Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
[ X ] Quarterly report under Section 13 or 15(d) of the Securities Ex-
change Act of 1934
For the quarter ended October 31, 2011
[ ] 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: 000-05378
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)
(308) 235-4645
(Registrant's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 [ X ] No [ ]
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ]
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares of the Registrant's Common Stock outstanding, as of
December 15, 2011 was 5,043,520.
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 and six month period
ended October 31, 2011, are attached hereto.
GEORGE RISK INDUSTRIES, INC.
BALANCE SHEETS
October 31, April 30,
2011 2011
------------ ------------
(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 4,703,000 $ 5,254,000
Investments and securities 19,135,000 19,512,000
Accounts receivable:
Trade, net of $29,150 and $5,053
doubtful account allowance 1,757,000 1,574,000
Other 1,000 1,000
Note receivable, current 5,000 5,000
Inventories 2,068,000 1,854,000
Prepaid expenses 211,000 151,000
Deferred current income taxes 256,000 166,000
------------ ------------
Total Current Assets $28,136,000 $28,517,000
Property and Equipment, net, at cost 758,000 639,000
Other Assets
Investment in Limited Land Partnership,
at cost 218,000 218,000
Projects in process 99,000 213,000
Note receivable 0 1,000
------------ ------------
Total Other Assets $ 317,000 $ 432,000
TOTAL ASSETS $29,211,000 $29,588,000
============ ============
GEORGE RISK INDUSTRIES, INC.
BALANCE SHEETS
October 31, April 30,
2011 2011
------------ ------------
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable, trade $ 120,000 $ 128,000
Dividends payable 589,000 483,000
Accrued expenses:
Payroll and related expenses 222,000 212,000
Income tax payable 72,000 36,000
------------ ------------
Total Current Liabilities $ 1,003,000 $ 859,000
Long-Term Liabilities
Aircraft ownership deposit payable 5,000 5,000
Deferred income taxes 67,000 53,000
------------ ------------
Total Long-Term Liabilities $ 72,000 $ 58,000
Stockholders' Equity
Convertible preferred stock, 1,000,000
shares authorized, Series 1-noncumulative,
$20 stated value, 25,000 shares authorized,
4,100 issued and outstanding 99,000 99,000
Common stock, Class A, $.10 par value,
10,000,000 shares authorized, 8,502,832
shares issued and outstanding 850,000 850,000
Additional paid-in capital 1,736,000 1,736,000
Accumulated other comprehensive income (268,000) 281,000
Retained earnings 29,160,000 29,115,000
Treasury stock, 3,457,912 and 3,451,857
shares, at cost (3,441,000) (3,410,000)
------------ ------------
Total Stockholders' Equity $28,136,000 $28,671,000
TOTAL LIABILITES AND STOCKHOLDERS' EQUITY $29,211,000 $29,588,000
============ ============
GEORGE RISK INDUSTRIES, INC.
INCOME STATEMENTS
Three months Six months Three months Six months
ended ended ended ended
October 31, October 31, October 31, October 31,
2011 2011 2010 2010
---------------------------------------------------
Net Sales $ 2,559,000 $ 5,158,000 $ 2,177,000 $ 4,184,000
Less: cost of goods sold (1,362,000) (2,554,000) (1,094,000) (2,323,000)
------------ ------------ ------------ ------------
Gross Profit $ 1,197,000 $ 2,604,000 $ 1,083,000 $ 1,861,000
Operating Expenses:
General and
administrative 202,000 408,000 202,000 384,000
Selling 421,000 762,000 383,000 774,000
Engineering 14,000 29,000 20,000 37,000
Rent paid to related
parties 11,000 23,000 11,000 23,000
------------ ------------ ------------ ------------
Total Operating Expenses $ 648,000 $ 1,222,000 $ 616,000 $ 1,218,000
Income From Operations 549,000 1,382,000 467,000 643,000
Other Income (Expense)
Other 4,000 12,000 4,000 7,000
Dividend and interest
income 149,000 341,000 137,000 320,000
Gain (loss) on
investments (99,000) 280,000 (43,000) (99,000)
Gain (loss) on sale
of assets 12,000 12,000 0 0
------------ ------------ ------------ ------------
$ 66,000 $ 645,000 $ 98,000 $ 228,000
Income Before Provisions
for Income Tax 615,000 2,027,000 565,000 871,000
Provisions for Income Tax
Current expense (211,000) (503,000) (185,000) (274,000)
Deferred tax benefit
(expense) 10,000 (318,000) 25,000 57,000
------------ ------------ ------------ ------------
Total Income Tax Expense $ (201,000) $ (821,000) $ (160,000) $ (217,000)
Net Income $ 414,000 $ 1,206,000 $ 405,000 $ 654,000
============ ============ ============ ============
Cash Dividends
Common Stock ($0.23
per share) $(1,160,000) $(1,160,000)
Common Stock ($0.20
per share) $(1,013,000) $(1,013,000)
Income Per Share of Common Stock:
Basic $0.08 $0.24 $0.08 $0.13
Assuming Dilution $0.08 $0.24 $0.08 $0.13
Weighted Average Number of
Common Shares Outstanding:
Basic 5,045,746 5,047,055 5,060,248 5,061,570
Diluted 5,066,246 5,067,555 5,080,748 5,082,070
GEORGE RISK INDUSTRIES, INC.
STATEMENTS OF COMPREHENSIVE INCOME
Three months Six months Three months Six months
ended ended ended ended
October 31, October 31, October 31, October 31,
2011 2011 2010 2010
----------------------------------------------------
Net Income $ 414,000 $ 1,206,000 $ 405,000 $ 654,000
------------ ------------ ------------ ------------
Other Comprehensive Income, net of tax
Unrealized gain (loss) on securities:
Unrealized holding
gains (losses) arising
during period (395,000) (959,000) 502,000 149,000
Reclassification adjustment
for (gains) losses included
in net income 127,000 13,000 40,000 125,000
Income tax expense related
to other comprehensive
income 112,000 395,000 (227,000) (115,000)
------------ ------------ ------------ ------------
Other Comprehensive
Income $ (156,000) $ (551,000) $ 315,000 $ 159,000
Comprehensive Income $ 258,000 $ 655,000 $ 720,000 $ 813,000
============ ============ ============ ============
GEORGE RISK INDUSTRIES, INC.
STATEMENTS OF CASH FLOWS
Six months Six months
ended ended
October 31, October 31,
2011 2010
---------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 1,206,000 $ 654,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 76,000 75,000
(Gain) loss on sale of investments (280,000) 99,000
(Gain) loss on sales of assets (12,000) 0
Reserve for bad debts 24,000 9,000
Reserve for obsolete inventory 22,000 23,000
Deferred income taxes 318,000 (56,000)
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable (208,000) 24,000
Inventories (236,000) 254,000
Prepaid expenses 169,000 90,000
Other receivables (1,000) 1,000
Income tax overpayment 0 (64,000)
Increase (decrease) in:
Accounts payable (7,000) 49,000
Accrued expenses 10,000 14,000
Income tax payable 37,000 0
------------ ------------
Net cash provided by (used in) operating
activities $ 1,118,000 $ 1,172,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Other assets manufactured (115,000) (55,000)
Proceeds from sale of assets 20,000 0
(Purchase) of property and equipment (201,000) (32,000)
Proceeds from sale of marketable securities 155,000 1,558,000
(Purchase) of marketable securities (442,000) (532,000)
(Loans) made to employees (2,000) 0
Collections of loans to employees 3,000 6,000
(Purchase) of treasury stock (32,000) (46,000)
------------ ------------
Net cash provided by (used in) investing
activities $ (614,000) $ 899,000
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid (1,055,000) (923,000)
------------ ------------
Net cash provided by (used in) financing
activities $(1,055,000) $ (923,000)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS $ (551,000) $ 1,148,000
Cash and cash equivalents, beginning of
period $ 5,254,000 $ 3,641,000
------------ ------------
Cash and cash equivalents, end of period $ 4,703,000 $ 4,789,000
============ ============
Supplemental Disclosure of Cash Flow
Information
Cash payments for:
Income taxes $ 465,000 $ 336,000
Interest expense $ 0 $ 0
Cash receipts for:
Income taxes $ 0 $ 0
GEORGE RISK INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2011
Note 1 Unaudited Interim Financial Statements
The accompanying financial statements have been prepared in accordance
with the instructions for Form 10-Q and do not include all of the information
and footnotes required by generally accepted accounting principles for com-
plete financial statements. It is suggested that these condensed financial
statements be read in conjunction with the financial statements and notes
thereto included in the Company's April 30, 2011 annual report on Form 10-K.
In the opinion of management, all adjustments, consisting only of normal re-
curring 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
The Company has investments in publicly traded equity securities as well
as certain state and municipal debt securities. These securities are class-
ified as available-for-sale securities, and are reported at fair value.
Refer to Note 7, Fair Value Measurements, for additional information on the
fair value measurements for all assets and liabilities, including invest-
ments, that are measured at fair value in these financial statements. Avail-
able -for-sale investments in debt securities mature between December 2011
and June 2042. The Company uses the average cost method to determine the
cost of securities sold and the amount reclassified out of accumulated other
comprehensive income into earnings. Unrealized gains and losses are excluded
from earnings and reported separately as a component of stockholder's equity.
Dividend and interest income are accrued as earned.
As of October 31, 2011, investments available-for-sale consisted of the
following:
Gross Gross
Cost Unrealized Unrealized Fair
Basis Gains Losses Value
------------ ------------ ------------ ------------
Municipal bonds $ 9,224,000 $ 137,000 $ (117,000) $ 9,244,000
Corporate bonds $ 66,000 $ 1,000 $ -- $ 67,000
Equity securities $ 9,521,000 $ 271,000 $ (753,000) $ 9,039,000
Money markets/CDs $ 785,000 $ -- $ -- $ 785,000
------------ ------------ ------------ ------------
Total $19,596,000 $ 409,000 $ (870,000) $19,135,000
In accordance with US GAAP, the Company evaluates all marketable
securities for other-than temporary declines in fair value, which are defined
as when the cost basis exceeds the fair value for approximately one year.
The Company also evaluates the nature of the investment, cause of impairment
and number of investments that are in an unrealized position. When an other-
than-temporary decline is identified, the Company will decrease the cost of
the marketable security to the new fair value and recognize a real loss. The
investments are periodically evaluated to determine if impairment changes are
required. As a result of this standard, management recorded impairment
losses of $66,000 for both the quarter and six months ended October 31, 2011.
As for the corresponding periods last year, $3,000 worth of impairment loss
was recorded for the quarter, while $11,000 of loss was recorded for the six
months ended October 31, 2010.
The following table shows the investments with unrealized losses that
are not deemed to be other-than-temporarily impaired, aggregated by invest-
ment category and length of time that individual securities have been in a
continuous unrealized loss position, at October 31, 2011.
Less than 12 months 12 months or greater Total
----------------------- --------------------- ---------------------
Fair Unrealized Fair Unrealized Fair Unrealized
Value Loss Value Loss Value Loss
...........................................................................
Municipal bonds
$ 597,000 $ (12,000) $3,921,000 $(105,000) $ 4,518,000 $ (117,000)
Equity securities
$3,216,000 $ (352,000) $2,422,000 $(401,000) $ 5,638,000 $ (753,000)
----------- ------------ ----------- ---------- ------------ ------------
Total
$3,813,000 $ (364,000) $6,343,000 $(506,000) $10,156,000 $ (870,000)
Municipal Bonds
---------------
The unrealized losses on the Company's investments in municipal bonds were
caused by interest rate increases. The contractual terms of these invest-
ments do not permit the issuer to settle the securities at a price less than
the amortized cost of the investment. Because the Company has the ability to
hold these investments until a recovery of fair value, which may be maturity,
the Company does not consider these investments to be other-than-temporarily
impaired at October 31, 2011.
Marketable Equity Securities
----------------------------
The Company's investments in marketable equity securities consist of a wide
variety of companies. Investments in these companies include growth, growth
income, and foreign investment objectives. Management has evaluated the in-
dividual holdings, and because of the recent decline in the stock market,
does not consider these investments to be other-than-temporarily impaired at
October 31, 2011.
Note 3 Inventories
At October 31, 2011, inventories consisted of the following:
Raw Materials $ 1,489,000
Work in Process 496,000
Finished Goods 264,000
------------
$ 2,249,000
Less: allowance for obsolete inventory (181,000)
------------
Net Inventories $ 2,068,000
============
Note 4 Business Segments
The following is financial information relating to industry
segments:
For the quarter ended
October 31,
2011 2010
---------------------------
Net revenue:
Security alarm products 2,238,000 1,974,000
Other products 321,000 203,000
------------ ------------
Total net revenue $ 2,559,000 $ 2,177,000
Income from operations:
Security alarm products 480,000 423,000
Other products 69,000 44,000
------------ ------------
Total income from operations $ 549,000 $ 467,000
Identifiable assets:
Security alarm products 3,130,000 2,612,000
Other products 1,328,000 887,000
Corporate general 24,753,000 24,591,000
------------ ------------
Total assets $29,211,000 $28,090,000
Depreciation and amortization:
Security alarm products 6,000 6,000
Other products 26,000 24,000
Corporate general 7,000 8,000
------------ ------------
Total depreciation and amortization $ 39,000 $ 38,000
Capital expenditures:
Security alarm products 0 11,000
Other products 16,000 0
Corporate general 17,000 4,000
------------ ------------
Total capital expenditures $ 33,000 $ 15,000
Note 5 Earnings per Share
Basic and diluted earning per share, assuming convertible preferred
stock was converted for each period presented, are:
For the three months ended October 31, 2011
-------------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- -----------
Net Income $ 414,000
===========
Basic EPS $ 414,000 5,045,746 $ 0.08
Effect of dilutive securities:
Convertible preferred stock 0 20,500
----------- ------------- -----------
Diluted EPS $ 414,000 5,066,246 $ 0.08
For the six months ended October 31, 2011
-------------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- -----------
Net Income $1,206,000
===========
Basic EPS $1,206,000 5,047,055 $ 0.24
Effect of dilutive securities:
Convertible preferred stock 0 20,500
----------- ------------- -----------
Diluted EPS $1,206,000 5,067,555 $ 0.24
For the three months ended October 31, 2010
-------------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- -----------
Net Income $ 405,000
===========
Basic EPS $ 405,000 5,060,248 $ 0.08
Effect of dilutive securities:
Convertible preferred stock 0 20,500
----------- ------------- -----------
Diluted EPS $ 405,000 5,080,748 $ 0.08
For the six months ended October 31, 2010
-------------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- -----------
Net Income $ 654,000
===========
Basic EPS $ 654,000 5,061,570 $ 0.13
Effect of dilutive securities:
Convertible preferred stock 0 20,500
----------- ------------- -----------
Diluted EPS $ 654,000 5,082,070 $ 0.13
Note 6 Retirement Benefit Plan
On January 1, 1998, the Company adopted the George Risk Industries, Inc.
Retirement Savings Plan (the "Plan"). The Plan is a defined contribution
savings plan designed to provide retirement income to eligible employees of
the corporation. The Plan is intended to be qualified under Section 401(k)
of the Internal Revenue Code of 1986, as amended. Matching contributions by
the Company of approximately $3,000 were paid during each quarter ending
October 31, 2011 and 2010. Likewise, the Company paid matching contributions
of approximately $6,000 during each six-month period ending October 31, 2011
and 2010. There were no discretionary contributions paid during either the
quarters or six-month periods ending October 31, 2011 and 2010, respectively.
Note 7 Fair Value Measurements
Generally accepted accounting principles in the United States of America
(US GAAP) defines fair value as the price that would be received from selling
an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. When determining the fair value
measurements for assets and liabilities, which are required to be recorded at
fair value, we consider the principal or most advantageous market in which we
would transact and the market-based risk measurements or assumptions that
market participants would use in pricing the asset or liability, such as in-
herent risk, transfer restrictions, and credit risk.
US GAAP establishes a fair value hierarchy that prioritizes the inputs
to valuation techniques used to measure fair value. The hierarchy gives the
highest priority to unadjusted quoted prices in active markets for identical
assets or liabilities (level 1 measurements) and the lowest priority to un-
observable inputs (level 3 measurements). The levels of the fair value
hierarchy under US GAAP are described below:
Level 1 - Valuation is based upon quoted prices for identical in-
struments traded in active markets.
Level 2 - Valuation is based upon quoted prices for similar in-
struments in active markets, quoted prices for identical
or similar instruments in markets that are not active,
and model-based valuation techniques for which all sig-
nificant assumptions are observable in the market.
Level 3 - Valuation is generated from model-based techniques that
use significant assumptions not observable in the market.
These unobservable assumptions reflect our own estimates
of assumptions that market participants would use in
pricing the asset or liability. Valuation techniques
include use of option pricing models, discounted cash
flow models and similar techniques.
Marketable Securities
---------------------
As of October 31, 2011, our investments consisted of publicly traded equity
securities as well as certain state and municipal debt securities. Our
marketable securities are valued using third-party broker statements. The
value of the majority of securities is derived from quoted market inform-
ation. The inputs to the valuation are generally classified as Level 1 given
the active market for these securities, however, if an active market does not
exist, the inputs are recorded at a lower level in the fair value hierarchy.
Fair Value Hierarchy
--------------------
The following tables set forth our assets and liabilities measured at fair
value on a recurring basis and a non-recurring basis by level within the fair
value hierarchy. As required by US GAAP, assets and liabilities are
classified in their entirety based on the lowest level of input that is
significant to the fair value measurement.
Assets Measured at Fair Value on a Recurring Basis
as of October 31, 2011
---------------------------------------------------
Level 1 Level 2 Level 3 Total
------- ------- ------- -------
Assets:
Equity Securities $9,892,000 $ 0 $ 0 $ 9,892,000
Municipal Bonds $ 0 $9,243,000 $ 0 $ 9,243,000
----------- ----------- ---------- ------------
Total fair value of
assets measured on a
recurring basis $9,892,000 $9,243,000 $ 0 $19,135,000
=========== =========== ========== ============
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, 2011.
Liquidity and capital resources
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Operating
---------
Net cash decreased $551,000 for the six months ended October 31, 2011, while,
for the same period last year, net cash increased $1,148,000. Accounts re-
ceivable increased $208,000 for the current six months and decreased $24,000
for the same period last year. The increase in cash flow for accounts re-
ceivable for the current period is a reflection of increased sales. At Oct-
ober 31, 2011, 66.31% of the receivables were considered current (less than
45 days) and 6.17% of the total were over 90 days past due. This is in com-
parison to having 79.16% of the receivables considered current and 2.61% over
90 days past due at October 31, 2010. Inventory increased $236,000 for the
current six months, while it decreased $254,000 for the same period last
year. The main reason for the increase in cash expenditures towards in-
ventory is that sales have increased and the prices of raw materials have
increased. Changes in prepaid expenses in regards to cash flow decreased by
$169,000 for the six months ending October 31, 2011. Conversely, changes in
prepaid expenses in regards to cash flow also decreased by $90,000 for the
six-month ending October 31, 2010. There was not an income tax overpayment
for the six months ended October 31, 2011, while there was a $64,000 increase
in income tax overpayment for the corresponding period last year. Management
paid income tax estimates based on prior year taxable income.
For the six months ended October 31, 2011, accounts payable decreased $7,000,
and increased $49,000 for the same period ended October 31, 2010. The change
in cash in regards to accounts payable can vary. It really depends on the
time of the month the invoices are due, since the company pays all invoices
within terms. Accrued expenses increased $10,000 for the six months ended
October 31, 2011, and also increased by $14,000 for the same period last
year. The current increase is due to elevated sales commissions. Income tax
payable increased $37,000 for the six months ending October 31, 2011, while
there was no payable on the books for the corresponding period last year.
Investing
---------
As for our investment activities, the Company has spent approximately
$201,000 on acquisitions of property and equipment for the current six-month
period and $32,000 was spent during the six months ended October 31, 2010.
An in-house built mold, valued at $169,000 and previously a project in pro-
cess, was completed during the current six-month period. Additionally, the
Company continues to purchase marketable securities, which include municipal
bonds and quality stocks. Cash spent on purchases of marketable securities
for the six months ended October 31, 2011 was $442,000 and $532,000 was spent
for the corresponding period last year. We use "money manager" accounts for
most stock transactions. By doing this, the Company gives an independent
third party firm, who are experts in this field, permission to buy and sell
stocks at will. The Company pays a quarterly service fee based on the value
of the investments. Furthermore, the Company continues to purchase back its
common stock when the opportunity arises. For the six months ended October
31, 2011, the Company purchased $32,000 worth of treasury stock and $46,000
worth was bought back for the six months ended October 31, 2010. We have
been actively searching for stockholders that have been "lost" over the
years. The payment of dividends over the last seven fiscal years has also
prompted many stockholders and/or their relatives and descendants to sell
back their stock to the Company. Also, we make purchases of company stock on
the open market when the opportunity arises.
Financing
---------
Cash flows from financing activities decreased by $1,055,000 for the six
months ending October 31, 2011. That figure consists of the payment of
dividends during the second quarter. The company declared a dividend of
$0.23 per share of common stock on September 30, 2011 and these dividends
were paid by October 31, 2011. As for the prior year numbers, net cash used
in financing activities was $923,000 for the six months ending October 31,
2010. A dividend of $0.20 per common share was declared and paid during the
second fiscal quarter last year.
The following is a list of ratios to help analyze George Risk Industries'
performance:
For the quarter ended
October 31,
2011 2010
---------------------------
Working capital $ 27,133,000 $ 26,216,000
Current ratio 28.052 33.607
Quick ratio 25.518 30.854
Results of Operations
~~~~~~~~~~~~~~~~~~~~~
Net sales were $2,559,000 for the quarter ended October 31, 2011, which is a
17.55% increase from the corresponding quarter last year. Year-to-date net
sales were $5,158,000 at October 31, 2011, which is a 23.28% increase from
the same period last year. Even though the majority of the Company's
products are tied to the housing market, the increase in sales is a result of
the Company focusing on gaining market share in the industry. The Company is
accomplishing this by having excellent customer service and being willing to
make many customized parts. Cost of goods sold was 53.22% of net sales for
the quarter ended October 31, 2011 and 50.25% for the same quarter last year.
Year-to-date cost of goods sold percentages were 49.52% for the current six
months and 55.52% for the corresponding six months last year. Management
continues to keep labor and other manufacturing expenses down and strives to
stay in the desired cost of goods sold percentage range of 45 to 50%. Also,
management raised prices at January 1, 2011. This was the first overall
price increase to take place in almost 10 years. The price increase helps
decrease the cost of goods sold percentage.
Operating expenses were 25.32% of net sales for the quarter ended October 31,
2011 as compared to 28.3 % for the corresponding quarter last year. Year-
to-date operating expenses were 23.69% of net sales for the six months ended
October 31, 2011, while they were 29.11% for the same period last year.
Keeping operating expenses around 30% of net sales, as the company has been
able to achieve over the years, shows that management keeps a close eye on
these expenses from year to year. Income from operations for the quarter
ended October 31, 2011 was at $549,000, which is a 17.56% increase from the
corresponding quarter last year, which had income from operations of
$467,000. Income from operations for the six months ended October 31, 2011
was at $1,382,000, which is a 114.93% increase from the corresponding six
months last year, which had income from operations of $643,000.
Other income and expenses showed gains of $66,000 and $645,000 for the
quarter and six months ended October 31, 2011, respectively. The other in-
come and expense numbers for last year also showed gains of $98,000 for the
quarter and $228,000 for the six months ending October 31, 2010. Dividend
and interest income was up 8.76% for the current quarter and was up 6.56%
for the current six-month period when compared to the same time periods last
year. During the current quarter, there was a $99,000 loss on investments
recorded. Management wrote down $66,000 of impaired investments during the
quarter ending October 31, 2011. This is compared to a write down of $3,000
for the same quarter last year. These figures are the same for the six
months ended October 31, 2011 and 2010, respectively. Management only had
to write down investments during the second quarters of the current and last
fiscal years.
Net income for the quarter ended October 31, 2011 was at $414,000, a 2.22%
increase from the corresponding quarter last year, which showed net income
of $405,000. Net income for the six months ended October 31, 2011 was
$1,206,000, an 84.4% increase from the same period last year. Net income
for the six months ended October 31, 2010 was $654,000. Earnings per common
share for the quarter ended October 31, 2011 were $0.08 per share and $0.24
per share for the year-to-date numbers. EPS for the quarter and six months
ended October 31, 2010 were $0.08 per share and $0.13 per share,
respectively.
New Product Development
~~~~~~~~~~~~~~~~~~~~~~~
The splice and corner connecting pieces for the E-Z Duct Quarter Round
Raceway are now in production and have been added to our popular E-Z Duct
line. We are also developing a plastic housing for our very popular flat
magnet (MF-875).
Engineering has nearly completed work on a garage door alert (DM-1) which
will monitor when the garage door has been left open and will automatically
shut the door - either by a timed delay after the garage door has been opened
or closing at a set time every day. Management believes this will be a good
up sell as many home burglaries happen through a garage door that is left
open or unlocked.
New water sensors (WM2600-10 & WM-10P), made from a flexible cord, have been
completed. This design contains multiple sensors to cover a larger detection
area such as along the wall of a computer or utility room. The WM-10P is a
ten-foot extension that can be added to the WM2600-10 or used with other
water sensors for wireless detection.
Engineering is also looking to complete a design on a 110V Current Controller
which would work with our contact switches to secure the door of a storage
unit and also turn on the light when the door is opened.
Recently Issued Accounting Pronouncements
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
There are no new accounting pronouncements that significantly affect the
Company.
Other Information
~~~~~~~~~~~~~~~~~
Management is always open to the possibility to acquire a business that would
complement our existing operations. This would require no outside financing.
The intent is to utilize the equipment, marketing techniques and established
customers to increase sales and profits.
There are no known seasonal trends with any of our 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 I. FINANCIAL INFORMATION
Item 3. Controls and Procedures
(a) Information required by Item 307
Our Chief Executive Officer and our Chief Financial Officer, after evaluating
the effectiveness of the Company's "disclosure controls and procedures" (as
defined in the Securities Exchange Act of 1934 (Exchange Act) Rules 13a-15(e)
or 15d-15(e)) as of the end of the period covered by this quarterly report,
have concluded that our disclosure controls and procedures are effective
based on their evaluation of these controls and procedures required by para-
graph (b) of Exchange Act Rules 13a-15 or 15d-15.
(b) Information required by Item 308
This disclosure is not yet required.
Item 3A. Controls and Procedures
Evaluation of disclosure controls and procedures:
-------------------------------------------------
Based on their evaluation of our disclosure controls and procedures (as de-
fined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of October
31, 2010, our president and chief executive officer and our chief financial
officer have concluded that our disclosure controls and procedures are
effective such that information required to be disclosed by us in the reports
that we file or submit under the Exchange Act is (i) recorded, processed,
summarized and reported within the time periods specified in the Securities
and Exchange Commission's rules and (ii) accumulated and communicated to our
management, including our chief executive officer and our chief financial
officer, as appropriate to allow timely decisions regarding disclosure. A
control system cannot provide absolute assurance, however, that the ob-
jectives of the control systems are met, and no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud,
if any, within a company have been detected.
Changes in internal controls over financial reporting:
------------------------------------------------------
There was no change in our internal controls over financial reporting that
occurred during the period covered by this report, that has materially
affected, or is reasonably likely to materially affect, our internal con-
trols over financial reporting.
Management's Annual Report on Internal Control over Financial Reporting:
------------------------------------------------------------------------
Our management is responsible for establishing and maintaining adequate in-
ternal control over financial reporting, as such term is defined in Rules
13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control system was
designed to provide reasonable assurance regarding the reliability of finan-
cial reporting and the preparation of financial statements for external pur-
poses, in accordance with generally accepted accounting principles. Because
of inherent limitations, a system of internal control over financial re-
porting may not prevent or detect misstatements. Therefore, even those
systems determined to be effective can provide no reasonable assurance of
achieving their control objectives. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may
become inadequate due to change in conditions, or that the degree of com-
pliance with the policies or procedures may deteriorate.
Our management, including our principal executive officer and principal
accounting officer, conducted an evaluation of the effectiveness of our in-
ternal control over financial reporting using the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) in
Internal Control-Integrated Framework. Based on its evaluation, our manage-
ment concluded that as of October 31, 2010 our internal control over
financial reporting is effective.
This quarterly report does not include an attestation report of the
Corporation's registered public accounting firm regarding internal control
over financial reporting. Management's report was not subject to attestation
by the Corporation's registered public accounting firm pursuant to Section
404(c) of the Sarbanes-Oxley Act of 2002, as amended, that permits the
Corporation to provide only the management's report in this quarterly report.
GEORGE RISK INDUSTRIES, INC.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table provides information relating to the Company's
repurchase of common stock for the first quarter of fiscal year 2012.
Period Number of shares repurchased
-------------------------------------- ----------------------------
August 1, 2011 - August 31, 2011 0
September 1, 2011 - September 30, 2011 2,450
October 1, 2011 - October 31, 2011 0
Item 3. Defaults upon Senior Securities
Not applicable
Item 4. (Removed and Reserved)
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
31. Certifications pursuant to Rule 13a-14(a)
31.1 Certification of the Chief Executive Officer
31.2 Certification of the Chief Financial Officer
32. Certifications pursuant to 18 U.S.C. 1350
32.1 Certification of the Chief Executive Officer
32.2 Certification of the Chief Financial Officer
B. Reports on Form 8-K
No 8-K reports were filed during the quarter ended October 31, 2011.
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 12-15-2011 By: /s/ Kenneth R. Risk
Kenneth R. Risk
President and Chairman of the Board
Date 12-15-2011 By: /s/ Stephanie M. Risk
Stephanie M. Risk
Chief Financial Officer and Controller
