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What changed in AstroNova, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of AstroNova, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+172 added−211 removedSource: 10-K (2024-04-12) vs 10-K (2023-04-17)

Top changes in AstroNova, Inc.'s 2024 10-K

172 paragraphs added · 211 removed · 135 edited across 6 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

46 edited+10 added−24 removed121 unchanged
Biggest changeThere is no assurance that we will not be subject to claims that we have violated applicable laws or codes of conduct, that we will be able to successfully defend against such claims or that we will not be subject to significant fines and penalties in the event we are found not to be in compliance with such laws or codes of conduct. 21 Any failure or perceived failure by us (or any third parties with whom we have contracted to store such information) to comply with applicable privacy and security laws, policies or related contractual obligations or any compromise of security that results in unauthorized access to personal information may result in governmental enforcement actions, significant fines, litigation, claims of breach of contract and indemnity by third parties and adverse publicity.
Biggest changeAny failure or perceived failure by us (or any third parties with whom we have contracted to store such information) to comply with applicable privacy and security laws, policies or related contractual obligations or any compromise of security that results in unauthorized access to personal information may result in governmental enforcement actions, significant fines, litigation, claims of breach of contract and indemnity by third parties and adverse publicity.
Relying on subcontractors involves a number of significant risks, including: • Disruptions in the global supply chain; • Limited control over the manufacturing process; 10 • Potential absence of adequate production capacity; • Potential delays in production lead times; • Unavailability of certain process technologies; • Reduced control over delivery schedules, manufacturing yields, quality and costs and • Exposure to rapid unplanned cost increases that cannot be adequately recovered by customer price increases due to market competition or contractual constraints.
Relying on subcontractors involves a number of significant risks, including: • Disruptions in the global supply chain; • Limited control over the manufacturing process; • Potential absence of adequate production capacity; • Potential delays in production lead times; • Unavailability of certain process technologies; • Reduced control over delivery schedules, manufacturing yields, quality and costs; and • Exposure to rapid unplanned cost increases that cannot be adequately recovered by customer price increases due to market competition or contractual constraints.
However, due to the complexity of our systems, and especially due to the ever-increasing sophistication of cyber-criminals, there is no assurance that our efforts will be sufficient to prevent cyber-attacks, security breaches, or the other potential exploitation of vulnerabilities or systems failures. In any such circumstance, our system redundancy and other disaster recovery planning may be ineffective or inadequate.
However, due to the complexity of our systems, and especially due to the ever-increasing sophistication of cyber-criminals, there is no assurance that our efforts will be sufficient to prevent cyber-attacks, security 10 breaches, or the other potential exploitation of vulnerabilities or systems failures. In any such circumstance, our system redundancy and other disaster recovery planning may be ineffective or inadequate.
Additional qualified subcontractors may not be available or may not be available on a timely or cost-competitive basis. Any interruption in the supply, increase in the cost of the products manufactured by a third-party subcontractor or failure of a subcontractor to meet quality standards could have a material adverse effect on our business, operating results and financial condition.
Additional qualified subcontractors may not be available or may not be available on a timely or cost-competitive 8 basis. Any interruption in the supply, increase in the cost of the products manufactured by a third-party subcontractor, or failure of a subcontractor to meet quality standards could have a material adverse effect on our business, operating results and financial condition.
We desire to reduce and ultimately eliminate any adverse environmental impact of our 20 business and to comply with relevant laws and regulations. We expect this effort to affect our ongoing operations and require additional capital and operating expenditures. If we were to fail to manage our environmental compliance effectively, we could suffer economic or reputational harm.
We desire to reduce and ultimately eliminate any adverse environmental impact of our business and to comply with relevant laws and regulations. We expect this effort to affect our ongoing operations and require additional capital and operating expenditures. If we were to fail to manage our environmental compliance effectively, we could suffer economic or reputational harm.
Foreign Corrupt Practices Act and other applicable U.S. and foreign laws prohibiting corrupt payments to government officials and other third parties. For example, the increased use of sanctions in U.S. international relations recently has increased our cost of compliance with the regulations intended to enforce them.
Foreign Corrupt Practices Act and other applicable U.S. and foreign laws prohibiting corrupt payments to 15 government officials and other third parties. For example, the increased use of sanctions in U.S. international relations recently has increased our cost of compliance with the regulations intended to enforce them.
We compete based 11 on technology, performance, price, quality, reliability, brand, distribution and customer service and support. Our success in future performance is largely dependent upon our ability to compete successfully in the markets we currently serve and to expand into additional market segments.
We compete based on technology, performance, price, quality, reliability, brand, distribution and customer service and support. Our success in future performance is largely dependent upon our ability to compete successfully in the markets we currently serve and to expand into additional market segments.
However, in the future, such events could result in legal claims or proceedings, liability or 13 penalties under privacy laws, disruption in operations, and damage to our brand and reputation, all of which could adversely affect our business, operating results and financial condition.
However, in the future, such events could result in legal claims or proceedings, liability or penalties under privacy laws, disruption in operations, and damage to our brand and reputation, all of which could adversely affect our business, operating results and financial condition.
If we do not comply with applicable laws, rules and regulations we could be subject to costs and liabilities and our business may be adversely impacted. 19 We are subject to regulatory constraints and compliance requirements due to our status as a publicly held company.
If we do not comply with applicable laws, rules and regulations we could be subject to costs and liabilities and our business may be adversely impacted. We are subject to regulatory constraints and compliance requirements due to our status as a publicly held company.
Our credit agreement with Bank of America requires us, among other things, to satisfy certain financial ratios on an ongoing basis, consisting of a maximum consolidated leverage ratio, a minimum consolidated fixed charge coverage ratio and an asset coverage ratio.
Our credit agreement with Bank of America, N.A. requires us, among other things, to satisfy certain financial ratios on an ongoing basis, consisting of a maximum consolidated leverage ratio, a minimum consolidated fixed charge coverage ratio and an asset coverage ratio.
There are numerous federal, state, local, and international laws and regulations regarding privacy and the storage, sharing, use, processing, disclosure and protection of this kind of information, the scope of which are changing, inconsistent and conflicting and subject to differing interpretations.
There are numerous federal, state, local, and international laws and regulations regarding privacy and the 16 storage, sharing, use, processing, disclosure and protection of this kind of information, the scope of which are changing, inconsistent and conflicting and subject to differing interpretations.
Item 1A. Risk Factors The following risk factors should be carefully considered in evaluating AstroNova, because such factors may have a significant impact on our business, operating results, liquidity and financial condition. As a result of the risk factors set forth below, actual results could differ materially from those projected in any forward-looking statements.
Item 1A. R isk Factors The following risk factors should be carefully considered in evaluating AstroNova, because such factors may have a significant impact on our business, operating results, liquidity and financial condition. As a result of the risk factors set forth below, actual results could differ materially from those projected in any forward-looking statements.
These 12 increases have been concentrated in label printing machines and supplies sold by our PI business, as well as in electronic components and assemblies in our T&M business.
These increases have been concentrated in label printing machines and supplies sold by our PI business, as well as in electronic components and assemblies in our T&M business.
For example, under these conditions or the expectation of such conditions, our customers may cancel orders, delay purchasing decisions or reduce their use of our services.
For example, under these conditions or the expectation of such conditions, our customers may cancel orders, delay purchasing decisions, or reduce their use of 11 our services.
In any of these events our costs may increase, and we may have significant charges or losses associated with the write-down or divestiture of assets. 18 Adverse conditions in the global banking industry and credit markets could impair our liquidity or interrupt our access to capital markets, borrowings or financial transactions to hedge certain risks.
In any of these events our costs may increase, and we may have significant charges or losses associated with the write-down or divestiture of assets. 14 Adverse conditions in the global banking industry and credit markets could impair our liquidity or interrupt our access to capital markets, borrowings or financial transactions to hedge certain risks.
Our future revenue growth depends on our ability to develop and introduce new products and services on a timely basis and achieve market acceptance of these new products and services. The markets for our products are characterized by evolving technologies which in turn effect our product introduction cycles.
Our future revenue growth depends on our ability to develop and introduce new products and services on a timely basis and achieve market acceptance of these new products and services. The markets for our products are characterized by evolving technologies which in turn affect our product introduction cycles.
In some instances, the regulations may mandate action on our part for which, to our knowledge, no current technical means to comply exist. If enacted, the costs to comply with these regulations could have a material adverse impact on our business.
In some instances, the regulations may mandate action on our part for which, to our knowledge, no current technical means to comply exist. If enacted, the costs of complying with these regulations could have a material adverse impact on our business.
The credit agreement governing our credit facility with Bank of America, N.A., as amended, contains, and any future debt agreements may include, several restrictive covenants that impose significant operating and financial restrictions on us and our subsidiaries.
The credit agreement governing our credit facility with Bank of America, N.A. contains, and any future debt agreements may include several restrictive covenants that impose significant operating and financial restrictions on us and our subsidiaries.
These defects could result in, among other things, a delay in recognition of sales, loss of sales, loss of market share, failure to achieve market acceptance or damage to our reputation. We could be subject to material claims by customers and may incur substantial expenses to correct any product defects.
These defects could result in, among other things, increased warranty provisions, a delay in recognition of sales, loss of sales, loss of market share, failure to achieve market acceptance, or damage to our reputation. We could be subject to material claims by customers and may incur substantial expenses to correct any product defects.
Revenue from international operations, which includes both direct and indirect sales to customers outside the U.S., accounted for approximately 35% of our total revenue for fiscal 2023, and we anticipate that international sales will continue to account for a significant portion of our revenue. In addition, we have employees, suppliers, contractors and facilities located outside the U.S.
Revenue from international operations, which includes both direct and indirect sales to customers outside the U.S., accounted for approximately 43% of our total revenue for fiscal 2024, and we anticipate that international sales will continue to account for a significant portion of our revenue. In addition, we have employees, suppliers, contractors and facilities located outside the U.S.
Accordingly, our business, operating results and financial condition could be harmed by a variety of factors, including: • Interruption to transportation flows for delivery of parts to us and finished goods to our customers; • Customer and vendor financial stability; • Fluctuations in foreign currency exchange rates; • Changes in a specific country’s or region’s environment including political, economic, monetary, regulatory or other conditions; • Trade protection measures and import or export licensing requirements; • Negative consequences from changes in tax laws; • Difficulty in managing and overseeing operations that are distant and remote from corporate headquarters; 15 • Difficulty in obtaining and maintaining adequate staffing; • Differing labor regulations; • Failure to comply with complex and rapidly changing government economic sanctions against other countries, especially arising from responses to armed conflict; • Unexpected changes in regulatory requirements; • Uncertainty surrounding the implementation and effects of the United Kingdom’s withdrawal from the EU, commonly known as “Brexit”; and • Geopolitical turmoil, including terrorism, war and public health disruptions, such as that caused by the COVID-19 pandemic or Russia’s invasion of Ukraine.
Accordingly, our business, operating results and financial condition could be harmed by a variety of factors, including: • Interruption to transportation flows for delivery of parts to us and finished goods to our customers; • Customer and vendor financial stability; • Fluctuations in foreign currency exchange rates; • Changes in a specific country’s or region’s environment including political, economic, monetary, regulatory, or other conditions; • Trade protection measures and import or export licensing requirements; • Negative consequences from changes in tax laws; • Difficulty in managing and overseeing operations that are distant and remote from corporate headquarters; • Difficulty in obtaining and maintaining adequate staffing; • Differing labor regulations; • Failure to comply with complex and rapidly changing government economic sanctions against other countries, especially arising from responses to armed conflict; • Unexpected changes in regulatory requirements; and • Geopolitical turmoil, including terrorism, war and public health disruptions, such as that caused by the COVID-19 pandemic or Russia’s invasion of Ukraine.
Changes in these rules or their interpretation or changes in underlying assumptions, estimates, or judgments could significantly change our reported or expected financial performance or financial condition. Item 1B. Unresolved Staff Comments None.
Changes in these rules or their interpretation or changes in underlying assumptions, estimates, or judgments could significantly change our reported or expected financial performance or financial condition. Item 1B. Unreso lved Staff Comments None.
In any acquisition that we complete, we cannot be certain that: • We will successfully integrate the operations of the acquired business with our own; 17 • All the benefits expected from such integration will be realized; • Management’s attention will not be diverted or divided, to the detriment of current operations; • Amortization of acquired intangible assets or possible impairment of acquired intangibles will not have a negative impact on operating results or other aspects of our business; • Delays or unexpected costs related to the acquisition will not have a detrimental impact on our business, operating results and financial condition; • Customer dissatisfaction with, or performance problems at, an acquired company will not have an adverse impact on our reputation; and • Respective operations, management and personnel will be compatible.
In any acquisition that we complete, we cannot be certain that: • We will successfully integrate the operations of the acquired business with our own; • All the benefits expected from such integration will be realized; • Management’s attention will not be diverted or divided, to the detriment of current operations; • Amortization of acquired intangible assets or possible impairment of acquired intangibles will not have a negative impact on operating results or other aspects of our business; • Delays or unexpected costs related to the acquisition will not have a detrimental impact on our business, operating results and financial condition; • Customer dissatisfaction with, or performance problems at, an acquired company will not have an adverse impact on our reputation; • We will successfully implement effective disclosure controls and internal controls over financial reporting at the acquired business in a timely fashion; and • Respective operations, management and personnel will be compatible.
Our business, results of operations and financial position could also be adversely affected, depending on the time required to obtain sufficient quantities from the original source or, if possible, to identify and obtain sufficient quantities from an alternative source.
Our business, results of operations and financial position could also be adversely affected, depending on the time required to obtain sufficient quantities from the original source or, if possible, to identify and obtain sufficient quantities from an alternative source as well as incurring higher costs to obtain needed components.
At the end of fiscal 2023, we had approximately $3.9 million of cash and cash equivalents. Our cash and cash equivalents are held in bank demand deposit accounts and foreign bank accounts.
At the end of fiscal 2024, we had approximately $4.5 million of cash and cash equivalents. Our cash and cash equivalents are held in bank demand deposit accounts and foreign bank accounts.
Changes to tax laws and regulations or changes to the interpretation thereof, the ambiguity of tax laws and regulations, the subjectivity of factual interpretations, uncertainties regarding the geographic mix of earnings in any particular period, and other factors, could have a material impact on our estimates of our effective tax rate and our deferred tax assets and liabilities.
Any of these factors could cause us to experience an effective tax rate significantly different from previous periods or our current expectations. 12 Changes to tax laws and regulations or changes to the interpretation thereof, the ambiguity of tax laws and regulations, the subjectivity of factual interpretations, uncertainties regarding the geographic mix of earnings in any particular period, and other factors could have a material impact on our estimates of our effective tax rate and our deferred tax assets and liabilities.
Operating outside the United States also exposes us to additional intellectual property risk. The laws and enforcement practices of certain jurisdictions in which we operate do not protect our intellectual property rights to the same extent as in the United States.
The loss of our Honeywell license agreement could have a material adverse impact on our business. Operating outside the United States also exposes us to additional intellectual property risk. The laws and enforcement practices of certain jurisdictions in which we operate do not protect our intellectual property rights to the same extent as in the United States.
For example, the 2020 grounding, suspension and subsequent slow restart of production of the Boeing 737 MAX, coupled with the negative impact of the COVID-19 pandemic on the demand for new aircraft and travel, reduced the demand for our airborne printers, as well as for the related repairs and supplies which has negatively affected our results of operations.
For example, the 2020 grounding, suspension and subsequent slow restart of the Boeing B737 MAX, coupled with the 7 impact of the COVID-19 pandemic reduced the demand for our airborne printers, as well as for the related repairs and supplies, which negatively affected our business.
Such restrictive covenants may significantly limit our ability to: • Incur future indebtedness; • Place liens on assets; • Pay dividends or distributions on our and our subsidiaries’ capital stock; • Repurchase or acquire our capital stock; • Conduct mergers or acquisitions; • Sell assets; and/or • Alter our or our subsidiaries’ capital structure, to make investments and loans, to change the nature of their business, and to prepay subordinated indebtedness.
Such restrictive covenants may significantly limit our ability to: • Incur future indebtedness; • Place liens on assets; • Pay dividends or distributions on our and our subsidiaries’ capital stock; • Repurchase or acquire our capital stock; • Conduct mergers or acquisitions; • Sell assets; and/or • Alter our or our subsidiaries’ capital structure, to make investments and loans, to change the nature of their business, and to prepay subordinated indebtedness. 13 We may not realize the anticipated benefits of past or future acquisitions, divestitures and strategic partnerships, and integration of acquired companies or divestiture of businesses may negatively impact our overall business.
We will continue to identify and pursue acquisitions of complementary companies and strategic assets, such as customer bases, products and technology. However, there can be no assurance that we will be able to identify suitable acquisition opportunities.
We have made strategic investments in other companies, products and technologies, including our August 2022 acquisition of Astro Machine LLC. We will continue to identify and pursue acquisitions of complementary companies and strategic assets, such as customer bases, products and technology. However, there can be no assurance that we will be able to identify suitable acquisition opportunities.
We have identified a material weakness in our internal control over financial reporting and that weakness has led to a conclusion that our internal control over financial reporting and disclosure controls and procedures were not effective as of January 31, 2023. The material weakness related to our inability to maintain effective controls to properly identify and assess significant non-routine transactions.
We have identified a material weakness in our internal control over financial reporting and that weakness has led to a conclusion that our internal control over financial reporting and disclosure controls and procedures were not effective as of January 31, 2024.
This has been exacerbated by increases in the cost of transportation to expedite incoming components and supplies. In many cases, we have had to expedite delivery of critical materials through significantly higher cost airfreight methods. Our ability to offset these effects through pricing actions for our products and services may not prove sufficient to offset these or further cost increases.
In many cases, we have had to expedite delivery of critical materials through significantly higher cost airfreight methods. Our ability to offset these effects through pricing actions for our products and services may not prove sufficient to offset these or further cost increases. Attempts to increase prices may not hold in the face of customer resistance and/or competition.
We have responded to these issues by increasing our inventories of those products to mitigate supply risk, negotiating quality related cost reimbursements, and in some cases, accelerating our development of PI products that rely on alternative suppliers.
We have responded to these issues by increasing our inventories of those products to mitigate supply risk, negotiating quality related cost reimbursements, and in some cases, accelerating our development of PI products that rely on alternative suppliers. In fiscal 2024, we incurred $0.6 million of incremental expense relating to warranty services and implementation of corrective retrofits resulting from these issues.
Also, we believe that the pandemic has negatively impacted our customers’ financial capacity materially enough to alter their strategies and industry dynamics so as to make changes in their demand more volatile.
Also, we believe that the pandemic negatively impacted our customers’ financial capacity materially enough to alter their strategies and industry dynamics, but the increase in travel demand has caused the industry profitability to rebound.
These factors may in particular cause demand for aircraft to grow slowly or decline, which would reduce demand for our products, and in turn harm our results of operations, financial position and cash flows.
Production or supply chain issues experienced by any aircraft manufacturer may cause aircraft deliveries to grow more slowly or decline, which would reduce demand for our products, and in turn harm our results of operations, financial position and cash flows.
As changes in our business environment occur, we may need to adjust our business strategies to meet these changes, or we may otherwise find it necessary to restructure our operations or particular businesses or assets.
For example, in fiscal 2024 we implemented a restructuring plan in our PI segment to reduce operating costs within that segment. As changes in our business environment occur, we may need to adjust our business strategies to meet these changes, or we may otherwise find it necessary to restructure our operations or particular businesses or assets.
Although we believe our tax estimates are reasonable, the ultimate tax outcome may materially differ from the amounts recorded in our consolidated financial statements and may materially affect our income tax benefit or expense, net loss or income, and cash flows in the period in which such determination is made. 16 Deferred tax assets are recognized for the expected future tax consequences of temporary differences between the carrying amount for financial reporting purposes and the tax bases of assets and liabilities, and for net operating losses and tax credit carry forwards.
Although we believe our tax estimates are reasonable, the ultimate tax outcome may materially differ from the amounts recorded in our consolidated financial statements and may materially affect our income tax benefit or expense, net loss or income, and cash flows in the period in which such determination is made.
However, if these efforts to constrain the cost of our operations are inadequate to offset higher product and employee wage costs, our results of operations and financial position could be materially adversely affected.
However, if these efforts to constrain the cost of our operations are inadequate to offset higher product and employee wage costs, our results of operations and financial position could be materially adversely affected. 9 Our inability to adequately enforce and protect our intellectual property defend against assertions of infringement or the loss of certain licenses could prevent or restrict our ability to compete.
While these effects have been abating, demand remains lower than it was pre-pandemic, and currently the outlook is uncertain. While demand for air travel has recently increased, the impact of another viral pandemic or other widespread health emergency could negatively impact this trend in the future.
While demand for air travel has recently increased, the impact of air-safety incidents or of another viral pandemic or other widespread health emergency could negatively impact this trend in the future.
We are also continually reviewing our operations with a view towards reducing our cost structure, including but not limited to reducing our labor cost-to-revenue ratio, improving process and system efficiencies and outsourcing certain internal functions. From time to time, we also engage in restructuring actions to reduce our cost structure.
If we are unable to obtain adequate pricing for our products and services, our results of operations and financial position could be materially adversely affected. We are also continually reviewing our operations with a view towards reducing our cost structure, including but not limited to reducing our labor cost-to-revenue ratio, improving process and system efficiencies and outsourcing certain internal functions.
We also review our long-lived assets including property, plant and equipment, and other intangibles assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. 14 Factors we consider include significant under-performance relative to expected historical or projected future operating results, significant negative industry or economic trends and our market capitalization relative to net book value.
We also review our long-lived assets including property, plant and equipment, and other intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.
Additional risks and uncertainties not presently known to us, or that we currently consider to be immaterial, may also impact our business operations.
Additional risks and uncertainties not presently known to us, or that we currently consider to be immaterial, may also impact our business operations. Business and Industry Risks: Our operating results and financial condition could be harmed if the markets into which we sell our products decline or do not grow as anticipated.
In some cases, we may record a valuation allowance to reduce our deferred tax assets to estimated realizable value. We review our deferred tax assets and valuation allowance requirements quarterly.
We review our deferred tax assets and valuation allowance requirements quarterly.
Our inability to adequately enforce and protect our intellectual property defend against assertions of infringement or the loss of certain licenses could prevent or restrict our ability to compete. We rely on patents, trademarks, licenses, and proprietary knowledge and technology, both internally developed and acquired, in order to maintain a competitive advantage.
We rely on patents, trademarks, licenses, and proprietary knowledge and technology, both internally developed and acquired, in order to maintain a competitive advantage. Our competitors may develop technologies that are similar or superior to our proprietary technologies or design technologies around the intellectual property protections or licenses that we currently own.
Management is taking action to remediate the deficiencies in its internal controls over financial reporting by augmenting resources in our financial organization.
Management is taking action to remediate this material weakness in its internal controls over financial reporting by designing an effective control environment and expanding our existing enterprise resource planning system to include the Astro Machine subsidiary.
Attempts to increase prices may not hold in the face of customer resistance and/or competition. If we are unable to obtain adequate pricing for our products and services, our results of operations and financial position could be materially adversely affected.
If we continue to experience product failures due to design or manufacturing defects, our business, results of operations and financial position could be materially and adversely affected.
Removed
Business and Industry Risks: The structural impacts on the economy as a result of the COVID-19 pandemic and its aftermath have adversely affected and will likely continue to adversely affect our revenues, results of operations and financial condition. All of our global operations were materially adversely affected by the worldwide COVID-19 pandemic and the related supply-chain disruptions.
Added
Although we have experienced a significant recovery in the demand for our airborne printers following the negative impact of the COVID-19 pandemic on the demand for new aircraft and travel, demand remains lower than it was pre-pandemic, and currently the outlook is uncertain.
Removed
The aftermath of the immediate severe impacts of COVID-19 on our operations and financial performance, the changes in our customers’ purchasing behavior, the post-pandemic impact of inflation from macroeconomic factors, and the continued and lingering structural impacts on our global supply chain, particularly with respect to the availability and costs of electronic components, have made planning for customer demand and manufacturing production more difficult.
Added
The supply chain disruption continues to affect our business as it has become difficult to ramp up production as quickly as needed to respond to the post-COVID increase in customer demand.
Removed
Also, it has led to a rise in the cost of a number of classes of acquired goods for both the T&M and PI segments.
Added
Additionally, due to supply chain disruptions, it has become more difficult to obtain the needed components for our legacy T&M products, and as a result we have incurred higher costs to obtain these components. The supply chain disruptions have been exacerbated by increases in the cost of transportation to expedite incoming components and supplies.
Removed
We will continue to evaluate the impact of COVID-19 and its aftermath effects on our business, results of operations and cash flows throughout fiscal 2024, including the potential impacts on various estimates and assumptions inherent in the preparation of our condensed consolidated financial statements.
Added
In fiscal 2024, we engaged in restructuring actions to reduce our cost structure in our PI segment.
Removed
Since the COVID-19 pandemic began we have experienced difficulties in obtaining raw materials and components for our products. Some of the structural dislocations in the global economy that were triggered by the pandemic are prolonging these difficulties.
Added
In fiscal 2024, we continued to have quality and reliability issues in certain models of our PI printers as a result of faulty ink provided by one of our larger suppliers.
Removed
Particularly with respect to certain electronic components for legacy products in our T&M segment, availability has been curtailed and may not recover, and in certain cases we have had to accelerate product redesign efforts and quickly transition customers to products with more viable 8 long-term product configurations.
Added
During the second quarter of fiscal 2024, we initiated a program to retrofit all of the printers sold to our customers that were affected by the faulty ink at a total cost of $0.6 million.
Removed
We expect to incur substantial costs in doing so but we are unable to accurately estimate the financial impact due to the rapidly changing environment. We also have had to incur additional costs, such as higher shipping fees (i.e., air rather than ocean freight) and though these have abated to a degree, they have not returned to pre-pandemic levels.
Added
Factors we consider include significant under-performance relative to expected historical or projected future operating results, significant negative industry or economic trends and our market capitalization relative to net book value.
Removed
These factors negatively impacted our efficiency, delayed shipments in each of the fiscal quarters of 2023, and caused what we believe are product shortages. We are addressing these issues through long-range planning and procuring higher inventory levels for affected items to help mitigate potential shortages whenever practicable.
Added
Deferred tax assets are recognized for the expected future tax consequences of temporary differences between the carrying amount for financial reporting purposes and the tax bases of assets and liabilities, and for net operating losses and tax credit carry forwards. In some cases, we may record a valuation allowance to reduce our deferred tax assets to estimated realizable value.
Removed
For our T&M segment, we are also monitoring and reacting to extended lead times on electronic components, and utilizing a variety of strategies, including blanket orders, vendor-bonded inventories, extended commitments to our supply base, and seeking alternative suppliers.
Added
The material weakness related to our failure to design and maintain an effective control environment at our Astro Machine subsidiary, which was acquired in August of 2022.
Removed
Additionally, we have taken actions to increase regular contact with our essential vendors and increased our forecasting horizon for our products to help us better manage our supply chain. In some cases, we are working with our vendors to help them procure components.
Added
There is no assurance that we will not be subject to claims that we have violated applicable laws or codes of conduct, that we will be able to successfully defend against such claims or that we will not be subject to significant fines and penalties in the event we are found not to be in compliance with such laws or codes of conduct.
Removed
Similarly, in our PI segment, we are increasing our inventory levels to ensure the adequacy of the supplies we sell to customers who use our printers. Our strategies to counteract these supply chain dislocations have significantly increased the amount of inventory we maintain to support our product sales.
Removed
We have also experienced several situations where component shortages and scarcity have required us to pay significantly higher costs to obtain those components, particularly electronic components and circuit board assemblies in the T&M segment and inks and printer machine parts in the PI segment.
Removed
We will continue to monitor our supply chain going forward and update our mitigation strategies as we determine appropriate. We are not able to predict how current supply chain difficulties will develop in the future, and if the steps we are taking are not effective, it could have a material adverse impact on our business and results of operations.
Removed
Our PI business was impacted by the COVID-19 pandemic as it limited our ability to meet with customers to demonstrate our products at trade shows and on-site in their facilities was curtailed. We partially countered this through a variety of virtual, on-line selling and digital marketing strategies, a number of which we continue to emphasize today.
Removed
The degree to which post-pandemic selling practices will revert to those that were dominant previously, and the ultimate mix of customer engagement methods of face-to-face selling versus digital selling methods remains uncertain. For example, throughout fiscal 2023 we have attended numerous trade shows, but demand generation through those selling methods have not fully recovered to pre-pandemic levels.
Removed
We believe that digital marketing has become a more permanent element of our go-to-market strategy. This has required us to shift resources to those technologies.
Removed
Further, in the PI segment, the timely and reliable delivery of acceptable quality printer components from certain of our suppliers has declined post-pandemic, causing us to incur additional direct procurement costs, to carry higher inventories to assure adequate supplies to satisfy customers, to incur additional warranty and technical service costs to offset those impacts and to accelerate alternative technology development.
Removed
The aerospace industry, which we serve through our aerospace product line, was significantly disrupted by the COVID-19 pandemic, both inside and outside of the United States because of the severe decline in the demand for air travel, demand for aircraft, and a general curtailment of aircraft production rates. This had a material adverse impact on our financial results.
Removed
Now that air travel demand and aircraft production demand have substantially improved, the direct and secondary impacts of the demand decline have abated, but demand for our products has not yet fully recovered to pre-pandemic levels.
Removed
Our current belief is that it may take two or more years before we reach full revenue recovery, and lingering impacts of the COVID-19 pandemic on the economic structure of the airline industry, and general economic conditions could still become a negative factor for demand for aircraft, which could stall or reverse current favorable trends.
Removed
If this were to happen individually or in combination, these factors would be difficult for us to respond to quickly, which could have a material adverse impact on our business operations and financial results. 9 Our operating results and financial condition could be harmed if the markets into which we sell our products decline or do not grow as anticipated.
Removed
Our competitors may develop technologies that are similar or superior to our proprietary technologies or design technologies around the intellectual property protections or licenses that we currently own. The loss of the trademarks QuickLabel, TrojanLabel, ToughWriter and ToughSwitch or the loss of the licenses provided under the Honeywell Agreement could have a material adverse impact on our business.
Removed
Any of these factors could cause us to experience an effective tax rate significantly different from previous periods or our current expectations.
Removed
We may not realize the anticipated benefits of past or future acquisitions, divestitures and strategic partnerships, and integration of acquired companies or divestiture of businesses may negatively impact our overall business. We have made strategic investments in other companies, products and technologies, including our August 2022 acquisition of Astro Machine LLC and 2017 acquisition of TrojanLabel.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following information pertains to each location: Location Approximate Square Footage Principal Use Dietzenbach, Germany 18,630 Manufacturing, sales and service Copenhagen, Denmark 4,800 R&D, sales and service Brossard, Quebec, Canada 4,500 Manufacturing, sales and service Elancourt, France 4,150 Sales and service Irvine, California, United States 3,100 Sales Shah Alam, Selangor, Malaysia 2,067 Sales Guangzhou, China 1,253 Sales and service Maidenhead, England 1,021 Sales and service Shanghai, China 425 Sales Mexico City, Mexico 97 Sales The West Warwick facility is used by both of our business segments, but the Elk Grove facility and leased locations are primarily used by the PI segment.
Biggest changeThe following information pertains to each location: Location Approximate Square Footage Principal Use Dietzenbach, Germany 18,630 Manufacturing, sales and service (PI segment) Copenhagen, Denmark 4,800 R&D, sales and service (PI segment) Brossard, Quebec, Canada 4,500 Manufacturing, sales and service (PI segment) Elancourt, France 4,150 Sales and service (PI segment) Shah Alam, Selangor, Malaysia 2,067 Sales (PI segment) Singapore 2,400 Sales (T&M segment) Shanghai, China 425 Sales (PI segment) Mexico City, Mexico 97 Sales (PI segment) We believe all our facilities are well maintained in good operating condition and generally adequate to meet our needs for the foreseeable future. 18
Item 2. Properties The following table sets forth information regarding our principal owned properties. The West Warwick property is subject to a security agreement and a mortgage in favor of the lender under our credit facility.
Item 2. P roperties The following table sets forth information regarding our principal owned properties. The West Warwick property is subject to a security agreement and a mortgage in favor of the lender under our credit facility.
Location Approximate Square Footage Principal Use West Warwick, Rhode Island, United States 135,500 Corporate headquarters, research and development, manufacturing, sales and service Elk Grove Village, Illinois 34,460 Astro Machine principal place of business We also lease facilities in various other locations.
Location Approximate Square Footage Principal Use West Warwick, Rhode Island, United States 135,500 Corporate headquarters, research and development, manufacturing, sales and service Elk Grove Village, Illinois 34,460 Astro Machine principal place of business The West Warwick facility is used by both of our business segments, while the Elk Grove Village facility is exclusively used by the PI segment.
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We believe our facilities are well maintained, in good operating condition and generally adequate to meet our needs for the foreseeable future. 22
Added
We also lease facilities in various other locations.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeMine Safety Disclosures Not applicable . 23 PART II
Biggest changeMine Sa fety Disclosures Not applicable. 19 PART II
Item 3. Legal Proceedings We are party to various legal proceedings arising from normal business activities. Management believes that the ultimate resolution of these matters will not have a material adverse effect on our financial position, results of operations or cash flows.
Item 3. Leg al Proceedings We are party to various legal proceedings arising from normal business activities. Management believes that the ultimate resolution of these matters will not have a material adverse effect on our financial position, results of operations or cash flows.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Market for the Registrant ’ s Common Stock, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock trades on the NASDAQ Global Market under the symbol “ALOT.” We had approximately 390 shareholders of record as of April 10, 2023, which does not reflect shareholders with beneficial ownership in shares held in nominee name.
Biggest changeItem 5. Market for the Registrant’s Common Stock, R elated Stockholder Matters and Issuer Purchases of Equity Securities Our common stock trades on the NASDAQ Global Market under the symbol “ALOT.” As of April 5, 2024, we had approximately 370 shareholders, which does not reflect shareholders with beneficial ownership in shares held in nominee name.
Stock Repurchases During the fourth quarter of fiscal 2023, we made the following repurchases of our common stock: Total Number of Shares Repurchased Average Price paid Per Share ($) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares That May Be Purchased Under the Plans or Programs November 1 – November 30 — — — — December 1 – December 31 678 (a)(b) 11.70 (a)(b) — — January 1 – January 31 — — — — (a) An executive of the company delivered 442 shares of our common stock toward the satisfaction of taxes due in connection with the vesting of restricted shares.
Stock Repurchases During the fourth quarter of fiscal 2024, we made the following repurchases of our common stock: Total Number of Shares Repurchased Average Price paid Per Share ($) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares That May Be Purchased Under the Plans or Programs November 1 – November 30 — — — — December 1 – December 31 309(a) 15.16(a) — — January 1 – January 31 — — — — (a) An executive of the company delivered 309 shares of our common stock toward the satisfaction of taxes due in connection with the vesting of restricted shares.
The shares delivered were valued at a market value of $11.75 per share and are included with treasury stock in the consolidated balance sheet. Item 6. [Reserved]
The shares delivered were valued at a market value of $15.16 per share and are included with treasury stock in the consolidated balance sheet. Item 6. [Reserved] 20
Removed
The shares delivered were valued at a market value of $11.67 per share and are included with treasury stock in the consolidated balance sheet. (b) An executive of the company delivered 236 shares of our common stock toward the satisfaction of taxes due in connection with the vesting of restricted shares.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe increase in selling and marketing expenses for the current year is primarily due to a decrease in payroll taxes in the second quarter of the prior year related to the ERC, which reduced payroll taxes in the amount of $0.8 million, as well as the current year increase in employee wages and travel and entertainment expenses.
Biggest changeSpecifically, selling and marketing expenses of $24.4 million in fiscal 2024 decreased 0.1% from the prior year amount of $24.5 million. The slight decrease in selling and marketing expenses for the current year is primarily due to a decrease in wages and benefits as well as a decrease in maintenance contract fees.
Our accounting policies relating to the recognition of revenue under ASC 606 require management to make estimates, determinations and judgments based on historical experience and on various other assumptions, which 34 include (i) the existence of a contract with the customer, (ii) the identification of the performance obligations in the contract, (iii) the value of any variable consideration in the contract, (iv) the standalone selling price of multiple obligations in the contract, for the purpose of allocating the consideration in the contract, and (v) determining when a performance obligation has been met.
Our accounting policies relating to the recognition of revenue under ASC 606 require management to make estimates, determinations and judgments based on historical experience and on various other assumptions, which include (i) the existence of a contract with the customer, (ii) the identification of the performance obligations in the contract, (iii) the value of any variable consideration in the contract, (iv) the standalone selling price of multiple obligations in the contract, for the purpose of allocating the consideration in the contract, and (v) determining when a performance obligation has been met.
A review of all available positive and negative evidence must be 35 considered, including our performance, the market environment in which we operate, length of carryforward periods, existing revenue backlog and future revenue projections.
A review of all available positive and negative evidence must be considered, including our performance, the market environment in which we operate, length of carryforward periods, existing revenue backlog and future revenue projections.
Under the Amended Credit Agreement, revolving credit loans may continue to be borrowed, at our option, in U.S. Dollars or, subject to certain conditions, Euros, British Pounds, Canadian Dollars or Danish Kroner.
Under the Amended Credit Agreement, revolving credit loans may continue 24 to be borrowed, at our option, in U.S. Dollars or, subject to certain conditions, Euros, British Pounds, Canadian Dollars or Danish Kroner.
Refer to Note 2 “Acquisitions” and Note 12, “Royalty Obligation,” in our audited consolidated financial statements included in this Annual Report on Form 10-K for further details. In order to meet our manufacturing demands and, in some cases, lock in particular pricing structures for specific goods used in manufacturing, we enter into purchase commitments with our suppliers.
Refer to Note 2 “Acquisitions” and Note 10, “Royalty Obligation,” in our audited consolidated financial statements included in this Annual Report on Form 10-K for further details. 26 In order to meet our manufacturing demands and, in some cases, lock in particular pricing structures for specific goods used in manufacturing, we enter into purchase commitments with our suppliers.
Overview We are a multi-national enterprise that leverages its proprietary data visualization technologies to design, develop, manufacture, distribute and service a broad range of products that acquire, store, analyze and present data in multiple formats. We organize our structure around a core set of competencies, including research and 24 development, manufacturing, service, marketing and distribution.
Overview We are a multi-national enterprise that leverages our proprietary data visualization technologies to design, develop, manufacture, distribute and service a broad range of products that acquire, store, analyze and present data in multiple formats. We organize our structure around a core set of competencies, including research and development, manufacturing, service, marketing and distribution.
Segment performance is evaluated based on the operating segment’s profit (loss) before corporate and financial administration expenses. The following table summarizes selected financial information by segment.
Segment performance is evaluated based on the operating segment’s profit before corporate and financial administration expenses. The following table summarizes selected financial information by segment.
In addition, we use the market approach, which compares the reporting unit to publicly traded companies and transactions involving similar business, to support the conclusions based upon the income approach. The income approach 36 requires the use of many assumptions and estimates including future revenue, expenses, capital expenditures, and working capital, as well as discount factors and income tax rates.
In addition, we use the market approach, which compares the 28 reporting unit to publicly traded companies and transactions involving similar business, to support the conclusions based upon the income approach. The income approach requires the use of many assumptions and estimates including future revenue, expenses, capital expenditures, and working capital, as well as discount factors and income tax rates.
No goodwill impairment was identified for the years ended January 31, 2023 or January 31, 2022. We recognize intangibles assets in accordance with ASC 350. Acquired intangible assets subject to amortization are stated at fair value and are amortized using the straight-line method over the estimated useful lives of the assets.
No goodwill impairment was identified for the years ended January 31, 2024 or January 31, 2023. We recognize intangibles assets in accordance with ASC 350. Acquired intangible assets subject to amortization are stated at fair value and are amortized using the straight-line method over the estimated useful lives of the assets.
If the projected undiscounted cash flows are less than the carrying value, then an impairment charge would be recorded for the excess of the carrying value over the fair value, which is determined by the discounting of future cash flows. No impairment of intangible assets was identified for the years ended January 31, 2023 or January 31, 2022.
If the projected undiscounted cash flows are less than the carrying value, then an impairment charge would be recorded for the excess of the carrying value over the fair value, which is determined by the discounting of future cash flows. No impairment of intangible assets was identified for the years ended January 31, 2024 or January 31, 2023.
In fiscal 2024 (after required debt amortization and payment of minimum guaranteed royalty payments to Honeywell), we will be focused on inventory reduction and reduction of debt outstanding under our revolving credit facility, to the degree possible as constrained by supply chain management challenges.
In fiscal 2025 (after required debt amortization and payment of minimum guaranteed royalty payments to Honeywell), we will be focused on inventory reduction and reduction of debt outstanding under our revolving credit facility, to the degree possible as constrained by supply chain management challenges.
At January 31, 2023, we had provided valuation allowances for future tax benefits resulting from certain domestic R&D tax credits, foreign tax credit carryforwards, and China net operating losses, all of which are expected to expire unused.
At January 31, 2024, we had provided valuation allowances for future tax benefits resulting from certain domestic R&D tax credits, foreign tax credit carryforwards, and China net operating losses, all of which are expected to expire unused.
Bad debt expense was less than 1% of net sales in each of fiscal 2023 and 2022. Warranty Claims: We offer warranties on some of our products. We establish a reserve for estimated costs of warranties at the time the product revenue is recognized.
Bad debt expense was less than 1% of net sales in each of fiscal 2024 and 2023. 27 Warranty Claims: We offer warranties on some of our products. We establish a reserve for estimated costs of warranties at the time the product revenue is recognized.
Fiscal 2022 compared to Fiscal 2021 For a comparison of our results of operations for the fiscal years ended January 31, 2022, and January 31, 2021, see “Part II, Item 7.
Fiscal 2023 compared to Fiscal 2022 For a comparison of our results of operations for the fiscal years ended January 31, 2023, and January 31, 2022, see “Part II, Item 7.
Fiscal 2022 compared to Fiscal 2021 For a comparison of our cash flow for the fiscal years ended January 31, 2022 and January 31, 2021, see “Part II, Item 7.
Fiscal 2023 compared to Fiscal 2022 For a comparison of our cash flow for the fiscal years ended January 31, 2023, and January 31, 2022, see “Part II, Item 7.
Business Combinations: We account for business acquisitions under the acquisition method of accounting in accordance with ASC 805, ‘‘Business Combinations,’’ where the total purchase price is allocated to the tangible and identified intangible assets acquired and liabilities assumed based on their estimated fair values.
Business Combinations: We account for business acquisitions under the acquisition method of accounting in accordance with ASC 805, “Business Combinations,” where the total purchase price is allocated to the tangible and identified intangible assets acquired and liabilities assumed based on their estimated fair values.
Management ’ s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis are meant to provide material information relevant to an assessment of the financial condition and results of operations of our company, including an evaluation of the amounts of cash flows from operations and outside resources, liquidity and certain other factors that may affect future results so as to allow investors to better view our company from management’s perspective.
Management’s Discu ssion and Analysis of Financial Condition and Results of Operations The following discussion and analysis are meant to provide material information relevant to an assessment of the financial condition and results of operations of our company, including an evaluation of the amounts of cash flows from operations and outside resources, liquidity and certain other factors that may affect future results so as to allow investors to better view our company from management’s perspective.
We spent approximately $6.8 million in both fiscal 2023 and 2022, and $6.2 million in fiscal 2021 on Company-sponsored product development. We are committed to continuous product development as essential to our organic growth and expect to continue our focus on research and development efforts in fiscal 2024 and beyond.
We spent approximately $6.9 million in fiscal 2024 and $6.8 million in both fiscal 2023 and 2022, on Company-sponsored product development. We are committed to continuous product development as essential to our organic growth and expect to continue our focus on research and development efforts in fiscal 2025 and beyond.
The days sales outstanding increased to 49 days at year end compared to 45 days at the end of fiscal 2022 contributing to the higher receivables balance at January 31, 2023. The days sales outstanding increase in the current year is due to customer mix, as aerospace receivables typically take longer to collect.
The days sales outstanding increased to 52 days at year end compared to 49 days at the end of fiscal 2023 contributing to the higher receivables balance at January 31, 2024. The days sales outstanding increase in the current year is due to customer mix, as aerospace receivables typically take longer to collect.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the fiscal year ended January 31, 2022, filed with the SEC on April 18, 2022. 28 Segment Analysis We report two segments consistent with our product revenue groups: PI and T&M.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the fiscal year ended January 31, 2023, filed with the SEC on April 17, 2023. Segment Analysis We report two segments consistent with our product revenue groups: PI and T&M.
As of January 31, 2023, we believe we are in compliance with all of the covenants in the Credit Agreement.
As of January 31, 2024, we believe we are in compliance with all of the covenants in the Credit Agreement.
We may reduce or terminate the revolving line of credit at any time, subject to certain thresholds and conditions, without premium or penalty.
We may reduce or terminate the revolving credit facility at any time, subject to certain thresholds and conditions, without premium or penalty.
PI current year segment operating profit was $7.9 million with a profit margin of 7.7%, compared to the prior year segment operating profit of $10.4 million and related profit margin of 11.5%.
PI current year segment operating profit was $10.1 million with a profit margin of 9.7%, compared to the prior year segment operating profit of $7.9 million and related profit margin of 7.7%.
Recent Accounting Pronouncements Reference is made to Note 1 of our audited consolidated financial statements included elsewhere in this report.
Recent Accounting Pronouncements Reference is made to Note 1, “Summary of Significant Accounting Policies,” in our audited consolidated financial statements included elsewhere in this report.
The increase in fiscal 2023 hardware revenue in the T&M segment was also impacted by $1.1 million in revenue recognized in the fourth as the result of successful claims for component cost increases for printer shipments to one customer throughout most of fiscal 2023 as described in Note 3, “Revenue Recognition,” in our consolidated financial statements included elsewhere in this report.
T&M revenue in fiscal 2024 and 2023 was also impacted by $1.3 million and $1.1 million, respectively, of revenue recognized as the result of successful claims for component cost increases for printer shipments to one customer as described in Note 3, “Revenue Recognition,” in our consolidated financial statements included elsewhere in this report.
Infrequently, we receive requests from customers to hold product being purchased from us for the customers’ convenience.
Infrequently, we receive requests from customers to hold products purchased from us for the customers’ convenience.
We are subject to a guaranteed minimum royalty payment obligation over the next five years pursuant to the Honeywell Agreements, which, at January 31, 2023 included a balance due of $5.1 million, with $1.7 million due within 12 months.
We are subject to a guaranteed minimum royalty payment obligation over the next five years pursuant to the Honeywell Agreements, which, at January 31, 2024 included a balance due of $4.7 million, with $2.6 million due within 12 months.
At January 31, 2023 our purchase commitments totaled $25.8 million, with $22.8 million due within 12 months, some of which are non-cancelable.
At January 31, 2024, our purchase commitments totaled $25.8 million, with $23.1 million due within 12 months, some of which are non-cancelable.
Fiscal 2023 international revenue reflects an unfavorable foreign exchange rate impact of $3.5 million, compared to a favorable foreign exchange rate impact of $1.1 million in fiscal 2022.
Fiscal 2024 international revenue reflects a favorable foreign exchange rate impact of $0.4 million, compared to an unfavorable foreign exchange rate impact of $3.5 million in fiscal 2023.
The results for the current year were impacted by expenses of $0.7 million ($0.5 million net of tax, or $0.07 per diluted share) related to transaction costs of the Astro Machine acquisition.
Net income for fiscal 2023 was $2.7 million, or $0.36 per diluted share. The results for the fiscal 2023 year were impacted by expenses of $0.7 million ($0.5 million net of tax, or $0.07 per diluted share) related to transaction costs of the Astro Machine acquisition.
Net cash used by investing activities for fiscal 2023 was $17.2 million, which includes $17.0 million related to the acquisition of Astro Machine and $0.2 million for capital expenditures. Net cash provided by financing activities for fiscal 2023 was $18.8 million.
Net cash used by investing activities for fiscal 2024 was $0.9 million for capital expenditures, compared to fiscal 2023 cash used of $17.2 million, which includes $17.0 million related to the acquisition of Astro Machine and $0.2 million for capital expenditures. Net cash used by financing activities for fiscal 2024 was $11.0 million.
In fiscal 2023, 2022, and 2021, revenue from customers in various geographic areas outside the United States, primarily in Western Europe, Canada and Asia, amounted to $50.6 million, $49.3 million, and $45.1 million, respectively. We maintain an active program of product research and development.
In fiscal 2024, 2023, and 2022, revenue from customers in various geographic areas outside the United States, primarily in Western Europe, Canada and Asia, amounted to $63.3 million, $59.0 million, and $49.3 million, respectively. 21 We maintain an active program of product research and development.
Net cash used by operating activities was $2.9 million in fiscal 2023 compared to net cash provided by operating activities of $1.4 million in the previous year. The increase in net cash used by operations for the current year is primarily due to an $11.5 million increase in cash used for working capital.
Net cash provided by operating activities was $12.4 million in fiscal 2024 compared to net cash used by operating activities of $2.9 million in the previous year. The increase in net cash provided by operations for the current year is primarily due to the impact of changes in working capital items.
The current year increase in T&M revenue was additionally favorably impacted by increased repair, parts and paper supply revenue related to aerospace printers, as flight hours and product utilization increased.
The current year increase in T&M revenue was additionally favorably impacted by increased repair, parts and paper supply revenue related to aerospace printers, as flight hours and product utilization increased. The current year T&M segment revenue increase was partially offset by a decline in T&M hardware sales in the data recorder product line.
Hardware revenue in fiscal 2023 was $42.4 million, an $11.0 million or 34.8% increase compared to fiscal 2022 hardware revenue of $31.5 million due to increased hardware sales in both the T&M and PI segments. T&M hardware sales increased 44.2% or $7.5 million compared to the prior year primarily due to increased sales in our aerospace printer product line.
Hardware revenue in fiscal 2024 was $49.4 million, a $7.0 million or 16.5% increase compared to fiscal 2023 hardware revenue of $42.4 million due to increased hardware sales in both the T&M and PI segments. T&M hardware sales increased 15.8% or $3.8 million compared to the prior year primarily due to increased sales in our aerospace printer product line.
The loans under the Amended Credit Agreement are subject to certain mandatory prepayments, subject to various exceptions, from (a) net cash proceeds from certain dispositions of property, (b) net cash proceeds from certain issuances of equity, (c) net cash proceeds from certain issuances of additional debt and (d) net cash proceeds from certain extraordinary receipts. 31 Amounts repaid under the revolving credit facility may be reborrowed, subject to our continued compliance with the Amended Credit Agreement.
The loans under the Amended Credit Agreement are subject to certain mandatory prepayments, subject to various exceptions, from (a) net cash proceeds from certain dispositions of property, (b) net cash proceeds from certain issuances of equity, (c) net cash proceeds from certain issuances of additional debt and (d) net cash proceeds from certain extraordinary receipts.
($ in thousands) Revenue Segment Operating Profit (Loss) Segment Operating Profit (Loss) as a % of Revenue 2023 2022 2021 2023 2022 2021 2023 2022 2021 P I $ 103,089 $ 90,915 $ 90,268 $ 7,889 $ 10,411 $ 12,885 7.7 % 11.5 % 14.3 % T&M 39,438 26,565 25,765 8,989 3,398 (1,032 ) 22.8 % 12.8 % (4.0 )% Total $ 142,527 $ 117,480 $ 116,033 16,878 13,809 11,853 11.8 % 11.8 % 10.2 % Corporate Expenses 11,435 9,553 9,420 Operating Income 5,443 4,256 2,433 Other Income (Expense), Net (2,033 ) 2,778 (254 ) Income Before Income Taxes 3,410 7,034 2,179 Income Tax Provision 749 605 895 Net Income $ 2,661 $ 6,429 $ 1,284 Product Identification Revenue from the PI segment increased 13.4% in fiscal 2023, with revenue of $103.1 million compared to revenue of $90.9 million in the prior year.
($ in thousands) Revenue Segment Operating Profit Segment Operating Profit as a % of Revenue 2024 2023 2022 2024 2023 2022 2024 2023 2022 P I $ 104,041 $ 103,089 $ 90,915 $ 10,087 $ 7,889 $ 10,411 9.7 % 7.7 % 11.5 % T&M 44,045 39,438 26,565 10,200 8,989 3,398 23.2 % 22.8 % 12.8 % Total $ 148,086 $ 142,527 $ 117,480 20,287 16,878 13,809 13.7 % 11.8 % 11.8 % Corporate Expenses 11,491 11,435 9,553 Operating Income 8,796 5,443 4,256 Other Income (Expense), Net (2,723 ) (2,033 ) 2,778 Income Before Income Taxes 6,073 3,410 7,034 Income Tax Provision 1,379 749 605 Net Income $ 4,694 $ 2,661 $ 6,429 Product Identification Revenue from the PI segment increased 0.9% in fiscal 2024, with revenue of $104.0 million compared to revenue of $103.1 million in the prior year.
Sales of ToughSwitch ethernet products also recovered to levels consistent with the fiscal 2019 through 29 fiscal 2021 period after a large decline in fiscal 2022, and we currently expect comparable revenue from those products in fiscal 2024.
Also contributing to the current year increase in revenue were increased sales of ToughSwitch ethernet products, which continue to recover to levels consistent with the fiscal 2019 through 2021 period after a large decline in fiscal 2022, and we currently expect comparable revenue from those products in fiscal 2025.
As of January 31, 2023, we had fixed lease payment obligations of $0.8 million, with $0.3 million due within 12 months. Refer to Note 13, “Leases,” in our audited consolidated financial statements included in this Annual Report on Form 10-K for further details.
The lease arrangements are for certain of our facilities at various locations worldwide. As of January 31, 2024, we had fixed lease payment obligations of $0.6 million, with $0.2 million due within 12 months. Refer to Note 11, “Leases,” in our audited consolidated financial statements included in this Annual Report on Form 10-K for further details.
Cash provided from financing activities for fiscal 2023 includes $15.9 million for borrowings under the revolving line of credit and $6.0 million of proceeds from long term borrowings. Cash outflows for financing activities for fiscal 2022 include principal payments on long-term debt and the guaranteed royalty obligation of $1.0 million and $2.0 million, respectively.
Cash provided from financing activities for fiscal 2023 includes $15.9 million for borrowings under the revolving credit facility and $6.0 million of proceeds from long term borrowings, which were partially offset by $2.0 million in guaranteed royalty obligation payments and $1.0 million of principle payments on long term debt .
Other expense in fiscal 2023 was $2.0 million compared to other income of $2.8 million in fiscal 2022. Current year expense includes $1.7 million of interest expense on our debt and revolving line of credit and $0.4 million of net foreign exchange loss, offset by net other income of $0.1 million.
Current year other expense includes $2.7 million of interest expense on our debt and revolving credit facility and $0.1 million of net foreign exchange loss, offset by net other income of $0.1 million.
Finally, if further acquisition opportunities develop that would require additional cash above our current available capacity, based on regular communication with our lender, we believe that our current operating performance and the reduction in leverage ratios as measured by the covenants within our credit facilities since the acquisition of Astro Machine would permit us to obtain sufficient additional debt financing, barring any unforeseen changes in the credit and capital markets. . 30 In connection with our purchase of Astro Machine on August 4, 2022, we entered into a Second Amendment to Amended and Restated Credit Agreement (the “Second Amendment”) with Bank of America, N.A., as lender (the “Lender”).
Furthermore, if acquisition opportunities develop that would require additional cash above our current available capacity, based on regular communication with our lender, we believe that our current operating performance and the reduction in leverage ratios as measured by the covenants within our credit facilities since the acquisition of Astro Machine would permit us to obtain sufficient additional short and long term debt financing, barring any unforeseen changes in the credit and capital markets.
Refer to Note 2, “Acquisition,” in our consolidated financial statements included elsewhere in this report for further details. We market and sell our products and services globally through a diverse distribution structure of direct sales personnel, manufacturers’ representatives and authorized dealers that deliver a full complement of branded products and services to customers in our respective markets.
We market and sell our products and services globally through a diverse distribution structure of direct sales personnel, manufacturers’ representatives, OEMs, and authorized dealers that deliver a full complement of branded products and services to customers in our respective markets.
Capital spending was very low in fiscal 2023 compared to our historical levels of spending. We believe that in the coming year, cash flow generation from operations and available unused credit capacity under our credit facility will support our anticipated needs.
We believe that in the coming year and in the longer term, cash flow generation from operations and available unused credit capacity under our credit facility will support our anticipated needs.
Our obligations under the Amended Credit Agreement continue to be secured by substantially all of our personal property assets (including a pledge of the equity interests we hold in ANI ApS, AstroNova GmbH and AstroNova SAS), subject to certain exceptions, and by a mortgage on our owned real property in West Warwick, Rhode Island, and are guaranteed by, and secured by substantially all of the personal property assets of Astro Machine.
Our obligations under the Amended Credit Agreement continue to be secured by substantially all of our personal property assets (including a pledge of the equity interests we hold in AstroNova Scandinavia ApS, AstroNova GmbH and AstroNova SAS), subject to certain exceptions, and by a mortgage on our owned real property in West Warwick, Rhode Island, and are guaranteed and secured by substantially all of the personal property assets of Astro Machine. 25 Equipment Loan In January 2024, we entered into a secured equipment loan facility agreement with Banc of America Leasing & Capital, LLC and borrowed the principal amount of $0.8 million thereunder for the financing of our purchase of production equipment.
Test & Measurement Revenue from the T&M product group was $39.4 million for fiscal 2023, a 48.5% increase compared to revenue of $26.6 million in the prior year. The current year increase in T&M revenue is primarily due to a 44.2% or $7.5 million increase in hardware sales resulting primarily from increased aerospace printer product unit volume.
Test & Measurement Revenue from the T&M product group was $44.0 million for fiscal 2024, an 11.7% increase compared to revenue of $39.4 million in the prior year. The increase in revenue for the current year was primarily attributable to strong hardware sales in our aerospace product lines as a result of increased aerospace printer product unit volume.
Also contributing to the increase in current year supply revenue was the increase in paper supply revenue for the aerospace printers in the T&M segment and the increased sales of supplies in our TrojanLabel product line in the PI segment.
The overall decline in supplies sales in the current year was partially offset by increased sales of toner and media supplies in our PI segment and an increase in paper supply revenue for the aerospace printers in our T&M segment.
Current year revenue through domestic channels was $91.8 million, an increase of 34.8% from prior year domestic revenue of $68.2 million. International revenue of $50.6 million for fiscal 2023 increased 2.7% compared to prior year international revenue of $49.3 million.
Current year revenue through domestic channels was $84.8 million, an increase of 1.4% from prior year domestic revenue of $83.6 million. International revenue of $63.3 million for fiscal 2024 increased 7.4% compared to prior year international revenue of $59.0 million.
The accounts receivable balance increased to $21.6 million at January 31, 2023, compared to $17.1 million at January 31, 2022. The increase in the accounts receivable balance is related to sales product mix in fiscal 2023 compared to the prior year, as well as the addition of Astro Machine.
The increase in the accounts receivable balance is related to sales product mix in fiscal 2024 compared to the prior year, as well as the addition of Astro Machine for a full year in fiscal 2024.
Service and other revenue in fiscal 2023 was $18.0 million, a 41.3% increase compared to fiscal 2022 service and other revenue of $12.7 million. The increase is due primarily to significantly increased repair and parts revenue for aerospace printer products in the T&M segment due to the impact of increased flight hour usage and pricing increases.
Also contributing to the current year increase is the increased repair and parts revenue for aerospace printer products in the T&M segment due to the impact of increased flight hour usage and pricing increases. Gross profit was $51.6 million for fiscal 2024, reflecting a 7.2% increase compared to fiscal 2023 gross profit of $48.2 million.
Our gross profit margin of 33.8% in fiscal 2023 reflects a 3.4 percentage point decrease compared to fiscal 2022 gross profit margin of 37.2%.
Our gross profit margin of 34.9% in fiscal 2024 reflects a 1.1 percentage point increase compared to fiscal 2023 gross profit margin of 33.8%.
T&M current year segment operating profit was $9.0 million resulting in a 22.8% profit margin compared to the prior year segment operating profit of $3.4 million and related operating margin of 12.8%.
T&M current year segment operating profit was $10.2 million resulting in a 23.2% profit margin compared to the prior year segment operating profit of $9.0 million and related operating margin of 22.8%. The increased profit and margins were primarily attributable to higher revenue from high-margin product lines.
The current year increase is attributable to the contribution of the newly acquired Astro Machine, which provided revenue of $12.5 million for the current year. Trojan Label related product supply revenue also grew in fiscal 2023 compared to the prior year due to the larger installed base of these printers.
The current year increase is primarily attributable to the contribution of a full year of revenue from the fiscal 2023 acquisition of Astro Machine, compared to six months in the prior year. Trojan Label related product supplies and part revenues also grew in fiscal 2024 compared to the prior year due to the larger installed base of these printers.
Management’s Discussion and Analysis of Liquidity and Capital Resources” in our annual report on Form 10-K for the fiscal year ended January 31, 2022, filed with the SEC on April 18, 2022.
Management’s Discussion and Analysis of Liquidity and Capital Resources” in our annual report on Form 10-K for the fiscal year ended January 31, 2023, filed with the SEC on April 17, 2023. Contractual Obligations, Commitments and Contingencies As of January 31, 2024, we had contractual obligations related to lease arrangements, debt and royalty obligation arrangements and purchase commitments.
The changes in accounts receivable, inventory, income taxes, accounts payable and accrued expenses for the current year decreased cash by $14.3 million in fiscal 2023 compared to $2.8 million in the prior year.
Specifically, the changes in accounts receivable, inventory, income taxes, accounts payable and accrued expenses for the current year increased cash by $1.0 million in fiscal 2024 compared to a decrease in cash of $14.3 million in the prior year. Our accounts receivable balance increased to $23.1 million at January 31, 2024, compared to $21.6 million at January 31, 2023.
Demand for printers, especially for narrow body aircraft, has increased due to the post-pandemic recovery in air travel demand and new orders of airplanes and the corresponding increase in production rates. The sales of printers for wide-body aircraft have increased but at much slower rates compared with narrow body demand.
Demand for printers has increased due to the post-pandemic recovery in air travel demand, which has driven new orders for airplanes and a corresponding increase in production rates.
We also continue to invest in sales and marketing initiatives by expanding and improving the existing sales force and using various marketing campaigns to achieve our goals of sales growth and increased profitability. COVID-19 Update All of our global operations were materially adversely affected by the worldwide COVID-19 pandemic and the related supply-chain disruptions.
We also continue to invest in sales and marketing initiatives by expanding and improving the existing sales force and using various marketing campaigns to achieve our goals of sales growth and increased profitability. Impact of COVID-19 The lingering impact of the COVID-19 pandemic continues to affect our business, most notably in our T&M segment.
($ in thousands) 2023 2022 Revenue As a % of Total Revenue % Change Over Prior Year Revenue As a % of Total Revenue P I $ 103,089 72.3 % 13.4 % $ 90,915 77.4 % T&M 39,438 27.7 % 48.5 % 26,565 22.6 % Total $ 142,527 100.0 % 21.3 % $ 117,480 100.0 % Net revenue in fiscal 2023 was $142.5 million, a 21.3% increase compared to net revenue of $117.5 million for fiscal 2022.
($ in thousands) 2024 2023 Revenue As a % of Total Revenue % Change Over Prior Year Revenue As a % of Total Revenue PI $ 104,041 70.3 % 0.9 % $ 103,089 72.3 % T&M 44,045 29.7 % 11.7 % 39,438 27.7 % Total $ 148,086 100.0 % 3.9 % $ 142,527 100.0 % Net revenue in fiscal 2024 was $148.1 million, a 3.9% increase compared to net revenue of $142.5 million for fiscal 2023.
At January 31, 2023, our cash and cash equivalents were $3.9 million. During fiscal 2023, we borrowed a net of $15.9 million on our revolving line of credit, and at January 31, 2023, we had $9.1 million available for borrowing under that facility.
At January 31, 2024, our cash and cash equivalents were $4.5 million and we had an outstanding balance of $8.9 million drawn and outstanding under our revolving credit facility. At January 31, 2024, we had $16.1 million available for borrowing under that facility.
Current year hardware sales in the PI segment increased 23.9% or $3.5 million compared to the prior year, predominately as a result of the August 2022 acquisition of Astro Machine. The increase in PI hardware sales for the current year was slightly offset by a decline in sales of our TrojanLabel product line printers.
Current year hardware sales in the PI segment increased 17.4% or $3.1 million compared to the prior year, predominately as a result of the August 2022 acquisition of Astro Machine which contributed a full year of revenue for fiscal 2024, compared to six months in fiscal 2023.
We recognized $0.7 million of income tax expense for the current fiscal year, resulting in an effective tax rate of 22.0% compared to 8.6% in fiscal 2022.
Prior year other expense included interest expense on debt and revolving credit facility of $1.7 million, and net foreign exchange loss of $0.5 million, offset by other income of $0.1 million. We recognized $1.4 million of income tax expense for the current fiscal year, resulting in an effective tax rate of 22.7% compared to 22.0% in fiscal 2023.
Debt arrangements under our Amended Credit Agreement with Bank of America, N.A., consist of the balance due of $14.3 million at January 31, 2023, with $2.1 million due within 12 months. For additional details regarding our long-term debt obligations, see Note 8, “Debt,” in our audited consolidated financial statements included in this Annual Report on Form 10-K.
For additional details regarding our long-term debt obligations, see Note 8, “Credit Agreement and Long Term Debt,” in our audited consolidated financial statements included in this Annual Report on Form 10-K.
No amount of the term loan that is repaid may be reborrowed.
Amounts repaid under the revolving credit facility may be reborrowed, subject to our continued compliance with the Amended Credit Agreement. No amount of the term loan that is repaid may be reborrowed.
If this were to happen individually or in combination, these factors would be difficult to respond to, which could have a material adverse impact on our business operations and financial results. 26 Results of Operations Fiscal 2023 compared to Fiscal 2022 The following table presents the revenue of each of our segments, as well as the percentage of total revenue and change from the prior year.
Results of Operations Fiscal 2024 compared to Fiscal 2023 The following table presents the revenue of each of our segments, as well as the percentage of total revenue and change from the prior year.
The results for the prior period were impacted by income of $4.5 million ($4.4 million net of tax, or $0.60 per diluted share) related to the forgiveness of our PPP loan, income of $2.1 million ($1.6 million net of tax, or $0.22 per diluted share) related to the net ERC and expense of $0.7 million ($0.5 million net of tax, or $0.07 per diluted share) related to the write-off of our Oracle EnterpriseOne ERP system and related prepaid service and maintenance contracts.
The results for this period were impacted by expense of $2.6 million ($2.0 million net of tax or $0.27 per diluted share) related to the 2024 Restructuring Plan and expense of $0.6 million ($0.5 million net of tax or $0.07 per diluted share) related to the 2024 Product Retrofit Program.
Selling, marketing and administrative expense grew in total by $0.6 million in support of the revenue growth, which was a significantly lower rate than revenue growth, demonstrating favorable operating leverage. Liquidity and Capital Resources Overview Historically, our primary sources of short-term liquidity have been cash generated from operating activities and borrowings under our revolving credit facility.
Liquidity and Capital Resources Overview Historically, our primary sources of short-term liquidity have been cash generated from operating activities and borrowings under our revolving credit facility. These sources have also historically funded the majority of our capital expenditures and contractual contingent consideration obligations.
As a result, we recorded a $4.5 million gain on the extinguishment of debt in Other Income (Expense) in our condensed consolidated income statement for the year ended January 31, 2022. Cash Flow The statements of cash flows for the years ended January 31, 2023, 2022, and 2021 are included on page F-9 of this Form 10-K.
The loan matures on January 23, 2029, and bears interest at a fixed rate of 7.06%. Cash Flow The statements of cash flows for the years ended January 31, 2024, 2023, and 2022 are included on page F-7 of this Form 10-K.
Revenue from supplies in fiscal 2023 was $82.1 million, a 12.1% or $8.8 million increase compared to fiscal 2022 supplies revenue of $73.2 million.
The increase in PI hardware sales for the current year was slightly offset by a decline in sales of our QuickLabel and TrojanLabel product line printers. Revenue from supplies in fiscal 2024 was $79.3 million, a 3.4% or $2.8 million decrease compared to fiscal 2023 supplies revenue of $82.1 million.
General and administrative expenses increased 19.7% to $11.4 million in the current year compared to $9.6 million in the prior year, primarily due to an increase in outside service fees and employee wages, and the impact of the ERC, which reduced manufacturing payroll taxes in the amount of $0.3 million in the third quarter of the prior year, partially offset by a decrease in bonus and advertising and trade show expenses.
General and administrative expenses increased 0.5% to $11.5 million in the current year compared to $11.4 million in the prior year, as increases in professional fees, wages, and bonuses were largely offset by decreases in outside service and employee fees.
Research & development (“R&D”) costs in fiscal 2023 of $6.8 million remained relatively unchanged from fiscal 2022, as increases in wages and benefits were substantially offset by decreases in bonus and supplies and repair expenses. The R&D spending level for fiscal 2023 represents 4.8% of net revenue, compared to the prior year level of 5.7%.
The R&D spending level for fiscal 2024 represents 4.7% of net revenue, compared to the prior year level of 4.8%. Other expense in fiscal 2024 was $2.7 million compared to $2.0 million in fiscal 2023.
The year-end inventory balance increased to $51.3 million at January 31, 2023 versus $34.6 million at January 31, 2022, a $16.7 million increase from the prior year end.
The year-end inventory balance decreased to $46.4 million at January 31, 2024 versus $51.3 million at January 31, 2023, a $5.0 million decrease from the prior year end. The decrease in our inventory balance is primarily due to the write-down of inventory of $2.0 million related to the 2024 Restructuring Plan.
The current year increase in PI revenue was slightly offset by declines in the sales of Trojan label hardware products resulting from the market reaction to quality problems caused by quality and reliability issues we faced from one supplier. Quick Label revenues were essentially flat as compared to the prior year.
The current year increase in PI 23 revenue was largely offset by declines in the revenue from inkjet supplies and certain tabletop label hardware sales, particularly in North America resulting primarily from the continued adverse market reaction to the deterioration of certain label printers due to the ink quality issues related to one of our larger suppliers.
Specific items increasing the effective tax rate in fiscal 2023 include the change in reserves related to uncertain tax positions under ASC 740 and an increase in the valuation allowance recorded on our China net operating losses. This increase was offset by state taxes, return to provision adjustments, share-based compensation, R&D tax credits, and foreign derived intangible income (“FDII”) deduction.
The increase in the effective tax rate in fiscal 2024 from fiscal 2023 is primarily related to the impact of the valuation allowance recorded on China net operating losses, the increase in the current provision for state and local taxes, and the change in the foreign rate differential.
Removed
In the aftermath of the immediate severe impacts of COVID-19 on our operations and financial performance the changes in our customers’ purchasing behavior, the post-pandemic impact of inflation from macroeconomic factors, and the continued and lingering structural impacts on our global supply chain, particularly with respect to the availability and costs of electronic components, have made planning for customer demand and manufacturing production more difficult.
Added
Refer to Note 2, “Acquisition,” in our consolidated financial statements included elsewhere in this report for further details. On July 26, 2023, we adopted a restructuring plan (the “2024 Restructuring Plan”) for our PI segment that transitioned a portion of the printer manufacturing within that segment from our facility in Rhode Island to our Astro Machine facility located in Illinois.
Removed
Also, it has led to a rise in the cost of a number of classes of acquired goods for both the T&M and PI segments.
Added
Additionally, we ceased selling certain of our older, lower-margin or low-volume PI segment products and made targeted reductions to our workforce. As part of the 2024 Restructuring Plan, we also consolidated certain of our international PI sales and distribution facilities and streamlined our channel partner network.
Removed
We will continue to evaluate the impact of COVID-19 and its aftermath effects on our business, results of operations and cash flows throughout fiscal 2024, including the potential impacts on various estimates and assumptions inherent in the preparation of the consolidated financial statements.
Added
The total cost of this plan was $2.5 million, comprised primarily of non-cash charges related to inventory write-offs and facility exit costs, and cash charges related to severance-related costs. As of January 31, 2024, we have completed the 2024 Restructuring Plan. Refer to Note 19, “Restructuring,” in our consolidated financial statements included elsewhere in this report for further details.
Removed
Since the COVID-19 pandemic began we have experienced difficulties in obtaining raw materials and components for our products. Some of the structural dislocations in the global economy that were triggered by the pandemic are prolonging these difficulties.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeOur primary currency translation exposure is related to our subsidiaries that have functional currencies denominated in Danish Kroner and the Euro. A hypothetical 10% change in the rates used to translate the results of our foreign subsidiaries would result in an increase or decrease in our consolidated net income of approximately $0.2 million for the year ended January 31, 2023.
Biggest changeA hypothetical 10% change in the rates used to translate the results of our foreign subsidiaries would result in an increase or decrease in our consolidated net income of less than $0.1 million for the year ended January 31, 2024. Transactional exposure arises where transactions occur in currencies other than the functional currency.
The cumulative foreign currency translation adjustment is recorded as a component of accumulated other comprehensive loss in shareholders’ equity. The reported results of our foreign 37 subsidiaries will be influenced by their translation into U.S. dollars by currency movements against the U.S. dollar.
The cumulative foreign currency translation adjustment is recorded as a component of accumulated other comprehensive loss in shareholders’ equity. The reported results of our foreign subsidiaries will be influenced by their translation into U.S. dollars by currency movements against the U.S. dollar.
Financial Exchange Risk The functional currencies of our foreign subsidiaries and branches are the local currencies—the British Pound in the U.K., the Canadian Dollar in Canada, the Danish Kroner in Denmark, the Chinese Yuan in China, and the Euro in France and Germany.
Foreign Currency Exchange Risk The functional currencies of our foreign subsidiaries and branches are the local currencies—the British Pound in the U.K., the Canadian Dollar in Canada, the Danish Kroner in Denmark, the Chinese Yuan in China, and the Euro in France and Germany.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk Our primary financial market risks consist of foreign currency exchange rates risk and the impact of changes in interest rates that fluctuate with the market on our variable rate credit borrowings under our existing credit agreement.
Item 7A. Quantitative and Qualit ative Disclosures about Market Risk Our primary financial market risks consist of foreign currency exchange rates risk and the impact of changes in interest rates that fluctuate with the market on our variable rate credit borrowings under our existing credit agreement.
At January 31, 2023, under the LIBOR Transition Amendment to the Amended Credit Agreement, the term loan bears interest at a BSBY (Bloomberg Short-Term Bank Yield) rate plus a margin that varies between 1.60% and 2.30% based on our consolidated leverage ratio.
At January 31, 2024, the term loan bears interest at a BSBY (Bloomberg Short-Term Bank Yield) rate plus a margin that varies between 1.60% and 2.30% based on our 29 consolidated leverage ratio.
During fiscal 2023, the weighted average interest rate on our variable rate debt was 4.77% and the weighted average interest rate on our revolving line of credit was 6.71% The impact on our results of operations of a 100 basis point change in the interest rates on the outstanding balance of our variable-rate debt and revolving line of credit would be approximately $0.2 million annually.
The impact on our results of operations of a 100 basis point change in the interest rates on the outstanding balance of our variable-rate debt and revolving credit facility would be approximately $0.3 million annually.
The resulting monetary assets and liabilities are translated into the appropriate functional currency at exchange rates prevailing at the balance sheet date and the resulting gains and losses are reported as foreign exchange gain (loss) in the consolidated statements of income. Foreign exchange losses resulting from transactional exposure were $0.5 million for the year ended January 31, 2023.
Transactions in foreign currencies are recorded at the exchange rate prevailing at the date of the transaction. The resulting monetary assets and liabilities are translated into the appropriate functional currency at exchange rates prevailing at the balance sheet date and the resulting gains and losses are reported as foreign exchange gain (loss) in the consolidated statements of income.
Interest Rate Risk At January 31, 2023, our total indebtedness included $14.25 million of term loan variable-rate debt and $15.9 million outstanding balance on our revolving line of credit.
Foreign exchange losses resulting from transactional exposure were $0.1 million for the year ended January 31, 2024. Interest Rate Risk At January 31, 2024, our total indebtedness included an outstanding principal amount of $12.2 million of term loan variable-rate debt and an outstanding principal balance of $8.9 million under our revolving credit facility.
Removed
Transactional exposure arises where transactions occur in currencies other than the functional currency. Transactions in foreign currencies are recorded at the exchange rate prevailing at the date of the transaction.
Added
Our primary currency translation exposure is related to our subsidiaries that have functional currencies denominated in Danish Kroner and the Euro.
Added
During fiscal 2024, the weighted average interest rate on our variable rate debt was 7.54% and the weighted average interest rate on our revolving credit facility was 7.70%.

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