AstroNova, Inc. Annual Report 2022

FY2022 Annual Report · AstroNova, Inc.
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To Our Shareholders,

Fiscal 2022 demonstrated the resilience of the AstroNova
business model. We successfully managed through a range of
macroeconomic headwinds during the year — supply chain
disruptions, steep price increases, and rising transportation costs
while driving top-line growth. Though persistent inﬂation and the
geopolitical environment continue to pose challenges for the global
economy as I write this letter, we r
emain focused on the levers within
our control:

r

• Robust order volume. We begin ﬁscal 2023 with a healthy

backlog — a forerunner of strong demand.

• New products in the pipeline. We plan to launch two new
products in our Product Identiﬁcation segment that build on
our leadership in the label printing and fast-growing
direct-to-package printing markets.

• Resurgent Aerospace business. After two sluggish years

due to the grounding of the 737 MAX and COVID-19, our Test
& Measurement segment is growing again, lifted by the MAX’s
resumption of service and the rebound in commercial air travel
from its pandemic lows.

• Strong recurring revenue stream. Revenue from supplies and
services accounted for 73% of our total sales in ﬁscal 2022,
slightly above the level achieved in ﬁscal 2021.

Fiscal 2022 In Review

Product Identiﬁcation
FY 2022 marked the Product Identiﬁcation segment’s ninth
consecutive year of top-line growth. Revenue increased to $90.9
million from $90.3 million in the prior ﬁscal year, br eneﬁtted by
strong contribution from newer products, including the T3-OPX.
Our wide-format, direct-to-package printing solution, the
T3-OPX, generated record results in FY 2022, its second full
year of availability.

What makes the T3-OPX stand out is its ability to print directly
onto a wide range of materials with ink-receptive surfaces, from
cardboard, postcards, and envelopes to boxes, paper bags,
and wooden planks. These capabilities provide businesses and
commercial printers with an unsurpassed level of ﬂexibility to
customize their products with packaging and design versatility.

With the growing reliance on e-commerce since the start of
the pandemic, three global megatrends — sustainability, byy
experience, and supply chain agility — are playing directly into the
success of our direct-to-package printing technology. We believe
that the value proposition of our technology creates a sustainable
competitive advantage for AstroNova over the long term.

rand

The ﬁscal 2022 performance of the Product Identiﬁcation segment
was adversely affected by supply chain disruptions, which prevented
certain products from being shipped during the year, ar nd by cost
inﬂation, which cuts into margins. Segment operating proﬁt of $10.4
million, or 11.5% of revenue, was down from $12.9 million, or 14.3%
of revenue, a year earlier.

Test & Measurement
By contrast, our Test & Measurement segment delivered improved
top and bottom-line results in ﬁscal 2022, buoyed by the resurgence
of commercial air travel in the U.S., Europe, and other markets.
Revenue increased to $26.6 million from $25.8 million in ﬁscal 2021.
Segment operating proﬁt was $3.4 million in ﬁscal 2022, or 12.8% of
segment revenue, compared with a segment operating loss of $1.0
million in ﬁscal 2021.

One need only look at the Transportation Security Administration’s
daily checkpoint travel numbers to understand the signiﬁcant
improvement in passenger trafﬁff c. Through April 16, an average of
1.8 million passengers have been screened at TSA checkpoints in
the calendar year 2022, up more than 75 percent through the same
period in the prior year. And while U.S. domestic passenger trafﬁff c
has rebounded faster than other routes, the airline industry expects
to see a return to pre-pandemic levels in 2023 and 2024.

Consistent with the ramp-up in air trafﬁff c, we see an increase
in both printer supply sales and repair services. At the same time,
the multi-year backlogs for both the Boeing 737 MAX and Airbus
A320 aircraft are growing, which bodes well for sales of our
aerospace products.

Focused on Sustainability
As an organization, we strive to establish and sustain a positive
environmental legacy for our business and future generations.
AstroNova works in partnership with environmental and community
stakeholders to build sustainability of our environment,
our communities, and our business through the following
guiding principles:

• Recognition that open communication with our stakeholders is

paramount to achieving sustainability

• A focus on identifying, measuring, and understanding the direct
and indirect impact of our operations and developing innovative
and realistic solutions for mitigating those impacts

• Promotion of environmentally responsible behavior by our

employees, suppliers, and customers

• A structured management system and procedures that meet or

exceed environmental compliance in the jurisdictions in which we
do business

Looking Ahead
We enter ﬁscal 2023 in solid shape ﬁnancially and operationally.
Looking ahead, we plan to continue executing on our strategy
to grow organically through the development of new products
and through complementary M&A that enables us to expand our
leadership across the end markets we serve.

On behalf of our Board of Directors and our team members around
the world, thank you for your continued conﬁdence and investment
in AstroNova. Stay safe and healthy in the year ahead.

Sincerely,

Gregory A. Woods
President and Chief Executive Ofﬁff cer

FINANCIAL HIGHLIGHTS

($ in millions, except per share amounts)

BOOKINGS

REVENUE

GROSS PROFIT

GROSS PROFIT MARGIN

OPERATINGAA

INCOME

OPERATINGAA

MARGIN

NET INCOME - GAAP

Years Ended January 31,

2022

2021

2020

$128.6

$113.6

$136.3

$117.5

$116.0

$133.4

$43.7

$41.4

$48.8

37.2%

35.6%

36.5%

$4.3

3.6%

$6.4

$2.4

2.1%

$1.3

$2.4

1.8%

$1.8

NET INCOME PER SHARE - DILUTED (GAAP)

$0.88

$0.18

$0.24

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING

TT

- DILUTED

7,339,000

7,166,000

7,238,000

ADJUSTED EBITDA(1)

ADJUSTED EBITDA(1) MARGIN

$13.2

$10.9

$10.1

11.2%

9.4%

7.6%

(1) Reconciliation of Net Income to Adjusted EBITDA:

Years Ended January 31,

Net Income - GAAP

Interest Expense, net

Income Tax Provision/(Beneﬁt)

Share-Based Compensation

Depreciation and Amortization

Adjusted EBITDA

2022

$6.4

0.7

0.6

1.5

4.0

2021

$1.3

0.9

0.9

1.8

6.0

2020

$1.8

0.7

(0.4)

1.8

6.2

$13.2

$10.9

$10.1

Use of Non-GAAP Financial Measure

The non-GAAP ﬁnancial measure, Adjusted EBITDA, is deﬁned as earnings before interest, taxes, depreciation, amortization, and share-based compensation. AstroNova believes that the inclusion of this
non-GAAP ﬁnancial measure helps investors gain a meaningful understanding of changes in the Company’s core operating results and also can help investors who wish to make comparisons between
AstroNova and other companies on both a GAAP and a non-GAAP basis. AstroNova’s management uses Adjusted EBITDA and other GAAP ﬁnancial measures as the basis for measuring its core
operating performance and comparing such performance to that of prior periods and the performance of its competitors. Adjusted EBITDA also is used by the Company’s management to assist with
their ﬁnancial and operating decision-making.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended January 31, 2022

‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from

to

OR

Commission file number 0-13200

AstroNova, Inc.

(Exact name of registrant as specified in its charter)

Rhode Island
(State or other jurisdiction of
incorporation or organization)

600 East Greenwich Avenue,
West Warwick, Rhode Island
(Address of principal executive offices)

05-0318215
(I.R.S. Employer Identification No.)

02893
(Zip Code)

Registrant’s telephone number, including area code: (401) 828-4000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Common Stock, $.05 Par Value

Trading Symbol

ALOT

Name of each exchange
on which registered

NASDAQ Global Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ‘ No È
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ‘ No È

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes È No ‘

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such
files). Yes È No ‘

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth
company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ‘

Accelerated filer È

Non-accelerated filer

Smaller reporting company È
Emerging growth company ‘

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any

new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ‘

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared
or issued its audit report. È

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ‘ Yes È No

The aggregate market value of the registrant’s voting common equity held by non-affiliates at July 31, 2021 was approximately $109,942,000 based on

the closing price on the Nasdaq Global Market on that date.

As of April 13, 2022, there were 7,315,168 shares of Common Stock (par value $0.05 per share) of the registrant outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Company’s definitive Proxy Statement for the 2022 Annual Meeting of Shareholders are incorporated by reference into Part III of this

Annual Report on Form 10-K where indicated.

Auditor Firm Id:

PCAOB ID No. 392

Auditor Name:

Wolf & Company, P.C.

Auditor Location:

Boston, MA

ASTRONOVA, INC.

FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS

Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page

3-8
8-20
20
20
20
20

PART I

Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.

PART II

Item 5.

Market for the Registrant’s Common Stock, Related Stockholder Matters and Issuer

Purchases of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Management’s Discussion and Analysis of Financial Condition and Results of

Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . .
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in and Disagreements with Accountants on Accounting and Financial

Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . .
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

21
21

21-34
34-35
35

35
35-36
36
36

Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . .
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Security Ownership of Certain Beneficial Owners and Management and Related

Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Certain Relationships, Related Transactions and Director Independence . . . . . . . . . . . .
Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

37
38

38
38
38

Exhibits and Financial Statement Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

39
39

Item 6.
Item 7.

Item 7A.
Item 8.
Item 9.

Item 9A.
Item 9B.
Item 9C.

PART III

Item 10.
Item 11.
Item 12.

Item 13.
Item 14.

PART IV

Item 15.
Item 16.

2

Forward-Looking Statements

ASTRONOVA, INC.

Information included in this Annual Report on Form 10-K may contain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not
statements of historical fact, but rather reflect our current expectations concerning future events and results. We
generally use the words “believes,” “expects,” “intends,” “plans,” “anticipates,” “likely,” “continues,” “may,”
“will,” and similar expressions to identify forward-looking statements. Such forward-looking statements,
including those concerning our expectations, involve risks, uncertainties and other factors, some of which are
beyond our control, which may cause our actual results, performance or achievements to be materially different
from those expressed or implied by such forward-looking statements. These risks, uncertainties and factors
include, but are not limited to, those factors set forth in this Annual Report on Form 10-K under “Item 1A. Risk
Factors.” We undertake no obligation to publicly update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise. The reader is cautioned not to unduly rely on such forward-
looking statements when evaluating the information presented in this Annual Report on Form 10-K.

Item 1. Business

PART I

General

Unless otherwise indicated, references to “AstroNova,” the “Company,” “we,” “our,” and “us” in this

Annual Report on Form 10-K refer to AstroNova, Inc. and its consolidated subsidiaries.

We design, develop, manufacture and distribute a broad range of specialty printers and data acquisition and
analysis systems, including both hardware and software, which incorporate advanced technologies to acquire,
store, analyze, and present data in multiple formats. Target markets for our hardware and software products
include aerospace, apparel, automotive, avionics, chemicals, computer peripherals, communications, distribution,
food and beverage, general manufacturing, packaging and transportation.

Our products are distributed worldwide through our own sales force, authorized dealers, and independent

dealers and representatives.

Our business consists of two segments, Product Identification (“PI”) and Test & Measurement (“T&M”).
includes specialty printing systems and related supplies sold under the QuickLabel®,
The PI segment
TrojanLabel® and GetLabels™ brand names. The T&M segment includes our line of aerospace printers and test
and measurement data acquisition systems sold under the AstroNova ® brand name. Refer to Note 17, “Nature of
Operations, Segment Reporting and Geographical Information,” in our audited consolidated financial statements
elsewhere in this report for financial information regarding our segments.

The following description of our business should be read in conjunction with “Management’s Discussion
and Analysis of Financial Conditions and Results of Operations” on pages 21 through 34 of this Annual Report
on Form 10-K.

Product Overview

Description of Business

We leverage our expertise in data visualization technologies to design, manufacture and market specialty

printing systems, test and measurement systems, and related services for select growing markets globally.

Product Identification products sold under the QuickLabel, TrojanLabel and GetLabels brands are used in
brand owner and commercial applications to provide product packaging, marketing, tracking, branding, and

3

labeling solutions to a wide array of industries. The PI segment offers a variety of digital color label tabletop
printers, direct-to-package printers, high-volume presses and specialty OEM printing systems, as well as a wide
range of label, tag and flexible packaging material substrates and other supplies, including ink and toner,
allowing customers to mark, track, protect and enhance the appearance of their products. In the T&M segment,
we have a long history of using our technologies to provide networking systems and high-resolution light-weight
flight deck and cabin printers for the aerospace market. In addition, the T&M segment includes data acquisition
recorders, sold under the AstroNova brand, to enable our customers to acquire and record visual and electronic
signal data from local and networked data streams and sensors. The recorded data is processed, analyzed and
stored and presented in various visual output formats.

Product Identification

Our PI segment includes three brands: QuickLabel, TrojanLabel, and GetLabels. The segment provides a
wide array of digital end-to-end product marking and identification solutions including hardware, software, and
supplies for OEMs, commercial printers, and brand owners. Our customers typically label or mark products on a
short to mid-size run basis and benefit from the efficiency, flexibility, and cost-savings of digitally printing labels
or packaging in their facility, on-demand, with the ability to accommodate multiple SKUs or variable data such
as bar codes, lot numbers or expiration dates. QuickLabel brand products include tabletop printers, production-
ready digital color label printers, and specialty OEM printing systems for either standalone output or inline
integration with existing pre-processing and finishing systems. Customers use our digital printing products in a
wide variety of industries, including chemical, cosmetics, food and beverage, medical products, nutraceutical,
pharmaceutical, and many others. TrojanLabel expands our customer market by providing a range of higher
volume digital color printers, OEM printing systems, and supplies that target the more demanding needs of brand
owners, commercial printers, label converters, and packaging manufacturers, giving them the ability to digitally
mark or encode products directly or to produce labels for post-printing applications. GetLabels brand products
include a full line of media supplies, including label materials, tags, inks, toners and thermal transfer ribbons
designed for optimal performance with our printing hardware, while also being compatible with a wide variety of
competitive and third-party printing hardware.

Current QuickLabel models include a selection of professional tabletop digital color label printers. The
high-speed QL-120X was built on our pioneering and successful Kiaro! platform. To expand the product line
further, in 2021, the QL-120Xe, a sister product to the dye ink QL-120X, was introduced in 2021 as a lower price
point option for low-volume applications and price-sensitive customers. In 2020, we introduced the QL-120D
which features high-performance pigment inks that can produce durable BS5609 certified labels and labels that
can withstand a wide range of demanding environmental conditions from sterilization to cryogenic freezing.
Introduced early in 2019, the high-performance QL-300 was the first 5-color toner-based electrophotographic
tabletop production label printer in the market. In addition, our QuickLabel line of printers includes the QL-850,
our next-generation wide-format inkjet color label printer, the QL-30 and QL-60 series, a family of high-end
monochrome printers, and the QLS-4100 XE, a unique solution with the ability to digitally print full-color labels
and tags using thermal transfer ribbon technology.

Our TrojanLabel portfolio includes a range of products from professional digital color label mini-presses to
large-scale all-in-one inline specialty printing systems for both brand owners, OEMs, and commercial printers.
The T2-C, a compact, digital mini-press designed for 24/7 label production, includes numerous differentiating
features for several end-use market applications. The T2-L is a narrow format digital press designed specifically
for flexible packaging substrates. Beyond label printing, the T3-OPX, the first of its kind direct-to-package
printer, which was introduced in late 2019, allows printing directly onto a range of flat products, including
cardboard, paper bags, flat wood planks and many other items using pigment inks that are resistant to both water
and UV exposure. A professional label press and finishing system, the T4, enables print, die-cut, and lamination
in an all-in-one machine with a much smaller footprint than others in the market.

GetLabels provides a broad range of high-quality supplies for both our printers and third-party printers
including label and tag materials, inks, toner and thermal transfer material, all specifically designed and

4

constructed for a wide variety of labeling applications. Label material and substrates are carefully qualified and
tested in our Rhode Island Materials Research Laboratory to ensure durability and compatibility with our
QuickLabel and TrojanLabel branded products, along with a variety of third-party printers.

The PI segment also develops and licenses various specialized software programs to design and manage
labels, print images, manage and operate our printers and presses, and coordinate printing on an automated basis
directly over networked systems. PI also provides worldwide training and support.

Test &Measurement

Products sold under our T&M segment are designed and manufactured for airborne printing solutions and
data acquisition. Our aerospace products include flight deck printing solutions, networking hardware and
specialized aerospace-grade thermal paper. Our data acquisition systems are used in research and development,
telemetry production monitoring, power and maintenance applications. These
flight
products are sold to customers in various industries, including aerospace & defense, automotive, commercial
airline, energy, manufacturing and transportation, to meet their need to acquire and record data from local and
networked data streams and sensors.

testing, missile/rocket

Airborne printers include our flagship ToughWriter® series used in the flight decks and cabins of military,
commercial, and business aircraft to print hard copies of data required for the safe and efficient operation of
aircraft. Examples of printed data include navigation maps, arrival and departure information, flight itineraries,
weather maps, performance data, passenger data, and air traffic control data. ToughSwitch® Ethernet switches
are used primarily in military aircraft and military vehicles to connect multiple computers or Ethernet devices.
The airborne printers and Ethernet switches are ruggedized to comply with rigorous military and commercial
flight worthiness standards for operation under extreme environmental conditions. We are currently furnishing
ToughWriter airborne printers for many aircraft made by Airbus, Boeing, Bombardier, Lockheed, Gulfstream,
and others. In addition to the ToughWriter products, we manufacture other flight deck printers, including the TP/
NP series, the RTP80 series and the PTA-45B series of airborne printers. The PTA-45B is subject to the Asset
Purchase and License Agreement with Honeywell International, Inc. (the “Honeywell Agreement”), pursuant to
which in 2017 we acquired an exclusive perpetual world-wide license to manufacture and support Honeywell’s
narrow-format flight deck printers for the Boeing 737 and Airbus 320 aircraft. Over time we expect customers to
replace the PTA-45B printers with ToughWriter products because they have numerous technical features and
functional advantages and significant weight savings.

Other T&M products include the TMX® all-in-one high-speed data acquisition system for applications
requiring high channel counts and acquisition rates; the Daxus® DXS-100 distributed data acquisition platform;
the SmartCorder® DDX-100, a portable all-in-one data acquisition system for facility maintenance and field
testing; and the Everest® EV-5000 digital strip chart recording system used mainly in telemetry applications. The
Daxus DXS-100 can be connected to the SmartCorder to increase channel count or networked as part of a
distributed measurement system spanning vast distances.

Technology

Our core technologies are data visualization technologies that relate to (1) acquiring data, (2) conditioning
the data, (3) displaying or printing the data on hard copy, monitor or electronic storage media, and (4) analyzing
the data. To service data visualization, we maintain technological core competencies and trade know-how
concerning the subject matter peculiar to each business unit. The technological disciplines are diverse and
include electronic, software, mechanical and industrial engineering aspects. Additionally, we possess engineering
expertise in digital signal processing, image processing, fluidics, color theory, high-speed material handling, and
airworthiness design.

Patents and Copyrights

We hold several product patents in the United States and in foreign countries. We rely on a combination of
copyright, patent, trademark, and trade secret laws in the United States and other jurisdictions to protect our

5

technology and brand names. We consider our intellectual property to be critical to the operation of our business.
In particular, we believe that the loss of the trademarks QuickLabel, TrojanLabel, ToughWriter, or ToughSwitch
or the loss of the license provided under the Honeywell Agreement could have a material adverse impact on our
business taken as a whole.

Manufacturing and Supplies

We manufacture many of the products that we design and sell. Raw materials and supplies are typically
available from a wide variety of sources. We manufacture many sub-assemblies and parts in-house, including
certain specialty printed circuit board assemblies and harnesses, and we have extensive electronic and
mechanical final assembly and test operations. Many parts not manufactured in-house are standard electronic
items available from multiple sources. Other printers and parts are designed or modified by us and manufactured
by outside vendors according to our specifications. We purchase certain components, assembled products, and
supplies used to manufacture our products from a single source or limited supplier sources. Although we believe
the majority of these sole or limited source components, assembled products, and supplies could be sourced
elsewhere with appropriate changes in the design of our products, such design might not be feasible on a timely
basis, and any interruption in these components, products or supplies could adversely affect our business. When
circumstances cause us to anticipate that we may not be able to acquire such components, products or supplies on
a timely basis, our practice is to procure a sufficient quantity in advance. In the past, we have made such advance
purchases primarily for aerospace products and in quantities that we anticipate will suffice for the life of the
aircraft program for which those printers are designed.

Marketing and Competition

We compete worldwide in multiple markets. Through our expanding network of manufacturing, sales and

support facilities, we do business in over 150 countries.

We believe we are a market leader in tabletop digital color label printing technology in the specialty printing
field, a market leader in flight deck printers, and an innovator in digital color mini-press systems. In the data
acquisition area, we are one of the leaders in general-purpose portable, high-speed data acquisition systems.

Management believes that we have a market leadership position in many of the markets we serve. We retain
our leadership position by virtue of our proprietary technology, product reputation, delivery, our channels to
market, technical assistance and service to customers. The number of competitors varies by product line. Key
include technology, quality, service and support,
competitive factors vary among our product
distribution network and breadth of product and service offerings.

lines, but

Our Product Identification products are sold by direct field salespersons as well as independent dealers and
representatives, while our Test & Measurement products are sold predominantly through direct sales and
manufacturers’ representatives. In the United States, we have factory-trained direct field salespeople located
throughout the country specializing in Product Identification products. We also have direct field sales or service
centers in Canada, China, Denmark, France, Germany, Malaysia, Mexico, Singapore, and the United Kingdom
staffed by our own employees and dedicated third-party contractors. Additionally, we utilize approximately
200 independent dealers and representatives selling and marketing our products in 60 countries.

No single customer accounted for 10% or more of our net revenue in any of the last three fiscal years.

Order Backlog

Our backlog varies regularly. It consists of a blend of orders for end-user customers, as well as original
equipment manufacturer customers. Manufacturing production is designed to meet forecasted demands and
built-to-order customer requirements. Accordingly, the amount of order backlog may not indicate future sales
trends. Backlog at January 31, 2022 and 2021 was $27.8 million and $22.5 million, respectively.

6

Government Regulation

We are subject to a wide variety of laws, rules, mandates, and regulations, some of which apply or may
apply to us as a result of our business particularly with respect to our aircraft cockpit printer business which sells
in a highly regulated industry, and others of which apply to us for other reasons, such as our status as a publicly
held company or the places in which we sell certain types or amounts of products. Existing and future laws and
regulations may result in increasing expense and may impede our growth. Applicable and potentially applicable
regulations and laws include regulations and laws regarding taxation, privacy, data protection, pricing, content,
distribution, energy consumption, environmental regulation, competition, consumer protection, employment,
import and export matters, information reporting requirements, access to our services and facilities, the design
and operation of websites, health, safety, and sanitation standards, the characteristics and quality of products and
services, product labeling and unfair and deceptive trade practices.

Our business outside of the U.S. exposes us to foreign and additional U.S. laws and regulations, including
but not limited to, laws and regulations relating to taxation, business licensing or certification requirements,
consumer protection, intellectual property rights, consumer and data protection, privacy, encryption, restrictions
on pricing or discounts, and the U.S. Foreign Corrupt Practices Act and other applicable U.S. and foreign laws
prohibiting corrupt payments to government officials and other third parties.

Environmental Matters

We believe that we are in compliance with all applicable federal, state, and local laws concerning the
discharge of material into the environment, or otherwise relating to the protection of the environment. We have
not experienced any material costs in connection with environmental compliance, and do not believe that such
compliance will have any material effect upon the financial position, results of operations, cash flows, or
competitive position of the Company.

Employees

As of January 31, 2022, we employed 339 full-time employees. Of our full-time employees, 238 were in the

United States, 80 in Europe, 10 in Canada, nine in Asia and two in Mexico.

None of our employees are represented by a labor union or covered by a collective bargaining agreement;

except for our employees in France, where local regulations generally require collective bargaining agreements.

Successful execution of our business strategy depends on our ability to retain several key employees in both
individual contributor and management roles. We continuously assess the risk of losing our key employees
through regular communications, engagement surveys and assessments in the labor market. Our retention
strategy is focused on ensuring competitive compensation packages, career and professional development,
leadership coaching and other actions to improve overall engagement with our key employees.

Culture

We have ingrained a strong and definable company culture that shapes how we operate and engage with

stakeholders and employees. Our culture consists of four key components:

• A powerful set of core values: Customer First, One Global Team, Innovation, Continuous Improvement

and Building Shareholder Value.

•

The AstroNova Operating System (AOS), the comprehensive business management process which helps
us manage the business to achieve continuous improvements in quality, delivery, cost, and growth.

• A commitment to operating with integrity and compliance to ensure our business is conducted in an

honest, legal, and environmentally responsible manner.

• A passionate commitment to quality that drives our goal to achieve zero defects and understand our

customers’ changing needs and expectations.

7

Our core values guide our employees’ behavior and dictate how our business is conducted. These core
values are reinforced during new hire orientation, ongoing engagement surveys, leadership development, and
team development activities and are also demonstrated through teamwork, leadership, and everyday interactions.

Diversity and Inclusion

We believe that our culture and core values are strengthened through diversity and inclusion. Our diversity
initiatives include—but are not limited to—our practices and policies on recruitment and selection; compensation
and benefits; professional development and training; promotions; transfers; social and recreational programs;
layoffs; terminations; and the ongoing development of a work environment built on the premise of gender and
diversity equity. These initiatives include periodic evaluation of our workforce demographics as compared to the
demographics in the workforce market, and an affirmative effort to attract, recruit, retain and train a diverse
workforce that is representative of the populations in the regions in which we do business.

Other Information

Our business is not seasonal in nature. However, our revenue is impacted by the size of certain individual

transactions, which can cause fluctuations in revenue from quarter to quarter.

Available Information

We make available on our website (www.astronovainc.com) our Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K and, if applicable, amendments to those reports filed or
furnished pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably
practicable after we electronically file such material with, or furnish it
the Securities and Exchange
Commission (SEC). These filings are also accessible on the SEC’s website at http://www.sec.gov.

to,

Item 1A. Risk Factors

The following risk factors should be carefully considered in evaluating AstroNova, because such factors
may have a significant impact on our business, operating results, liquidity and financial condition. As a result of
the risk factors set forth below, actual results could differ materially from those projected in any forward-looking
statements. Additional risks and uncertainties not presently known to us, or that we currently consider to be
immaterial, may also impact our business operations.

Business and Industry Risks:

The ongoing COVID-19 pandemic has adversely affected and will likely continue to adversely affect our
revenues, results of operations and financial condition.

All of our global operations have been materially adversely affected by the worldwide COVID-19 pandemic

during the past two years. We expect this adverse impact to continue to a degree that we cannot predict.

We made significant modifications to our global pre-pandemic operations because of the COVID-19
pandemic. We initially required most non-production related team members to work remotely. Although this no
longer is required for health and safety reasons, for many of our team members, remote work has become a
preference and we believe we have to a large degree successfully adapted to it through the use of technology and
changed management practices, but further adaptations, unknown at this time, may be required. As the result of
the changes that have been required by the response to the COVID-19 pandemic, we expect that the mix of
on-site and remote work will be permanently changed, as will our increased safety protocols and the other
adaptations undertaken during the pandemic, but our practices and plans are still developing, and we cannot
predict the result yet.

8

Since the COVID-19 pandemic began we have experienced difficulties in obtaining raw materials and
components for our products. Some of the structural dislocations in the global economy caused by the pandemic
are deepening and prolonging these difficulties. We have had to incur additional costs, such as expedited and
express shipping fees (i.e., air rather than ocean freight.) These difficulties have also negatively impacted our
efficiency, delayed shipments and caused product shortages. We are currently monitoring the world-wide delays
in transit time, as freight carriers continue to experience significant delays in overseas shipments. We are
addressing these issues through long range planning and procuring higher inventory on severely allocated items
to help mitigate potential shortages whenever practicable. We are also monitoring and reacting to extended lead
times on electronic components and utilizing a variety of strategies, including blanket orders, vendor-bonded
inventories, extended commitments to our supply base, and seeking alternative suppliers. Additionally, we have
taken actions to increase regular contact with our essential vendors and increased our forecasting horizon for our
products to help us better manage our supply chain. In some cases, we are working with our vendors to help them
procure components. Our strategies to counteract the impact of the pandemic and the related supply chain
dislocations have increased the amount of inventory we maintain to support our product sales. We have also
experienced several situations where component shortages and scarcity have required us to pay significantly
higher costs to obtain those components. We will continue to monitor our supply chain going forward and update
our mitigation strategies as we determine appropriate. We are not able to predict how current supply chain
difficulties will develop in the future, and if the steps we are taking are not effective, it could have a material
adverse impact on our results of operations.

Our Product Identification business has been negatively impacted by the COVID-19 pandemic because our
ability to meet with customers to demonstrate our products at trade shows and on-site in their facilities has been
curtailed. We have partially countered this through a variety of virtual, on-line selling and digital marketing
strategies, but the degree to which this will be successful to mitigate the lack of face-to-face selling is unclear.

The aerospace industry, which we serve through our aerospace product line, has also been significantly
disrupted by the COVID-19 pandemic, both inside and outside of the United States because of the severe decline
in the demand for air travel, demand for aircraft, and a general curtailment of aircraft production rates. This has
had a material adverse impact on our financial results. While air travel demand and aircraft production demand
has recovered to some extent, it remains unclear whether these demand factors will continue to recover, and to
what extent. The secondary impacts of the demand decline and resulting financial losses on the economic
structure of the airline industry could become a negative factor for demand for aircraft due to industry
consolidation. Individually or in combination, these factors may continue to have a material adverse impact on
our business operations and financial results.

Our operating results and financial condition could be harmed if the markets into which we sell our products
decline or do not grow as anticipated.

Any decline in our customers’ markets or their general economic conditions would likely result in a
reduction in demand for our products. For example, the 2020 grounding, suspension and subsequent slow restart
of production of the Boeing 737 MAX, and then the effect of the COVID-19 pandemic on the demand for new
aircraft, reduced demand for our airborne printers that are installed on that aircraft, as well as the related repairs
and supplies, which has negatively affected our results of operations. While these effects have begun to abate,
demand remains lower than it was beforehand, and the outlook is uncertain. Some of our customers have been
and may remain reluctant to make capital equipment purchases and may continue to defer certain of these
purchases to future periods. While demand for air travel has recently increased, the impact of another period of
COVID-19 infections could negatively impact this trend in the future. Also, we believe our customers’ markets
have declined and the impact on their financial capacity has been material enough to alter their strategies and
industry dynamics. These factors may cause demand for aircraft to grow slowly or decline, which would reduce
our demand, and in turn which could harm our results of operations, financial position and cash flows.

9

Our future revenue growth depends on our ability to develop and introduce new products and services on a
timely basis and achieve market acceptance of these new products and services.

The markets for our products are characterized by evolving technologies which in turn effect our product
introduction cycles. Our future success depends largely upon our ability to address the rapidly changing needs of
our customers by developing and supplying high-quality, cost-effective products, product enhancements and
services on a timely basis and by keeping pace with technological developments and emerging industry
standards. The success of our new products will also depend on our ability to differentiate our offerings from our
competitors’ offerings, price our products competitively, anticipate our competitors’ development of new
products, and maintain high levels of product quality and reliability. We spend a significant amount of time and
effort on the development of our airborne and color printer products as well as our acquisition and data recorder
products. Failure to meet our customers’ changing business needs or to further develop any of our new products
and their related markets as anticipated could adversely affect our future revenue growth and operating results.

As we introduce new or enhanced products, we must also successfully manage the transition from older
products to minimize disruption in customers’ ordering patterns, avoid excessive levels of older product
inventories and provide sufficient supplies of new products to meet customer demands. The introduction of new
or enhanced products may shorten the life cycle of our existing products, or replace sales of some of our current
products, thereby offsetting the benefit of even a successful product introduction and may cause customers to
defer purchasing existing products in anticipation of the new products. Additionally, when we introduce new or
enhanced products, we face numerous risks relating to product transitions, including the inability to accurately
forecast demand, manage excess and obsolete inventories, address new or higher product cost structures, and
manage different sales and support requirements due to the type or complexity of the new products. Any
customer uncertainty regarding the timeline for rolling out new products or our plans for future support of
existing products may cause customers to delay purchase decisions or purchase competing products which would
adversely affect our business and operating results.

Operational and Business Strategy Risks:

We are dependent upon contract manufacturers for some of our products. If these manufacturers do not meet
our requirements, either in volume or quality, then we could be materially harmed.

We subcontract the manufacturing and assembly of certain of our products to independent third parties at
facilities located in various countries. Relying on subcontractors involves a number of significant risks,
including:

• Disruptions in the global supply chain;

•

•

•

Limited control over the manufacturing process;

Potential absence of adequate production capacity;

Potential delays in production lead times;

• Unavailability of certain process technologies; and

• Reduced control over delivery schedules, manufacturing yields, quality and costs.

If one of our significant subcontractors becomes unable or unwilling to continue to manufacture or provide
these products in required volumes or fails to meet our quality standards, we will have to identify qualified
alternate subcontractors or take over the manufacturing ourselves. Additional qualified subcontractors may not be
available or may not be available on a timely or cost competitive basis. Any interruption in the supply, increase
in the cost of the products manufactured by a third-party subcontractor or failure of a subcontractor to meet
quality standards could have a material adverse effect on our business, operating results and financial condition.

10

For certain components, assembled products and supplies, we are dependent upon single or limited source
suppliers. If these suppliers do not meet demand, either in volume or quality, then we could be materially
harmed.

Although we use standard parts and components for our products where possible, we purchase certain
components, assembled products and supplies used in the manufacture of our products from a single source or
limited supplier sources. If the supply of a key component, assembled products or certain supplies were to be
delayed or curtailed or, in the event a key manufacturing or sole supplier delays shipment of such components or
assembled products, our ability to ship products in desired quantities and in a timely manner would be adversely
affected. For example, due to the continued global COVID-19 pandemic, there has been and likely will continue
to be disruption to our supply chain due to the delays of component shipments from our vendors in China and
other jurisdictions in which normal business operations are disrupted. Our business, results of operations and
financial position could also be adversely affected, depending on the time required to obtain sufficient quantities
from the original source or, if possible, to identify and obtain sufficient quantities from an alternative source.
Additionally, if any single or limited source supplier becomes unable or unwilling to continue to supply these
components, assembled products or supplies in required volumes, we will have to identify and qualify acceptable
replacements or redesign our products with different components. Alternative sources may not be available, or
product redesign may not be feasible on a timely basis. Any interruption in the supply of or increase in the cost of
the components, assembled products and supplies provided by single or limited source suppliers could have a
material adverse effect on our business, operating results, and financial condition.

We face significant competition, and our failure to compete successfully could adversely affect our results of
operations and financial condition.

We operate in an environment of significant competition, especially in the markets in which we sell our PI
printers and T&M data acquisition products. This competition is driven by rapid technological advances,
evolving industry standards, frequent new product introductions and the demands of customers to become more
efficient. Our competitors range from large international companies to relatively small firms. We compete based
on technology, performance, price, quality, reliability, brand, distribution and customer service and support. Our
success in future performance is largely dependent upon our ability to compete successfully in the markets we
currently serve and to expand into additional market segments. Additionally, current competitors or new market
entrants may develop new products or services with features that could adversely affect the competitive position
of our products. To remain competitive, we must develop new products, services and applications and
periodically enhance our existing offerings. If we are unable to compete successfully, our customers could seek
alternative solutions from our competitors and we could lose market share, which could materially and adversely
affect our business, results of operations and financial position.

Our profitability is dependent upon our ability to obtain adequate pricing for our products and to control our
cost structure.

Our success depends on our ability to obtain adequate pricing for our products and services. For a variety of
complex reasons, many of which were triggered by the COVID-19 pandemic, the general economy has been
significantly impacted by supply chain disruptions. Examples of some of these impacts on us include reduced
availability of certain electronic components and the need to pay premium prices to obtain them, and noticeably
higher costs for a wide array of other parts and raw material components. This has been exacerbated by
significant increases in the cost of transportation to expedite incoming components and supplies. In many cases
we have had to expedite delivery of critical materials through significantly higher cost airfreight methods. Our
ability to offset these effects through pricing actions for our products and services may not prove sufficient to
offset these or further cost increases. Attempts to increase prices may not hold in the face of customer resistance
and/or competition. If we are unable to obtain adequate pricing for our products and services, our results of
operations and financial position could be materially adversely affected.

We are also continually reviewing our operations with a view towards reducing our cost structure, including
but not limited to reducing our labor cost-to-revenue ratio, improving process and system efficiencies and

11

outsourcing certain internal functions. From time to time, we also engage in restructuring actions to reduce our
cost structure. However, if these efforts to constrain the cost of our operations are inadequate to offset higher
product and employee wage costs, our results of operations and financial position could be materially adversely
affected.

Our inability to adequately enforce and protect our intellectual property, defend against assertions of
infringement or lose certain licenses could prevent or restrict our ability to compete.

We rely on patents, trademarks, licenses, and proprietary knowledge and technology, both internally
developed and acquired,
in order to maintain a competitive advantage. Our competitors may develop
technologies that are similar or superior to our proprietary technologies or design technologies around the
intellectual property protections or licenses that we currently own. The loss of the trademarks QuickLabel,
TrojanLabel, ToughWriter and ToughSwitch or the loss of the licenses provided under the Honeywell Agreement
could have a material adverse impact on our business taken as a whole. Operating outside the United States also
exposes us to additional intellectual property risk. The laws and enforcement practices of certain jurisdictions in
which we operate do not protect our intellectual property rights to the same extent as in the United States. Any
diminution in our ability to defend against the unauthorized use of these rights and assets could have an adverse
effect on our results of operations and financial condition. Litigation may be necessary to protect our intellectual
property rights or defend against claims of infringement, which could result in significant costs and divert our
management’s focus away from operations.

We have significant inventories on hand.

We maintain a significant amount of inventory, and a result of recent supply chain disruption expect to
increase the amount of inventory we maintain on-hand. Although we have provided an allowance for slow-
moving and obsolete inventory, any significant unanticipated changes in future product demand or market
conditions, including obsolescence or the uncertainty in the global market, as well as continued reduced demand
for our products if the COVID-19 pandemic is further prolonged, could have an impact on the value of inventory
and adversely affect our business, operating results and financial condition.

We could incur liabilities as a result of installed product failures due to design or manufacturing defects.

We have incurred and could in the future incur additional liabilities because of product failures due to
design or manufacturing defects. Our products may have defects despite our internal testing or testing by
customers. These defects could result in among other things, a delay in recognition of sales, loss of sales, loss of
market share, failure to achieve market acceptance or damage to our reputation. We could be subject to material
claims by customers and may incur substantial expenses to correct any product defects. While in the past, we
have successfully obtained partial compensation from suppliers for their contribution to product quality issues,
we may not be successful in such a recovery in the future, and these recoveries have not in the past and are not in
the future likely to fully offset the full financial impact on us.

In addition, through our acquisitions, we have assumed, and may in the future assume, liabilities related to
products previously developed by an acquired company that have not been subjected to adequate product
development, testing and quality control processes, and may have unknown or undetected defects. Some types of
defects may not be detected until the product is installed in a user environment. This may cause us to incur
significant warranty, repair or re-engineering costs. As such, it could also divert the attention of engineering
personnel from product development efforts which may result in increased costs and lower profitability.

We could experience a significant disruption in or security breach of our information technology system which
could harm our business and adversely affect our results of operations.

We rely on on-premises and cloud-based information technology systems, some of which are managed by or
licensed from third parties, to support many critical aspects of our business, as well as, to process, transmit and

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store our own electronic proprietary or confidential information, and confidential information of customers,
employees, suppliers and others including personally identifiable information, credit card data, and other
proprietary confidential information. These systems are vulnerable to damage, disruptions and/or shutdowns
due to attack by cyber-criminals, data breaches, employee error, power outages, computer viruses,
telecommunication or utility failures, systems failures, natural disasters, catastrophic events or other unforeseen
events. These vulnerabilities could interfere with our operations, compromise our data processing capacity and
the security of our information and that of our customers and suppliers, and expose us to liability which could
adversely impact our business and reputation. We actively manage these risks through a variety of hardware and
software-based techniques that we own, license or otherwise procure from third parties under contract to
safeguard our systems, and we own or procure from third parties system data storage redundancy and disaster
recovery capability. In particular we have increased our investment in tools, techniques and training that we
believe will reduce our vulnerability to attacks from cyber-criminals. However due to the complexity of our
systems, and especially due to the ever-increasing sophistication of cyber-criminals, there is no assurance that
our efforts will be sufficient to prevent cyber-attacks, security breaches, or the other potential exploitation of
vulnerabilities or systems failures. In any such circumstance, our system redundancy and other disaster recovery
planning may be ineffective or inadequate. While we have experienced, and expect to continue to experience,
these types of threats to our information technology networks and infrastructure, none of them to date has had a
material impact. However, in the future such events could result in legal claims or proceedings, liability or
penalties under privacy laws, disruption in operations, and damage to our brand and reputation, all of which
could adversely affect our business, operating results and financial condition.

We depend on our key employees and other highly qualified personnel and our ability to attract and develop
new, talented professionals. Our inability to attract and retain key employees, as well as challenges with
respect to the management of human capital resources, could compromise our future success and our business
could be harmed.

Our future success depends upon our ability to attract and retain, through competitive compensation and
benefits programs, professional and executive employees, including sales, operating, marketing, and financial
management personnel as well as our ability to manage human capital resources. There is substantial competition
for skilled personnel, and the failure to attract, develop, retain and motivate qualified personnel could negatively
impact our business, financial condition, results of operations and prospects. In order to hire new personnel or
retain or replace our key personnel, we must maintain competitive compensation and benefits, and we may also
be required to increase compensation, which would decrease net income. Additionally, several key employees
have special knowledge of customers, supplier relationships, business processes, manufacturing operations, and
financial management issues. The loss of any of these employees as the result of competitive compensation
pressures or ineffective management of human capital resources could harm our ability to perform efficiently and
effectively until their knowledge and skills are replaced, which might be difficult to do quickly, and as a result
could have a material adverse effect on our business, financial condition, and results of operations. Failure to
retain or attract key personnel could impede our ability to grow and could result in our inability to operate our
business profitably.

Although we have not experienced any material disruptions due to labor shortages to date, we have observed
an overall tightening and increasingly competitive labor market, and the demand for qualified individuals is
expected to remain strong for the foreseeable future. Any sustained labor shortage or increased turnover rates
within our employee base, whether caused by COVID-19 or as a result of general macroeconomic factors or
wage competition, could lead to increased costs and lost profitability and could otherwise compromise us in
efficiently operating our business.

We may record future impairment charges, which could materially adversely impact our results of operations.

We test our goodwill balances annually, or more frequently if indicators are present or changes in
circumstances suggest that impairment may exist. We assess goodwill for impairment at the reporting unit level

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and, monitor the key drivers of fair value to detect events or other changes that would warrant an interim
impairment test of our goodwill and intangible assets. Declines in the future performance and cash flows of a
reporting unit or asset group, changes in our reporting units or in the structure of our business as a result of future
reorganizations, acquisitions or divestitures of assets or businesses, or changes in other key assumptions, may
result in the recognition of significant asset impairment charges, which could have a material adverse impact on
our results of operations.

We also review our long-lived assets including property, plant and equipment, and other intangibles assets
for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.
Factors we consider include significant under-performance relative to expected historical or projected future
operating results, significant negative industry or economic trends and our market capitalization relative to net
book value. We may be required in the future to record a significant charge to earnings in our financial
statements during the period in which any impairment of our long-lived assets is determined. Such charges could
have a significant adverse impact on our results of operations and our financial condition.

Financial and Economic Risks:

Economic, political and other risks associated with international sales and operations could adversely affect
our results of operations and financial position.

Because we sell our products worldwide, our business is subject to risks associated with doing business
internationally. Revenue from international operations, which includes both direct and indirect sales to customers
outside the U.S., accounted for approximately 40% of our total revenue for fiscal year 2022, and we anticipate
that international sales will continue to account for a significant portion of our revenue. In addition, we have
employees, suppliers, contractors and facilities located outside the U.S. Accordingly, our business, operating
results and financial condition could be harmed by a variety of factors, including:

•

Interruption to transportation flows for delivery of parts to us and finished goods to our customers;

• Customer and vendor financial stability;

•

Fluctuations in foreign currency exchange rates;

• Changes in a specific country’s or region’s environment including political, economic, monetary,

regulatory or other conditions;

•

Trade protection measures and import or export licensing requirements;

• Negative consequences from changes in tax laws;

• Difficulty in managing and overseeing operations that are distant and remote from corporate

headquarters;

• Difficulty in obtaining and maintaining adequate staffing;

• Differing labor regulations;

•

Failure to comply with complex and rapidly changing government economic sanctions measures against
other countries, especially arising from responses to armed conflict;

• Unexpected changes in regulatory requirements;

• Uncertainty surrounding the implementation and effects of the United Kingdom’s withdrawal from the

EU, commonly known as “Brexit”; and

• Geopolitical turmoil, including terrorism, war and public health disruptions, such as that caused by the

current COVID-19 pandemic.

To date the impact of the Russian invasion of Ukraine and the resulting governmental sanctions and our decision
to halt all activities in the affected areas has had an immaterial impact on revenues.

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Changes in our tax rates or exposure to additional income tax liabilities or assessments could affect our
profitability. In addition, audits by tax authorities could result in additional tax payments for prior periods.

As a global company, we are subject to taxation in numerous countries, states and other jurisdictions. As a
result, our effective tax rate is based on the tax rates in effect where we operate. In preparing our financial
statements, we estimate the amount of tax that will become payable in each jurisdiction. Our effective tax rate
may vary as a result of numerous factors, including changes in the mix of our profitability from jurisdiction to
jurisdiction, the results of examinations and audits of our tax filings, whether we secure or sustain acceptable
arrangements with tax authorities, adjustments to the value of our uncertain tax positions, changes in accounting
for income taxes and changes in tax laws. Any of these factors could cause us to experience an effective tax rate
significantly different from previous periods or our current expectations.

Changes to tax laws and regulations or changes to the interpretation thereof (including regulations and
interpretations pertaining to the 2017 Tax Cuts and Jobs Act), the ambiguity of tax laws and regulations, the
subjectivity of factual interpretations, uncertainties regarding the geographic mix of earnings in any particular
period, and other factors, could have a material impact on our estimates of our effective tax rate and our deferred
tax assets and liabilities. The impact of these factors may be substantially different from period-to-period. In
addition, the amount of income taxes we pay is subject to ongoing audits by U.S. federal, state and local tax
authorities. If audits result in payments or assessments different from our reserves, our future results may include
unfavorable adjustments to our tax liabilities and our financial statements could be adversely affected. Any
further significant changes to the tax system in the United States or in other jurisdictions (including changes in
the taxation of international income as further described below) could adversely affect our financial statements.

We may have exposure to additional tax liabilities, which could negatively impact our income tax expense, net
income and cash flow.

We are subject to income and other taxes in both the U.S. and the foreign jurisdictions in which we operate.
The determination of our worldwide provision for income taxes and current and deferred tax assets and liabilities
requires judgment and estimation. In the ordinary course of our business, there are many transactions and
calculations where the ultimate tax determination is uncertain. We are subject to regular review and audit by both
domestic and foreign tax authorities and to the prospective and retrospective effects of changing tax regulations
and legislation. Although we believe our tax estimates are reasonable, the ultimate tax outcome may materially
differ from the amounts recorded in our consolidated financial statements and may materially affect our income
tax benefit or expense, net loss or income, and cash flows in the period in which such determination is made.

Deferred tax assets are recognized for the expected future tax consequences of temporary differences
between the carrying amount for financial reporting purposes and the tax bases of assets and liabilities, and for
net operating losses and tax credit carry forwards. In some cases, we may record a valuation allowance to reduce
our deferred tax assets to estimated realizable value. We review our deferred tax assets and valuation allowance
requirements quarterly. If we are unable to demonstrate that it is more likely than not that we will not be able to
generate sufficient future taxable income to realize the net carrying value of deferred tax assets, we will record a
valuation allowance to reduce the deferred tax assets to estimated realizable value, which could result in a
material income tax charge. As part of our review, we consider positive and negative evidence, including
cumulative results of recent years.

If we are unable to successfully comply with our credit agreement with Bank of America or secure alternative
financing, our business and financial condition could be materially adversely affected.

Our credit agreement with Bank of America requires us, among other things, to satisfy certain financial
ratios on an ongoing basis, consisting of a maximum consolidated leverage ratio and a minimum consolidated
fixed charge coverage ratio. We are also required to comply with other covenants and conditions, set forth in the
credit agreement, including, among others, limitations on our and our subsidiaries’ ability to incur future
indebtedness, to place liens on assets, to pay dividends or distributions on their capital stock, to repurchase or

15

acquire their capital stock, 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, in
each case subject to certain exceptions and thresholds as set forth in the credit agreement. If we were to violate
the terms of the credit agreement and we were unable to renegotiate its terms at that time or secure alternative
financing, it could have a material adverse impact on us.

The agreements governing our indebtedness subject us to various restrictions that limit our ability to pursue
business opportunities.

The credit agreement governing our credit facility with Bank of America, N.A., as amended, contains, and
any future debt agreements may include, several restrictive covenants that impose significant operating and
financial restrictions on us and our subsidiaries. Such restrictive covenants may significantly limit our ability to:

•

•

•

Incur future indebtedness;

Place liens on assets;

Pay dividends or distributions on our and our subsidiaries’ capital stock;

• Repurchase or acquire our capital stock;

• Conduct mergers or acquisitions;

•

Sell assets; and/or

• Alter our or our subsidiaries’ capital structure, to make investments and loans, to change the nature of

their business, and to prepay subordinated indebtedness.

We may not realize the anticipated benefits of past or future acquisitions, divestitures and strategic
partnerships, and integration of acquired companies or divestiture of businesses may negatively impact our
overall business.

We have made strategic investments in other companies, products and technologies. We will continue to
identify and pursue acquisitions of complementary companies and strategic assets, such as customer bases,
products and technology. However, there can be no assurance that we will be able to identify suitable acquisition
opportunities. In any acquisition that we complete we cannot be certain that:

• We will successfully integrate the operations of the acquired business with our own;

• All the benefits expected from such integration will be realized;

• Management’s attention will not be diverted or divided, to the detriment of current operations;

• Amortization of acquired intangible assets or possible impairment of acquired intangibles will not have

a negative impact on operating results or other aspects of our business;

• Delays or unexpected costs related to the acquisition will not have a detrimental impact on our business,

operating results and financial condition;

• Customer dissatisfaction with, or performance problems at, an acquired company will not have an

adverse impact on our reputation; and

• Respective operations, management and personnel will be compatible.

In certain instances, as permitted by applicable law and NASDAQ rules, acquisitions may be consummated
without seeking and obtaining shareholder approval, in which case shareholders will not have an opportunity to
consider and vote upon the merits of such an acquisition. Although we will endeavor to evaluate the risks
inherent in an acquisition, there can be no assurance that we will properly ascertain or assess such risks.

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We may also divest certain businesses from time to time. Divestitures will likely involve risks, such as
difficulty splitting up businesses, distracting employees, potential loss of revenue and negatively impacting
margins, and potentially disrupting customer relationships. A successful divestiture depends on various factors,
including our ability to:

•

•

Effectively transfer assets, liabilities, contracts, facilities and employees to the purchaser;

Identify and separate the intellectual property to be divested from the intellectual property that we wish
to keep; and

• Reduce fixed costs previously associated with the divested assets or business.

All of these efforts require varying levels of management resources, which may divert our attention from
other business operations. Further, if market conditions or other factors lead us to change our strategic direction,
we may not realize the expected value from such transactions.

If we are not able to successfully integrate or divest businesses, products, technologies or personnel that we
acquire or divest, or able to realize expected benefits of our acquisitions, divestitures or strategic partnerships,
our business, results of operations and financial condition could be adversely affected.

Adverse conditions in the global banking industry and credit markets could impair our liquidity or interrupt
our access to capital markets, borrowings or financial transactions to hedge certain risks.

At the end of fiscal 2022, we had approximately $5.3 million of cash and cash equivalents. Our cash and
cash equivalents are held in a mix of money market funds, bank demand deposit accounts and foreign bank
accounts. Disruptions in the financial markets such as those caused by the current COVID-19 pandemic may, in
some cases, result in an inability to access assets such as money market funds that traditionally have been viewed
as highly liquid. Any failure of our counterparty financial institutions or funds in which we have invested may
adversely impact our cash and cash equivalent positions and, in turn, our financial position.

To date, we have been able to access financing that has allowed us to make investments in growth
opportunities and fund working capital requirements as needed. In addition, we occasionally enter into financial
transactions to hedge certain foreign exchange and interest rate risks. Our continued access to capital markets, the
stability of our lenders and their willingness to support our needs, and the stability of the counter-parties to our
financial transactions that hedge risks are essential for us to meet our current and long-term obligations, fund
operations, and fund our future strategic initiatives. An interruption in our access to external financing or
financial transactions to hedge risk could materially and adversely affect our business and financial condition.

Inadequate self-insurance accruals or insurance coverage for employee health care benefits could have an
adverse effect on our business, financial results or financial condition.

In the U.S., we maintain an employee health insurance coverage plan on a self-insured basis backed by stop-
loss coverage which sets a limit on our liability for both individual and aggregate claim costs. We record
expenses based on actual claims incurred and estimates of the costs of expected claims, administrative costs, and
stop-loss insurance premiums.

We record a liability for our estimated cost of U.S. claims incurred and unpaid as of each balance sheet date.
Our estimated liability is recorded on an undiscounted basis and is based on historical trends. Our history of
claims activity is closely monitored, and liabilities are adjusted as warranted based on changing circumstances. It
is possible, however, that our actual liabilities may exceed our estimates of loss. We may also experience an
unexpectedly large number of claims that result in costs or liabilities in excess of our projections, which could
cause us to record additional expenses, which could adversely impact our business, financial condition, results of
operations and cash flow. We believe that the liabilities we have recorded to date will be sufficient to provide for
losses we may incur due to increased COVID-19 related employee health care insurance costs. However, the
ultimate amount of these costs cannot be estimated at this time, and a prolonged period of spread of the disease
could further increase our costs and liabilities, the impact of which may be material.

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Legal and Regulatory Risks:

Certain of our products require certifications by customers, regulators or standards organizations, and our
failure to obtain or maintain such certifications could negatively impact our business.

In certain industries and for certain products, such as those used in aircraft, we must obtain certifications for
our products by customers, regulators or standards organizations. If we fail to obtain required certifications for
our products, or if we fail to maintain such certifications on our products after they have been certified, our
business, financial condition, results of operations and cash flows could be materially and adversely affected.

We are subject to laws and regulations; failure to address or comply with these laws and regulations could
harm our business and adversely affect our results of operations.

Our operations are subject to laws, rules, regulations, including environmental regulations, government
policies and other requirements in each of the jurisdictions in which we conduct business. Changes in laws, rules,
regulations, policies or requirements could result in the need to modify our products and could affect the demand
for our products, which may have an adverse impact on our future operating results. In addition, we must comply
with regulations restricting our ability to include lead and certain other substances in our products. If we do not
comply with applicable laws, rules and regulations we could be subject to costs and liabilities and our business
may be adversely impacted.

Certain of our operations and products are subject to environmental, health and safety laws and regulations,
which may result in substantial compliance costs or otherwise adversely affect our business.

Our operations are subject to numerous federal, state, local and foreign laws and regulations relating to
protection of the environment, including those that impose limitations on the discharge of pollutants into the air
and water, establish standards for the use, treatment, storage and disposal of solid and hazardous materials and
wastes, and govern the cleanup of contaminated sites. As such, our business is subject to and may be materially
and adversely affected by compliance obligations and other liabilities under those environmental, health and
safety laws and regulations. Certain of our products contain, and some of manufacturing operations use various
substances which have been or may be deemed to be hazardous or dangerous. Thus, we have and will continue to
generate a generally limited amounts of hazardous wastes in our operations. We manage our compliance with
laws and regulations and the proper mitigation of risks internally and through the input or external consultants
and outside service providers and we believe we are in material compliance with all applicable environmental
laws and regulations. We desire to reduce and ultimately eliminate any adverse environmental impact of our
business and to comply with relevant laws and regulations. We expect this effort to affect our ongoing operations
and require additional capital and operating expenditures. If we were to fail to manage our environmental
compliance effectively, we could suffer economic or reputational harm.

As the result of the COVID-19 pandemic crisis, we have been required by U.S. federal and state
governmental authorities and governmental authorities in non-U.S. jurisdictions, as well as our own desire to
adhere to best health and safety practices, and have implemented new policies and procedures to reduce infection
risk in our operations. These initiatives have increased our costs and added complexity and inefficiency to our
manufacturing operations and all administrative and office-based functions.

Our operations are subject to anti-corruption laws, including the U.S. Foreign Corrupt Practices Act, and any
determination that we or any of our subsidiaries has violated the Foreign Corrupt Practices Act could have a
material adverse effect on our business.

The U.S. Foreign Corrupt Practices Act (FCPA), the UK Bribery Act and similar worldwide anti-corruption
laws generally prohibit companies and their intermediaries from making improper payments to government
officials and others for the purpose of obtaining or retaining business. Our internal policies mandate compliance
with these anti-corruption laws. We operate in parts of the world that have experienced governmental corruption

18

to some degree, and in certain circumstances, strict compliance with anti-corruption laws may conflict with local
customs and practices. Despite our training and compliance programs, there can be no assurance that our internal
control policies and procedures will protect us from reckless or criminal acts committed by those of our
employees or agents who violate our policies.

Unauthorized access to personal data could give rise to liabilities as a result of governmental regulation,
conflicting legal requirements or differing views of personal privacy rights and compliance with laws designed
to prevent unauthorized access of personal data could be costly.

We collect and store certain data, including proprietary business information, and may have access to
confidential or personal information that is subject to privacy and security laws, regulations and customer-
imposed controls. Security breaches or other unauthorized access to, or the use or transmission of, personal user
information could result in a variety of claims against us, including privacy-related claims. There are numerous
federal, state, local, and international laws and regulations regarding privacy and the storage, sharing, use,
processing, disclosure and protection of this kind of information, the scope of which are changing, inconsistent
and conflicting and subject to differing interpretations.

We also expect that there will continue to be new laws, regulations, and industry standards concerning
privacy, data protection, and information security proposed and enacted in various jurisdictions. For example, in
2016 the European Commission adopted the General Data Protection Regulation (GDPR), a comprehensive
privacy and data protection reform that became effective in May 2018. The GDPR, which is applicable to all
companies processing data of European Union residents, imposes significant fines and sanctions for violations.
Similarly, the California Consumer Privacy Act of 2018, which was enacted in June 2018 and came into effect on
January 1, 2020, provides a new private right of action for data breaches and requires companies that process
information on California residents to make new disclosures to consumers about their data collection, use and
sharing practices and allow consumers to opt out of certain data sharing with third parties.

Additionally, other jurisdictions have enacted or are enacting data localization laws that require data
generated in or relating to the residents of those jurisdictions to be physically stored within those jurisdictions. In
many cases, these laws and regulations apply not only to transfers between unrelated third parties but also to
transfers between us and our subsidiaries. All these evolving compliance and operational requirements impose
significant costs that are likely to increase over time.

While we continue to assess these requirements and the ways they may impact the conduct of our business,
we believe that we materially comply with applicable laws and industry codes of conduct relating to privacy and
data protection. There is no assurance that we will not be subject to claims that we have violated applicable laws
or codes of conduct, that we will be able to successfully defend against such claims or that we will not be subject
to significant fines and penalties in the event we are found not to be in compliance with such laws or codes of
conduct.

Any failure or perceived failure by us (or any third parties with whom we have contracted to store such
information) to comply with applicable privacy and security laws, policies or related contractual obligations or
any compromise of security that results in unauthorized access to personal
in
governmental enforcement actions, significant fines, litigation, claims of breach of contract and indemnity by
third parties and adverse publicity. In the case of such an event, our reputation may be harmed, we could lose
current and potential users and the competitive positions of our various brands could be diminished, any or all of
which could adversely affect our business, financial condition and results of operations.

information may result

Changes in accounting standards and subjective assumptions, estimates, and judgments by management
related to complex accounting matters could significantly affect our financial results or financial condition.

Generally accepted accounting principles and related accounting pronouncements,

implementation
guidelines, and interpretations with regard to a wide range of matters that are relevant to our business, such as

19

revenue recognition, asset impairment and fair value determinations, inventories, business combinations and
intangible asset valuations, leases, and litigation, are highly complex and involve many subjective assumptions,
estimates and judgments. Changes in these rules or their interpretation or changes in underlying assumptions,
estimates, or judgments could significantly change our reported or expected financial performance or financial
condition.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

The following table sets forth information regarding our principal owned property. This property is subject

to a security agreement and a mortgage in favor of the lender under our credit facility.

Location

Approximate
Square
Footage

Principal Use

West Warwick, Rhode Island, United States . . .

135,500 Corporate headquarters, research and

development, manufacturing, sales and
service

We also lease facilities in various other locations. The following information pertains to each location:

Location

Approximate
Square
Footage

Dietzenbach, Germany . . . . . . . . . . . . . . . . . . . .
Copenhagen, Denmark . . . . . . . . . . . . . . . . . . . .
Brossard, Quebec, Canada . . . . . . . . . . . . . . . . .
Elancourt, France . . . . . . . . . . . . . . . . . . . . . . . .
Schaumburg, Illinois, United States . . . . . . . . . .
Irvine, California, United States . . . . . . . . . . . . .
Shah Alam, Selangor, Malaysia . . . . . . . . . . . . .
Guangzhou, China . . . . . . . . . . . . . . . . . . . . . . . .
Maidenhead, England . . . . . . . . . . . . . . . . . . . . .
Shanghai, China . . . . . . . . . . . . . . . . . . . . . . . . .
Mexico City, Mexico . . . . . . . . . . . . . . . . . . . . .

18,630
4,800
4,500
4,150
3,428
3,100
2,067
1,252
1,021
425
97

Principal Use

Manufacturing, sales and service
R&D, sales and service
Manufacturing, sales and service
Sales and service
Sales
Sales
Sales
Sales and service
Sales and service
Sales
Sales

The West Warwick facility is used by both of our business segments, but the leased locations are primarily
used by the Product Identification segment. We believe our facilities are well maintained, in good operating
condition and generally adequate to meet our needs for the foreseeable future.

Item 3. Legal Proceedings

We are not a party to any pending, material legal proceedings. However, because of the nature of our
business, we may be subject in the future to lawsuits or other claims, including those pertaining to product
liability, patent infringement, commercial, employment, employee benefits, environmental and stockholder
matters.

Item 4. Mine Safety Disclosures

Not applicable.

20

PART II

Item 5. Market for the Registrant’s Common Stock, Related Stockholder Matters and Issuer Purchases of

Equity Securities

Our common stock trades on the NASDAQ Global Market under the symbol “ALOT.”

We had approximately 214 shareholders of record as of April 12, 2022, which does not reflect shareholders

with beneficial ownership in shares held in nominee name.

Stock Repurchases

During the fourth quarter of fiscal 2022, we made the following repurchases of our common stock:

November 1 – November 30
December 1 – December 31
January 1 – January 31

Total Number
of Shares
Repurchased

Average
Price paid
Per Share ($)

—
483(a)
1,682(b)

—
15.88 (a)
13.10(b)

Total Number of
Shares Purchased as
Part of Publicly
Announced Plans
or Programs

Maximum Number
of Shares That
May Be Purchased
Under the Plans
or Programs

—
—
—

—
—
—

(a) An executive of the company delivered 483 shares of our common stock toward the satisfaction of taxes due
in connection with the vesting of restricted shares. The shares delivered were valued at a market value of $15.88
per share and are included with treasury stock in the consolidated balance sheet.

(b) An executive of the company delivered 1,682 shares of our common stock toward the satisfaction of taxes
due in connection with the vesting of restricted shares. The shares delivered were valued at a market value of
$13.10 per share and are included with treasury stock in the consolidated balance sheet.

Item 6. (Reserved)

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis are meant to provide material information relevant to an assessment
of the financial condition and results of operations of our company, including an evaluation of the amounts of
cash flows from operations and outside resources, liquidity and certain other factors that may affect future
results so as to allow investors to better view our company from management’s perspective. The following
discussion and analysis of our financial condition and results of operations should be read together with our
financial statements and the related notes and other financial information included elsewhere in this annual
report on Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in
this annual report on Form 10-K, including information with respect to our plans and strategy for our business
and financing, includes forward-looking statements that involve risks and uncertainties. Carefully review the
“Forward-Looking Statements” and “Risk Factors” sections of
this annual report on Form 10-K for a
discussion of important factors that could cause actual results to differ materially from the results described in
or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

We are a multi-national enterprise that leverages its proprietary data visualization technologies to design,
develop, manufacture, distribute and service a broad range of products that acquire, store, analyze and present
data in multiple formats. We organize our structure around a core set of competencies, including research and
development, manufacturing, service, marketing and distribution. We market and sell our products and services
through the following two segments:

•

Product Identification (“PI”) – offers color and monochromatic digital label printers, over-printers and
custom OEM printers. PI also provides software to design, manage and print labeling and packaging

21

images locally and across networked printing systems, as well as all related printing supplies such as
pressure sensitive labels, tags, inks, toners and thermal transfer ribbons used by digital printers. PI also
provides on-site and remote service, spare parts and various service contracts.

•

Test and Measurement (“T&M”) – offers a suite of products and services that acquire data from local
and networked data streams and sensors as well as wired and wireless networks. The T&M segment
includes a line of aerospace printers used to print hard copies of data required for the safe and efficient
operation of aircraft, including navigation maps, clearances, arrival and departure procedures, flight
itineraries, weather maps, performance data, passenger data, and various air traffic control data.
Aerospace products also include aircraft networking systems for high-speed onboard data transfer. T&M
also provides repairs, service and spare parts.

We market and sell our products and services globally through a diverse distribution structure of direct sales
personnel, manufacturers’ representatives and authorized dealers that deliver a full complement of branded
products and services to customers in our respective markets. Our growth strategy centers on organic growth
through product
initiatives, as well as strategic
acquisitions that fit into or complement existing core businesses. In fiscal 2022, 2021 and 2020, revenue from
customers in various geographic areas outside the United States, primarily in Western Europe, Canada and Asia,
amounted to $49.3 million, $45.1 million and $49.8 million, respectively.

innovation made possible by research and development

We maintain an active program of product research and development. During fiscal 2022, 2021 and 2020,
we spent $6.8 million, $6.2 million and $8.1 million, respectively, on Company-sponsored product development.
We are committed to continuous product development as essential to our organic growth and expect to continue
our focus on research and development efforts in fiscal 2022 and beyond.

We also continue to invest in sales and marketing initiatives by expanding the existing sales force and using
various marketing campaigns to achieve our goals of sales growth and increased profitability notwithstanding the
challenging economic environment.

COVID-19 Update

All of our global operations have been materially adversely affected by the worldwide COVID-19 pandemic

during the past two years. We expect this adverse impact to continue to a degree that we cannot predict.

We made significant modifications to our global pre-pandemic operations because of the COVID-19
pandemic. We initially required most non-production related team members to work remotely. Although this is
no longer required for health and safety reasons, for many of our team members, remote work has become a
preference and we believe we have to a large degree successfully adapted to it through the use of technology and
changed management practices, but further adaptations, unknown at this time, may be required. We expect that
our operations and modalities of on-site and remote work will be impacted permanently, as will our increased
safety protocols and the other adaptations undertaken during the pandemic, but our practices and plans are still
developing and we cannot predict the results yet.

Since the COVID-19 pandemic began we have experienced difficulties in obtaining raw materials and
components for our products. Some of the structural dislocations in the global economy caused by the pandemic
are deepening and prolonging these difficulties. We have had to incur additional costs, such as expedited and
express shipping fees (i.e., air rather than ocean freight). These difficulties have also negatively impacted our
efficiency, delayed shipments and caused product shortages. We are currently monitoring the world-wide delays
in transit time, as freight carriers continue to experience significant delays in overseas shipments. We are
addressing these issues through long range planning and procuring higher inventory on severely allocated items
to help mitigate potential shortages whenever practicable. We are also monitoring and reacting to extended lead
times on electronic components and utilizing a variety of strategies, including blanket orders, vendor-bonded
inventories, extended commitments to our supply base, and seeking alternative suppliers. Additionally, we have

22

taken actions to increase regular contact with our essential vendors and increased our forecasting horizon for our
products to help us better manage our supply chain. In some cases, we are working with our vendors to help them
procure components. Our strategies to counteract the impact of the pandemic and the related supply chain
dislocations have increased the amount of inventory we maintain to support our product sales. We have also
experienced several situations where component shortages and scarcity have required us to pay significantly
higher costs to obtain those components. We will continue to monitor our supply chain going forward and update
our mitigation strategies as we determine appropriate. We are not able to predict how current supply chain
difficulties will develop in the future, and if the steps we are taking are not effective, it could have a material
adverse impact on our results of operations.

Product Identification Update

Our Product Identification business has been negatively impacted by the COVID-19 pandemic because our
ability to meet with customers to demonstrate our products at trade shows and on-site in their facilities has been
curtailed. We have partially countered this through a variety of virtual, on-line selling and digital marketing
strategies, but the degree to which this will be successful to mitigate the lack of face-to-face selling is unclear.

Test & Measurement Update

The aerospace industry, which we serve through our aerospace product line, has also been significantly
disrupted by the COVID-19 pandemic, both inside and outside of the United States because of the severe decline
in the demand for air travel and aircraft, and a general curtailment of aircraft production rates. This has had a
material adverse impact on our financial results. While air travel demand and aircraft production demand has
recovered to some extent, it remains unclear whether these demand factors will continue to recover and to what
extent. The secondary impacts of the demand decline and resulting financial losses on the economic structure of
the airline industry could become a negative factor for demand for aircraft due to industry consolidation.
Individually or in combination, these factors may continue to have a material adverse impact on our business
operations and financial results.

PPP Loan Forgiveness

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.

On June 15, 2021, the SBA approved our application for forgiveness of the entire $4.4 million principal
balance of our PPP Loan and all accrued interest thereon. As a result, we recorded a $4.5 million gain on
extinguishment of debt, which is included in the accompanying consolidated income statement for the period
ended January 31, 2022.

Employee Retention Credits

The CARES Act provides an employee retention credit (“ERC”) that is a refundable tax credit against
certain employer taxes. On December 27, 2020, Congress enacted the Taxpayer Certainty and Disaster Tax
Relief Act of 2020, which amended and extended ERC availability under Section 2301 of the CARES Act.
Before the enactment of the Taxpayer Certainty and Disaster Tax Relief Act of 2020, we were ineligible for the
ERC because we received the PPP Loan. Following enactment of the Taxpayer Certainty and Disaster Tax Relief
Act of 2020, we and other businesses that received loans under that program became retroactively eligible for the
ERC.

23

In the second quarter of fiscal 2022, we determined that we qualified for an employee retention credit of
$3.1 million for wages paid in calendar year 2020 and the first calendar quarter of 2021. We recorded a
receivable in the second quarter of fiscal 2022 within prepaid expenses and other current assets in the condensed
consolidated balance sheet. Such amount remains outstanding as of January 31, 2022 and was received
subsequent to year end on March 22, 2022.

The $3.1 million of ERCs was recognized as a reduction in employer payroll taxes and allocated to the
financial statement captions from which the employer’s payroll taxes were originally incurred. As a result, we
recorded a reduction in expenses of $1.7 million in cost of revenue, $0.8 million in selling and marketing,
$0.3 million in research and development and $0.3 million in general and administrative which is included in the
accompanying condensed consolidated income statement for the period ended January 31, 2022.

Results of Operations

Fiscal 2022 compared to Fiscal 2021

The following table presents the revenue of each of our segments, as well as the percentage of total revenue

and change from the prior year.

($ in thousands)

2022

Revenue

As a % of
Total Revenue

% Change
Over Prior Year

Product Identification . . . . . . . . . . . . . . . .
T&M . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 90,915
26,565

77.4%
22.6%

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$117,480

100.0%

0.7%
3.1%

1.2%

2021

As a % of
Total Revenue

77.8%
22.2%

100.0%

Revenue

$ 90,268
25,765

$116,033

Net revenue in fiscal 2022 was $117.5 million, a 1.2% increase compared to net revenue of $116.0 million
for fiscal 2021. Current year revenue through domestic channels was $68.2 million, a decline of 3.8% from prior
year domestic revenue of $70.9 million. International revenue of $49.3 million for fiscal 2022 increased 9.2%
compared to prior year international revenue of $45.1 million. Fiscal 2022 international revenue reflects a
favorable foreign exchange rate impact of $1.1 million, compared to a favorable impact of $0.8 million in fiscal
2021.

Hardware revenue in fiscal 2022 was $31.5 million, a $2.6 million or 7.7% decrease compared to fiscal
2021 hardware revenue of $34.1 million. The current year decrease in hardware revenue is due to the decline in
hardware revenue in both the PI and T&M segments. The decrease in hardware revenue is primarily due to a
10.1% decline in hardware sales in the T&M segment resulting from overall lower aerospace printer product line
sales in the T&M segment as a result of the continuing effects of the Boeing 737 MAX grounding and the impact
of the sharp decline in air travel due to COVID-19. T&M hardware revenue for the current year was also
negatively impacted by a decline in sales of data recorders. Also contributing to the overall decline in hardware
revenue for the current year was a more modest decline in sales in the PI segment of QuickLabel model printers
which was partially offset by sales related to printers in the TrojanLabel product group.

Revenue from supplies in fiscal 2022 was $73.2 million, a 2.1% increase compared to fiscal 2021 supplies
revenue of $71.8 million. Supplies revenue increased in both the PI and T&M segment in the current year, with
the increase primarily due to increased demand for Trojan Label product supplies due to increased market
penetration of these printers. Also contributing to the current year increase in supplies revenue was the increase
in sales of supplies in both our aerospace printer and data recorder product lines, and a slight increase in ink jet
supply sales in the QuickLabel product group. The current year increase was offset to a large extent by a decline
in sales of EP and Thermal film supplies in the QuickLabel product group due to a shift from legacy thermal
transfer and electrophotographic products to newer ink jet products.

Service and other revenue in fiscal 2022 was $12.7 million, a 25.6% increase compared to fiscal 2021
service and other revenue of $10.2 million. The increase is due primarily to overall increased repair and parts
revenue in both the T&M and PI segments.

24

Gross profit was $43.7 million for fiscal 2022, reflecting a 5.8% increase compared to fiscal 2021 gross
profit of $41.4 million. Our gross profit margin of 37.2% in fiscal 2022 reflects a 2.4 percentage point increase
compared to fiscal 2021 gross profit margin of 35.6%. The higher profit and related margin for the current year
compared to the prior year is primarily attributable to increased revenue and the impact of the ERC, which
reduced manufacturing payroll taxes in the amount of $1.7 million in the second quarter of the current year.

Operating expenses for the current year were $39.5 million, representing a 1.4% increase from the prior
year’s operating expenses of $38.9 million. Specifically, selling and marketing expenses of $23.2 million in
fiscal 2022 decreased 0.5% from the prior year amount of $23.3 million. The decrease in selling and marketing
expenses for the current year is primarily due to a decrease in payroll taxes in the second quarter of the current
year related to the ERC, as well as a decrease in amortization expense related to the second quarter’s change in
the remaining useful lives and amortization methods for certain of our customer relationship intangibles. The
current year decline in selling and marketing expenses was partially offset by an increase in employee wages and
bonuses as well as increased travel and entertainment, commissions, and advertising expenses. General and
administrative expenses increased 1.4% to $9.6 million in the current year compared to $9.4 million in the prior
year, primarily due to an increase in outside service fees, employee wages, bonuses and fees, partially offset by a
decrease in payroll taxes related to the ERC. Research & development (“R&D”) costs in fiscal 2022 of
$6.8 million increased 8.8% from $6.2 million in fiscal 2021, primarily due to an increase in employee wages
and bonus and outside consulting fees. The current year increase in R&D costs was partially offset by a decline
in payroll taxes related to the ERC. The R&D spending level for fiscal 2022 represents 5.7% of net revenue,
compared to the prior year level of 5.3%.

Other income in fiscal 2022 was $2.8 million compared to other expense of $0.3 million in fiscal 2021.
Current year other income includes $4.5 million related to the forgiveness of our PPP Loan, partially offset by
$0.7 million related to the write-off of our Oracle EnterpriseOne ERP system and related prepaid service and
maintenance contracts as a result of the full implementation of a new ERP system in our US based operations in
the fourth quarter of fiscal 2022, interest expense on debt of $0.7 million, and net foreign exchange loss of
$0.3 million. Prior year other expense includes $1.0 million of interest expense on debt and revolving line of
credit, offset by a net foreign exchange gain of $0.6 million and other income of $0.1 million.

We recognized $0.6 million of income tax expense for the current fiscal year, resulting in an effective tax
rate of 8.6%. The decrease in the effective tax rate in 2022 from 2021 is primarily related to the PPP loan
forgiveness tax-exempt income. Specific items decreasing the effective tax rate include PPP loan forgiveness
tax-exempt income, R&D tax credits, foreign derived intangible income (“FDII”) deductions, and a change in
reserves related to ASC 740 liabilities. This decrease was offset by state taxes, return to provision adjustments,
and taxes on foreign earnings. The PPP Loan forgiveness is excluded from taxable income under Section 1106(i)
of the CARES Act. During fiscal 2021 we recognized a $0.9 million income tax expense, or a 41.1% effective
tax rate. The effective tax rate in this period was directly impacted by the change in mix of income between
relevant jurisdictions in which we are subject to income taxes. Specific items increasing the fiscal 2021 effective
tax rate include foreign rate differential, Denmark statutory audit adjustments, stock-based compensation, and
Canada withholding taxes. This increase was offset by the foreign derived intangible income deduction, the
release of a valuation allowance in China, and R&D tax credits expected to be utilized.

Net income for fiscal 2022 was $6.4 million, or $0.88 per diluted share. The results for the current period
were impacted by income of $4.5 million ($4.4 million net of tax or $0.60 per diluted share) related to the
forgiveness of our PPP Loan, income of $2.1 million ($1.6 million net of tax or $0.22 per diluted share) related to
the net ERC and expense of $0.7 million ($0.5 million net of tax or $0.07 per diluted share) related to the
write-off of our Oracle EnterpriseOne ERP system and related prepaid service and maintenance contracts. Net
income for the prior year was $1.3 million or $0.18 per diluted share. Return on revenue was 5.5% for fiscal
2022 compared to 1.1% for fiscal 2021.

25

Fiscal 2021 compared to Fiscal 2020

For a comparison of our results of operations for the fiscal years ended January 31, 2021, and January 31,
2020, see “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations” of our annual report on Form 10-K for the fiscal year ended January 31, 2021, filed with the SEC on
April 13, 2021.

Segment Analysis

We report two segments consistent with our product revenue groups: PI and T&M. Segment performance is
evaluated based on the operating segment’s profit (loss) before corporate and financial administration expenses.
The following table summarizes selected financial information by segment.

($ in thousands)

2022

Revenue

2021

Segment Operating Profit (Loss)

Segment Operating Profit
(Loss) as a % of Revenue

2020

2022

2021

2020

2022

2021

2020

PI . . . . . . . . . . . . . . . . . $ 90,915 $ 90,268 $ 88,116 $10,411 $12,885 $ 7,509
6,281
T&M . . . . . . . . . . . . . .

(1,032)

25,765

26,565

45,330

3,398

11.5% 14.3% 8.5%
12.8% (4.0)% 13.9%

Total

. . . . . . . . . . . . . . $117,480 $116,033 $133,446

13,809

11,853

13,790

11.8% 10.2% 10.3%

Corporate Expenses . .

Operating Income . . . .
Other Expense, Net . . .

Income Before Income
Taxes . . . . . . . . . . . .

Income Tax Provision

(Benefit) . . . . . . . . .

Net Income . . . . . . . . .

Product Identification

9,553

4,256
2,778

9,420

11,357

2,433
(254)

2,433
(1,063)

7,034

2,179

1,370

605

895

(389)

$ 6,429 $ 1,284 $ 1,759

Revenue from the PI segment increased 0.7% in fiscal 2022, with revenue of $90.9 million compared to
revenue of $90.3 million in the prior year. The current year increase is primarily attributable to growth in demand
the increase in current year sales of
for ink jet and media supplies for the Trojan Label product
QuickLabel’s ink jet printer supplies and an increase in parts and repairs revenue in both the QuickLabel and
Trojan Label product groups. Also contributing to the increase in revenue for the current year was an increase in
hardware sales in the Trojan Label product group for certain new products such as the Trojan Two Compact
printer and the T3-OPX label press. PI current year segment operating profit was $10.4 million with a profit
margin of 11.5%, compared to the prior year segment operating profit of $12.9 million and related profit margin
of 14.3%. The decrease in current year segment operating profit and margin is primarily due to increased
operating expenses.

line,

Test & Measurement

Revenue from the T&M product group was $26.6 million for fiscal 2022, a 3.1% increase compared to
revenue of $25.8 million in the prior year. The increase in revenue for the current year is primarily attributable to
the increase in repairs and parts sales for the aerospace printer product lines. To a lesser degree, the increase in
the current year revenue was also impacted by the increase in supplies revenue in the aerospace product lines.
T&M current year segment operating profit was $3.4 million resulting in a 12.8% profit margin compared to the
prior year segment operating loss of $1.0 million and related negative operating margin of 4.0%. The increased
profit and margins are a result of increased sales and lower manufacturing and operating costs.

26

Liquidity and Capital Resources

Overview

Historically, our primary sources of short-term liquidity have been cash generated from operating activities
and borrowings under our revolving credit facility. These sources have also funded a portion of our capital
expenditures and contractual contingent consideration obligations. We have typically funded acquisitions by
borrowing under bank term loan facilities.

On July 30, 2020, we entered into an Amended and Restated Credit Agreement (the “A&R Credit
Agreement”) with Bank of America, N.A. (the “Lender”), our wholly owned subsidiary ANI ApS, a Danish
private limited liability company and ANI ApS’s wholly-owned subsidiary TrojanLabel ApS, a Danish private
limited liability company (“TrojanLabel”). The A&R Credit Agreement amended and restated the Credit
Agreement dated as of February 28, 2017, by and among us, ANI ApS, TrojanLabel and the Lender. In
connection with our entry into 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, prior to
the effectiveness of the Amendment (as defined below), its obligations were guaranteed by ANI ApS and
TrojanLabel.

On March 24, 2021, we entered into a First Amendment to Credit Agreement (the “Amendment”) to our
A&R Credit Agreement (the “A&R Credit Agreement amended by the Amendment, the “Amended Credit
Agreement”) with the Lender, ANI ApS and TrojanLabel. Immediately prior to the closing of the Amendment,
we repaid $2.6 million in principal amount of the term loan outstanding under the A&R Credit Agreement,
resulting in an outstanding balance of the term loan of $10.0 million and no amount drawn and outstanding under
the revolving credit facility under the Amended Credit Agreement.

The Amended Credit Agreement expires on September 30, 2025, a significant extension of tenor. It also
eliminated a minimum adjusted EBITDA covenant, an asset coverage covenant and a minimum liquidity
covenant, and, subject to ongoing covenant compliance, significantly reduced limitations on restricted payments
such as dividends, eliminated restrictions on capital expenditures and increased operating flexibility with respect
to funding our global operations.

The Amended Credit Agreement provides for (i) a term loan in the principal amount of $10.0 million, and
(ii) a $22.5 million revolving credit facility available for general corporate purposes. At the closing of the
Amended Credit Agreement, we borrowed the entire $10.0 million term loan which was used to refinance in full
the outstanding term loan under the A&R Credit Agreement. Under the Amended Credit Agreement, revolving
credit loans may continue to be borrowed, at our option, in U.S. Dollars or, subject to certain conditions, Euros,
British Pounds, Canadian Dollars or Danish Kroner.

While we expected that as a result of the impact of the COVID-19 pandemic, some of our customers would
experience liquidity pressure and be unable to pay us for products on a timely basis, in general our recent
receivables collection experience has been consistent with our historical experience and a significant
deterioration in receivables collection has not occurred.

In response to the COVID-19 pandemic and related economic dislocation, we have implemented and will
continue to implement a variety of expense reduction and cash preservation initiatives. On April 27, 2020, our
board of directors suspended our quarterly cash dividend beginning with the second quarter of our fiscal year
2021.

At January 31, 2022, our cash and cash equivalents were $5.3 million. There was no outstanding balance on
our revolving line of credit at January 31, 2022 and we have $22.5 million available for borrowing under that
facility. We believe that our available cash and credit facilities combined with our cash generated from
to support our operating requirements including our capital expenditure
operations will be sufficient
commitments.

27

Indebtedness

Term Loan

The Amended Credit Agreement requires that the term loan be paid as follows: 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 April 30,
2021 through January 31, 2022 is $187,500; 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 April 30, 2022 through January 31, 2023 is
$250,000; 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 April 30, 2023 through January 31, 2025 is $312,500; 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
April 30, 2025 and July 31, 2025 is $500,000; and the entire remaining principal balance of the term loan is
required to be paid on September 30, 2025. 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 September 30, 2025, at which time any outstanding
revolving loans will be due and payable in full, and the revolving credit facility will terminate. We may reduce or
terminate the revolving line of credit at any time, subject to certain thresholds and conditions, without premium
or penalty.

The Amended Credit Agreement includes an uncommitted accordion provision under which the term loan
and/or revolving credit facility commitments may be increased in an aggregate principal amount not exceeding
$10.0 million, subject to obtaining the agreement of the Lender and the satisfaction of certain other conditions.

As under the A&R Credit Agreement, the loans under the Amended 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 Amended Credit Agreement. No amount of the term loan that is repaid may be reborrowed.

On December 14, 2021, we and Bank of America, N.A. entered into a LIBOR Transition Amendment (the
“LIBOR Amendment”) with regard to the Amended Credit Agreement. The LIBOR Amendment, among other
things, (i) changes the rate under the Amended Credit Agreement for borrowings denominated in U.S. Dollars
from a LIBOR-based rate to a BSBY (Bloomberg Short-Term Bank Yield Index)-based rate, subject to certain
adjustments, (ii) changes the rate under the Amended Credit Agreement for borrowings denominated in British
Pounds Sterling from a LIBOR-based rate to a SONIA (Sterling Overnight Index Average)-based rate, subject to
certain adjustments, (iii) changes the rate under the Amended Credit Agreement for borrowings denominated in
Euros from a LIBOR-based rate to a EURIBOR (Euro Interbank Offered Rate)-based rate, subject to certain
adjustments, and (iv) updates certain other provisions of the Amended Credit Agreement regarding successor
interest rates to LIBOR.

Prior to giving effect to the LIBOR Amendment, the interest rates under Amended Credit Agreement were
as follows: the term loan and revolving credit loans bore interest at a rate per annum equal to, at our option,
either (a) the LIBOR Rate as defined in the A&R Credit Agreement (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 varied within a
range of 1.60% to 2.30% 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) 0.50%, plus a margin that varied within a range of 0.60% to 1.30% based on our
consolidated leverage ratio. In addition to certain other fees and expenses that we are required to pay to the
Lender, we are required to pay a commitment fee on the undrawn portion of the revolving credit facility that
varies within a range of 0.15% and 0.30% based on our consolidated leverage ratio.

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The interest rates under the Amended Credit Agreement, giving effect to the LIBOR Amendment, are as
follows: the term loan and revolving credit loans bear interest at a rate per annum equal to, at our option, either
(a) the BSBY Rate as defined in the LIBOR Amendment (or in the case of revolving credit loans denominated in
a Pounds Sterling, Euros or another currency other than U.S. Dollars, the SONIA Rate as defined in the LIBOR
the applicable quoted rate,
Amendment, EURIOBOR Rate as defined in the LIBOR Amendment, or
respectively), plus a margin that varies within a range of 1.60% to 2.30% 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 BSBY Rate, SONIA Rate, EURIBOR Rate or other applicable
quoted rate plus 1.00% or (iv) 0.50%, plus a margin that varies within a range of 0.60% to 1.30% based on our
consolidated leverage ratio. In addition to certain other fees and expenses that we are required to pay to the
Lender, we are required to pay a commitment fee on the undrawn portion of the revolving credit facility that
varies within a range of 0.15% and 0.30% based on our consolidated leverage ratio.

We must comply with various customary financial and non-financial covenants under the Amended Credit
Agreement. The financial covenants under the Amended Credit Agreement consist of a maximum consolidated
leverage ratio and a minimum consolidated fixed charge coverage ratio. The minimum EBITDA, minimum
consolidated asset coverage ratio, minimum liquidity and maximum capital expenditures covenants with which
we were required to comply under the A&R Credit Agreement were eliminated by the Amendment. 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 their capital stock, to repurchase or acquire their capital stock, 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, in each case subject to certain
exceptions and thresholds as set forth in the Amended Credit Agreement, certain of which provisions were
modified by the Amendment.

The Lender is entitled to accelerate repayment of the loans and to terminate its revolving credit commitment
under the Amended 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 a change of control.

Our obligations under the Amended Credit Agreement continue to be secured by substantially all of our
personal property assets (including a pledge of the equity interests held by us 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. Pursuant to
the Amendment, the guarantees of our obligations under the A&R Credit Agreement that were previously
provided by ANI ApS and TrojanLabel were released.

PPP Loan

On May 6, 2020, we entered into a Loan Agreement with and executed a promissory note in favor of
Greenwood Credit Union pursuant to which we borrowed $4.4 million from Greenwood pursuant to the
Paycheck Protection Program administered by the United States Small Business Administration (the “SBA”) and
authorized by 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, which was enacted on
June 5, 2020. We believe that our obtaining the PPP Loan and suspending the payment of dividends on our
common stock were instrumental in our ability to successfully negotiate the A&R Credit Agreement.

The PPP Loan, which would have matured on May 6, 2022, was unsecured and bore interest at a rate of
1.0% per annum, accruing from the loan date. No payments would have been due on the PPP Loan until the date
on which the lender determined the amount of the PPP Loan that was eligible for forgiveness.

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On June 15, 2021, Greenwood notified us that the SBA approved our application for forgiveness of the
entire $4.4 million principal balance of our PPP Loan and all accrued interest thereon. As a result, we recorded a
$4.5 million gain on extinguishment of debt in other income (expense) which is included in our consolidated
income statement for the period ended January 31, 2022.

Cash Flow

The statements of cash flows for the years ended January 31, 2022, 2021 and 2020 are included on page 50
of this Form 10-K. Net cash provided by operating activities was $1.4 million in fiscal 2022 compared to net cash
provided by operating activities of $15.5 million in the previous year. The decrease in net cash provided by
operations for the current year is primarily due to a decrease in cash provided by working capital of $11.3 million
from fiscal 2021. The changes in accounts receivable, inventory, income taxes, accounts payable and accrued
expenses for the current year decreased cash by $3.9 million in fiscal 2022 compared to an increase to cash of
$7.4 million in the prior year. The decrease in cash from operations for fiscal 2022 was also impacted by the
$3.1 million ERC receivable and the $4.5 million gain on the forgiveness of the PPP Loan.

The accounts receivable balance decreased to $17.1 million at January 31, 2022, compared to $17.4 at
January 31, 2021. The slight decrease in the accounts receivable balance is related to sales product mix in fiscal
2022 compared to the prior year. The days sales outstanding dropped to 45 days at year end compared to 51 days
at the end of fiscal 2021 contributing to the lower receivables balance at January 31, 2022. The days sales
outstanding decrease in the current year is due to customer mix, as aerospace receivables typically take longer to
collect, and these revenues continued to represent a lesser percentage of total sales in fiscal 2022.

The year-end inventory balance increased to $34.6 million at January 31, 2022 versus $30.1 million at
January 31, 2021, and the days inventory on hand increased to 156 days at the end of fiscal 2022 as compared to
147 days at the end of the fiscal 2021. The current period increase in inventory is due to increased production
demand.

Net cash used by investing activities for fiscal 2022 was $1.8 million for capital expenditures, of which
$1.6 million related to the capitalization of our new ERP system and the related hardware, and the remaining
$0.2 million was for machinery and tools.

Net cash used by financing activities for fiscal 2022 was $5.6 million. Cash outflows for financing activities
for fiscal 2022 included the refinancing of debt, which resulted in a net outflow of cash of $2.6 million, and
principal payments on the new long-term debt and the guaranteed royalty obligation of $0.8 million and
$2.0 million, respectively.

Fiscal 2021 compared to Fiscal 2020

For a comparison of our cash flow for the fiscal years ended January 31, 2021 and January 31, 2020, see
“Part II, Item 7. Management’s Discussion and Analysis of Liquidity and Capital Resources” in our annual report
on Form 10-K for the fiscal year ended January 31, 2021, filed with the SEC on April 13, 2021.

Contractual Obligations, Commitments and Contingencies

As of January 31, 2022, we had contractual obligations related to lease arrangements, debt and royalty

obligation arrangements and purchase commitments.

The lease arrangements are for certain of our facilities at various locations worldwide. As of January 31,
2022, we had fixed lease payment obligations of $1.1 million, with $0.3 million due within 12 months. Refer to
Note 12, “Leases,” in our audited consolidated financial statements included in this Annual Report on Form 10-K
for further details.

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Debt arrangements under our Amended Credit Agreement with Bank of America, N.A., consist of the
balance due of $9.3 million at January 31, 2022. For additional details regarding our long-term debt obligations,
see Note 7, “Debt,” in our audited consolidated financial statements included in this Annual Report on Form
10-K.

We are subject to a guaranteed minimum royalty payment obligation over the next six years pursuant to the
Honeywell Agreement, which, at January 31, 2022, included a balance due of $6.4 million, with $2.0 million due
within 12 months. Refer to Note 11, “Royalty Obligation,” in our audited consolidated financial statements
included in this Annual Report on Form 10-K for further details.

In order to meet our manufacturing demands and, in some cases, lock in particular pricing structures for
specific goods used in manufacturing, we enter into purchase commitments with our suppliers. At January 31,
2022 our purchase commitments totaled $37.5 million, with $35.4 million due within 12 months, most of which
are non-cancelable.

We are also subject to contingencies, including legal proceedings and claims arising out of its businesses
that cover a wide range of matters, such as: contract and employment claims; workers compensation claims;
product liability claims; warranty claims; and claims related to modification, adjustment or replacement of
component parts of units sold. 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 our
consolidated financial position or results of operations. It is possible, however, that results of operations for any
future period could be materially affected by changes in our assumptions or strategies related to these
contingencies or changes out of our control.

Critical Accounting Policies and Estimates

Our discussion and analysis of financial condition and results of operations are based upon our consolidated
financial statements, which have been prepared in accordance with accounting principles generally accepted in
the United States. Certain of our accounting policies require the application of judgment in selecting the
appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an
inherent degree of uncertainty. We periodically evaluate the judgments and estimates used for our critical
accounting policies to ensure that such judgments and estimates are reasonable for our interim and year-end
reporting requirements. These judgments and estimates are based on our historical experience, current trends and
information available from other sources, as appropriate. We do not believe there is a great likelihood that
materially different amounts would be reported using different assumptions pertaining to the accounting policies
described below, however, if actual conditions differ from the assumptions used in our judgments, our financial
results could be materially different from our estimates.

We believe the following critical accounting policies require significant judgments and estimates in the

preparation of our consolidated financial statements:

Revenue Recognition: We recognize revenue in accordance with Accounting Standards Update
(ASU) 2014-9, Revenue from Contracts with Customers (also referred to as Topic 606). Under Topic 606, based
on the nature of our contracts and consistent with prior practice, we recognize most of our revenue upon
shipment, which is when the performance obligation has been satisfied.

Our accounting policies relating to the recognition of revenue under Topic 606 require management to make
estimates, determinations and judgments based on historical experience and on various other assumptions, which
include (i) the existence of a contract with the customer, (ii) the identification of the performance obligations in
the contract, (iii) the value of any variable consideration in the contract, (iv) the stand alone selling price of
multiple obligations in the contract, for the purpose of allocating the consideration in the contract, and
(v) determining when a performance obligation has been met. Recognition of revenue based on incorrect
judgments, including the identification of performance obligation arrangements as well as the pattern of delivery

31

for those services, could result
recognition, which could have a material effect on our financial condition and results of operations.

in inappropriate recognition of revenue, or incorrect

timing of revenue

We recognize revenue for non-recurring engineering (NRE) fees, as necessary, 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.

Infrequently, we receive requests from customers to hold product being purchased from us for the
customers’ convenience. We recognize revenue for such bill and hold arrangements in accordance with the
guidance provided by Topic 606, which requires the transaction to meet the following criteria in order to
determine that the customer has obtained control: (a) the reason for the bill and hold is substantive, (b) the
product has separately been identified as belonging to the customer, (c) the product is currently ready for
physical transfer to the customer, and (d) we do not have the ability to use the product or direct it to another
customer.

Allowance for Doubtful Accounts: Accounts receivable consists primarily of receivables from our customers
arising from the sale of our products. We actively monitor our exposure to credit risk through the use of credit
approvals and credit limits. Accounts receivable is presented net of reserves for doubtful accounts.

We estimate the collectability of our receivables and establish allowances for accounts receivable that we
estimate to be uncollectible. We base these allowances on our historical collection experience, the length of time
our accounts receivable are outstanding and the financial condition of individual customers. In situations where
we are aware of a specific customer’s inability to meet its financial obligation, such as in the case of a
bankruptcy filing, we assess the need for a specific reserve for bad debts. We believe that our procedure for
estimating such amounts is reasonable and historically have not resulted in material adjustments in subsequent
periods. Bad debt expense was less than 1% of net sales in each of fiscal 2022 and 2021.

Warranty Claims: We offer warranties on some of our products. We establish a reserve for estimated costs
of warranties at the time the product revenue is recognized. This reserve requires us to make estimates regarding
the amounts necessary to settle future and existing claims using historical data on products sold as of the balance
sheet date. The length of the warranty period, the product’s failure rates, and the customer’s usage affect
estimated warranty cost. If actual warranty costs differ from our estimated amounts, future results of operations
could be affected adversely. Warranty cost is recorded as cost of revenue, and the reserve balance recorded as an
accrued expense. While we maintain product quality programs and processes, our warranty obligation is affected
by product failure rates and the related corrective costs. If actual product failure rates and/or corrective costs
differ from the estimates, we revise our estimated warranty liability accordingly.

Inventories: Inventories are stated at the lower of cost or net realizable value. The process for evaluating and
recording obsolete and excess inventory provisions consists of analyzing the inventory supply on hand and
estimating the net realizable value of the inventory based on historical experience, current business conditions
and anticipated future revenue. We believe that our procedures for estimating such amounts are reasonable and
historically have not resulted in material adjustments in subsequent periods when the estimates are adjusted to
actual experience.

Income Taxes: A valuation allowance is established when it is “more-likely-than-not” that all or a portion of
deferred tax assets will not be realized. A review of all available positive and negative evidence must be
considered, including our performance, the market environment in which we operate, length of carryforward
periods, existing revenue backlog and future revenue projections. If actual factors and conditions differ
materially from the estimates made by management, the actual realization of the net deferred tax assets or
liabilities could vary materially from the amounts previously recorded. At January 31, 2022, we had provided
valuation allowances for future tax benefits resulting from certain domestic R&D tax credits and foreign tax
credit carryforwards, both of which could expire unused.

32

The calculation of tax liabilities involves significant judgment in estimating the impact of uncertainties in
the application of complex tax laws and regulations in a multitude of jurisdictions. Although guidance on the
accounting for uncertain income taxes prescribes the use of a recognition and measurement model,
the
determination of whether an uncertain tax position has met those thresholds will continue to require significant
judgment by management. If the ultimate resolution of tax uncertainties is different from what we have
estimated, our income tax expense could be materially impacted.

On March 27, 2020, the 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 (”PPP”), 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 pursuant to which we borrowed $4.4 million. 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 PPP. 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 deducted the full $4.4 million of qualified expenses on our 2020 federal tax
return. On June 15, 2021, Greenwood notified us that the SBA approved our application for forgiveness of the
entire $4.4 million principal balance of our PPP Loan and all accrued interest thereon. As a result, in the second
quarter of fiscal 2022, we recorded a $4.5 million gain on extinguishment of debt. The PPP loan forgiveness
recognized in the second quarter of fiscal 2022 is excluded from taxable income under Section 1106(i) of the
CARES Act.

Intangible and Long-Lived Assets: Long-lived assets, such as definite-lived intangible assets and property,
plant and equipment, 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, which is determined by the discounting of future cash flows.

include macroeconomic conditions,

Goodwill: Goodwill is tested for impairment at the reporting unit. 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. 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 first qualitatively assessed to determine 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 assessment
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. If a
quantitative assessment is required, 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,
we use 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

33

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.

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 grants and assessed the expected risk
tolerance of different option groups. The risk-free interest rate used in the model 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 (“RSAs”) and restricted stock units
(“RSUs”) 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 date of grant. 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.

Recent Accounting Pronouncements

Reference is made to Note 1 of our audited consolidated financial statements included elsewhere in this

report.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Our primary financial market risks consist of foreign currency exchange rates risk and the impact of changes
in interest rates that fluctuate with the market on our variable rate credit borrowings under our existing credit
agreement.

Financial Exchange Risk

The functional currencies of our foreign subsidiaries and branches are the local currencies—the British
Pound in the U.K., the Canadian Dollar in Canada, the Danish Kroner in Denmark, the Chinese Yuan in China,
and the Euro in France and Germany. We are exposed to foreign currency exchange risk as the functional
currency financial statements of foreign subsidiaries are translated to U.S. dollars. The assets and liabilities of
our foreign subsidiaries having a functional currency other than the U.S. dollar are translated into U.S. dollars at
the exchange rate prevailing at the balance sheet date, and at an average exchange rate for the reporting period
for revenue and expense accounts. The cumulative foreign currency translation adjustment is recorded as a
component of accumulated other comprehensive loss in shareholders’ equity. The reported results of our foreign
subsidiaries will be influenced by their translation into U.S. dollars by currency movements against the U.S.
dollar. Our primary currency translation exposure is related to our subsidiaries that have functional currencies
denominated in Danish Kroner and the Euro. A hypothetical 10% change in the rates used to translate the results
of our foreign subsidiaries would result
income of
approximately $0.2 million for the year ended January 31, 2022.

in an increase or decrease in our consolidated net

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Transactional exposure arises where transactions occur in currencies other than the functional currency.
Transactions in foreign currencies are recorded at the exchange rate prevailing at the date of the transaction. The
resulting monetary assets and liabilities are translated into the appropriate functional currency at exchange rates
prevailing at the balance sheet date and the resulting gains and losses are reported as foreign exchange gain (loss)
in the consolidated statements of income. Foreign exchange losses resulting from transactional exposure were
$0.3 million for the year ended January 31, 2022.

Interest Rate Risk

At January 31, 2022, our total indebtedness included $9.25 million of term loan variable-rate debt. At
January 31, 2022, under the LIBOR Transition Amendment to the Amended Credit Agreement, the term loan
bears interest at a BSBY (Bloomberg Short-Term Bank Yield) rate plus a margin that varies between 1.60% and
2.30% based on our consolidated leverage ratio. During fiscal 2022, the interest rate on our variable rate debt
ranged between 2.35% to 4.65% . The impact on our results of operations of a 100 basis point change in the
interest rate on the outstanding balance of our variable-rate debt, would be approximately $0.1 million annually.

Item 8. Financial Statements and Supplementary Data

The consolidated financial statements required under this item are submitted as a separate section of this

report on the pages indicated at Item 15(a)(1).

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management has evaluated, under the supervision and with the participation of our Chief Executive
Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures as of the end of
the period covered by this Annual Report on Form 10-K pursuant to Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended (Exchange Act). Based on that evaluation, our Chief Executive
Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures were
effective at January 31, 2022 to ensure that the information required to be disclosed in our Exchange Act reports
is (1) recorded, processed, summarized and reported in a timely manner and (2) accumulated and communicated
to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to
allow timely decisions regarding required disclosure.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial
reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Our internal control
over financial reporting is designed to provide reasonable assurance regarding the reliability of its financial
reporting and the preparation of published financial statements in accordance with generally accepted accounting
principles.

Because of the inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to risk that
controls may become inadequate because of changes in conditions, or the degree of compliance may deteriorate.

Management conducted its evaluation of the effectiveness of its internal control over financial reporting as
of January 31, 2022. In making this assessment, management used the criteria set forth in the Internal Control-

35

the Treadway
Integrated Framework (2013)
Commission (“COSO”). Based on this assessment, the principal executive officer and principal financial officer
believe that as of January 31, 2022, our internal control over financial reporting was effective based on criteria
set forth by COSO in “Internal Control-Integrated Framework.”

issued by the Committee of Sponsoring Organizations of

Changes in Internal Controls over Financial Reporting

There have been no changes in our internal control over financial reporting during our most recently
completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.

Item 9B. Other Information

None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

36

Item 10. Directors, Executive Officers and Corporate Governance

PART III

The information required by this item is incorporated herein by reference to our definitive proxy statement

to be filed for our 2022 Annual Meeting of Shareholders.

The following sets forth certain information with respect to all executive officers of the Company. All

officers serve at the pleasure of the Board of Directors.

Name

Gregory A. Woods . . . . . . . . .
David S. Smith . . . . . . . . . . . .
Stephen M. Petrarca . . . . . . . .
Michael J. Natalizia . . . . . . . . .

Tom Carll

. . . . . . . . . . . . . . . .

Age

63
65
59
58

55

Position

President, Chief Executive Officer and Director
Vice President, Chief Financial Officer and Treasurer
Vice President—Operations
Chief Technology Officer and Vice President of Strategic

Technical Alliances

Vice President and General Manager—Aerospace

Mr. Woods has served as Chief Executive Officer of the Company since February 1, 2014. Mr. Woods
joined the Company in September 2012 as Executive Vice President and Chief Operating Officer and was
appointed President and Chief Operating Officer on August 29, 2013. Prior to joining the Company, Mr. Woods
served from January 2010 to August 2012 as Managing Director of Medfield Advisors, LLC, an advisory firm
located in Medfield, Massachusetts focused on providing corporate development and strategy guidance to
technology driven manufacturing firms. From 2008 to 2010, Mr. Woods served as President of Performance
Motion Devices, a specialty semiconductor and electronics manufacturer located in Lincoln, Massachusetts.

Mr. Smith was appointed Vice President, Chief Financial Officer and Treasurer of the Company effective
January 22, 2018. Prior to joining the Company, Mr. Smith served as Managing Partner of S.C. Advisors LLC, a
financial management consultancy firm from 2008 through January 2018. Mr. Smith has also held a variety of
senior finance positions at semiconductor and manufacturing companies, including Senior Vice President and
Chief Financial Officer of Standard Microsystems Corporation, a global semiconductor company, from 2005 to
2008 and Vice President, Finance and Chief Financial Officer of both Dover Corporation, a diversified global
manufacturing company, from 2000 to 2002 and Crane Company, a diversified manufacturing company from
1994 to 2000.

Mr. Petrarca was appointed Vice President—Operations in 1998. He has previously held positions as
General Manager of Manufacturing, Manager of Grass Operations and Manager of Grass Sales. He has been with
the Company since 1980.

Mr. Natalizia was appointed Vice President and Chief Technology Officer of the Company on March 9,
2012. Prior to this appointment, Mr. Natalizia held the position of Director of Product Development of the
Company since 2005.

Mr. Carll joined the Company in 1989 and has held the position of Vice President and General Manager—
Aerospace since 2011. Previously, Mr. Carll was Product Manager and National Sales Manager of the AstroNova
Test & Measurement product group and from its formation in 2004, the AstroNova Aerospace business group.

Code of Ethics

We have adopted a Code of Conduct which applies to all of our directors, officers and employees of the
Company, including our Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”) and principal
accounting officer which meets the requirements of a “code of ethics” as defined in Item 406 of Regulation S-K.
A copy of the Code of Conduct will be provided to shareholders, without charge, upon request directed to
Investor Relations or can be obtained on our website, (www.astronovainc.com), under the heading “Investors—
Corporate Governance—Governance Documents.” We intend to disclose any amendment to, or waiver of, a

37

provision of the Code of Conduct for the CEO, CFO, principal accounting officer, or persons performing similar
functions by posting such information on our website.

Item 11. Executive Compensation

The information required by this item is incorporated herein by reference to our definitive Proxy Statement

to be filed for our 2022 Annual Meeting of Shareholders.

The information set forth under the heading “Compensation Committee Report” in our definitive Proxy
Statement is furnished and shall not be deemed filed for purposes of Section 18 of the Exchange Act, nor be
incorporated by reference in any filing under the Securities Act of 1933, as amended.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this item is incorporated herein by reference to our definitive Proxy Statement

to be filed for our 2022 Annual Meeting of Shareholders.

Equity Compensation Plan Information

The following table sets forth information about our equity compensation plans as of January 31, 2022:

Number of Securities to
be Issued Upon Exercise
of Outstanding Options,
Warrants and Rights

Weighted-
Average Exercise
Price of
Outstanding
Options,
Warrants and
Rights

Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation Plans

Plan Category

Equity Compensation Plans Approved by

Shareholders . . . . . . . . . . . . . . . . . . . . . . . .

776,975(1)

$14.67(2)

401,893(3)

Equity Compensation Plans Not Approved

by Shareholders . . . . . . . . . . . . . . . . . . . . .

—

—

—

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

776,975(1)

$14.67(2)

401,893(3)

(1)

Includes 323,468 shares issuable upon exercise of outstanding options granted under our 2007 Equity
Incentive Plan; 139,075 shares issuable upon exercise of outstanding options granted under our 2015 Equity
Incentive Plan; and 135,500 shares issuable upon exercise of outstanding options granted, 135,403 restricted
stock units and 43,529 unvested performance stock units outstanding under our 2018 Equity Incentive Plan.
This balance does not include 20,410 of unvested restricted stock which are subject to forfeiture.

(2) Does not include restricted stock units.
(3) Represents 399,611 shares available for grant under the AstroNova, Inc. 2018 Equity Incentive Plan and

2,282 shares available for purchase under the Employee Stock Purchase Plan.

Additional information regarding these equity compensation plans is contained in Note 15, “Share-Based

Compensation,” in our audited consolidated financial statements included in this Annual Report on Form 10-K.

Item 13. Certain Relationships, Related Transactions and Director Independence

The information required by this item is incorporated herein by reference to our definitive Proxy Statement

for our 2022 Annual Meeting of Shareholders.

Item 14. Principal Accountant Fees and Services

The information required by this item is incorporated herein by reference to our definitive Proxy Statement

for our 2022 Annual Meeting of Shareholders.

38

Item 15. Exhibits and Financial Statement Schedule

(a)(1) Financial Statements:

PART IV

The following documents are included as part of this Annual Report filed on Form 10-K:

Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets as of January 31, 2022 and 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Income—Years Ended January 31, 2022, 2021 and 2020 . . . . . . . . . . . . . . . .
Consolidated Statements of Comprehensive Income—Years Ended January 31, 2022, 2021 and 2020 . . .
Consolidated Statements of Changes in Shareholders’ Equity—Years Ended January 31, 2022, 2021

and 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows—Years Ended January 31, 2022, 2021 and 2020 . . . . . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(a)(2) Financial Statement Schedule:

Page

44-45
46
47
48

49
50
51-75

Schedule II—Valuation and Qualifying Accounts and Reserves—Years Ended January 31, 2022, 2021

and 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

76

All other schedules for which provision is made in the applicable accounting regulations of the Securities
and Exchange Commission are not required under the related instructions or are inapplicable, and therefore, have
been omitted.

Item 16. Form 10-K Summary

Not Applicable.

(a)(3) Exhibits:

Exhibit
Number

(2.1)

(3A)

(3B)

(4.1)

(4.2)

Share Purchase Agreement, dated January 7, 2017, as amended, by and among ANI ApS, Trojan
Holding ApS, as a Seller and as the Sellers’ Representative, and Li Wei Chong filed as Exhibit 2.1
to our Annual Report on Form 10-K for the year ended January 31, 2017 and incorporated by
reference herein*

Restated Articles of Incorporation of the Company and all amendments thereto filed as Exhibit 3A
to our Quarterly Report on Form 10-Q for the quarter ended April 30, 2016 and incorporated by
reference herein.

By-laws of the Company as amended to date filed as Exhibit 3B to our Annual Report on
Form 10-K for the fiscal year ended January 31, 2008 (File No. 000-13200) and incorporated by
reference herein.

Specimen form of common stock certificate of the Company filed as Exhibit 4 to our Quarterly
Report on Form 10-Q for the quarter ended April 30, 2016 and incorporated by reference herein.

Description of securities registered pursuant to Section 12 of the Exchange Act filed as Exhibit 4.2
to our Annual Report on Form 10-K for the fiscal year ended January 31, 2020 (File
No. 000-13200) and incorporated by reference herein.

(10.1)

2. Astro-Med, Inc. 2007 Equity Incentive Plan as filed as Appendix A to the Definitive Proxy
Statement filed on April 25, 2007 on Schedule 14A (File No. 000-13200) for the 2007 annual
shareholders meeting and incorporated by reference herein.**

39

Exhibit
Number

(10.2)

(10.3)

(10.4)

(10.5)

(10.6)

(10.7)

(10.8)

(10.9)

(10.10)

(10.11)

(10.12)

(10.13)

(10.14)

(10.16)

40

Change in Control Agreement dated as of November 24, 2014 by and between the Company and
Gregory A. Woods filed as Exhibit 10.13 to our Annual Report on Form 10-K for the year ended
January 31, 2015 and incorporated by reference herein.**

AstroNova Inc. 2015 Equity Incentive Plan filed as Exhibit A to the Definitive Proxy Statement
filed on April 21, 2015 (File No. 000-13200) for the 2015 annual shareholders meeting and
incorporated by reference herein.**

Form of Indemnification Agreement for directors and officers filed as Exhibit 10.1 to our
Quarterly Report on Form 10-Q for the period ended October 31, 2015 and incorporated by
reference herein.**

Form of Restricted Stock Agreement granted under the Amended and Restated Non-Employee
Director Annual Compensation Program filed as Exhibit 10.2 to the Company’s Quarterly Report
on Form 10-Q for the period ended July 30, 2016 and incorporated by reference herein.**

Form of Incentive Stock Option Agreement granted under the 2015 Equity Incentive Plan filed as
Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the period ended July 30, 2016
and incorporated by reference herein.**

Form of Non-Statutory Stock Option Agreement granted under the 2015 Equity Incentive Plan
filed as Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the period ended
July 30, 2016 and incorporated by reference herein.**

Form of Non-Employee Director Non-Statutory Stock Option Agreement granted under the 2015
Equity Incentive Plan filed as Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for
the period ended July 30, 2016 and incorporated by reference herein.**

Form of Restricted Stock Agreement granted under the 2015 Equity Incentive Plan filed as
Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the period ended July 30, 2016
and incorporated by reference herein.**

Form of Non-Employee Director Restricted Stock Agreement granted under the 2015 Equity
Incentive Plan filed as Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the
period ended July 30, 2016 and incorporated by reference herein.**

Form of Time-Based Restricted Stock Unit Agreement granted under the 2015 Equity Incentive
Plan filed as Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q for the period ended
July 30, 2016 and incorporated by reference herein.**

Form of Performance Restricted Stock Unit Agreement granted under the 2015 Equity Incentive
Plan filed as Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q for the period ended
July 30, 2016 and incorporated by reference herein.**

Asset Purchase and License Agreement, dated September 28, 2017, by and between AstroNova,
Inc. and Honeywell International, Inc. filed as Exhibit 10.1 to the Company’s Current Report on
Form 8-K, event date September 28, 2017, filed with the SEC on October 4, 2017 and
incorporated by reference herein.

Amended and Restated AstroNova, Inc. Employee Stock Purchase Plan filed as Exhibit 10.1 to the
Company’s Current Report on Form 8-K/A, event date November 20, 2017, filed with the SEC on
December 28, 2017 and incorporated by reference herein.

Form of Performance-based Restricted Stock Unit Award Agreement filed as Exhibit 10.1 to the
Company’s Current Report on Form 8-K, event date June 4, 2018, filed with the SEC on June 4,
2018 and incorporated by reference herein.**

Exhibit
Number

(10.17)

(10.18)

(10.19)

(10.20)

(10.21)

(10.22)

(10.23)

(10.24)

(10.25)

(10.26)

(10.27)

(10.28)

Form of Restricted Stock Unit Agreement (time-based vesting) filed as Exhibit 10.2 to the
Company’s Current Report on Form 8-K, event date June 4, 2018, filed with the SEC on June 4,
2018 and incorporated by reference herein.**

Form of Incentive Stock Option filed as Exhibit 10.3 to the Company’s Current Report on
Form 8-K, event date June 4, 2018, filed with the SEC on June 4, 2018 and incorporated by
reference herein.**

Form of Non-statutory Stock Option filed as Exhibit 10.4 to the Company’s Current Report on
Form 8-K, event date June 4, 2018, filed with the SEC on June 4, 2018 and incorporated by
reference herein.**

Form of Non-statutory Stock Option (Non-employee Director) filed as Exhibit 10.5 to the
Company’s Current Report on Form 8-K, event date June 4, 2018, filed with the SEC on June 4,
2018 and incorporated by reference herein.**

Form of Restricted Stock Agreement filed as Exhibit 10.6 to the Company’s Current Report on
Form 8-K, event date June 4, 2018, filed with the SEC on June 4, 2018 and incorporated by
reference herein.**

Form of Non-employee Director Restricted Stock Agreement filed as Exhibit 10.7 to the
Company’s Current Report on Form 8-K filed, event date June 4, 2018, filed with the SEC on
June 4, 2018 and incorporated by reference herein.**

AstroNova, Inc. Amended and Restated Non-Employee Director Annual Compensation Program
filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed, event date January 31,
2019, filed with the SEC on February 4, 2019 and incorporated by reference herein.**

AstroNova, Inc. 2018 Equity Incentive Plan Non-Employee Director Restricted Stock Agreement
filed as Exhibit 10.41 to the Company’s Annual Report on Form 10-K for the fiscal year ended
January 31, 2019 and incorporated by reference to herein.*

AstroNova, Inc. 2018 Equity Incentive Plan, as amended, filed as Appendix A to the Company’s
Definitive Proxy Statement filed with the SEC on May 25, 2019 on Schedule 14A and
incorporated by reference herein.*

Amended and Restated Credit Agreement dated as of July 30, 2020 among AstroNova, Inc., ANI
ApS, TrojanLabel ApS, and Bank of America, N.A. filed as Exhibit 10.4 to the Company’s
Quarterly Report on Form 10-Q for the quarter ended August 1, 2020 and incorporated by
reference herein.

Amended and Restated Security and Pledge Agreement dated as of July 30, 2020 among
AstroNova, Inc. and Bank of America, N.A. , filed as Exhibit 10.2 to the Company’s Current
Report on Form 8-K, event date July 30, 2020, and incorporated by reference herein.

Open-End Mortgage Deed to Secure Present and Future Loans under Chapter 25 of Title 34 of the
Rhode Island General Laws, Assignment of Leases and Rents, Security Agreement and Fixture
Filing dated as of July 30, 2020 among AstroNova, Inc. and Bank of America, N.A., filed as
Exhibit 10.3 to the Company’s Current Report on Form 8-K, event date July 30, 2020, and
incorporated by reference herein.

(10.29)

Change in Control Agreement dated September 8, 2020 by and between AstroNova, Inc. and
David S. Smith filed as Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the
quarter ended August 1, 2020 and incorporated by reference herein.**

41

Exhibit
Number

(10.30)

(10.31)

First Amendment to Credit Agreement dated as of March 24, 2021 among AstroNova, Inc.
ANI ApS, TrojanLabel ApS and Bank of America, N.A., filed as Exhibit 10.34 to the Company’s
Annual Report on Form 10-K for the period ended January 31, 2021, and incorporated by
reference herein.

First Amendment
to Open-End Mortgage Deed to Secure Present and Future Loans under
Chapter 25 of Title 34 of the Rhode Island General Laws, Assignment of Leases and Rents,
Security Agreement and Fixture Filing dated as of March 24, 2021 among AstroNova, Inc. and
Bank of America, N.A., filed as Exhibit 10.35 to the Company’s Annual Report on Form 10-K for
the period ended January 31, 2021, and incorporated by reference herein.

(10.32)

Form of Indemnification Agreement for directors and officers, filed as Exhibit 10.1 to the
Company’s Quarterly Report on Form 10-Q for the period ended October 30, 2021, and
incorporated by reference herein.**

(10.33)†

LIBOR Transition Amendment dated as of December 14, 2021 among AstroNova, Inc. and Bank
of America, N.A.

(21)

(23.1)

(31.1)

(31.2)

(32.1)

(32.2)

List of Subsidiaries of the Company.

Consent of Wolf & Company, P.C.

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.

Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.

Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.

Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.

(101.INS)

XBRL Instance Document—the instance document does not appear in the Interactive Data File
because its XBRL tags are embedded within the Inline XBRL document

(101.SCH)

Inline XBRL Taxonomy Extension Schema Document

(101.CAL)

Inline XBRL Taxonomy Extension Calculation Linkbase Document

(101.DEF)

Inline XBRL Taxonomy Extension Definition Linkbase Document

(101.LAB)

Inline XBRL Taxonomy Extension Label Linkbase Document

(101.PRE)

Inline XBRL Taxonomy Extension Presentation Linkbase Document

(104)

Cover Page Interactive Data File (embedded within the Inline XBRL document).

*

Schedules to this Exhibit have been omitted in reliance on Item 601(b)(2) of Regulation S-K. The Company
will furnish copies of any such schedules to the SEC upon request.

** Management contract or compensatory plan or arrangement.
†

Filed herewith.

42

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

SIGNATURES

ASTRONOVA, INC.
(Registrant)

Date: April 18, 2022

By:

/S/ GREGORY A. WOODS

(Gregory A. Woods, Chief Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed

below by the following persons on behalf of the registrant and in the capacities and on the date indicated.

Name

Title

Date

/s/ GREGORY A. WOODS
Gregory A. Woods

/s/ DAVID S. SMITH
David S. Smith

/s/

JEAN A. BUA
Jean A. Bua

/s/ MITCHELL I. QUAIN
Mitchell I. Quain

/s/ YVONNE E. SCHLAEPPI
Yvonne E. Schlaeppi

/s/ HAROLD SCHOFIELD
Harold Schofield

/s/ RICHARD S. WARZALA
Richard S. Warzala

President, Chief Executive Officer and

April 18, 2022

Director (Principal Executive
Officer)

Vice President, Chief Financial Officer
and Treasurer (Principal Accounting
and Financial Officer)

Director

Director

Director

Director

Director

April 18, 2022

April 18, 2022

April 18, 2022

April 18, 2022

April 18, 2022

April 18, 2022

43

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Shareholders and Board of Directors of
AstroNova, Inc.

Opinions on the Financial Statements and Internal Control Over Financial Reporting

We have audited the accompanying consolidated balance sheets of AstroNova, Inc. (the “Company”) as of
January 31, 2022 and 2021, and the related consolidated statements of income, comprehensive income, changes
in shareholders’ equity and cash flows for each of the three years in the period ended January 31, 2022 and the
related notes and the financial statement schedule listed in Item 15(a)(2)
the “financial
statements”). We also have audited the Company’s internal control over financial reporting as of January 31,
2022, based on criteria established in Internal Control—Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission in 2013.

(collectively,

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial
position of the Company as of January 31, 2022 and 2021, and the results of its operations and its cash flows for
each of the years in the three-year period ended January 31, 2022, in conformity with accounting principles
generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all
material respects, effective internal control over financial reporting as of January 31, 2022, based on criteria
established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission in 2013.

Basis for Opinions

The Company’s management is responsible for these financial statements, for maintaining effective internal
control over financial reporting, and for its assessment of the effectiveness of internal control over financial
reporting included in the accompanying Management’s Annual Report on Internal Control over Financial
Reporting. Our responsibility is to express an opinion on the Company’s financial statements and an opinion on
the Company’s internal control over financial reporting based on our audits. We are a public accounting firm
registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to
be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we
plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of
material misstatement, whether due to error or fraud, and whether effective internal control over financial
reporting was maintained in all material respects.

Our audits of the financial statements included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the financial
statements. Our audit of internal control over financial reporting included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the
design and operating effectiveness of internal control based on the assessed risk. Our audits also included
performing such other procedures as we considered necessary in the circumstances. We believe that our audits
provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in

44

accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the
company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the financial statements that were
communicated or required to be communicated to the audit committee and that: (1) relate to accounts or
disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or
complex judgments. We have determined that there are no critical audit matters.

/s/ Wolf & Company, P.C.
We have served as the Company’s auditor since 2013.

Boston, Massachusetts
April 18, 2022

45

ASTRONOVA, INC.

CONSOLIDATED BALANCE SHEETS

As of January 31

(In Thousands, Except Share Data)

CURRENT ASSETS

ASSETS

Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts Receivable, net of reserves of $826 in 2022 and $1,054 in 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employee Retention Credit Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid Expenses and Other Current Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

Total Current Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, Plant and Equipment, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Identifiable Intangibles, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred Tax Assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Right of Use Asset
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2022

2021

5,276
17,124
34,609
3,135
3,634

63,778
11,441
19,200
12,156
5,591
1,094
1,695

$ 11,439
17,415
30,060
—
1,807

60,721
12,011
21,502
12,806
5,941
1,389
1,103

TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$114,955

$115,473

CURRENT LIABILITIES

LIABILITIES AND SHAREHOLDERS’ EQUITY

Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Accrued Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current Portion of Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current Liability—Royalty Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current Liability—Excess Royalty Payment Due . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income Taxes Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

8,590
3,512
4,113
1,000
2,000
235
323
262

$

5,734
2,917
3,874
5,326
2,000
177
655
285

Total Current Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

20,035

20,968

NON-CURRENT LIABILITIES

Long-Term Debt, net of current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Royalty Obligation, net of current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-Term Debt—PPP Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lease Liabilities, net of current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income Taxes Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred Tax Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8,154
4,361
—
808
399
186

7,109
6,161
4,422
1,065
681
384

TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

33,943

40,790

Commitments and Contingencies (See Note 22)
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 10,566,404 shares in 2022 and

10,425,094 shares in 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional Paid-in Capital
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Treasury Stock, at Cost, 3,324,280 shares in 2022 and 3,297,058 shares in 2021 . . . . . . . . . . . . . . . . . . . . . .
Accumulated Other Comprehensive Loss, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—

—

528
59,692
56,514
(33,974)
(1,748)

521
58,049
50,085
(33,588)
(384)

TOTAL SHAREHOLDERS’ EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

81,012

74,683

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$114,955

$115,473

See Notes to the Consolidated Financial Statements.

46

ASTRONOVA, INC.

CONSOLIDATED STATEMENTS OF INCOME

For the years ended January 31

(In Thousands, Except Per Share Data)

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$117,480
73,741

$116,033
74,673

$133,446
84,688

2022

2021

2020

Gross Profit
Costs and Expenses:

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Selling and Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Research and Development
General and Administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Operating Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Income (Expense):

Gain on Extinguishment of Debt – PPP Loan . . . . . . . . . . . . . . . . . . . . . .
Loss on Disposal of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain (Loss) on Foreign Currency Transactions . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net

Income before Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income Tax Provision (Benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net Income Per Common Share—Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net Income Per Common Share—Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

$

$

Weighted Average Number of Common Shares Outstanding—Basic . . . . . . .
Dilutive Effect of Common Stock Equivalents . . . . . . . . . . . . . . . . . . . . . . . . .

Weighted Average Number of Common Shares Outstanding—Diluted . . . . . .

43,739

41,360

48,758

23,177
6,753
9,553

39,483

4,256

23,301
6,206
9,420

38,927

2,433

4,466
(696)
(677)
(288)
(27)

2,778

7,034
605

6,429

0.89

0.88

7,207
132

7,339

$

$

$

—
—
(955)
590
111

(254)

2,179
895

1,284

0.18

0.18

7,104
62

7,166

$

$

$

26,884
8,084
11,357

46,325

2,433

—
—
(682)
(448)
67

(1,063)

1,370
(389)

1,759

0.25

0.24

7,024
214

7,238

See Notes to the Consolidated Financial Statements.

47

ASTRONOVA, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the years ended January 31

(In Thousands)

Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Comprehensive Income (Loss), net of taxes and reclassification adjustments:

2022

2021

2020

$ 6,429

$1,284

$1,759

Foreign Currency Translation Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in Value of Derivatives Designated as Cash Flow Hedge . . . . . . . . . . . .
(Gains) Losses from Cash Flow Hedges Reclassified to Income Statement
. . . .
Cross-Currency Interest Rate Swap Terminations . . . . . . . . . . . . . . . . . . . . . . . .

(1,426)
—
62
—

710
(239)
193
45

Other Comprehensive Income (Loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(1,364)

709

(133)
122
(264)
—

(275)

Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 5,065

$1,993

$1,484

See Notes to the Consolidated Financial Statements.

48

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

ASTRONOVA, INC.

($ In Thousands)

Common Stock

Shares

Amount

Additional
Paid-in
Capital

Retained
Earnings

Treasury
Stock

Balance January 31, 2019 . . . . . . . . . 10,218,559 $511 $53,568 $49,511 $(32,997)

Share-Based Compensation . . .
Employee Option Exercises . . .
Restricted Stock Awards

— —

65,121

Vested, net

. . . . . . . . . . . . . .

59,930

1,775
790

(3)

—
—

—

3

3

Accumulated
Other
Comprehensive
Income (Loss)

Total
Shareholders’
Equity

$ (818)
—
—

$69,775
1,775
782

—
(11)

(469)

—

(469)

Common Stock—Cash
Dividend—$0.28 per
share . . . . . . . . . . . . . . . . . . .
Net Income . . . . . . . . . . . . . . . .
Other Comprehensive Loss . . .

— —
— —
— —

— (1,972)
1,759
—
—
—

—
—
—

Balance January 31, 2020 . . . . . . . . . 10,343,610 $517 $56,130 $49,298 $(33,477)

Share-Based Compensation . . .
Employee Option Exercises . . .
Restricted Stock Awards

— —

16,487

Vested, net

. . . . . . . . . . . . . .

64,997

1,819
103

(3)

—
—

—

1

3

—
—

—
—
(275)

$(1,093)
—
—

(1,972)
1,759
(275)

$71,375
1,819
104

(111)

—

(111)

Common Stock—Cash
Dividend—$0.07 per
share . . . . . . . . . . . . . . . . . . .
Net Income . . . . . . . . . . . . . . . .
Other Comprehensive Income .

— —
— —
— —

—
—
—

(497)
1,284
—

—
—
—

Balance January 31, 2021 . . . . . . . . . 10,425,094 $521 $58,049 $50,085 $(33,588)

Share-Based Compensation . . .
Employee Option Exercises . . .
Restricted Stock Awards

Vested, net

. . . . . . . . . . . . . .
Net Income . . . . . . . . . . . . . . . .
Other Comprehensive Loss . . .

— —

14,371

126,939

1

6

— —
— —

1,493
156

—
—

(6)

—
—

—
6,429
—

—
—

(386)
—
—

—
—
709

$ (384)
—
—

—
—
(1,364)

(497)
1,284
709

$74,683
1,493
157

(386)
6,429
(1,364)

Balance January 31, 2022 . . . . . . . . . 10,566,404 $528 $59,692 $56,514 $(33,974)

$(1,748)

$81,012

See Notes to the Consolidated Financial Statements.

49

ASTRONOVA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended January 31

(In Thousands)

2022

2021

2020

Cash Flows from Operating Activities:

Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities:

$ 6,429

$ 1,284

$ 1,759

Depreciation and Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of Debt Issuance Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share-Based Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on Disposal of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on Extinguishment of Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred Income Tax Provision (Benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in Assets and Liabilities:

Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Receivable – Employee Retention Credit Receivable . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts Payable and Accrued Expenses . . . . . . . . . . . . . . . . . . . . . . . . .
Income Taxes Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,994
44
1,493
696
(4,466)
210

77
(3,135)
(4,883)
4,052
(2,043)
(1,074)

5,983
75
1,819
—
—
(1,021)

2,702
—
4,247
(57)
1,482
(970)

6,284
49
1,775
—
—
(1,638)

3,594
—
(3,938)
(2,732)
(1,773)
(156)

Net Cash Provided by Operating Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,394

15,544

3,224

Cash Flows from Investing Activities:

Additions to Property, Plant and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(1,796)

(2,587)

(2,906)

Net Cash Used by Investing Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(1,796)

(2,587)

(2,906)

Cash Flows from Financing Activities:

Net Cash Proceeds from Employee Stock Option Plans . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Cash Proceeds from Share Purchases under Employee Stock Purchase Plan . . . . . .
Net Cash Used for Payment of Taxes Related to Vested Restricted Stock . . . . . . . . . . . .
Net (Repayments)/Borrowings under Revolving Credit Facility . . . . . . . . . . . . . . . . . . .
Payment of Minimum Guarantee Royalty Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from Long-Term Debt – PPP Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from Long-Term Debt Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payoff of Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Principal Payments on Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments of Debt Issuance Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends Paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

60
96
(386)
—
(2,000)
—
10,000
(12,576)
(750)
—
—

9
95
(111)
(6,500)
(2,000)
4,422
15,232
(11,732)
(3,958)
(100)
(497)

654
128
(469)
5,000
(1,875)
—
—
—
(5,208)
—
(1,972)

Net Cash Used by Financing Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5,556)

(5,140)

(3,742)

Effect of Foreign Exchange Rate Changes on Cash and Cash Equivalents . . . . . . . . . . . . . . .

(205)

(627)

139

Net Increase (Decrease) in Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and Cash Equivalents, Beginning of Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6,163)
11,439

7,190
4,249

(3,285)
7,534

Cash and Cash Equivalents, End of Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 5,276

$ 11,439

$ 4,249

Supplemental Information:

Cash Paid During the Period for:

Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income Taxes, Net of Refunds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$
342
$ 2,414

$
$

677
446

$
531
$ 2,913

See Notes to the Consolidated Financial Statements.

50

ASTRONOVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
January 31, 2022, 2021 and 2020

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
using information that is reasonably available to us at this time. Some of the more significant estimates relate to
revenue recognition; the allowances for doubtful accounts; inventory valuation; income taxes; estimated useful
life and valuation of long-lived assets and goodwill; share-based compensation; and warranty reserves.
Management’s estimates are based on the facts and circumstances available at the time estimates are made,
historical experience, risk of loss, general economic conditions and trends, and management’s assessments of the
probable future outcome of these matters, including our expectations at the time regarding the duration, scope
and severity of the COVID-19 pandemic. 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. At January 31, 2022 and 2021, $3.7 million and $4.6 million, respectively,
was held in foreign bank accounts.

Inventories: Inventories are stated at the lower of standard and average cost 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 judgment and estimates within the revenue recognition process, 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
to receive in exchange for such products, which is generally at the
amount of consideration we expect
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.

51

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 11% and 9% of revenue for the years
ended January 31, 2022 and 2021, respectively. 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

52

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 loss of $0.3 million in fiscal 2022, a net transaction foreign
exchange gain of $0.6 million in fiscal 2021, and a net transaction foreign exchange loss of $0.4 million in fiscal
2020.

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
$1.3 million; $0.9 million and $1.8 million in fiscal 2022, 2021 and 2020, 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
2022, 2021 or 2020.

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 2022, 2021 or 2020.

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

53

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. If the quantitative assessment is performed, 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 qualitative assessment for our fiscal 2022 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. There were no
impairment charges for our goodwill in fiscal years 2022, 2021 or 2020.

Leases: We account for our leases in accordance with Accounting Standard Codification (“ASC”) 842,
Leases. ASC 842 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

54

and administrative expense on the consolidated statement of income. ROU assets are classified as such on the
consolidated balance sheet, short-term lease liabilities are classified in accrued expenses, and long-term lease
liabilities are classified as such 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, 2022 and 2021, a valuation allowance
was provided for deferred tax assets attributable to certain domestic R&D and foreign tax credit carryforwards
which are expected to 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 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 applied for forgiveness of the PPP Loan. Consistent with the legislation, we deducted the full $4.4 million of
qualified expenses on our 2020 federal tax return. On June 15, 2021, Greenwood notified us that the United
States Small Business Administration (the “SBA”) approved our application for forgiveness of the entire
$4.4 million principal balance of our PPP Loan and all accrued interest thereon. As a result, in the second quarter
of fiscal 2022, we recorded a $4.5 million gain on extinguishment of debt. The PPP loan forgiveness is excluded
from taxable income under Section 1106(i) of the CARES Act.

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 2022, 2021
and 2020, there were 345,085; 642,623 and 202,187, 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 assets and liabilities at fair value on a recurring and non-
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

55

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 at January 31,
2022 and 2021.

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 use derivative instruments as part of our overall strategy
to manage exposure to market risks primarily associated with fluctuations in foreign currency exchange rates and

56

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:

Income Taxes

In December 2019, the FASB issued 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. 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. The adoption of this guidance did not have a material impact on our consolidated financial
statements and accompanying disclosures.

No other new accounting pronouncements, issued or effective during fiscal 2022, have had or are expected

to have a material impact on our consolidated financial statements.

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:

(In thousands)

2022

2021

2020

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Central and South America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 68,185
31,922
6,519
5,926
3,271
1,657

$ 70,911
29,029
5,574
5,105
3,950
1,464

$ 83,671
29,617
5,719
8,316
4,145
1,978

Total Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$117,480

$116,033

$133,446

57

Major product types:

(In thousands)

2022

2021

2020

Hardware . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Service and Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 31,492
73,244
12,744

$ 34,111
71,772
10,150

$ 48,959
71,838
12,649

Total Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$117,480

$116,033

$133,446

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 $262,000 and
$285,000 at January 31, 2022 and January 31, 2021, 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,
2022 is primarily due to $269,000 of revenue recognized during the period that was included in the deferred
revenue balance at January 31, 2021 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. In the second quarter of fiscal 2022, we extended the remaining useful
life of these deferred costs from 6 years to 20 years and changed the amortization method from units sold to the
straight-line method. We believe these changes, based on the life of the aircraft under the applicable sales
contracts, appropriately reflects a more systematic and rational approach. This change is being treated as a
change in accounting estimate that is affected by a change in accounting principle. The impact on net income was
immaterial for the period ended January 31, 2022. The balance of these contract assets at January 31, 2021 was
$0.9 million and in the second quarter of the current year, we incurred an additional $0.4 million in contract costs
which will be amortized over 20 years. We amortized $60,000 of direct costs for the period ended January 31,
2022, and the balance of deferred incremental direct costs net of accumulated amortization at January 31, 2022,
was $1.3 million of which $0.1 million is reported in other current assets and $1.2 million is reported in other
assets in the accompanying consolidated balance sheet.

58

Note 3—Intangible Assets

Intangible assets are as follows:

January 31, 2022

January 31, 2021

Gross
Carrying
Amount

Accumulated
Amortization

Currency
Translation
Adjustment

Net
Carrying
Amount

Gross
Carrying
Amount

Accumulated
Amortization

Currency
Translation
Adjustment

Net
Carrying
Amount

(In thousands)

Miltope:

Customer Contract

Relationships . . . . $ 3,100

$ (2,515)

$ — $

585 $ 3,100

$ (2,284)

$ — $

816

RITEC:

Customer Contract

Relationships . . . .

2,830

(1,557)

TrojanLabel:

Existing Technology
Distributor Relations

2,327
937

(1,767)
(498)

—

127
46

1,273

2,830

(1,423)

—

1,407

687
485

2,327
937

(1,405)
(396)

196
89

1,118
630

Honeywell:

Customer Contract

Relationships . . . .

27,243

(11,073)

—

16,170

27,243

(9,712)

—

17,531

Intangible Assets, net

. . . $36,437

$(17,410)

$

173

$19,200 $36,437

$(15,220)

$

285

$21,502

In the second quarter of the current year, we extended the remaining useful life of the customer contract
relationship intangibles for Honeywell International, Inc. (“Honeywell”) from 6 years to 20 years and for the
RITEC intangibles we changed the amortization method which was based on revenue with a remaining life of 4
years to the straight-line method with a 20-year remaining life. We believe these changes, based on the life of the
aircraft related to these intangibles, appropriately reflects a more systematic and rational approach to distributing
the cost of these intangibles over their useful lives. The change in the amortization of the Honeywell customer
contract relationship intangibles is being treated as a change in accounting estimate and the change in the
amortization of the RITEC customer contract relationship intangibles is being treated as a change in accounting
estimate that is effected by a change in accounting principle. The changes in amortization resulted in a
$1.8 million decrease in amortization expense and a $1.8 million increase to net income for the period ended
January 31, 2022.

There were no impairments to intangible assets during the periods ended January 31, 2022 and 2021.
Amortization expense of $2.2 million, $4.1 million and $4.2 million with regard to acquired intangibles has been
included in the consolidated statements of income for the years ended January 31, 2022, 2021 and 2020,
respectively.

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

(In thousands)

2023

2024

2025

2026

2027

Estimated amortization expense . . . . . . . . . . . . . . .

$1,632

$1,693

$1,008

$1,008

$1,008

59

Note 4—Inventories

The components of inventories are as follows:

(In thousands)
Materials and Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Work-in-Progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finished Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Inventory Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

January 31,

2022

2021

$22,709
1,489
19,718

$20,265
2,076
16,371

43,916
(9,307)

38,712
(8,652)

$34,609

$30,060

Finished goods inventory includes $3.4 million and $4.0 million of demonstration equipment at January 31,

2022 and 2021, respectively.

Note 5—Property, Plant and Equipment

Property, plant and equipment consist of the following:

(In thousands)
Land and Land Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings and Leasehold Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Machinery and Equipment
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Computer Equipment and Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Gross Property, Plant and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

January 31,

2022

2021

$ 1,004
12,666
23,238
13,913

50,821
(39,380)

$ 1,004
12,642
23,346
13,847

50,839
(38,828)

Net Property Plant and Equipment

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$11,441

$12,011

Depreciation expense on property, plant and equipment was $1.7 million for the year ended January 31,

2022 and $1.9 million and $2.0 million for the years ended January 31, 2020 and 2019, respectively.

During the current fiscal year, we wrote-off our Oracle EnterpriseOne enterprise resource planning (“ERP”)
system due to the full implementation of a new ERP system in our US operations. The book value and related
accumulated depreciation of the Oracle EnterpriseOne ERP system along with the balance of the related prepaid
service and maintenance contracts have been removed from the accompanying consolidated balance sheet at
January 31, 2022, and we have recorded a net loss on the disposal of $696,000, which is included in other income
(expense) in the accompanying consolidated income statement for the year ended January 31, 2022.

60

Note 6—Accrued Expenses

Accrued expenses consist of the following:

(In thousands)
Warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Professional Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Freight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lease Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued Property & Sales Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stockholder Relation Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dealer Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Accrued Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

January 31,

2022

2021

$ 834
411
347
327
316
102
139
1,637

$ 730
546
57
372
443
91
57
1,578

$4,113

$3,874

Note 7—Credit Agreement and Long-Term Debt

Credit Agreement

On March 24, 2021, we entered into a First Amendment to Credit Agreement (the “Amendment”) to our
Amended & Restated Credit Agreement (the “A&R Credit Agreement,” as amended by the Amendment; the
“Amended Credit Agreement”) with Bank of America, N.A., as lender (the “Lender”), and our subsidiaries, ANI
ApS and TrojanLabel. The A&R Credit Agreement, which we entered into on July, 30, 2020, 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. Immediately prior to the closing of the Amendment, we repaid
$2.6 million in principal amount of the term loan outstanding under the A&R Credit Agreement

The Amended Credit Agreement provides for (i) a term loan in the principal amount of $10.0 million, and
(ii) a $22.5 million revolving credit facility available for general corporate purposes. At the closing of the
Amendment, we borrowed the entire $10.0 million term loan which was used to refinance, in full, the outstanding
term loan under the A&R Credit Agreement. Under the Amended Credit Agreement, revolving credit loans may
continue to be borrowed, at our option, in U.S. Dollars or, subject to certain conditions, Euros, British Pounds,
Canadian Dollars or Danish Kroner.

Balances outstanding under the revolving line of credit for the years ended January 31, 2022 and 2021, bore
interest at weighted average annual rates of 4.10% and 3.41%, respectively and we incurred $4,000 and $188,000
in fiscal 2022 and 2021, respectively, for interest on this obligation. Additionally, for fiscal years ended
January 31, 2022 and 2021, we incurred $50,000 and $8,300, respectively, for commitment fees on the undrawn
portion of our revolving credit facility. Both the interest expense and commitment fees are included as interest
there is no balance
expense in the accompanying consolidated income statement. At January 31, 2022,
outstanding on the revolving line of credit and the entire $22.5 million is available for borrowing.

The Amended Credit Agreement requires that the term loan be paid in quarterly installments on the last day
of each of our fiscal quarters with the final payment due on September 30, 2025. 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 September 30,
2025, at which time any outstanding revolving loans will be due and payable in full, and the revolving credit
facility will terminate. We may reduce or terminate the revolving line of credit at any time, subject to certain
thresholds and conditions, without premium or penalty.

The Amended Credit Agreement includes an uncommitted accordion provision under which the term loan
and/or revolving credit facility commitments may be increased in an aggregate principal amount not exceeding
$10.0 million, subject to obtaining the agreement of the Lender and the satisfaction of certain other conditions.

61

On December 14, 2021, we and the Lender entered into a LIBOR Transition Amendment (the “LIBOR
Amendment”) with regard to the Amended Credit Agreement. The LIBOR Amendment, among other things,
(i) changes the rate under the Amended Credit Agreement for borrowings denominated in U.S. Dollars from a
LIBOR-based rate to a BSBY (Bloomberg Short-Term Bank Yield Index)-based rate, subject
to certain
adjustments, (ii) changes the rate under the Amended Credit Agreement for borrowings denominated in British
Pounds Sterling from a LIBOR-based rate to a SONIA (Sterling Overnight Index Average)-based rate, subject to
certain adjustments, (iii) changes the rate under the Amended Credit Agreement for borrowings denominated in
Euros from a LIBOR-based rate to a EURIBOR (Euro Interbank Offered Rate)-based rate, subject to certain
adjustments, and (iv) updates certain other provisions of the Amended Credit Agreement regarding successor
interest rates to LIBOR.

The interest rates under the Amended Credit Agreement, giving effect to the LIBOR Amendment, are as
follows: the term loan and revolving credit loans bear interest at a rate per annum equal to, at our option, either
(a) the BSBY Rate as defined in the LIBOR Amendment (or in the case of revolving credit loans denominated in
a Pounds Sterling, Euros or another currency other than U.S. Dollars, the SONIA Rate as defined in the LIBOR
Amendment, EURIOBOR Rate as defined in the LIBOR Amendment, or
the applicable quoted rate,
respectively), plus a margin that varies within a range of 1.60% to 2.30% 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 BSBY Rate, SONIA Rate, EURIBOR Rate or other applicable
quoted rate plus 1.00% or (iv) 0.50%, plus a margin that varies within a range of 0.60% to 1.30% based on our
consolidated leverage ratio. In addition to certain other fees and expenses that we are required to pay to the
Lender, we are required to pay a commitment fee on the undrawn portion of the revolving credit facility that
varies within a range of 0.15% and 0.30% based on our consolidated leverage ratio.

As under the A&R Credit Agreement, the loans under the Amended 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 Amended Credit Agreement. No amount of the term loan that is repaid may be reborrowed.

We must comply with various customary financial and non-financial covenants under the Amended Credit
Agreement. The financial covenants under the Amended Credit Agreement consist of a maximum consolidated
leverage ratio and a minimum consolidated fixed charge coverage ratio. 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 their capital stock,
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, in each case subject to certain exceptions and thresholds
as set forth in the Amended Credit Agreement, certain of which provisions were modified by the Amendment.

to repurchase or acquire their capital stock,

The Lender is entitled to accelerate repayment of the loans and to terminate its revolving credit commitment
under the Amended 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 a change of control.

Our obligations under the Amended Credit Agreement continue to be secured by substantially all of our
personal property assets (including a pledge of the equity interests held 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.

62

Long-Term Debt

Long-term debt in the accompanying condensed consolidated balance sheets under the Amended Credit

Agreement is as follows:

(In thousands)

January 31,

2022

2021

USD Term Loan (2.35% as of January 31, 2022); maturity date of

September 30, 2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
USD Term Loan (4.65% as of January 31, 2021) . . . . . . . . . . . . . . . . . . . . . . . . .

$ 9,250
—

$ —
12,576

Debt Issuance Costs, net of accumulated amortization . . . . . . . . . . . . . . . . .
Current Portion of Term Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9,250
(96)
(1,000)

12,576
(141)
(5,326)

Long-Term Debt

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 8,154

$ 7,109

During the years ended January 31, 2022, 2021 and 2020, we recognized $0.3 million, $0.5 million and
$0.4 million of interest expense on our long-term debt, respectively, which was included in interest expense in
the accompanying consolidated income statement.

The schedule of required principal payments remaining under the Amended Credit Agreement on long-term

debt outstanding as of January 31, 2022 is as follows:

(In thousands)
Fiscal 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,000
1,000
1,250
6,000
$9,250

Note 8—Paycheck Protection Program Loan

On May 6, 2020, we entered into a loan agreement with, and executed a promissory note in favor of
Greenwood pursuant to which we borrowed $4.4 million (the “PPP Loan”) from Greenwood under the Paycheck
Protection Program (“PPP”) administered by the SBA and authorized by the CARES Act.

The PPP Loan, originally scheduled to mature on May 6, 2022, was unsecured and bore interest at a rate of
1.0% per annum, accruing from the loan date. No payments were due on the PPP Loan until the date on which
the lender determined the amount of the PPP Loan that is eligible for forgiveness. The PPP Loan was classified
as long-term debt—PPP Loan in the condensed consolidated balance sheet at January 31, 2021.

On June 15, 2021, Greenwood notified us that the SBA approved our application for forgiveness of the
entire $4.4 million principal balance of our PPP Loan and all accrued interest thereon. As a result, in the second
quarter of fiscal 2022, we recorded a $4.5 million gain on extinguishment of debt, which is included in the
accompanying consolidated income statement for the period ended January 31, 2022.

Note 9—Derivative Financial Instruments and Risk Management

In 2017, 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. 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

63

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.

The interest rate swap agreement effectively modified our exposure to interest rate risk by effectively
converting our floating-rate term-loan debt to fixed-rate debt, thus reducing the impact of interest-rate changes on
future interest expense. This swap involved 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 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 these two swaps. 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 of fiscal 2021. 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 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 $0.2 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 tables present

the impact of the derivative instruments in our consolidated financial

statements for the years ended January 31, 2022 and 2021:

Cash Flow Hedge
(In thousands)

Years Ended

Amount of Gain(Loss)
Recognized in OCI
on
Derivative

January 31,
2022

January 31,
2021

Location of Gain (Loss)
Reclassified from
Accumulated OCI into
Income

Amount of Gain (Loss)
Reclassified from
Accumulated OCI into
Income

January 31,
2022

January 31,
2021

Swap contracts . . . . . . . . . . . . . . . . . . . .

$—

$(360)

Other Income

$(79)

$(288)

At January 31, 2022, we expect to reclassify approximately $0.1 million of net losses on the frozen OCI
balance associated with the terminated interest rate swap from accumulated other comprehensive loss to earnings
during the next 12 months due to the payment of variable interest associated with the floating interest rate debt.

Note 10—Employee Retention Credit

The CARES Act provides an employee retention credit (“ERC”) that is a refundable tax credit against
certain employer taxes. On December 27, 2020, Congress enacted the Taxpayer Certainty and Disaster Tax
Relief Act of 2020, which amended and extended ERC availability under Section 2301 of the CARES Act.
Before the enactment of the Taxpayer Certainty and Disaster Tax Relief Act of 2020, we were ineligible for the
ERC because we received the PPP Loan. Following enactment of the Taxpayer Certainty and Disaster Tax Relief
Act of 2020, we and other businesses that received loans under that program became retroactively eligible for the
ERC.

As a result of the foregoing legislation, we were eligible to claim a refundable tax credit against the
employer share of Social Security taxes equal to seventy percent (70%) of the qualified wages that we paid to our
employees between December 31, 2020 and June 30, 2021. Qualified wages are limited to $10,000 per employee
per calendar quarter in 2021 for a maximum ERC per employee of $7,000 per calendar quarter in 2021.

We evaluated our eligibility for the ERC in the second quarter of calendar year 2021. In order to qualify for
the ERC, we needed to experience a 20% reduction in gross receipts from either (1) the same quarter in calendar

64

year 2019 or (2) the immediately preceding quarter to the corresponding calendar quarter in 2019. We
determined that we qualified for the employee retention credit under the first scenario for wages paid in calendar
year 2020 and the first calendar quarter of 2021. In the second quarter of the current year, we amended certain
payroll tax filings and applied for a refund of $3.1 million. Since there is no US GAAP guidance for for-profit
business entities that receive government assistance that is not in the form of a loan, an income tax credit or
revenue from a contract with a customer, we determined the appropriate accounting treatment by analogy to
other guidance. We accounted for the employee retention credit by analogy to International Accounting
Standards (IAS) 20, Accounting for Government Grants and Disclosure of Government Assistance, of
International Financial Reporting Standards (IFRS). Under an IAS 20 analogy, a business entity would recognize
the credit on a systematic basis over the periods in which the entity recognizes the payroll expenses for which the
grant (i.e., tax credit) is intended to compensate when there is reasonable assurance (i.e., it is probable) that the
entity will comply with any conditions attached to the grant and the grant (i.e., tax credit) will be received.

We recorded a $3.1 million receivable in the second quarter of fiscal 2022 for the ERC receivable. This
amount remains outstanding as of January 31, 2022 and is included as such in the accompanying consolidated
balance sheet. The $3.1 million of ERCs was recognized as a reduction in employer payroll taxes and allocated to
the financial statement captions from which the employee’s taxes were originally incurred. As a result, we
recorded a reduction in expenses of $1.7 million in cost of revenue, $0.8 million in selling and marketing,
$0.3 million in research and development and $0.3 million in general and administrative which is reflected in the
accompanying consolidated income statement for the year ended January 31, 2022.

Subsequent to year end, on March 22, 2022, we received the $3.1 million for the ERC.

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, 2022, we had paid an aggregate of $7.5 million of the guaranteed
minimum royalty obligation. At January 31, 2022, 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 $4.4 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, 2022 and January 31,
2021, we also incurred excess royalty expense of $0.5 million and $31 thousand, 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, 2022.

Note 12—Leases

We enter into lease contracts for certain of our facilities at various locations worldwide. Our leases have
remaining lease terms of one to six years, some of which include options to extend the lease term for periods of
up to five years when it is reasonably certain that we will exercise such options.

65

Balance sheet and other information related to our leases is as follows:
Operating Leases
(In thousands)

Balance Sheet Classification

January 31,
2022

January 31,
2021

Lease Assets . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . .
Lease Liabilities—Current
Lease Liabilities—Long Term . . . . . . . . . . . . .

Right of Use Assets
Other Accrued Expenses
Lease Liabilities

$1,094
327
$ 808

$1,389
372
$1,065

Lease cost information is as follows:
Operating Leases
(In thousands)

Statement of Income Classification

2022

2021

Operating Lease Costs . . . . . . . . . . . . . . . .

General and Administrative Expense

$510

$485

At January 31, 2022, maturities of operating lease liabilities are as follows:
(In thousands)

2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 327
308
203
159
153
91

Total Lease Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Less: Imputed Interest

1,241
(106)

Total Lease Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,135

As of January 31, 2022, the weighted-average remaining lease term and weighted-average discount rate for
our operating leases are 4.5 years and 3.85%, 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)

2022

2021

Cash paid for operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$372

$429

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)

Balance at January 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Comprehensive Income (Loss) before reclassification . . . . . . . . . . . . . . . . . . . . . . . .
Amounts reclassified from AOCI to Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other Comprehensive Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balance at January 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Comprehensive Income (Loss) before reclassification . . . . . . . . . . . . . . . . . . . . . . . .
Amounts Reclassified from AOCI to Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cross-Currency Interest Rate Swap Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other Comprehensive Income (Loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balance at January 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Comprehensive Loss before reclassification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amounts Reclassified from AOCI to Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other Comprehensive Income (Loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balance at January 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

66

Foreign Currency
Translation
Adjustments

Net
Unrealized
Gain (Losses)
on Cash Flow
Hedges

$ (852)
(133)
—

(133)

$ (985)
710
—
—

710

$ (275)
(1,426)
—

(1,426)

$(1,701)

$ 34
122
(264)

(142)

$(108)
(239)
193
45

(1)

$(109)
—

62

62

$ (47)

Total

$ (818)
(11)
(264)

(275)

$(1,093)
471
193
45

709

$ (384)
(1,426)
62

(1,364)

$(1,748)

The amounts presented above in other comprehensive income (loss) are net of taxes except for translation

adjustments associated with our German and Danish subsidiaries.

Note 14—Shareholders’ Equity

During fiscal 2022 and 2021, certain of our employees delivered a total of 27,222 and 15,357 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 $0.4 million and $0.1 million, respectively,
and are included in treasury stock in the accompanying consolidated balance sheets at January 31, 2022 and
2021. These transactions did not impact the number of shares authorized for repurchase under our current
repurchase program.

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, there were 135,403 unvested RSUs; 43,529 unvested PSUs; 20,410 unvested RSAs
and options to purchase an aggregate of 135,500 shares outstanding as of January 31, 2022.

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,
2022, options to purchase an aggregate of 323,468 shares were outstanding under the 2007 Plan and options to
purchase an aggregate of 139,075 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 2022 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:

(In thousands)
Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted Stock Awards and Restricted Stock Units . . . . . . . . . . . . . . .
Employee Stock Purchase Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 210
1,266
17

$ 517
1,285
17

$ 616
1,136
23

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,493

$1,819

$1,775

67

Stock Options:

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

Options Outstanding, January 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Options Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Options Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Options Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Options Cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Options Outstanding, January 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Options Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Options Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Options Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Options Cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Options Outstanding, January 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Options Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Options Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Options Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Options Cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Weighted-
Average
Exercise
Price Per
Share

$14.30
—
11.60
15.73
6.22

$14.46
—
7.60
12.89
7.36

$14.63
—
9.34
15.09
—

Number
of Shares

771,145

—
(57,175)
(34,526)
(400)

679,044

—
(1,200)
(54,361)
(1,400)

622,083

—
(6,425)
(17,615)
—

Options Outstanding, January 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

598,043

$14.67

Set forth below is a summary of options outstanding at January 31, 2022:

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

$5.00-10.00
$10.01-15.00
$15.01-20.00

35,844
345,749
216,450

598,043

$ 7.97
13.62
17.48

$14.67

0.5
3.9
5.8

4.4

35,844
345,749
209,900

591,493

$ 7.97
13.62
17.43

$14.63

Weighted
Average
Remaining
Contractual
Life

0.5
3.9
5.8

4.3

No options were granted during fiscal 2022 or fiscal 2021. As of January 31, 2022, there was $8,000 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 0.3 years.

As of January 31, 2022, the aggregate intrinsic value (the aggregate difference between the closing stock
price of our common stock on January 31, 2022, and the exercise price of the outstanding options) that would
have been received by the option holders if all options had been exercised was $0.3 million for all exercisable
options and $0.3 million for all options outstanding. The total aggregate intrinsic value of options exercised
during fiscal 2022, 2021 and 2020 was $26,000, $4,000 and $0.5 million, respectively.

68

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, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Outstanding at January 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Outstanding at January 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

133,667
119,522
(59,930)
(58,625)

134,634
245,131
(64,997)
(117,355)

197,413
151,406
(126,939)
(22,538)

Outstanding at January 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

199,342

$16.90
19.86
14.50
19.00

$16.79
7.61
17.28
8.83

$ 9.96
14.51
10.43
14.26

$12.63

As of January 31, 2022, there was $1.7 million of unrecognized compensation expense related to unvested

RSUs and RSAs. This expense is expected to be recognized over a weighted average period of 1.0 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:

Shares Reserved, Beginning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares Purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10,374
(8,092)

24,974
(14,600)

33,853
(8,879)

Shares Reserved, Ending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,282

10,374

24,974

2022

2021

2020

Note 16—Income Taxes

The components of income (loss) before income taxes are as follows:

(In thousands)
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2022

2021

2020

$5,046
1,988

$(1,193) $1,930
(560)

3,372

$7,034

$ 2,179

$1,370

69

The components of the provision/(benefit) for income taxes are as follows:

2022

2021

2020

(In thousands)
Current:

Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$(183) $ 1,272
224
420

76
501

$

660
221
368

394

1,916

1,249

Deferred:

Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 180
177
(146)

$ (910) $(1,364)
(282)
8

(189)
78

211

(1,021)

(1,638)

$ 605

$

895

$ (389)

Total income tax provision/(benefit) differs from the expected tax provision/(benefit) as a result of the

following:

2022

2021

2020

(In thousands)
Income Tax Provision at Statutory Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Return to Provision Adjustment
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State Taxes, Net of Federal Tax Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Denmark Statutory Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign Rate Differential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in Valuation Allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Meals and Entertainment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Canada Withholding Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Global Intangible Low Taxed Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign Tax Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign Derived Intangible Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share Based Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
R&D Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in Reserves Related to ASC 740 Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PPP Loan Forgiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,477
368
143
—
61
57
9

$ 458 $ 288
(207)
(48)

(2)
28
341 —
315
197
256
(81)
11
31
62 —
107
14
— (344)
(107)
(150)
(145)
171
(209)
(157)
(352)
(10)
—
26

13

—
—
—
(55)
(95)
(180)
(245)
(937) —

2

$ 605

$ 895 $(389)

Our effective tax rate for 2022 was 8.6% compared to 41.1% in 2021 and (28.4)% in 2020. The decrease in
the effective tax rate in 2022 from 2021 is primarily related to the PPP loan forgiveness tax-exempt income.
Specific items decreasing the effective tax rate include PPP loan forgiveness tax-exempt income, R&D tax
credits, foreign derived intangible income (“FDII”) deduction, and change in reserves related to ASC 740
liabilities. This decrease was offset by state taxes, return to provision adjustments, and taxes on foreign earnings.

The increase in the effective tax rate in 2021 from 2020 is primarily related to the change in mix of income
between relevant jurisdictions in which we are subject to income taxes. Specific items increasing the effective tax
rate include foreign rate differential, Denmark statutory audit adjustments, stock-based compensation, and
Canada withholding taxes. This increase was offset by the foreign derived intangible income (“FDII”) deduction,
the release of a valuation allowance in China, and R&D tax credits expected to be utilized.

70

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:

(In thousands)
Deferred Tax Assets:

Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Honeywell Royalty Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State R&D Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share-Based Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bad Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Warranty Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation Accrual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Operating Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ASU 842 Adjustment – Lease Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrecognized State Tax Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred Service Contract Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Deferred Tax Liabilities:

Accumulated Tax Depreciation in Excess of Book Depreciation . . . . . . . . . . . . . . . . . . .
Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ASU 842 Adjustment – Lease Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

January 31,

2022

2021

$ 2,159
2,655
1,925
593
213
198
322
152
93
64
154
61
224

$ 2,700
2,590
1,546
600
245
176
159
154
125
101
83
68
308

8,813

8,855

455
767
90
318

752
399
119
307

1,630

1,577

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation Allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7,183
(1,778)

7,278
(1,721)

Net Deferred Tax Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 5,405

$ 5,557

Deferred taxes are reflected in the consolidated balance sheet as follows:

January 31,

2022

2021

Deferred Tax Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred Tax Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5,651
(246)

5,941
(384)

Total Net Deferred Tax Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 5,405

$ 5,557

The valuation allowances of $1.8 million at January 31, 2022 and $1.7 million at January 31, 2021, relate to
domestic research and development tax credit carryforwards and foreign tax credit carryforwards which are
expected to expire unused.

At January 31, 2022, we had net operating loss carryforwards of $0.6 million in China, which expire in 2023
through 2027. We have net operating loss carryforwards of less than $0.1 million in France, which can be carried
forward indefinitely. We expect to utilize the net operating loss carryforwards in China and France before
expiration.

At January 31, 2022, we had state research credit carryforwards of approximately $1.6 million which expire
in 2022 through 2029. Additionally, we had $0.2 million of foreign tax credits. We maintain a full valuation
allowance against these credits as we expect these credits to expire unused.

71

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:

(In thousands)
Balance, beginning of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increases in prior period tax positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increases in current period tax positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reductions related to lapse of statutes of limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reductions related to settlement with tax authorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —

$ 384
63
67
(211)

$362 $ 618
59 —
5
(42)
—

2
(26)
(232)

Balance, end of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 303

$384 $ 362

2022

2021

2020

During fiscal 2022 and 2021, we released $211,000 and $50,000, respectively, of accrued interest and
penalties relating to a change in various unrecognized tax positions. We have accrued potential interest and
penalties of $95,000 included in Income Taxes Payable in the consolidated balance sheet at January 31, 2022.

The Company and its subsidiaries file income tax returns in U.S. federal jurisdictions, various state
jurisdictions, and various foreign jurisdictions. The Company was previously under audit by the IRS for the tax
years ended January 31, 2015, 2016, and 2017, but on June 6, 2019, we received formal communication
regarding the close of the audit with no additional changes made by the IRS. Therefore, the reserves for federal
uncertain tax positions relating to the years in question have been released. In fiscal 2020, we released $232,000
relating to the federal tax exposure for the years previously under audit and $74,000 of related interest (net of
federal benefit) and penalties.

U.S. income taxes have not been provided on $7.3 million of undistributed earnings of our foreign
subsidiaries since it is our intention to permanently reinvest such earnings offshore. If the earnings were
distributed in the form of dividends, the Company would not be subject to U.S. tax as a result of the Tax Act but
could be subject to foreign income and withholding taxes. Determination of the amount of this unrecognized
deferred income tax liability is not practical.

Note 17—Nature of Operations, Segment Reporting and Geographical Information

Our 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. We
organize and manage our business as a portfolio of products and services designed around a common theme of
data acquisition and information output. We have two reporting segments consistent with our revenue product
groups: Product Identification (“PI”) and Test & Measurement (“T&M”).

Our PI segment produces an array of high-technology digital color and monochrome label printers and mini
presses, labeling software and supplies 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. The T&M segment also includes our line of aerospace flight deck and cabin printers.

Business is conducted in the United States and through foreign branch offices and subsidiaries 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.

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

72

Summarized below are the revenue and segment operating profit (loss) (both in dollars and as a percentage

of revenue) for each reporting segment:

($ in thousands)

Product

2022

Revenue

2021

Segment Operating Profit
(Loss)

Segment Operating Profit (Loss)
as a % of Revenue

2020

2022

2021

2020

2022

2021

2019

Identification . . . . . $ 90,915 $ 90,268 $ 88,116 $10,411 $12,885 $ 7,509
6,281

T&M . . . . . . . . . . . . . .

(1,032)

26,565

25,765

45,330

3,398

11.5% 14.3%
8.5%
12.8% (4.0)% 13.9%

Total . . . . . . . . . . . . . . $117,480 $116,033 $133,446

13,809

11,853

13,790

11.8% 10.2% 10.3%

Corporate Expenses . .

Operating Income . . . .
Other Income

(Expense), Net

. . . .

Income Before Income
Taxes . . . . . . . . . . .
Income Tax Provision
(Benefit) . . . . . . . . .

Net Income . . . . . . . . .

9,553

4,256

9,420

11,357

2,433

2,433

2,778

(254)

(1,063)

7,034

2,179

1,370

605

895

(389)

$ 6,429 $ 1,284 $ 1,759

No customer accounted for greater than 10% of net revenue in fiscal 2022, 2021 or 2020.

Other information by segment is presented below:

(In thousands)

Assets

January 31,

2022

2021

Product Identification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
T&M . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 51,732
50,374
12,849

$ 50,047
51,262
14,164

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$114,955

$115,473

*

Corporate assets consist principally of cash, cash equivalents, deferred tax assets and refunds, and certain
prepaid corporate assets.

(In thousands)

Depreciation and
Amortization

Capital Expenditures

2022

2021

2020

2022

2021

2020

Product Identification . . . . . . . . . . . . . . . . . . . . . . . . . . . .
T&M . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,157
2,837

$1,835
4,148

$1,928
4,356

$ 847
949

$1,563
1,024

$2,001
905

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$3,994

$5,983

$6,284

$1,796

$2,587

$2,906

73

Geographical Data

Presented below is selected financial information by geographic area:

(In thousands)

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Central and South America . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2022

$ 68,185
31,922
6,519
5,926
3,271
1,657

Revenue

2021

$ 70,911
29,029
5,574
5,105
3,950
1,464

Long-Lived Assets*

January 31,

2020

2022

2021

$ 83,671
29,617
5,719
8,316
4,145
1,978

$29,131
1,486
9
15
—
—

$31,226
2,274
13
—
—
—

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$117,480

$116,033

$133,446

$30,641

$33,513

* Long-lived assets exclude goodwill assigned to the T&M segment of $4.5 million at both January 31, 2022 and
2021 and $7.6 million and $8.3 million assigned to the PI segment at January 31, 2022 and 2021, respectively.

Note 18—Employee Benefit Plans

We sponsor 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 our policy to fund any contributions accrued. Our
annual contribution amounts are determined by the Board of Directors. Contributions paid or accrued amounted
to $0.5 million in fiscal 2022, $0.4 million in fiscal 2021 and $0.5 million in fiscal 2020.

Note 19—Product Warranty Liability

We offer a manufacturer’s warranty for the majority of our hardware products. The specific terms and
conditions of warranty vary depending upon the products sold and country in which we do business. We estimate
the warranty costs based on historical claims experience and record a liability in the amount of such estimates at
the time product revenue is recognized. We regularly assess the adequacy of our recorded warranty liabilities and
adjust 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:

(In thousands)
Balance, beginning of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for Warranty Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of Warranty Repairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

730
2,174
(2,070)

$ 850
855
(975)

$

832
1,733
(1,715)

Balance, end of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

834

$ 730

$

850

2022

2021

2020

During fiscal 2022, we incurred incremental costs because of a product quality issue with one of our
vendors. As the result of discussions with the vendor, which was responsible for the product quality issue, we
entered into an agreement whereby the vendor paid us $975,000 as partial reimbursement of the costs we
incurred in supporting our customers with respect to the product quality issue. We have recorded this payment to
offset cost of goods in our Product Identification segment for the product lines effected by the product quality
issue to partially reverse the accounting impact when the original costs of the quality issues were incurred during
the year.

74

Note 20—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 our customer base. We periodically perform
on-going credit evaluations of our customers. We have not historically experienced significant credit losses on
collection of our accounts receivable.

During the years ended January 31, 2022, 2021 and 2020, one vendor accounted for 23.3%, 23.2% and
21.2% of purchases, and 15.4%, 28.3% and 28.0% of accounts payable, respectively, as of January 31, 2022,
2021 and 2020.

Note 21—Commitments and Contingencies

We are 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 our control.

Note 22—Fair Value Measurements

Assets and Liabilities Not Recorded at Fair Value on the Consolidated Balance Sheet

Our long-term debt, including the current portion of long-term debt not reflected in the financial statements

at fair value, is reflected in the table below:

(In thousands)

Fair Value Measurement at
January 31, 2022

Level 1 Level 2

Level 3

Total

Carrying
Value

Long-Term Debt and Related Current Maturities . . . . . . . . . . . .

$ — $ — $ 9,255

$ 9,255

$ 9,250

(In thousands)

Fair Value Measurement at
January 31, 2021

Level 1 Level 2

Level 3

Total

Carrying
Value

Long-Term Debt and Related Current Maturities . . . . . . . . . . . .

$ — $ — $12,586

$12,586

$12,576

The fair value of our long-term debt, including the current portion, is estimated by discounting the future
cash flows using current interest rates at which similar borrowings with the same maturities would be made to
borrowers with similar credit ratings and is classified as Level 3.

75

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

ASTRONOVA, INC.

Description

Allowance for Doubtful Accounts (1):
(In thousands)

Year Ended January 31,

Balance at
Beginning
of Year

Provision/
(Benefit)
Charged to
Operations Deductions(2)

Balance
at End
of Year

2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,054
$ 856
$ 521

$ 50
$194
$546

$(278)
$
4
$(211)

$ 826
$1,054
$ 856

(1) The allowance for doubtful accounts has been netted against accounts receivable in the balance sheets as of

the respective balance sheet dates.

(2) Uncollectible accounts written off, net of recoveries.

76

(cid:37)(cid:49)(cid:52)(cid:50)(cid:49)(cid:52)(cid:35)(cid:54)(cid:39) (cid:35)(cid:48)(cid:38) (cid:53)(cid:42)(cid:35)(cid:52)(cid:39)(cid:42)(cid:49)(cid:46)(cid:38)(cid:39)(cid:52) (cid:43)(cid:48)(cid:40)(cid:49)(cid:52)(cid:47)(cid:35)(cid:54)(cid:43)(cid:49)(cid:48)

(cid:38)(cid:43)(cid:52)(cid:39)(cid:37)(cid:54)(cid:49)(cid:52)(cid:53)

(cid:71)(cid:73)(cid:81)(cid:84)(cid:91) (cid:35)(cid:16) (cid:57)(cid:81)(cid:81)(cid:70)(cid:85)

(cid:50)(cid:84)(cid:71)(cid:85)(cid:75)(cid:70)(cid:71)(cid:80)(cid:86) (cid:67)(cid:80)(cid:70) (cid:37)(cid:74)(cid:75)(cid:71)(cid:72) (cid:39)(cid:90)(cid:71)(cid:69)(cid:87)(cid:86)(cid:75)(cid:88)(cid:71) (cid:49)(cid:72)(cid:386)(cid:72)(cid:72) (cid:69)(cid:71)(cid:84)(cid:14) (cid:35)(cid:84)

(cid:85)(cid:86)(cid:84)(cid:81)(cid:48)(cid:81)(cid:88)(cid:67)(cid:14) (cid:43)(cid:80)(cid:69)(cid:16)

(cid:44)(cid:71)(cid:67)(cid:80) (cid:35)(cid:16) (cid:36)(cid:87)(cid:67)
(cid:39)(cid:90)(cid:71)(cid:69)(cid:87)(cid:86)(cid:75)(cid:88)(cid:71) (cid:56)(cid:75)(cid:69)(cid:71) (cid:50)(cid:84)(cid:71)(cid:85)(cid:75)(cid:70)(cid:71)(cid:80)(cid:86) (cid:67)(cid:80)(cid:70) (cid:37)(cid:74)(cid:75)(cid:71)(cid:72) (cid:40)(cid:75)(cid:80)(cid:67)(cid:80)(cid:69)(cid:75)(cid:67)(cid:78) (cid:49)(cid:72)(cid:386)(cid:72)(cid:72) (cid:69)(cid:71)(cid:84)(cid:14)(cid:84)(cid:84)
(cid:48)(cid:39)(cid:54)(cid:53)(cid:37)(cid:49)(cid:55)(cid:54) (cid:53)(cid:91)(cid:85)(cid:86)(cid:71)(cid:79)(cid:85)(cid:14) (cid:43)(cid:80)(cid:69)(cid:16)

(cid:47)(cid:75)(cid:86)(cid:69)(cid:74)(cid:71)(cid:78)(cid:78) (cid:43)(cid:16) (cid:51)(cid:87)(cid:67)(cid:75)(cid:80)
(cid:39)(cid:90)(cid:71)(cid:69)(cid:87)(cid:86)(cid:75)(cid:88)(cid:71) (cid:37)(cid:81)(cid:87)(cid:80)(cid:69)(cid:75)(cid:78)(cid:14) (cid:35)(cid:79)(cid:71)(cid:84)(cid:75)(cid:69)(cid:67)(cid:80) (cid:53)(cid:71)(cid:69)(cid:87)(cid:84)(cid:75)(cid:86)(cid:75)(cid:71)(cid:85)(cid:14) (cid:43)(cid:80)(cid:69)(cid:16)

(cid:59)(cid:88)(cid:81)(cid:80)(cid:80)(cid:71) (cid:39)(cid:16) (cid:53)(cid:69)(cid:74)(cid:78)(cid:67)(cid:71)(cid:82)(cid:82)(cid:75)
(cid:47)(cid:67)(cid:80)(cid:67)(cid:73)(cid:75)(cid:80)(cid:73) (cid:50)(cid:67)(cid:84)(cid:86)(cid:80)(cid:71)(cid:84)(cid:14) (cid:53)(cid:84)

(cid:86)(cid:84)(cid:67)(cid:86)(cid:71)(cid:88)(cid:75)(cid:85)(cid:71) (cid:46)(cid:46)(cid:37)

(cid:42)(cid:67)(cid:84)(cid:81)(cid:78)(cid:70) (cid:53)(cid:69)(cid:74)(cid:81)(cid:386)(cid:71)(cid:78)(cid:70)
(cid:50)(cid:84)(cid:75)(cid:80)(cid:69)(cid:75)(cid:82)(cid:67)(cid:78)(cid:14) (cid:53)(cid:69)(cid:74)(cid:81)(cid:386)(cid:71)(cid:78)(cid:70) (cid:43)(cid:79)(cid:67)(cid:73)(cid:75)(cid:80)(cid:73) (cid:35)(cid:85)(cid:85)(cid:81)(cid:69)(cid:75)(cid:67)(cid:86)(cid:71)(cid:85)(cid:14) (cid:46)(cid:46)(cid:37)

(cid:57)(cid:57)

(cid:52)(cid:75)(cid:69)(cid:74)(cid:67)(cid:84)(cid:70) (cid:53)(cid:16) (cid:57)(cid:67)(cid:84)(cid:92)(cid:67)(cid:78)(cid:67)(cid:12)
(cid:37)(cid:74)(cid:67)(cid:75)(cid:84)(cid:79)(cid:67)(cid:80) (cid:81)(cid:72) (cid:86)(cid:74)(cid:71) (cid:36)(cid:81)(cid:67)(cid:84)(cid:70)(cid:14) (cid:50)(cid:84)(cid:71)(cid:85)(cid:75)(cid:70)(cid:71)(cid:80)(cid:86) (cid:67)(cid:80)(cid:70)
(cid:37)(cid:74)(cid:75)(cid:71)(cid:72) (cid:39)(cid:90)(cid:71)(cid:69)(cid:87)(cid:86)(cid:75)(cid:88)(cid:71) (cid:49)(cid:72)(cid:386)(cid:72)(cid:72) (cid:69)(cid:71)(cid:84)(cid:14) (cid:35)(cid:84)
(cid:12) (cid:46)(cid:71)(cid:67)(cid:70) (cid:43)(cid:80)(cid:70)(cid:71)(cid:82)(cid:71)(cid:80)(cid:70)(cid:71)(cid:80)(cid:86) (cid:38)(cid:75)(cid:84)(cid:71)(cid:69)(cid:86)(cid:81)(cid:84)

(cid:78)(cid:78)(cid:75)(cid:71)(cid:70) (cid:47)(cid:81)(cid:86)(cid:75)(cid:81)(cid:80) (cid:54)(cid:71)(cid:69)(cid:74)(cid:80)(cid:81)(cid:78)(cid:81)(cid:73)(cid:75)(cid:71)(cid:85)(cid:14) (cid:43)(cid:80)(cid:69)(cid:16)

(cid:41)(cid:39)(cid:48)(cid:39)(cid:52)(cid:35)(cid:46) (cid:37)(cid:49)(cid:55)(cid:48)(cid:53)(cid:39)(cid:46)

(cid:40)(cid:81)(cid:78)(cid:71)(cid:91) (cid:42)(cid:81)(cid:67)(cid:73) (cid:46)(cid:46)(cid:50)
(cid:36)(cid:81)(cid:85)(cid:86)(cid:81)(cid:80)(cid:14) (cid:47)(cid:67)(cid:85)(cid:85)(cid:67)(cid:69)(cid:74)(cid:87)(cid:85)(cid:71)(cid:86)(cid:86)(cid:85) (cid:18)(cid:20)(cid:20)(cid:19)(cid:18)

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