10-Q 1 january2012-10q.txt 10-Q FOR THE QUARTER ENDED JANUARY 31, 2012 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 quarterly period ended January 31, 2012 [ ] 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 March 16, 2012 was 5,042,800. 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 nine month period ended January 31, 2012, are attached hereto. GEORGE RISK INDUSTRIES, INC. BALANCE SHEETS
January 31, April 30, 2012 2011 ------------ ------------ (unaudited) ASSETS Current Assets Cash and cash equivalents $ 5,186,000 $ 5,254,000 Marketable securities (Note 2) 19,735,000 19,512,000 Accounts receivable: Trade, net of $14,000 and $5,000 doubtful account allowance 1,692,000 1,574,000 Other 1,000 1,000 Note receivable, current 5,000 5,000 Inventories (Note 3) 2,133,000 1,854,000 Prepaid expenses 159,000 151,000 Deferred income taxes 130,000 166,000 ------------ ------------ Total Current Assets $29,041,000 $28,517,000 Property and Equipment, net at cost $ 810,000 $ 639,000 Other Assets Investment in Land Limited Partnership, at cost 228,000 218,000 Projects in process 24,000 213,000 Note receivable 5,000 1,000 Other 1,000 0 ------------ ------------ Total Other Assets $ 258,000 $ 432,000 TOTAL ASSETS $30,109,000 $29,588,000 ============ ============
GEORGE RISK INDUSTRIES, INC. BALANCE SHEETS
January 31, April 30, 2012 2011 ------------ ------------ (unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable, trade $ 59,000 $ 128,000 Dividends payable 589,000 483,000 Accrued expenses Payroll and other expenses 273,000 212,000 Property taxes 2,000 0 Income tax payable 140,000 36,000 ------------ ------------ Total Current Liabilities $ 1,063,000 $ 859,000 Long-Term Liabilities Aircraft owership deposit payable 5,000 5,000 Deferred income taxes 74,000 53,000 ------------ ------------ Total Long-Term Liabilities $ 79,000 $ 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 133,000 281,000 Retained earnings 29,596,000 29,115,000 Treasury stock, 3,459,312 and 3,451,857 shares, at cost (3,447,000) (3,410,000) ------------ ------------ Total Stockholders' Equity $28,967,000 $28,671,000 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $30,109,000 $29,588,000 ============ ============
GEORGE RISK INDUSTRIES, INC. INCOME STATEMENTS (unaudited) Three months Nine months Three months Nine months ended ended ended ended January 31, January 31, January 31, January 31, 2012 2012 2011 2011 --------------------------------------------------- Net Sales $ 2,584,000 $ 7,742,000 $ 2,220,000 $ 6,404,000 Less: cost of goods sold (1,247,000) (3,801,000) (1,119,000) (3,442,000) ------------ ------------ ------------ ------------ Gross Profit $ 1,337,000 $ 3,941,000 $ 1,101,000 $ 2,962,000 Operating Expenses: General and administrative 181,000 590,000 184,000 567,000 Selling 411,000 1,173,000 381,000 1,155,000 Engineering 14,000 43,000 22,000 59,000 Rent paid to related parties 11,000 34,000 11,000 34,000 ------------ ------------ ------------ ------------ Total Operating Expenses $ 617,000 $ 1,840,000 $ 598,000 $ 1,815,000 Income From Operations 720,000 2,101,000 503,000 1,147,000 Other Income (Expense) Other 6,000 18,000 2,000 9,000 Dividend and interest income 222,000 562,000 216,000 536,000 Gain (loss) on sale of investments (384,000) (104,000) 97,000 (2,000) Gain (loss) on sale of assets 0 13,000 0 0 ------------ ------------ ------------ ------------ $ (156,000) $ 489,000 $ 315,000 $ 543,000 Income Before Provisions for Income Tax 564,000 2,590,000 818,000 1,690,000 Provisions for Income Tax Current Expense 283,000 786,000 202,000 476,000 Deferred tax expense (benefit) (155,000) 163,000 (136,000) (192,000) ------------ ------------ ------------ ------------ Total Income Tax Expense 128,000 949,000 66,000 284,000 Net Income $ 436,000 $ 1,641,000 $ 752,000 $ 1,406,000 ============ ============ ============ ============ Cash Dividends Common Stock ($0.23 per share) 0 (1,160,000) Common Stock ($0.20 per share) 0 (1,013,000) Income Per Share of Common Stock (Note 5): Basic $0.09 $0.33 $0.15 $0.28 Diluted $0.09 $0.32 $0.15 $0.28 Weighted Average Number of Common Shares Outstanding: Basic 5,043,585 5,045,898 5,054,500 5,059,213 Diluted 5,064,085 5,066,398 5,075,000 5,079,713
GEORGE RISK INDUSTRIES, INC. STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
Three months Nine months Three months Nine months ended ended ended ended January 31, January 31, January 31, January 31, 2012 2012 2011 2011 ---------------------------------------------------- Net Income $ 436,000 $ 1,641,000 $ 752,000 $ 1,406,000 ------------ ------------ ------------ ------------ Other Comprehensive Income, net of tax Unrealized gain (loss) on securities: Unrealized holding gains (losses) arising during period 377,000 (582,000) (98,000) 50,000 Reclassification adjustment for (gains) losses 313,000 327,000 (76,000) 51,000 Income tax expense related to other comprehensive income (288,000) 106,000 73,000 (43,000) ------------ ------------ ------------ ------------ Other Comprehensive Income $ 402,000 $ (149,000) $ (101,000) $ 58,000 Comprehensive Income $ 838,000 $ 1,492,000 $ 651,000 $ 1,464,000 ============ ============ ============ ============
GEORGE RISK INDUSTRIES, INC. STATEMENTS OF CASH FLOWS (unaudited)
Nine months Nine months ended ended January 31, January 31, 2012 2011 ---------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 1,641,000 $ 1,406,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 120,000 114,000 (Gain) loss on sale of investments 104,000 2,000 (Gain) loss on sale of assets (13,000) 0 Reserve for bad debts 9,000 10,000 Reserve for obsolete inventory 35,000 8,000 Deferred income taxes 163,000 (192,000) Changes in assets and liabilities: (Increase) decrease in: Accounts receivable (127,000) (11,000) Inventories (315,000) 115,000 Prepaid expenses (7,000) 57,000 Income tax overpayment 0 (23,000) Increase (decrease) in: Accounts payable (69,000) 0 Accrued expenses 63,000 75,000 Income tax payable 104,000 0 ------------ ------------ Net cash provided by (used in) operating activities $ 1,708,000 $ 1,561,000 CASH FLOWS FROM INVESTING ACTIVITIES: Other assets manufactured 189,000 (82,000) Proceeds from sale of assets 20,000 0 (Purchase) of property/equipment (298,000) (44,000) Proceeds from sale of marketable securities 168,000 1,584,000 (Purchase) of marketable securities (748,000) (762,000) (Purchase) of long-term investment (10,000) 0 (Loans) made to employees (10,000) 0 Collections of loans to employees 5,000 10,000 (Purchase) of treasury stock (37,000) (59,000) ------------ ------------ Net cash provided by (used in) investing activities $ (721,000) $ 647,000 CASH FLOWS FROM FINANCING ACTIVITIES: Dividends paid (1,055,000) (924,000) ------------ ------------ Net cash provided by (used in) financing activities $(1,055,000) $ (924,000) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ (68,000) $ 1,284,000 Cash and cash equivalents, beginning of period $ 5,254,000 $ 3,641,000 ------------ ------------ Cash and cash equivalents, end of period $ 5,186,000 $ 4,925,000 ============ ============ Supplemental Disclosure of Cash Flow Information Cash payments for: Income taxes $ 680,000 $ 497,000 Interest expense 0 0 Cash receipts for: Income taxes 0 0
GEORGE RISK INDUSTRIES, INC. NOTES TO FINANCIAL STATEMENTS JANUARY 31, 2011 Note 1 Unaudited Interim Financial Statements The accompanying unaudited 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 prin- ciples in the United States of America (US GAAP) for complete financia statements. These financial statements should be read in conjunction with the financial statements and notes contained in the company's annual report on Form 10-K for the year ended April 30, 2011. In the opinion of manage- ment, all adjustments, consisting only of normal recurring adjustments con- sidered 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. We have evaluated subsequent events through March 16, 2012, the issuance date of these financial statements. The Company did not have any material, recognizable subsequent events. 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 February 2012 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 stockholders'equity. Dividend and interest income are accrued as earned. As of January 31, 2012, investments available-for-sale consisted of the following: Gross Gross Cost Unrealized Unrealized Fair Basis Gains Losses Value ------------ ------------ ------------ ------------ Municipal bonds $ 9,498,000 $ 272,000 $ (70,000) $ 9,700,000 Corporate bonds $ 166,000 $ 10,000 $ 0 $ 176,000 Equity securities $ 6,680,000 $ 368,000 $ (351,000) $ 8,697,000 Money markets and CDs $ 1,162,000 $ 0 $ 0 $ 1,162,000 ------------ ------------ ------------ ------------ Total $19,506,000 $ 650,000 $ (421,000) $19,735,000
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 $5,000 for the quarter ended January 31, 2012 and recorded an im- pairment loss of $71,000 for the nine months ended January 31, 2012. As for the corresponding periods last year, management did not record an impairment loss for the quarter, while $11,000 of loss was recorded for the nine months ended January 31, 2011. 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 January 31, 2012. Less than 12 months 12 months or greater Total ----------------------- --------------------- --------------------- Fair Unrealized Fair Unrealized Fair Unrealized Value Loss Value Loss Value Loss ........................................................................... Municipal bonds $ 879,000 $ (6,000) $1,797,000 $ (64,000) $2,676,000 $ (70,000) Equity securities $2,676,000 $ (189,000) $1,199,000 $ (162,000) $3,875,000 $ (351,000) Total $3,555,000 $ (195,000) $2,996,000 $ (226,000) $6,551,000 $ (421,000)
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 January 31, 2012. 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. The individual holdings have been evaluated, and due to management's plan to hold onto these investments for an extended period, the Company does not consider these investments to be other- than-temporarily impaired at January 31, 2012. Note 3 Inventories At January 31, 2012, inventories consisted of the following: Raw materials $ 1,509,000 Work in process 505,000 Finished goods 287,000 ------------ 2,301,000 Less: allowance for obsolete inventory (168,000) ------------ Totals $ 2,133,000
Note 4 Business Segments The following is financial information relating to industry segments:
For the quarter ended January 31, 2012 2011 --------------------------- Net revenue: Security alarm products 2,287,000 1,921,000 Other products 297,000 299,000 ------------ ------------ Total net revenue $ 2,584,000 $ 2,220,000 Income from operations: Security alarm products 637,000 435,000 Other products 83,000 68,000 ------------ ------------ Total income from operations $ 720,000 $ 503,000 Identifiable assets: Security alarm products 3,302,000 2,694,000 Other products 1,213,000 974,000 Corporate general 25,594,000 25,060,000 ------------ ------------ Total assets $30,109,000 $28,728,000 Depreciation and amortization: Security alarm products 6,000 6,000 Other products 33,000 25,000 Corporate general 5,000 7,000 ------------ ------------ Total depreciation and amortization $ 44,000 $ 38,000 Capital expenditures: Security alarm products 0 0 Other products 96,000 11,000 Corporate general 0 0 ------------ ------------ Total capital expenditures $ 96,000 $ 11,000
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 January 31, 2012 ------------------------------------------- Income Shares Per-share (Numerator) (Denominator) Amount ----------- ------------- ----------- Net Income $ 436,000 =========== Basic EPS $ 436,000 5,043,585 $ 0.086 Effect of dilutive securities: Convertible preferred stock 0 20,500 ----------- ------------- ----------- Diluted EPS $ 436,000 5,064,085 $ 0.086 For the nine months ended January 31, 2012 ------------------------------------------- Income Shares Per-share (Numerator) (Denominator) Amount ----------- ------------- ----------- Net Income $1,641,000 =========== Basic EPS $1,641,000 5,045,898 $ 0.325 Effect of dilutive securities: Convertible preferred stock 0 20,500 ----------- ------------- ----------- Diluted EPS $1,641,000 5,066,398 $ 0.323 For the three months ended January 31, 2011 -------------------------------------------- Income Shares Per-share (Numerator) (Denominator) Amount ----------- ------------- ----------- Net Income $ 752,000 =========== Basic EPS $ 752,000 5,054,500 $ 0.149 Effect of dilutive securities: Convertible preferred stock 0 20,500 ----------- ------------- ----------- Diluted EPS $ 752,000 5,075,000 $ 0.148 For the nine months ended January 31, 2011 -------------------------------------------- Income Shares Per-share (Numerator) (Denominator) Amount ----------- ------------- ----------- Net Income $1,406,000 =========== Basic EPS $1,406,000 5,059,213 $ 0.278 Effect of dilutive securities: Convertible preferred stock 0 20,500 ----------- ------------- ----------- Diluted EPS $1,406,000 5,079,713 $ 0.277
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 January 31, 2012 and 2011. Likewise, the Company paid matching contributions of $9,000 during the nine-month periods ending January 31, 2012 and 2011. There were no discretionary contributions paid during either the quarters or nine-month periods ending January 31, 2012 and 2011, 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 inherent 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. Investments and Marketable Securities ------------------------------------- As of January 31, 2012, our investments consisted of money markets, CDs, publicly traded equity securities and certain state and municipal debt securities. Our investments are valued using third-party broker statements. The value of the investments is derived from quoted market information. The inputs to the valuation are classified as Level 1 given the active market for these securities, however, if an active market does not exist, which is the case for municipal and corporate bonds, the inputs are recorded as Level 2. 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 January 31, 2012 --------------------------------------------------- Level 1 Level 2 Level 3 Total ------- ------- ------- ------- Assets: Money Markets and CDs $1,162,000 $ 0 $ 0 $ 1,162,000 Equity Securities $8,697,000 $ 0 $ 0 $ 8,697,000 Municipal and Corporate Bonds $ 0 $9,876,000 $ 0 $ 9,876,000 ----------- ----------- ---------- ------------ Total fair value of assets measured on a recurring basis $9,859,000 $9,876,000 $ 0 $19,735,000
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 con- densed 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 $68,000 for the nine months ended January 31, 2012, while, for the same period last year, net cash increased $1,284,000. Accounts re- eivable increased $127,000 for the current nine months and increased $11,000 for the same period last year. The increase in cash flow for accounts re- ceivable is a reflection of increased sales. At January 31, 2012, 64.93% of the receivables were considered current (less than 45 days) and 2.82% of the total were over 90 days past due. For comparison, 73.70% of the receivables were current and 1.55% were past 90 days at January 31, 2011. Inventories increased $315,000 for the current nine months, and it decreased $115,000 for the same period last year. The current increase is due to increased sales and the prices of raw materials have increased. Changes in prepaid expenses in regards to cash flow increased by $7,000 and decreased by $57,000 for the nine-month periods ending January 31, 2012 and 2011, respectively. There was not an income tax overpayment for the nine months ended January 31, 2012, while there was a $23,000 increase in income tax overpayment for the cor- responding period last year. Management paid income tax estimates based on prior year taxable income. For the nine months ended January 31, 2012, accounts payable decreased $69,000 while cash flow towards accounts payable did not fluctuate for the same period ended January 31, 2011. 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 its invoices within the terms. Accrued expenses increased $63,000 for the nine months ended January 31, 2012, and these expenses increased $75,000 for the corresponding nine months last year. The current increase is a result of increased sales commissions and more employees. Income tax payable increased $104,000 for the nine months ending January 31, 2012, 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 $298,000 on acquisitions of property and equipment for the current nine-month period and $44,000 was spent during the nine months ended January 31, 2011. Two in-house built molds, valued at $265,000 and previously classified as projects in process, were completed during the current nine-month period. Additionally, the Company continues to purchase marketable securities, which include municipal and corporate bonds and quality stocks. Cash spent on pur- chases of marketable securities for the nine months ended January 31, 2012 was $748,000 and $762,000 was spent for the corresponding period last year. In addition, proceeds from the sale of marketable securities for the nine months ended January 31, 2012 were $168,000 and $1,584,000 for the same period last year. We use "money manager" accounts for most stock trans- actions. 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 invest- ments. Furthermore, the Company continues to purchase back its common stock when the opportunity arises. For the nine months ended January 31, 2012, the Company purchased $37,000 worth of treasury stock and $59,000 worth was bought back for the nine months ended January 31, 2011. 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. Financing --------- Cash flows from financing activities decreased by $1,055,000 for the nine months ending January 31, 2012. 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 $924,000 for the nine months ending January 31, 2011. A dividend of $0.20 per common share was also 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 January 31, 2012 2011 --------------------------- Working capital (current assets - current liabilities) $ 27,978,000 $ 26,844,000 Current ratio (current assets / current liabilities) 27.320 33.978 Quick ratio ((cash + investments+ AR) / current liabilities) 25.036 30.581
Results of operations ~~~~~~~~~~~~~~~~~~~~~ Net sales were $2,584,000 for the quarter ended January 31, 2012, which is a 16.4% increase from the corresponding quarter last year. Year-to-date net sales at January 31, 2012 were $7,742,000, which is a 20.9% 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 48.26% of net sales for the quarter ended January 31, 2012 and 50.41% for the same quarter last year. Year-to-date cost of goods sold percentages were 49.1% for the current nine months and 53.75% for the corresponding nine 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, 2012. The price increase helps in- crease the gross profit. Operating expenses were 23.88% of net sales for the quarter ended January 31, 2012 as compared to 26.94% for the corresponding quarter last year. Year-to- date operating expenses were 23.77% of net sales for the nine months ended January 31, 2012, while they were 28.34% for the same period last year. Having relatively the same percentages for operating expenses shows that management has a good grip on spending habits. Income from operations for the quarter ended January 31, 2012 was at $720,000, which is a 43.14% in- crease from the corresponding quarter last year, which had income from oper- ations of $503,000. Income from operations for the nine months ended January 31, 2012 was at $2,101,000, which is an 83.17% increase from the correspond- ing nine months last year, which had income from operations of $1,147,000. Other income and expenses showed a loss of $156,000 and a gain of $489,000 for the quarter and nine months ended January 31, 2012. The numbers for the corresponding periods last year were gains of $315,000 for the quarter and $543,000 for the nine-months ending January 31, 2011. Dividend and interest income was up 2.78% for the quarter and was up 4.85% for the current nine- month period when comparing to the same time periods last year. During the current quarter, there was a $384,000 loss on investments recorded. Manage- ment wrote down $5,000 of impaired investments during the quarter ending January 31, 2012. There was not a write down of investments for the same quarter last year. As for the nine months ended January 31, 2012 and 2011, there were write-downs of $71,000 and $11,000, respectively. Net income for the quarter ended January 31, 2012 was $436,000, which is a 42.02% decrease from the corresponding quarter last year, which showed a net gain of $752,000. Net income for the nine months ended January 31, 2012 was $1,641,000, a 16.71% increase from the same period last year. Net income for the nine months ended January 31, 2011 was $1,406,000. Earnings per common share for the quarter ended January 31, 2012 was $0.09 per share and $0.33 per share for the year-to-date numbers. EPS for the quarter and nine months ended January 31, 2011 was $0.15 per share and $0.28 per share, respectively. New product information ~~~~~~~~~~~~~~~~~~~~~~~ In response to customer requests, we have modified our 3/4" and 1" recessed contacts into a shorter and stubby version. This makes for easier install- ation. Depending on the part number, these are used in steel door or aluminum and wood doors. We have also added a service repair connector to our product line. The weather pack nylon connectors are environmentally sealed to withstand ex- posure to temperature and moisture. This connector (SRC-12) is an ideal companion for our great selling HVAC kits and other applications for removal of equipment for service and repair. Engineering has 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 burglars gain access through a garage door that is left open or unlocked. Engineering is working on a plastic housing for our very popular MF-875 flat magnet. They are also looking to complete a design on an 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 Jan- uary 31, 2011, our president and chief executive officer and our chief finan- cial 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 controls 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 internal 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 January 31, 2012 our internal control over financial reporting is effective. This quarterly report does not include an attestation report of the Corpor- ation'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 Cor- poration 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 third quarter of fiscal year 2012. Period Number of shares repurchased -------------------------------------- ---------------------------- November 1, 2011 - November 30, 2011 1,200 December 1, 2011 - December 31, 2011 200 January 1, 2012 - January 31, 2012 0
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. 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 January 31, 2012. 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 03-16-2012 By: /s/ Kenneth R. Risk Kenneth R. Risk President and Chairman of the Board Date 03-16-2012 By: /s/ Stephanie M. Risk Stephanie M. Risk Chief Financial Officer and Controller