UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
[ X ] Quarterly report under Section 13 or 15(d) of the Securities Ex-
change Act of 1934
For the quarter ended January 31, 2003
[ ] Transition report under Section 13 or 15(d) of the Securities Ex-
change Act of 1934
For the transition period from ___________ to _____________
Commission File Number: 0-5378
GEORGE RISK INDUSTRIES, INC.
(Exact name of small business issuer as specified in its charter)
Colorado 84-0524756
(State of incorporation) (IRS Employers Identification No.)
802 South Elm St.
Kimball, NE 69145
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (308) 235-4645
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares of the Registrant's Common Stock outstanding, as of
March 14, 2003, was 5,402,528.
Transitional Small Business Disclosure Format: Yes [ X ] No [ ]
GEORGE RISK INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
The unaudited financial statements for the three month period ended
January 31, 2003, and the nine month period ended January 31, 2003, are
attached hereto.
GEORGE RISK INDUSTRIES, INC.
BALANCE SHEET
JANUARY 31, 2003
ASSETS
Current Assets
Cash and cash equivalents $ 2,379,000
Marketable securities (Note 2) 9,140,000
Accounts receivable:
Trade, net of $50,000 doubtful account allowance 1,749,000
Other 1,000
Notes receivable 1,000
Inventories (Note 3) 2,508,000
Prepaid expenses 82,000
Deferred income taxes 52,000
------------
Total Current Assets $15,912,000
Property and Equipment, net at cost $ 953,000
Other Assets
Projects in process 55,000
Long-term investment 200,000
Other 2,000
------------
Total Other Assets $ 257,000
TOTAL ASSETS $17,122,000
============
GEORGE RISK INDUSTRIES, INC.
BALANCE SHEET
JANUARY 31, 2003
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable, trade $ 167,000
Accrued expenses
Payroll and related expenses 200,000
Property taxes 2,000
Income taxes payable 147,000
Notes payable, current 80,000
------------
Total Current Liabilities $ 596,000
Long-Term Liabilities
Notes payable 155,000
------------
Total Long-Term Liabilities $ 155,000
Stockholders' Equity
Convertible preferred stock, 1,000,000 shares
authorized, Series 1-noncumulative, $20 stated
value, 25,000 shares authorized, 5,350 issued
and outstanding 107,000
Common stock, Class A, $.10 par value, 10,000,000
shares authorized, 8,502,832 shares issued and
outstanding 850,000
Additional paid-in capital 1,736,000
Accumulated other comprehensive income (1,625,000)
Retained earnings 17,066,000
Less: cost of treasury stock, 3,099,304 shares,
at cost (1,763,000)
-------------
Total Stockholders' Equity $ 16,371,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 17,122,000
=============
GEORGE RISK INDUSTRIES, INC.
STATEMENT OF INCOME AND RETAINED EARNINGS
Three months Nine months Three months Nine months
ended ended ended ended
January 31, January 31, January 31, January 31,
2003 2003 2002 2002
--------------------------------------------------------
Net Sales $ 3,393,000 $ 9,978,000 $ 2,916,000 $ 9,302,000
Less: cost of goods
sold (1,709,000) (4,875,000) (1,448,000) (4,721,000)
------------ ------------ ------------ ------------
Gross Profit $ 1,684,000 $ 5,103,000 $ 1,468,000 $ 4,581,000
Operating Expenses:
General and
administrative 167,000 504,000 178,000 529,000
Selling 585,000 1,798,000 543,000 1,875,000
Engineering 17,000 51,000 27,000 60,000
Rent Paid to Related
Parties 11,000 38,000 14,000 45,000
------------ ------------ ------------ ------------
Total Operating
Expenses $ 780,000 $ 2,391,000 $ 762,000 $ 2,509,000
Income From Operations 904,000 2,712,000 706,000 2,072,000
Other Income (Expense)
Interest Income (5,000) (16,000) 3,000 11,000
Interest Expense 0 0 (1,000) (1,000)
Investment Income
(Loss) 83,000 252,000 81,000 221,000
Gain/(loss) on sale
of investments 115,000 (56,000) 0 (118,000)
Other Income (Loss) 7,000 (3,000) 2,000 7,000
------------ ------------ ------------ ------------
$ 200,000 $ 177,000 $ 85,000 $ 120,000
Income Before Provisions
for Income Tax 1,104,000 2,889,000 791,000 2,192,000
Provisions for Income
Tax (461,000) (1,206,000) (331,000) (915,000)
------------ ------------ ------------ ------------
Net Income $ 643,000 $ 1,683,000 $ 460,000 $ 1,227,000
Retained Earnings, beginning
of period $16,423,000 $15,383,000 $14,343,000 $13,526,000
Retained Earnings, end
of period $17,066,000 $17,066,000 $14,803,000 $14,803,000
Income Per Share
(Note 6)
Basic $ .12 $ .31 $ .08 $ .23
Assuming Dilution $ .12 $ .31 $ .08 $ .22
GEORGE RISK INDUSTRIES, INC.
STATEMENT OF COMPREHENSIVE INCOME
Three months Nine months Three months Nine months
ended ended ended ended
January 31, January 31, January 31, January 31,
2003 2003 2002 2002
--------------------------------------------------------
Net Income $ 643,000 $ 1,683,000 $ 460,000 $ 1,277,000
------------ ------------ ------------ ------------
Other Comprehensive Income, net of tax
Unrealized gain (loss) on securities:
Unrealized holding gains
(losses) arising
during period (17,000) (141,000) 107,000 (127,000)
Reclassification adjustment
for gains (losses) included
in net income 115,000 (56,000) 0 (118,000)
------------ ------------ ------------ ------------
Other Comprehensive
Income $ 98,000 $ (197,000) $ 107,000 $ (245,000)
Comprehensive Income $ 741,000 $ 1,486,000 $ 567,000 $ 1,032,000
============ ============ ============ ============
GEORGE RISK INDUSTRIES, INC.
STATEMENT OF CASH FLOWS
Three months Nine months Three months Nine months
ended ended ended ended
January 31, January 31, January 31, January 31,
2003 2003 2002 2002
--------------------------------------------------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Income $ 643,000 $ 1,683,000 $ 460,000 $ 1,277,000
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation 66,000 162,000 72,000 193,000
Change in unrealized gain (loss)
on investments 98,000 (197,000) 107,000 (245,000)
Changes in assets and liabilities:
(Increase) decrease in:
Marketable securities (289,000) (451,000) (189,000) (2,537,000)
Accounts receivable 205,000 141,000 (52,000) 423,000
Inventories (80,000) (80,000) (11,000) 118,000
Prepaid expenses (13,000) (8,000) 11,000 (3,000)
Other assets (21,000) (221,000) 97,000 3,000
Receivables-officers
and employees 3,000 2,000 4,000 7,000
Increase (decrease) in:
Accounts payable (19,000) 63,000 (16,000) (66,000)
Accrued expenses (60,000) (38,000) (29,000) (24,000)
Income tax payable 0 282,000 (8,000) (27,000)
------------- ------------ ------------- ------------
Net cash provided by
(used in) operating
activities $ 533,000 $ 1,338,000 $ 446,000 $ (881,000)
CASH FLOWS FROM INVESTING
ACTIVITIES:
(Purchase) Sale of property and
equipment (45,000) (49,000) (110,000) (152,000)
(Purchase) of treasury
stock 0 0 (560,000) (560,000)
------------ ------------ ------------ ------------
Net cash provided by
(used in) investing
activities $ (45,000) $ (49,000) $ (670,000) $ (712,000)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Principal payments on
long-term debt 0 (4,000) (3,000) (10,000)
Treasury stock issued 0 0 0 21,000
------------ ------------ ------------ ------------
Net cash provided by
(used in) financing
activities $ 0 $ (4,000) $ (3,000) $ 11,000
NET INCREASE (DECREASE)
IN CASH AND CASH
EQUIVALENTS $ 488,000 $ 1,285,000 $ (227,000) $(1,582,000)
============ ============ ============ ============
Cash and cash equivalents,
beginning of
period $ 1,891,000 $ 1,094,000 $ 1,147,000 $ 2,502,000
Cash and cash equivalents,
end of period $ 2,379,000 $ 2,379,000 $ 920,000 $ 920,000
GEORGE RISK INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 2003
Note 1 Unaudited Interim Financial Statements
------------------------------------------------
The accompanying financial statements have been prepared in accordance
with the instructions for Form 10QSB and do not include all of the inform-
ation and footnotes required by generally accepted accounting principals for
complete financial statements. In the opinion of management, all adjustments,
consisting only of normal recurring adjustments considered necessary for a
fair presentation, have been included. Operating results for any quarter are
not necessarily indicative of the results for any other quarter or for the
full year.
Note 2 Marketable Securities
-------------------------------
Marketable equity securities are recorded at the lower of cost or market
and are classified as available-for-sale securities. The cost of marketable
securities sold is determined on the average cost method with realized gains
or losses being reflected in the income statement. The securities are
accounted for using fair value as required by FAS 115. Any unrealized gains
or losses are reported as a separate component of stockholder's equity until
realized. Dividend and interest income are accrued as earned.
Marketable equity securities and unrealized gains and losses consist of
the following as of January 31, 2003 and January 31, 2002:
Cost Basis $10,765,000 $ 9,849,000
Fair Value 9,140,000 8,754,000
------------ ------------
Net Unrealized Gain (Loss) $(1,625,000) $(1,095,000)
Note 3 Inventories
---------------------
At January 31, 2003 and January 31, 2002, respectively, inventories
consisted of the following:
Raw Materials $ 1,635,000 $ 2,029,000
Work in Process 480,000 360,000
Finished Goods 398,000 290,000
Warehouse in England 65,000 32,000
------------ ------------
$ 2,578,000 $ 2,711,000
Less: allowance for obsolete
inventory (70,000) (70,000)
------------ ------------
Net Inventories $ 2,508,000 $ 2,641,000
============ ============
Note 4 Business Segments
---------------------------
The following is financial information relating to industry segments:
For the quarter ended
January 31,
2003 2002
---------------------------
Net revenue:
Keyboard, pool alarm and other products $ 679,000 $ 395,000
Security alarm products 2,714,000 2,521,000
------------ ------------
Total net revenue $ 3,393,000 $ 2,916,000
Income from operations:
Keyboard, pool alarm and other products $ 181,000 $ 96,000
Security alarm products 723,000 610,000
------------ ------------
Total income from operations $ 904,000 $ 706,000
Identifiable assets:
Keyboard, pool alarm and other products $ 298,000 $ 353,000
Security alarm products 3,683,000 3,766,000
Corporate general 13,141,000 11,121,000
------------ ------------
Total assets $17,122,000 $15,240,000
Depreciation and amortization:
Keyboard, pool alarm and other products $ 2,000 $ 2,000
Security alarm products 40,000 45,000
Corporate general 24,000 25,000
------------ ------------
Total depreciation and amortization $ 66,000 $ 72,000
Capital expenditures:
Keyboard, pool alarm and other products $ 30,000 $ 46,000
Security alarm products 15,000 2,000
Corporate general 0 62,000
------------ ------------
Total capital expenditures $ 45,000 $ 110,000
Note 5 Revenue Recognition
-----------------------------
George Risk Industries recognizes its revenues when goods are shipped
and billed to our customers. There is a $50,000 allowance that was estab-
lished to account for any uncollectable accounts.
Note 6 Earnings per Share
----------------------------
Basic and diluted earnings per share, assuming convertible preferred
stock was converted for each period presented, are:
For the three months ended January 31, 2003
-------------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
Net income $ 643,000
===========
Basic EPS $ 643,000 5,402,528 $ 0.12
Effect of Dilutive Securities:
Convertible preferred stock 0 26,750
----------- ----------- --------
Diluted EPS $ 643,000 5,429,278 $ 0.12
For the nine months ended January 31, 2003
------------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
Net Income $ 1,683,000
===========
Basic EPS $ 1,683,000 5,402,528 $ 0.31
Effect of Dilutive Securities:
Convertible preferred stock 0 26,750
----------- ----------- --------
Diluted EPS $ 1,683,000 5,429,278 $ 0.31
For the three months ended January 31, 2002
-------------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
Net Income $ 460,000
===========
Basic EPS $ 460,000 5,510,108 $ 0.08
Effect of Dilutive Securities:
Convertible preferred stock 0 26,750
----------- ----------- --------
Diluted EPS $ 460,000 5,536,858 $ 0.08
For the nine months ended January 31, 2002
------------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
Net Income $ 1,277,000
===========
Basic EPS $ 1,277,000 5,649,428 $ 0.23
Effect of Dilutive Securities:
Convertible preferred stock 0 26,750
----------- ----------- --------
Diluted EPS $ 1,277,000 5,676,178 $ 0.22
GEORGE RISK INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Item 2. Management Discussion and Analysis of Financial Condition and
Results of Operations
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the attached
condensed consolidated financial statements, and with the George Risk
Industries' audited financial statements and discussion for the fiscal year
ended April 30, 2002
Net cash increased $488,000 during the quarter ended January 31, 2003 as com-
pared to a decrease of $227,000 during the corresponding quarter last year.
As for the year-to-date numbers, net cash increased $1,285,000 for the nine
months ended January 31, 2003, while, for the same period last year, net cash
decreased $1,582,000. The main reason for the big decrease in the year-to-
date figures for last year is that we transferred $2,500,000 into an annuity
on the marketable securities section. Marketable securities increased
$289,000 for the quarter and increased $451,000 for the year-to-date data.
We have not been putting much additional cash into the marketable securities,
except for the annuity last year, but instead we are using the money already
in the investment accounts and hopefully are making smart investment choices.
Inventories increased $80,000 for the current quarter as compared to an
$11,000 increase for the same quarter last year. The year-to-date numbers
show an $8,000 increase in inventory for the current year, while there was a
$3,000 increase for the same period last year. We have had more sales this
year, so that accounts for the increase in the raw materials Accounts re-
ceivable decreased $205,000 during the current quarter as compared to a
$52,000 increase for the corresponding quarter last year. The year-to-date
figures show a decrease of $141,000 for the current nine months and a
$423,000 decrease for the same period last year. Although sales are higher
when comparing the current quarter to the same quarter last year, our
accounts receivable turnover has stayed constant. At January 31, 2003,
73.61% of the receivables were considered current (less than 45 days) and
6.68% of the total were over 90 days past due. For the quarter ended January
31, 2003 there was a $21,000 increase in other assets while for the quarter
ended January 31, 2002, there was a $97,000 decrease. The nine months ended
January 31, 2003, shows a $221,000 increase in other assets while the same
period last year shows a $3,000 decrease. The reason for the big increase in
other assets for the year to date figure is that we purchased two units of an
LLC that purchased land in the Winter Park, CO area as a long-term investment.
At the quarter ended January 31, 2003, accounts payable decreased $19,000 as
compared to a $16,000 decrease for the same quarter the year before. As for
year-to-date numbers, there was a $63,000 decrease for the nine months ended
January 31, 2003, and a $66,000 decrease for the same period ended January
31, 2002. As usual, we continue to strive to pay all of our bills within
terms and take all purchase discounts that are available. There were no pay-
ments for notes payable during the current quarter, as compared to a $3,000
decrease for the corresponding quarter last year. Year-to-date figures dis-
played a $4,000 decrease for the current nine months, while there was a
$10,000 decrease for same period last year. No new notes have been needed to
conduct our day to day business, and we just paid off the vehicle notes that
were on the books. Income tax payable shows a zero dollar change for the
quarter ended January 31, 2003, while it decreased $8,000 for the quarter
ended January 31, 2002. For the nine months ended January 31, 2003, income
tax payable increased $282,000, while it decreased $27,000 for the cor-
responding period a year ago. The differences from year to year reflect the
differences in net income.
The following is a list of ratios to help analyze George Risk Industries'
performance:
For the quarter ended
January 31
2003 2002
--------------------------
Working capital $15,316,000 $13,724,000
Current ratio 26.698 38.360
Quick ratio 22.262 31.005
Cash per share (including marketable
securities) $ 2.13 $ 1.71
Equity per share $ 3.03 $ 2.62
Net sales were $3,393,000 for the quarter ended January 31, 2003, which is a
16.4% increase from the corresponding quarter last year. Year-to-date net
sales were $9,978,000 at January 31, 2003, which is a 7.3% increase from the
same period last year. Cost of goods sold was 50.4% of net sales for the
quarter ended January 31, 2003 and 49.7% for the same quarter last year.
Year-to-date cost of goods sold percentages were 48.9% for the current nine
months and 50.8% for the corresponding nine months last year. Having rel-
atively the same percentage of cost of goods sold from period to period shows
that we keep our costs in line. Our cost of materials and direct labor
fluctuate in proportion to how our sales vary.
Operating expenses were 23.0% of net sales for the quarter ended January 31,
2003 as compared to 26.1% for the corresponding quarter last year. Year-to-
date operating expenses were 24.0% of net sales for the nine months ended
January 31, 2003, while they were 27.0% for the same period last year. As our
growth has slowed down over the past couple of years, management has finally
become accustomed to what they need to be doing to keep their expenses down.
Income from operations for the quarter ended January 31, 2003 was at
$904,000, which is a 28.0% increase from the corresponding quarter last year,
which had income from operations of $706,000. Income from operations for the
nine months ended January 31, 2003 was at $2,712,000, which is a 30.9% in-
crease from the corresponding nine months last year, which had income from
operations of $2,072,000.
Other income and expenses showed gains of $200,000 and $177,000 for the
quarter and nine months ended January 31, 2003, respectively. The numbers
for the corresponding periods last year were gains of $85,000 and $120,000.
While we are making money on interest income, it is sometimes offset with bad
investments. But we did have a bad investment turn good for us in January
2003. We had written off a bond at fiscal year end 1999 because this com-
pany, Cole Taylor, had declared bankruptcy. As it turns out, some things
were not done properly and we got our entire investment plus interest was
returned to us. Thus, net income for the quarter ended January 31, 2003 was
at $643,000, a 39.8% increase from the corresponding quarter last year, which
showed a net income of $460,000. Net income for the nine months ended Jan-
uary 31, 2003 was $1,683,000, a 31.8% increase from the same period last
year. Net income for the nine months ended January 31, 2001 was $1,277,000.
Earnings per common share for the quarter ended January 31, 2003 was $0.12
per share and $0.31 per share for the year-to-date numbers. EPS for the
quarter and nine moths ended January 31, 2002 was $0.08 per share and $0.23
per share, respectively.
George Risk Industries does have two distinct business segments, security
alarm products and keyboard products that are subject to disclosure under
SFAS No. 131. See the notes to the financial statements in order to examine
the two segments.
Here is an update on some of our new product development. The 5/8" x 1 1/4"
E-Z 75 Raceway is now in-house. Tool and die has completed work on the
double gang box and most of the additional connectors. Research and
development is moving forward on the design for a raceway box to hold smoke
alarms. The sales department is experiencing an increase in demand for our
mercury tilt switches, which require a variety of packaging. Engineering is
assisting in the design work. After introducing our 4110 vane switch set, we
have received customer requests for a larger version to be used on commercial
doors. The 4480 series should be available in early spring. Research and
development is also designing current controllers that could operate up to
1800 wattage. Research continues on the wireless module, temperature
sensors, a humidity probe for our Thermstat series, and a glass break switch.
Management is always open to the possibility to acquire a business that would
complement our existing operations. This would probably not require any
outside financing. The intent is to utilize the equipment, marketing tech-
niques and established customers to increase sales and profits.
There are no known seasonal trends with any of GRI's products, since we sell
to distributors and OEM manufacturers. The products are tied to the housing
industry and will fluctuate with building trends.
GEORGE RISK INDUSTRIES, INC.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Securities
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
A. Reports on Form 8-K
No 8-K reports were filed during the quarter ended
January 31, 2003.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
George Risk Industries, Inc.
(Registrant)
Date 03-14-2003 By: /s/ Kenneth R. Risk
Kenneth R. Risk
President and Chairman of the Board
By: /s/ Stephanie M. Risk
Stephanie M. Risk
Chief Financial Officer