of the reporting unit’s expected long-term operating performance. The market approach compares the reporting units to similar publicly traded companies. Based on our quantitative impairment assessment as of January 31, 2021, we determined that the fair value of the reporting units were in excess of their carrying values and therefore, no goodwill impairment had occurred.
v3.21.1
Intangible Assets
12 Months Ended
Jan. 31, 2021
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets
Note 4—Intangible Assets
Intangible assets are as follows:
 
   
January 31, 2021
   
January 31, 2020
 
(In thousands)
 
Gross
Carrying
Amount
   
Accumulated
Amortization
   
Currency
Translation
Adjustment
   
Net
Carrying
Amount
   
Gross
Carrying
Amount
   
Accumulated
Amortization
   
Currency
Translation
Adjustment
   
Net
Carrying
Amount
 
Miltope:
                                                               
Customer Contract Relationships
  $ 3,100     $ (2,284   $ —       $ 816     $ 3,100     $ (2,021   $ —       $ 1,079  
RITEC:
                                                               
Customer Contract Relationships
    2,830       (1,423     —         1,407       2,830       (1,076     —         1,754  
Non-Competition
Agreement
    950       (950     —         —         950       (871     —         79  
TrojanLabel:
                                                               
Existing Technology
    2,327       (1,405     196       1,118       2,327       (1,053     78       1,352  
Distributor Relations
    937       (396     89       630       937       (297     27       667  
Honeywell:
                                                               
Customer Contract Relationships
    27,243       (9,712     —         17,531       27,243       (6,791     —         20,452  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Intangible Assets, net
  $ 37,387     $ (16,170   $       285     $ 21,502     $ 37,387     $ (12,109   $       105     $ 25,383  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
There were no impairments to intangible assets during the periods ended January 31, 2021 and 2020. Amortization expense of $4.1 million; $4.2 million and $4.1 million with regard to acquired intangibles has been included in the consolidated statements of income for years ended January 31, 2021, 2020 and 2019, respectively.
Estimated amortization expense for the next five fiscal years is as follows:
 
(In thousands)
  
2022
 
  
2023
 
  
2024
 
  
2025
 
  
2026
 
Estimated amortization expense
   $ 3,938      $ 3,956      $ 4,055      $ 3,416      $ 3,021  
v3.21.1
Inventories
12 Months Ended
Jan. 31, 2021
Inventory Disclosure [Abstract]  
Inventories
Note 5—Inventories
The components of inventories are as follows:
 
 
  
January 31
 
 
  
2021
 
  
2020
 
(In thousands)              
Materials and Supplies
   $ 20,265      $ 20,151  
Work-in-Progress
     2,076        1,408  
Finished Goods
     16,371        17,992  
    
 
 
    
 
 
 
       38,712        39,551  
Inventory Reserve
     (8,652      (5,626
    
 
 
    
 
 
 
     $ 30,060      $ 33,925  
    
 
 
    
 
 
 
Finished goods inventory includes $4.0 million and $3.4 million of demonstration equipment at January 31, 2021 and 2020, respectively.
v3.21.1
Property, Plant and Equipment
12 Months Ended
Jan. 31, 2021
Property, Plant and Equipment [Abstract]  
Property, Plant and Equipment
Note 6—Property, Plant and Equipment
Property, plant and equipment consist of the following:
 
 
  
January 31
 
 
  
2021
 
  
2020
 
(In thousands)
  
 
 
  
 
 
Land and Land Improvements
  
  
1,004     
967  
Buildings and Leasehold Improvements
     12,642        12,524  
Machinery and Equipment
     23,346        23,167  
Computer Equipment and Software
     13,847        11,388  
    
 
 
    
 
 
 
Gross Property, Plant and Equipment
     50,839        48,046  
Accumulated Depreciation
     (38,828      (36,778
    
 
 
    
 
 
 
Net Property Plant and Equipment
  
12,011     
11,268  
    
 
 
    
 
 
 
Depreciation expense on property, plant and equipment was $1.9 million for the year ended January 31, 2021 and $2.0 million for both of the years ended January 31, 2020 and 2019.
v3.21.1
Accrued Expenses
12 Months Ended
Jan. 31, 2021
Payables and Accruals [Abstract]  
Accrued Expenses
Note 7—Accrued Expenses
Accrued expenses consisted of the following:
 
 
  
January 31
 
 
  
2021
 
  
2020
 
(In thousands)
  
 
 
  
 
 
Warranty
   $ 730      $ 850  
Professional Fees
     546        697  
Lease Liability
     372        416  
Accrued Payroll & Sales Tax
     292        193  
Stockholder Relation Fees
     91        194  
Dealer Commissions
     57        236  
Other Accrued Expenses
     1,851        2,125  
    
 
 
    
 
 
 
     $ 3,939      $ 4,711  
    
 
 
    
 
 
 
v3.21.1
Credit Agreement and Long- Term Debt
12 Months Ended
Jan. 31, 2021
Debt Disclosure [Abstract]  
Credit Agreement and Long- Term Debt
Note 8—Credit Agreement and Long-
 
Term Debt
Credit Agreement
On July 30, 2020, we entered into an Amended and Restated Credit Agreement (the “A&R Credit Agreement”) with Bank of America, N.A., as lender (the “Lender”), our wholly owned subsidiary, ANI ApS, a Danish private limited liability company and TrojanLabel ApS, a Danish private limited liability company and wholly-owned subsidiary of ANI ApS (“TrojanLabel”). The A&R Credit Agreement amended and restated the Credit Agreement dated as of February 28, 2017 (the “Prior Credit Agreement”) by and among us, ANI ApS, TrojanLabel and the Lender. In connection with the A&R Credit Agreement, we entered into an Amended and Restated Security and Pledge Agreement and a mortgage in favor of the Lender with respect to our owned real property in West Warwick, Rhode Island. Under the A&R Credit Agreement, AstroNova, Inc. is the sole borrower, and at January 31, 2021, its obligations are guaranteed by ANI ApS and TrojanLabel.
Immediately prior to the closing of the A&R Credit Agreement, we repaid $1.5 million in principal amount of term loans outstanding under the 
Prior
 
Credit Agreement.
The A&R Credit Agreement provides for (i) a term loan in the principal amount of $15.2 million, which we used to refinance the outstanding term loans borrowed by us and ANI ApS under the 
Prior
Credit Agreement
 
and a portion of the outstanding revolving loans borrowed by us under the
Pr
i
or
 Credit Agreement, and (ii) a $10.0 million revolving credit facility available to us for general corporate purposes. Revolving credit loans may be borrowed, at our option, in U.S. Dollars or, subject to certain conditions, Euros, British Pounds, Canadian Dollars or Danish Kroner.
During the third quarter of fiscal year 2021, we repaid the entire outstanding balance under the revolving line of credit. Balances outstanding under the revolving line of credit during the year ended January 31, 2021 bore interest at a weighted average annual rate of 3.41%, and $188,000 of interest was incurred and is included in other income (expense) in the accompanying condensed consolidated income statement for the year ended January 31, 2021. At January 31, 2021, there was no balance outstanding under the revolving line of credit and $10.0 million was available for borrowing under the revolving credit facility.
The A&R Credit Agreement was accounted for as a debt modification in a
non-
troubled
debt restructuring. We incurred $0.2 million of new debt issuance costs related to the term loan, of which $0.1 million of new lender fees were recorded against the debt as debt issuance costs and will be amortized over the term of the loan and $0.1 million of third party fees that were expensed as incurred. Additionally, $0.1 million of unamortized debt issuance costs related to the prior term debt will be amortized over the remaining life of the new term loan. We also incurred $0.1 million of new debt issuance fees in connection with the revolving line of credit which are included as a component of prepaid expenses and other current assets and will be amortized over the remaining life of the A&R Credit Agreement.
Under the A&R Credit Agreement, the principal amount of each quarterly installment required to be paid on the last day of each of our fiscal quarters ending on or about July 31, 2020 and October 31, 2020 was $0.8 million; the principal amount of the quarterly installment required to be paid on the last day of our fiscal quarter ending January 31, 2021 was $1.1 million; the principal amount of the quarterly installment required to be paid on the last day of the our fiscal quarter ending on or about April 30, 2021 will be $1.1 million; the principal amount of each quarterly installment required to be paid on the last day of each of the our fiscal quarters ending on or about July 31, 2021, October 31, 2021, January 31, 2022 and April 30, 2022 is $1.4 million, and the entire remaining principal balance of the term loan is required to be paid on June 15, 2022. We may voluntarily prepay the term loan, in whole or in part, from time to time without premium or penalty (other than customary breakage costs, if applicable). We may repay borrowings under the revolving credit facility at any time without premium or penalty (other than customary breakage costs, if applicable), but in any event no later than June 15, 2022, and any outstanding revolving loans thereunder will be due and payable in full, and the revolving credit facility will terminate, on such date. We may reduce or terminate the revolving line of credit at any time, subject to certain thresholds and conditions, without premium or penalty.
Under the A&R Credit Agreement the term loan and revolving credit loans bear interest at a rate per annum equal to, at the our option, either (a) the LIBOR Rate (or in the case of revolving credit loans denominated in a currency other than U.S. Dollars, the applicable quoted rate), plus a margin that varies within a range of 2.15% to 3.65% based on our consolidated leverage ratio, or (b) a fluctuating reference rate equal to the highest of (i) the federal fund rate plus 0.50%, (ii) Bank of America’s publicly announced prime rate, (iii) the LIBOR Rate plus 1.00% or (iv) 1.00%, plus a margin that varies within a range of 1.15% to 2.65% based on our consolidated leverage ratio. We are also required to pay a commitment fee on the undrawn portion of the revolving credit facility that varies within a range of 0.25% and 0.675% based on our consolidated leverage ratio.
The loans under the A&R Credit Agreement are subject to certain mandatory prepayments, subject to various exceptions, from (a) net cash proceeds from certain dispositions of property, (b) net cash proceeds from certain issuances of equity, (c) net cash proceeds from certain issuances of additional debt and (d) net cash proceeds from certain extraordinary receipts.
Amounts repaid under the revolving credit facility may be reborrowed, subject to continued compliance with the A&R Credit Agreement. No amount of the term loan that is repaid may be reborrowed.
Under the A&R Credit Agreement, we must comply with various customary financial and
non-financial
covenants including a maximum consolidated leverage ratio, a minimum consolidated fixed charge coverage ratio, a minimum level of EBITDA, a consolidated asset coverage ratio and a minimum level of liquidity. The primary
non-financial
covenants limit our and our subsidiaries’ ability to incur future indebtedness, to place liens on assets, to pay dividends or distributions on capital stock, to repurchase or acquire capital stock, to conduct mergers or acquisitions, to sell assets, to alter the capital structure, to make investments and loans, to change the nature of their business, and to prepay subordinated indebtedness, in each case subject to certain exceptions and thresholds as set forth in the A&R Credit Agreement.
The Lender is entitled to accelerate repayment of the loans and to terminate its revolving credit commitment under the A&R Credit Agreement upon the occurrence of any of various customary events of default, which include, among other events, the following (which are subject, in some cases, to certain grace periods): failure to pay when due any principal, interest or other amounts in respect of the loans, breach of any of our covenants or representations under the loan documents, default under any other of our or our subsidiaries’ significant indebtedness agreements, a bankruptcy, insolvency or similar event with respect to us or any of our subsidiaries, a significant unsatisfied judgment against us or any of our subsidiaries, or our undergoing a change of control.
In addition to the guarantees by ANI ApS and TrojanLabel, our obligations under the A&R Credit Agreement are also secured by substantially all of AstroNova, Inc.’s personal property assets (including a pledge of the equity interests it holds in ANI ApS, in our wholly-owned German subsidiary AstroNova GmbH, and in our wholly-owned French subsidiary AstroNova SAS), subject to certain exceptions, and by a mortgage on our owned real property in West Warwick, Rhode Island.
Long-Term Debt
Long-term debt in the accompanying condensed consolidated balance sheets under the A&R Credit Agreement is as follows:
 
 
  
January 31
 
(In thousands)
  
2021
 
  
2020
 
USD Term Loan (4.65% as of January 31, 2021); maturity date of June 15, 2022
   $ 12,576      $ —    
USD Term Loan (3.03% as of January 31, 2021); maturity date November 30, 2022
     —          8,250  
USD Term Loan (3.03% as of January 31, 2021); maturity date of January 31, 2022
     —          4,784  
    
 
 
    
 
 
 
       12,576        13,034  
Debt Issuance Costs, net of accumulated amortization
     (141      (111
Current Portion of Term Loan
     (5,326      (5,208
    
 
 
    
 
 
 
Long-Term Debt
   $ 7,109      $ 7,715  
    
 
 
    
 
 
 
During the years ended January 31, 2021, 2020 and 2019, we recognized $0.5 million, $0.4 million and $0.6 million of interest expense, respectively, which was included in other income (expense) in the accompanying consolidated income statement.
The schedule of required principal payments remaining under the A&R Credit Agreement on long-term debt outstanding as of January 31, 2021 is as follows:
 
(In thousands)
  
 
 
Fiscal 2022
   $ 5,326  
Fiscal 2023
     7,250  
    
 
 
 
     $ 12,576  
    
 
 
 
Refer to Note 23, “Subsequent Event” for details regarding the First Amendment to Credit Agreement to our A&R Credit Agreement, which was entered into subsequent to year end on March 24, 2021.
v3.21.1
Paycheck Protection Program Loan
12 Months Ended
Jan. 31, 2021
Debt Disclosure [Abstract]  
Paycheck Protection Program Loan
Note 9—Paycheck Protection Program Loan
On May 6, 2020, we entered into a loan agreement with, and executed a promissory note in favor of Greenwood Credit Union (“Greenwood”) pursuant to which we borrowed $4.4 million (the “PPP Loan”) from Greenwood pursuant to the Paycheck Protection Program (“PPP”) administered by the United States Small Business Administration (the “SBA”) and authorized by the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), enacted on March 27, 2020. The terms of the PPP Loan were subsequently revised in accordance with the provisions of the Paycheck Protection Flexibility Act of 2020 (the “PPP Flexibility Act”) which was enacted on June 5, 2020.
The PPP Loan, which will mature on May 6, 2022, is unsecured and bears interest at a rate of 1.0% per annum, accruing from the loan date, and is payable monthly. No payments are due on the PPP Loan until the date on which the SBA determines the amount of the PPP Loan that is eligible for forgiveness, so long as we apply for forgiveness within the ten months from the end of the twenty-four week period following the date of loan disbursement, but interest will continue to accrue during the deferral period. We accrued interest for the PPP Loan in the amount of $33,000, which is included in other income (expense) in the accompanying consolidated statements of income for the year ended January 31, 2021.
The PPP Loan may be prepaid at any time without penalty. The loan agreement and promissory note include customary provisions for a loan of this type, including prohibitions on our payment of dividends or repurchase of
 
shares of our stock while the PPP Loan remains outstanding. The loan agreement and promissory note also include events of default relating to, among other things, payment defaults, breaches of the provisions of the loan agreement or the promissory note, and cross-defaults on other loans.
Subject to the limitations and conditions set forth in the CARES Act, the PPP Flexibility Act, and the regulations and guidance provided by the SBA with respect to the PPP, a portion of the PPP Loan may be forgiven in an amount up to the amount of the PPP Loan proceeds that we spent on payroll, rent, utilities and interest on certain debt during the twenty-four-week period following incurrence of the PPP Loan. Interest accrued on the forgiven portion of the principal amount of the PPP Loan is also forgiven. The amount of the PPP Loan to be forgiven in respect of rent, utilities and interest on certain debt will be capped at 40% of the forgiven amount, with the remaining forgiven amount allocated to payroll costs. We have fully utilized the PPP Loan proceeds for qualifying expenses during fiscal year 2021 and subsequent to year end we applied for forgiveness of the PPP Loan (including all associated accrued interest) in accordance with the terms of the CARES Act, as amended by the PPP Flexibility Act. Whether our application for forgiveness will be granted and in what amount is subject to approval by the SBA and may also be subject to further requirements in any regulations and guidelines the SBA may adopt. The PPP Loan is classified as long-term debt in the condensed consolidated balance sheet until the forgiveness determination has been made by the SBA.
v3.21.1
Derivative Financial Instruments and Risk Management
12 Months Ended
Jan. 31, 2021
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments and Risk Management
Note 10—Derivative Financial Instruments and Risk Management
On February 28, 2017, as part of the Prior Credit Agreement, we 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 ANI ApS and an interest rate swap to manage the interest rate risk associated with our variable rate term loan borrowing (the “Swaps”). Both Swaps were designated as cash flow hedges of floating-rate borrowings.
Our cross-currency interest rate swap agreement effectively modified our exposure to interest rate risk and foreign currency exchange rate risk by converting our floating-rate debt denominated in U.S. Dollars on ANI ApS’s books to a fixed-rate debt denominated in Danish Kroner for the term of the loan, thus reducing the impact of interest-rate and foreign currency exchange rate changes on future interest expense and principal repayments. This swap involved the receipt of floating interest rate amounts in U.S. Dollars in exchange for fixed-rate interest payments in Danish Kroner, as well as exchanges of principal at the inception spot rate, over the life of the term loan.
Subsequently, concurrent with our borrowings to fund the payments for the Asset Purchase and License Agreement with Honeywell International, we entered into an interest rate swap agreement to modify our exposure to interest rate risk by effectively converting our floating-rate borrowings to fixed-rate debt over the term of the loan, thus reducing the impact of interest-rate changes on future interest expense. This swap involved the receipt of floating interest rate amounts in U.S. Dollars in exchange for fixed interest rate payments in U.S. dollars over the life of the term loan.
As a direct result of the terms of the Lender’s conditions for entry into the A&R Credit Agreement, on July 30, 2020, we terminated the two Swaps that we used to manage the interest rate and foreign currency exchange risks associated with our prior borrowings under the
Prior
Credit Agreement. The terms of the A&R Credit Agreement caused those swaps to cease to be effective hedges of the underlying exposures. The termination of the Swaps was contracted immediately prior to the end of the second quarter of fiscal 2021 at a cash cost of approximately $0.7 million, which was settled in the third quarter. Upon termination, the remaining balance of $58,000 in accumulated other comprehensive loss related to the cross-currency interest rate swap was reclassified into earnings as the forecasted foreign currency interest payments will not occur and such balance is included in other expense in the accompanying consolidated statements of income for the period ended January 31, 2021. The remaining balance in accumulated other comprehensive loss related to the interest rate swap of $ 0.1 million is being amortized into earnings through the original term of the hedge relationship as the underlying floating interest rate debt still exists.
The following table summarizes the notional amount and fair value of our derivative instruments:
 
Cash Flow Hedges
(In thousands)
  
January 31, 2021
 
  
January 31, 2020
 
  
Notional Amount
 
  
Fair Value Derivatives
 
  
Notional Amount
 
  
Fair Value Derivatives
 
 
  
Asset
 
  
Liability
 
  
Asset
 
  
Liability
 
Cross-currency Interest Rate Swap
   $      $      $      $ 4,489      $      $ 250  
Interest Rate Swap
   $      $      $      $ 8,250      $      $ 96  
The following tables present the impact of the derivative instruments in our consolidated financial statements for the years ended January 31, 2021 and 2020:
 
 
  
Years Ended
 
Cash Flow Hedge
(In thousands)
  
Amount of Gain(Loss)
Recognized in OCI
on
Derivative
 
  
Location of Gain (Loss)
Reclassified from
Accumulated OCI into
Income
 
  
Amount of Gain (Loss)
Reclassified from
Accumulated OCI into
Income
 
  
January 31,
2021
 
 
January 31,
2020
 
  
January 31,
2021
 
 
January 31,
2020
 
Swap contracts
   $ (301   $ 159        Other Income      $ (248   $ 338  
    
 
 
   
 
 
             
 
 
   
 
 
 
At January 31, 2021, we expect to reclassify approximately $0.1 million of net gains on the swap contracts from accumulated other comprehensive loss to earnings during the next 12 months due to changes in foreign exchange rates and the payment of variable interest associated with the floating-rate debt.
v3.21.1
Royalty Obligation
12 Months Ended
Jan. 31, 2021
Royalty Obligation Disclosure [Abstract]  
Royalty Obligation
Note 11—Royalty Obligation
In fiscal 2018, AstroNova, Inc. entered into an Asset Purchase and License 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 of the licensed printers. The purchase price included a guaranteed minimum royalty payment of $15.0 million, to be paid in quarterly installments over a
ten-year
period. Royalty payments are based on gross revenues from the sales of the printers, paper and repair services of the licensed products. The royalty rates vary based on the year in which they are paid or earned and product sold or service provided, and range from single-digit to mid double-digit percentages of gross revenue.
The guaranteed minimum royalty payment obligation was recorded at the present value of the minimum annual royalty payments using a present value factor of 2.8%, which is based on the estimated
after-tax
cost of debt for similar companies. As of January 31, 2021, we had paid an aggregate of $5.5 million of the guaranteed minimum royalty obligation. At January 31, 2021, the current portion of the outstanding guaranteed minimum royalty obligation of $2.0 million is to be paid over the next twelve months and is reported as a current liability and the remainder of $6.1 million is reported as a long-term liability on our consolidated balance sheet. In addition to the guaranteed minimum royalty payments, for the periods ended January 31, 2021 and January 31, 2020, we also incurred excess royalty expense of $31 thousand and $1.2 million, respectively, which is included in cost of revenue in our consolidated statements of income. A total of $0.2 million of excess royalty is payable and reported as a current liability on our consolidated balance sheet at January 31, 2021.
v3.21.1
Leases
12 Months Ended
Jan. 31, 2021
Leases [Abstract]  
Leases
Note 12—Leases
We enter into lease contracts for certain of its facilities at various locations worldwide. Our leases have remaining lease terms of one to eight years, some of which include options to extend the lease term for periods of up to five years when it is reasonably certain the Company will exercise such options.
We lease office space from an affiliate. This lease is classified as an operating lease with annual rental payments of $63,000 for both January 31, 2021 and January 31, 2020.
Balance sheet and other information related to our leases is as follows:
 
Operating Leases
(In thousands)
  
Balance Sheet Classification
  
January 31,
2021
    
January 31,
2020
 
Lease Assets
   Right of Use Assets   
$
1,389
 
 
$ 1,661  
Lease Liabilities
Current
   Other Accrued Expenses   
 
372
 
 
  416  
Lease Liabilities
Long Term
   Lease Liabilities   
$
1,065
 
 
$ 1,279  
Lease cost information is as follows:
 
Operating Leases
(In thousands)
  
Statement of Income Classification
    
Year Ended
January 31,
2021
    
Year Ended
January 31,
2020
 
Operating Lease Costs
       General and Administrative Expense        $ 485      $ 449  
Maturities of operating lease liabilities are as follows:
 
(In thousands)
  
January 31,
2021
 
2022
   $ 372  
2023
     318  
2024
     292  
2025
     184  
2026
     163  
Thereafter
     270  
    
 
 
 
Total Lease Payments
     1,599  
Less: Imputed Interest
     (162
    
 
 
 
Total Lease Liabilities
   $ 1,437  
    
 
 
 
As of January 31, 2021, the weighted-average remaining lease term and weighted-average discount rate for our operating leases are 5.2 years and 4.00%, respectively. We calculated the weighted-average discount rate using incremental borrowing rates, which equal the rates of interest that we would pay to borrow funds on a fully collateralized basis over a similar term.
Supplemental cash flow information related to leases is as follows:
 
(In thousands)
  
Year Ended
January 31,
2021
    
Year Ended
January 31,
2020
 
Cash paid for operating lease liabilities
   $ 429      $ 406  
v3.21.1
Accumulated Other Comprehensive Loss
12 Months Ended
Jan. 31, 2021
Equity [Abstract]  
Accumulated Other Comprehensive Loss
Note 13—Accumulated Other Comprehensive Income (Loss)
The changes in the balance of accumulated other comprehensive income (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, 2018
   $ (181   $ (3   $ 12     $ (172
Other Comprehensive Income (Loss) before reclassification
     (671     —         622       (49
Amounts reclassified from AOCI to Earnings
     —         3       (600     (597
    
 
 
   
 
 
   
 
 
   
 
 
 
Other Comprehensive Income (Loss)
     (671     3       22       (646
    
 
 
   
 
 
   
 
 
   
 
 
 
Balance at January 31, 2019
   $ (852   $ —       $ 34     $ (818
Other Comprehensive Income (Loss) before reclassification
     (133     —         122       (11
Amounts reclassified from AOCI to Earnings
     —         —         (264     (264
    
 
 
   
 
 
   
 
 
   
 
 
 
Other Comprehensive Income (Loss)
     (133     —         (142     (275
    
 
 
   
 
 
   
 
 
   
 
 
 
Balance at January 31, 2020
   $ (985   $ —       $ (108   $ (1,093
Other Comprehensive Income (Loss) before reclassification
     710       —         (239     471  
Amounts Reclassified from AOCI to Earnings
     —         —         193       193  
Cross-Currency Interest Rate Swap Termination
     —         —         45       45  
    
 
 
   
 
 
   
 
 
   
 
 
 
Other Comprehensive Income (Loss)
     710       —         (1     709  
    
 
 
   
 
 
   
 
 
   
 
 
 
Balance at January 31, 2021
   $ (275   $ —       $ (109   $ (384
    
 
 
   
 
 
   
 
 
   
 
 
 
The amounts presented above in other comprehensive income (loss) are net of taxes except for translation adjustments associated with our German and Danish subsidiaries.
v3.21.1
Shareholders' Equity
12 Months Ended
Jan. 31, 2021
Federal Home Loan Banks [Abstract]  
Shareholders' Equity
Note 14—Shareholders’ Equity
During fiscal 2021, 2020 and 2019, certain of our employees delivered a total of 15,357, 20,329 and 33,430 shares, respectively, of our 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 $0.1 million; $0.5 million and $0.6 million, respectively, and are included in treasury stock in the accompanying consolidated balance sheets at January 31, 2021, 2020 and 2019. These transactions did not impact the number of shares authorized for repurchase under our current repurchase program.
v3.21.1
Share-Based Compensation
12 Months Ended
Jan. 31, 2021
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Share-Based Compensation
Note 15—Share-Based Compensation
The Company maintains the following share-based compensation plans:
Stock Plans:
We have one equity incentive plan from which we are authorized to grant equity awards, the AstroNova, Inc. 2018 Equity Incentive Plan (the “2018 Plan”). The 2018 Plan provides for, among other things, the issuance of awards, including incentive stock options,
non-qualified
stock options, stock appreciation rights, time-based restricted stock units (“RSUs”), or performance-based restricted stock units (“PSUs”) and restricted stock awards (RSAs). The 2018 Plan authorizes the issuance of up to 950,000 shares of common stock, plus an additional number of shares equal to the number of shares subject to awards granted under the previous equity incentive plans that are forfeited, cancelled, satisfied without the issuance of stock, otherwise terminated (other than by exercise), or, for shares of stock issued pursuant to any unvested award, that are reacquired by us at not more
than the grantee’s purchase price (other than by exercise). Under the 2018 Plan, all awards to employees generally have a minimum vesting period of one year. Options granted under the 2018 Plan must be issued at an exercise price of not less than the fair market value of our common stock on the date of grant and expire after ten years. Under the 2018 Plan, 186,500 unvested shares of restricted stock and options to purchase an aggregate of 135,500 shares were outstanding as of January 31, 2021.
In addition to the 2018 Plan, we previously granted equity awards under our 2015 Equity Incentive Plan (the “2015 Plan”) and our 2007 Equity Incentive Plan (the “2007 Plan”). No new awards may be issued under either the 2007 or 2015 Plans, but outstanding awards will continue to be governed by those plans. As of January 31, 2021, options to purchase an aggregate of 337,958 shares were outstanding under the 2007 Plan and 10,833 unvested shares of restricted stock and options to purchase an aggregate of 148,625 shares were outstanding under the 2015 Plan.
We also have a
Non-Employee
Director Annual Compensation Program (the “Program”), under which each of our
non-employee
directors automatically receives a grant of restricted stock on the date of their
re-election
to our board of directors. The number of whole shares granted is equal to the number calculated by dividing the stock component of the director compensation amount determined by the compensation committee for that year by the fair market value of our stock on that day. The value of the restricted stock award for fiscal 2021 was $60,000. Shares of restricted stock granted under the Program become vested on the first anniversary of the date of grant, conditioned upon the recipient’s continued service on our board of directors through that date.
Share-Based Compensation:
Share-based compensation expense has been recognized as follows:
 
 
 
Years Ended January 31
 
 
 
    2021    
 
  
    2020    
 
  
    2019    
 
(In thousands)
 
 
 
  
 
 
  
 
 
Stock Options
   $ 517      $ 616      $ 783  
Restricted Stock Awards and Restricted Stock Units
     1,285        1,136        1,088  
Employee Stock Purchase Plan
     17        23        15  
    
 
 
    
 
 
    
 
 
 
Total
   $ 1,819      $ 1,775      $ 1,886  
    
 
 
    
 
 
    
 
 
 
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, 2018
     745,270     $ 12.52  
Options Granted
     196,000       18.21  
Options Exercised
     (150,125     10.62  
Options Forfeited
     (16,300     15.10  
Options Cancelled
     (3,700     8.95  
    
 
 
   
 
 
 
Options Outstanding, January 31, 2019
     771,145     $ 14.30  
Options Granted
     —         —    
Options Exercised
     (57,175     11.60  
Options Forfeited
     (34,526     15.73  
Options Cancelled
     (400     6.22  
    
 
 
   
 
 
 
Options Outstanding, January 31, 2020
     679,044     $ 14.46  
Options Granted
     —         —    
Options Exercised
     (1,200     7.60  
Options Forfeited
     (54,361     12.89  
Options Cancelled
     (1,400     7.36  
    
 
 
   
 
 
 
Options Outstanding, January 31, 2021
     622,083     $ 14.63  
    
 
 
   
 
 
 
Set forth below is a summary of options outstanding at January 31, 2021:
 
Outstanding
 
  
Exercisable
 
Range of
Exercise prices
  
Number of
Shares
 
  
Weighted-
Average
Exercise Price
 
  
Weighted-
Average
Remaining
Contractual Life
 
  
Number of
Shares
 
  
Weighted-
Average
Exercise Price
 
  
Weighted
Average
Remaining
Contractual
Life
 
$5.00-10.00
     41,044      $ 7.97        1.3        41,044      $ 7.97        1.3  
$10.01-15.00
     359,314        13.63        4.9        326,741        13.65        4.7  
$15.01-20.00
     221,725        17.48            6.8        167,367        17.22        6.7  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
 
       622,083      $ 14.63            5.3        535,152      $ 14.33        5.1  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
 
No options were granted during fiscal 2021 or
fis
cal
2020. The weighted-average estimated fair value of options granted during fiscal 2019 was $7.43. As of January 31, 2021, there was $0.2 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 0.8 years.
As of January 31, 2021, the aggregate intrinsic value (the aggregate difference between the closing stock price of our common stock on January 31, 2021, and the exercise price of the outstanding options) that would have been received by the option holders if all options had been exercised was $0.1 million for all exercisable options and $0.1 million for all options outstanding. The total aggregate intrinsic value of options exercised during 2021, 2020 and 2019 was $4,000, $0.5 million and $1.1 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, 2018
  
 
177,347
 
  
$
13.99
 
Granted
  
 
108,790
 
  
 
17.85
 
Vested
  
 
(67,447
  
 
14.26
 
Forfeited
  
 
(85,023
  
 
14.17
 
 
  
 
 
 
  
 
 
 
Outstanding at January 31, 2019
     133,667      $ 16.90  
Granted
     119,522        19.86  
Vested
     (59,930      14.50  
Forfeited
     (58,625      19.00  
    
 
 
    
 
 
 
Outstanding at January 31, 2020
     134,634      $ 16.79  
    
 
 
    
 
 
 
Granted
     245,131        7.61  
Vested
     (64,997      17.28  
Forfeited
     (117,355      8.83  
    
 
 
    
 
 
 
Outstanding at January 31, 2021
     197,413      $ 9.96  
    
 
 
    
 
 
 
As of January 31, 2021, there was $1.1 million of unrecognized compensation expense related to unvested RSUs and RSAs. This expense is expected to be recognized over a weighted average period of 0.8 years.
Employee Stock Purchase Plan (ESPP):
Our
 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
 
    
    2021    
    
    2020    
    
    2019    
 
Shares Reserved, Beginning
     24,974        33,853        39,207  
Shares Purchased
     (14,600      (8,879      (5,354
    
 
 
    
 
 
    
 
 
 
Shares Reserved, Ending
     10,374        24,974        33,853  
    
 
 
    
 
 
    
 
 
 
v3.21.1
Income Taxes
12 Months Ended
Jan. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes
Note 16—Income Taxes
The components of income (loss) before income taxes are as follows:
 
    
January 31
 
    
2021
   
2020
   
2019
 
(In thousands)                   
Domestic
   $ (1,193   $ 1,930     $ 6,859  
Foreign
     3,372       (560     449  
    
 
 
   
 
 
   
 
 
 
     $ 2,179     $ 1,370     $ 7,308  
    
 
 
   
 
 
   
 
 
 
The components of the provision/(benefit) for income taxes are as follows:
 
 
  
January 31
 
 
  
2021
 
 
2020
 
 
2019
 
(In thousands)
  
 
 
 
 
 
 
 
 
Current:
  
     
 
     
 
     
Federal
   $ 1,272      $ 660      $ 1,807  
State
     224        221        457  
Foreign
     420        368        952  
    
 
 
    
 
 
    
 
 
 
     1,916        1,249        3,216
 
    
 
 
    
 
 
    
 
 
 
 
Deferred:
                        
Federal
   $ (910   $ (1,364   $ (843
State
     (189     (282     (170
Foreign
     78       8       (625
    
 
 
   
 
 
   
 
 
 
       (1,021     (1,638     (1,638
    
 
 
   
 
 
   
 
 
 
     $ 895     $ (389   $ 1,578  
    
 
 
   
 
 
   
 
 
 
Total income tax provision/(benefit)
 
differs from the expected tax provision/(benefit) as a result of the following:
 
    
January 31
 
    
2021
   
2020
   
2019
 
(In thousands)                   
Income Tax Provision at Statutory Rate
   $ 458     $ 288     $ 1,534  
Denmark Statutory Audit
     341       —         —    
Foreign Rate Deferential
     197       315       558  
Share Based Compensation
     171       (145     (127
Canada Withholding Taxes
     62       —         —    
State Taxes, Net of Federal Tax Effect
     28       (48     226  
Global Intangible Low Taxed Incom
e
     14       107       —    
Meals and Entertainment
     11       31       56  
U.S. Corporate Rate Change
     —         —         52  
Transition Tax on Repatriated Earnings
     —         —         14  
Return to Provision Adjustment
     (2     (207     58  
Change in Reserves Related to ASC 740 Liability
     (10     (352     (34
Change in Valuation Allowance
     (81     256       —    
R&D Credits
     (157     (209     (218
Foreign Derived Intangible Income
     (150     (107     (53
Foreign Tax Credits
     —         (344     (477
Other
     13       26       (11
    
 
 
   
 
 
   
 
 
 
     $ 895     $ (389   $ 1,578