FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended September 30, 1994 Commission file number 1-7233
Standex International Corporation
(Exact name of Registrant as specified in its charter)
Delaware 31-0596149
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
6 Manor Parkway, Salem, New Hampshire 03079
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (603) 893-9701
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such report), and (2) has been subject to such
filing requirements for the past 90 days. Yes X . No .
The number of shares of Registrant's Common Stock outstanding on
September 30, 1994 was 14,396,033.
STANDEX INTERNATIONAL CORPORATION
I N D E X
Page No.
PART I. FINANCIAL INFORMATION:
Statements of Consolidated Income for the Three
Months Ended September 30, 1994 and 1993 ................ 2
Consolidated Balance Sheet, September 30, 1994 and
June 30, 1994 ........................................... 3
Statement of Changes in Consolidated Cash Flows for the
Three Months Ended September 30, 1994 and 1993 .......... 4
Notes to Financial Information. ........................... 5
Management's Discussion and Analysis....................... 6-7
PART II. OTHER INFORMATION.................................. 8
Form 10-Q
PART I. FINANCIAL INFORMATION
STANDEX INTERNATIONAL CORPORATION
<TABLE>
Statement of Consolidated Income
(000 Omitted)
<CAPTION>
Three Months Ended
September 30
1994 1993
<S> <C> <C>
Net Sales $140,591 $127,338
Cost of Products Sold 94,636 86,316
Gross Profit Margin 45,955 41,022
Selling, General & Adminis-
trative Expenses 30,374 29,337
Income from Operations 15,581 11,685
Other Income/(Expense):
Net gain on Disposition of
Businesses and Product Lines 5,080 -
Interest Expense (1,853) (1,462)
Interest Income 119 175
Other Income/(Expense) - net 3,346 (1,287)
Income Before Income Taxes 18,927 10,398
Provision for Income Taxes 7,126 4,088
Net Income $ 11,801 $ 6,310
Earnings Per Share $ .80 $ .41
Cash Dividends per Share $ .14 $ .12
</TABLE>
<TABLE>
STANDEX INTERNATIONAL CORPORATION
Consolidated Balance Sheet
(000 Omitted)
<CAPTION>
September 30 June 30
___ 1994____ __1994_
ASSETS
CURRENT ASSETS:
<S> <C> <C>
Cash $ 16,183 $ 5,023
Receivables, net of allowances for doubtful accounts 86,631 83,381
Inventories (approximately 40% finished goods, 25%
work in process, and 35% raw material and supplies) 103,177 104,561
Prepaid expenses 8,520 3,988
Total current assets 214,511 196,953
PROPERTY, PLANT AND EQUIPMENT 203,024 213,563
Less accumulated depreciation 118,783 123,866
Total 84,241 89,697
OTHER ASSETS
Goodwill, net 16,105 16,257
Prepaid pension and other 21,036 20,814
Total 37,141 37,071
TOTAL $335,893 $323,721
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable and current portion of long-term debt $ 2,317 $ 9,576
Accounts payable 31,844 28,711
Income taxes 6,438 2,773
Accrued expenses 29,482 29,090
Total current liabilities 70,081 70,150
LONG-TERM DEBT (less current portion included above) 121,831 112,854
DEFERRED INCOME TAXES AND OTHER LIABILITIES 19,065 21,785
STOCKHOLDERS' EQUITY
Common stock 41,976 41,976
Paid-in Capital 1,041 871
Retained earnings 256,461 246,705
Cumulative translation adjustment (1,532) (3,414)
Less cost of treasury shares (173,030) (167,206)
Total stockholders' equity 124,916 118,932
TOTAL $335,893 $323,721
</TABLE>
<TABLE>
STANDEX INTERNATIONAL CORPORATION
Statement of Consolidated Cash Flows
(000 Omitted)
<CAPTION>
Three Months Ended
September 30
1994 1993
Cash Flows from Operating Activities:
<S> <C> <C>
Net income $ 11,801 $ 6,310
Depreciation and amortization 3,098 3,043
Net gain on dispositions of businesses
and product lines (5,080) -
Net changes in assets and liabilities (4,006) (15,232)
Net Cash Provided by/(Used for) Operating Activities 5,813 (5,879)
Cash Flows from Investing Activities:
Expenditures on property and equipment (3,165) (3,474)
Proceeds from sale of businesses and product lines 13,606 -
Other 64 50
Net Cash Provided by/(Used for) Investing Activities 10,505 (3,424)
Cash Flows from Financing Activities:
Proceeds from long-term debt 14,087 10,500
Payments of debt (12,368) (1,774)
Cash dividends paid (2,044) (1,829)
Purchase of treasury stock (6,345) (927)
Other, net 690 727
Net Cash (Used for)/Provided by Financing Activities (5,980) 6,697
Effect of Exchange Rate Changes on Cash 822 (917)
Net Change in Cash 11,160 (3,523)
Cash at Beginning of Year 5,023 7,518
Cash at September 30 $ 16,183 $ 3,995
Supplemental Disclosure of Cash Flow Information:
Cash paid during the three months for:
Interest 1,701 1,408
Income taxes 2,506 1,885
</TABLE>
NOTES TO FINANCIAL INFORMATION
1. Management Statement
The financial statements as reported in Form 10-Q reflect all adjustments
(including those of a normal recurring nature) which are, in the opinion of
management, necessary to a fair statement of results for the three months ended
September 30, 1994 and 1993.
2. Per Share Calculation
Shares (in thousands) used in per share data are as follows:
<TABLE>
<CAPTION>
September 30
1994 1993
<S> <C> <C>
Earnings 14,815 15,539
Cash Dividends 14,602 15,238
</TABLE>
Earnings per share have been computed according to generally accepted
accounting principles.
Cash dividends per share have been computed based on the shares
outstanding at the time the dividends were paid.
3. Contingencies
The Company is a party to various claims and legal proceedings related to
environmental matters generally incidental to its business. Management has
evaluated each matter based upon the advice of its independent environmental
consultants and has recorded an appropriate provision for the resolution of
such matters in accordance with Statement of Financial Accounting Standards
(SFAS) No. 5, "Accounting for Contingencies," Management believes that the
ultimate disposition of these matters will not have a material adverse effect
on the Company's financial statements.
4. Dispositions
In August, 1994 the Company sold its Standex International Engraving GmbH
subsidiary for a total consideration of $19.4 million. In addition, in
September, 1994 the Company formulated a plan to dispose, or otherwise align,
certain businesses and product lines. In the aggregate these transactions
resulted in a net gain of $5,100,000 which has been recorded in the
accompanying Statement of Consolidated Income as a component of Other
Income/(Expense). The net sales of the subsidiary and the other businesses and
product lines were approximately $29,100,000 for fiscal 1994.
5. Subsequent Event
In November, 1994 the Company re-negotiated its Revolving Credit Agreement
which increased the maximum credit line available from $125,000,000 to
$175,000,000 and extended repayment terms from December 1997 to October 1999.
The financial covenants were substantially reduced. All other conditions and
warranties remained substantially unchanged from the prior Revolving Credit
Agreement.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MATERIAL CHANGES IN FINANCIAL CONDITION
During the three months ended September 30, 1994, the Company sold a Germany
subsidiary for net proceeds of $13.6 million. In addition, the Company
formulated a plan to dispose, or otherwise align, certain other businesses and
product lines. In the aggregate, these transactions resulted in a gain of $5.1
million. The proceeds from the sale, as well as net operating cash flows of
$5.8 million, were used to purchase $6.3 million of Treasury Stock, fund plant
and equipment expenditures of $3.2 million and pay out $2.0 million in cash
dividends to the Company's shareholders. In October 1994, the remaining net
proceeds from the sale were used to reduce debt. Residual costs related to the
disposition and alignment of the other businesses and product lines will not
have a material impact on future cash flows.
In November 1994, the Company re-negotiated its Revolving Credit Agreement
which increased the maximum credit line available from $125 million to $175
million and extended repayment terms from December 1997 to October 1999. The
financial covenants were substantially reduced. All other conditions and
warranties remained substantially unchanged from the prior Revolving Credit
Agreement. While existing cash flows and bank credit agreements are
sufficient to meet anticipated cash needs, the re-negotiated Revolving Credit
Agreement will further enhance the Company's ability to react should an
appropriate investment opportunity present itself.
OPERATIONS
Quarter Ended September 30, 1994
as compared to the Quarter Ended September 30, 1993
For the first quarter ended September 30, 1994, Net Sales reached record
levels. Net Sales increased $13.3 million as compared to the same quarter of
fiscal 1994. The Company's three segments reported growth in Net Sales due
to improved customer demand within many of the markets each segment serves.
The Institutional segment registered the largest gain in Net Sales of $6.7
million. The Graphics/Mail Order and Industrial segments experienced an
increase in Net Sales of $3.4 and $3.2 million, respectively.
For the three months ended September 30, 1994, the Gross Profit Margin
Percentage rose to 32.7% as compared to 32.2% in the same quarter of the prior
year. The Institutional segment reported a slight increase in the Gross Profit
Margin Percentage. A slight decline in the Gross Profit Margin Percentage was
registered by the Graphics/Mail Order segment. The Industrial segment
experienced a 1.3% increase in the Gross Profit Margin Percentage due mainly to
the growth in Net Sales reported for the latest quarter.
Selling, General and Administrative Expenses (SG&A) rose 3.5%, or $1.0 million,
in the first quarter of fiscal 1995 when compared to the same quarter of fiscal
1994. All segments reported modest growth in SG&A primarily due to increased
business activity. However, as a percentage of Net Sales, SG&A decreased from
23.0% of Net Sales in the first quarter of fiscal 1994 to 21.6% for the same
period of fiscal 1995. Each of the Company's three segments reported a decline
in SG&A as a percentage of Net Sales.
Interest Expense rose 26.7%, or $391,000, as compared to the first quarter of
fiscal 1994 due to increased borrowings at higher interest rates than those
experienced in the first quarter of fiscal 1994.
As described previously, during the quarter ended September 30, 1994, a net
gain of $5.1 million was reported due to the disposition a German subsidiary
and a plan to dispose, or otherwise align, certain businesses and product
lines. This gain, in addition to the above factors, resulted in an 82.0%,
or $8.5 million, increase in Income Before Income Taxes as compared to the
same quarter last year.
The effective tax rate decreased from 39.3% in the first quarter of fiscal
1994 to 37.6% for the same period of fiscal 1995 primarily due to the
utilization of foreign tax credits.
Due to the factors discussed above, Net Income for the first quarter of fiscal
1995 increased $5.5 million, or 87.0%, versus the same quarter last year.
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K
The Company filed no reports on Form 8-K with the Securities and
Exchange Commission during the quarter ended September 30, 1994.
Form 10-Q
STANDEX INTERNATIONAL CORPORATION
SIGNATURES
Pursuant to the Requirements of the Securities Exchange Act of 1934 the
Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
STANDEX INTERNATIONAL CORPORATION
Date: November 9, 1994 /s/ Robert R. Kettinger
Robert R. Kettinger, Corporate Controller
Date: November 9, 1994 /s/ Lindsay M. Sedwick
Lindsay M. Sedwick, Vice President/Treasurer
EXHIBIT INDEX
Exhibit 27 Financial Data Schedule
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> QTR-1
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> SEP-30-1994
<CASH> 16,183
<SECURITIES> 0
<RECEIVABLES> 89,429
<ALLOWANCES> 2,798
<INVENTORY> 103,177
<CURRENT-ASSETS> 214,511
<PP&E> 203,024
<DEPRECIATION> 118,783
<TOTAL-ASSETS> 335,893
<CURRENT-LIABILITIES> 70,081
<BONDS> 121,831
<COMMON> 41,976
0
0
<OTHER-SE> 82,940
<TOTAL-LIABILITY-AND-EQUITY> 335,893
<SALES> 140,591
<TOTAL-REVENUES> 145,790
<CGS> 94,636
<TOTAL-COSTS> 94,636
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,853
<INCOME-PRETAX> 18,927
<INCOME-TAX> 7,126
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,801
<EPS-PRIMARY> .80
<EPS-DILUTED> 0
</TABLE>
