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 December 31, 1993 Commission file number 1-5249
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
December 31, 1993 was 15,052,255.
<PAGE>
STANDEX INTERNATIONAL CORPORATION
I N D E X
Page No.
PART I. FINANCIAL INFORMATION:
Statements of Consolidated Income for the Three and Six
Months Ended December 31, 1993 and 1992 ................. 2
Consolidated Balance Sheet, December 31, 1993 and
June 30, 1993 ........................................... 3
Statement of Changes in Consolidated Cash Flows for the
Six Months Ended December 31, 1993 and 1992 ............. 4
Notes to Financial Information. ........................... 5
Management's Discussion and Analysis....................... 6-7
PART II. OTHER INFORMATION.................................. 8
<PAGE1>
Form 10-Q
PART I. FINANCIAL INFORMATION
STANDEX INTERNATIONAL CORPORATION
Statement of Consolidated Income
(000 Omitted)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31 December 31
<S> <C> <C> <C> <C>
Net Sales $133,493 $136,160 $260,831 $263,211
Cost of Products Sold 87,720 89,276 174,036 174,257
Gross Profit Margin 45,773 46,884 86,795 88,954
Selling, General & Adminis-
trative Expenses 33,522 35,030 62,859 66,659
Income from Operations 12,251 11,854 23,936 22,295
Other Income/(Expense):
Interest Expense (1,388) (1,484) (2,850) (3,022)
Interest Income 22 210 197 374
Other Income/(Expense) - net (1,366) (1,274) (2,653) (2,648)
Income Before Income Taxes 10,885 10,580 21,283 19,647
Provision for Income Taxes 3,798 3,967 7,886 7,530
Net Income $ 7,087 $ 6,613 $ 13,397 $ 12,117
Earnings Per Share $ .46 $ .40 $ .87 $ .73
Cash Dividends per Share $ .13 $ .105 $ .25 $ .20
</TABLE>
<PAGE2>
STANDEX INTERNATIONAL CORPORATION
Consolidated Balance Sheet
(000 Omitted)
<TABLE>
<CAPTION>
December 31 June 30
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash $ 10,184 $ 7,518
Receivables, net of allowances for doubtful accounts 75,173 75,451
Inventories (approximately 45% finished goods, 20% work
in process, and 35% raw material and supplies) 99,026 95,478
Prepaid expenses 7,336 3,904
Total current assets 191,719 182,351
PROPERTY, PLANT AND EQUIPMENT 210,904 207,421
Less accumulated depreciation 120,094 116,502
Total 90,810 90,919
OTHER ASSETS
Goodwill, net 16,562 17,288
Prepaid pension and other 18,598 18,011
Total 35,160 35,299
TOTAL $317,689 $308,569
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable and current portion of long-term debt $ 8,118 $ 10,714
Accounts payable 31,824 28,234
Income taxes 4,588 4,413
Accrued expenses 24,755 29,862
Total current liabilities 69,285 73,223
LONG-TERM DEBT (less current portion included above) 107,156 94,416
DEFERRED INCOME TAXES AND OTHER LIABILITIES 18,681 19,406
STOCKHOLDERS' EQUITY
Common stock 41,976 41,976
Paid-in Capital 3 -
Retained earnings 236,959 227,358
Cumulative translation adjustment (4,241) (946)
Less cost of treasury shares (152,130) (146,780)
Less loan to Stock Ownership Trust - (84)
Total stockholders' equity 122,567 121,524
TOTAL $317,689 $308,569
</TABLE>
<PAGE3>
STANDEX INTERNATIONAL CORPORATION
Statement of Consolidated Cash Flows
(000 Omitted)
<TABLE>
<CAPTION>
Six Months Ended
December 31
1993 1992
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 13,397 $ 12,117
Depreciation and amortization 6,076 6,736
Net changes in assets and liabilities (10,446) (4,581)
Net Cash Provided by Operating Activities 9,027 14,272
Cash Flows from Investing Activities:
Expenditures on property and equipment (7,111) (6,996)
Other 98 284
Net Cash Used for Investing Activities (7,013) (6,712)
Cash Flows from Financing Activities:
Proceeds from long-term debt 12,850 5,690
Payments of debt (2,706) (6,481)
Cash dividends paid (3,797) (3,279)
Purchase of treasury stock (6,928) (12,282)
Other, net 1,665 2,362
Net Cash Provided/(Used for) by Financing Activities 1,084 (13,990)
Effect of Exchange Rate Changes on Cash (432) (237)
Net Change in Cash 2,666 (6,667)
Cash at Beginning of Year 7,518 10,891
Cash at December 31 $ 10,184 $ 4,224
Supplemental Disclosure of Cash Flow Information:
Cash paid during the six months for:
Interest 2,812 3,004
Income taxes 7,711 8,738
</TABLE>
<PAGE4>
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 six months ended December 31, 1993 and 1992.
2. Per Share Calculation
Shares (in thousands) used in per share data have been adjusted to
reflect the May, 1993 two-for-one stock split and are as follows:
<TABLE>
<CAPTION>
December 31
1993 1992
<S> <C> <C>
Earnings 15,487 16,625
Cash Dividends 15,189 16,394
</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. Adoption of Financial Accounting Standards
Two statements of Financial Accounting Standards (SFAS) were adopted
effective July 1, 1993. "Employers' Accounting for Postretirement Benefits
Other Than Pensions" (SFAS No. 106) will result in an increase in annual
operating expenses of approximately $640,000. "Accounting for Income Taxes"
(SFAS No. 109) did not have a material effect on the Company's financial
statements.
<PAGE5>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONSOLIDATION AND RESULTS OF OPERATIONS
MATERIAL CHANGES IN FINANCIAL CONDITION
For the six months ended December 31, 1993, a $10.4 million net reduction
in operating assets and liabilities was experienced when compared to the
same period of the prior year. Since June 30, 1993, inventories increased
$3.5 million in anticipation of third quarter sales. Accounts Payable
increased $3.6 million primarily due to the rise in inventories. Prepaid
expenses increased $3.4 million due to the annual prepayment of insurance
premiums. Also, since June 30, 1993, Accrued Expenses decreased $5.1
million due primarily to payments related to the Company's Profit
Improvement Incentive Plan (PIPS).
Additionally, for the six months ended December 31, 1993, the Company
expended $7.1 million in plant and equipment, repurchased $6.9 million of
its common stock and paid out $3.8 million in cash dividends to its
shareholders. These transactions were financed primarily from operating
cash flows and from borrowings under the Company's existing bank credit
agreement. The Company believes that existing cash flows and the current
bank credit agreement are sufficient to meet its anticipated cash
requirements for the foreseeable future.
Two Statements of Financial Accounting Standards (SFAS) were adopted
effective July 1, 1993. "Employer's Accounting for Postretirement Benefits
Other Than Pensions" (SFAS No. 106) will result in an increase in annual
operating expenses of approximately $640,000. The implementation of
"Accounting for Income Taxes" (SFAS No. 109) did not have a material effect
on the Company's financial statements. "Employer's Accounting for
Postemployment Benefits" (SFAS No. 112) was issued in November 1992 and
management does not expect the implementation of this standard to have a
material effect on the Company's financial statements.
OPERATIONS
Quarter Ended December 31, 1993
as compared to the Quarter Ended December 31, 1992
Net Sales for the quarter ended December 31, 1993 decreased $2.7 million as
compared to the same quarter of fiscal 1993. The Company's Graphics/Mail
Order and Industrial segments reported reductions in Net Sales of $4.0 and
$1.9 million respectively. These declines were offset by a $3.2 million
improvement in the Institutional segment's Net Sales. The reduction
reported by the Graphics/Mail Order segment is caused by the cyclical
nature of its James Burn division combined with a reduction in European
sales due to recessionary factors. The Industrial segment's decrease in
Net Sales is also primarily due to the European recession. Improvement in
Net Sales was reported by several units in the Institutional segment none
of which was individually significant.
In the second quarter of fiscal 1994, a Gross Profit Margin Percentage of
34.3% was reported which is consistent with the percentage reported in the
prior year of 34.4%. The Company's three segments reported only minor
variations in Gross Profit Margin Percentages.
<PAGE6>
Selling, General and Administrative Expenses for the second quarter of
fiscal 1994 decreased $1.5 million, to 25.1% of Net Sales versus 25.7% of
Net Sales for the second quarter of fiscal 1993. The greatest decline in
these expenditures was reported by the Graphics/Mail Order segment as cost
reduction strategies have been implemented due to this segment's decline in
Net Sales.
The above factors resulted in a 2.9% increase in Income Before Taxes as
compared to the same period of the prior year. The effective tax rate in
the second quarter dropped to 34.9% versus 37.5% in the same period of
fiscal 1993. This was partly caused by a reduction in European profits
which are normally taxed at higher effective tax rates. Net Income for the
second quarter of fiscal 1994 increased $474,000, or 7.2%, as compared to
the same quarter last year.
Six Months Ended December 31, 1993
as Compared to Six Months Ended December 31, 1992
Net Sales for the six months ended December 31, 1993, decreased $2.4
million when compared to the same period of the prior year. The Company's
Institutional segment reported an improvement in Net Sales of $8.4 million
which was offset by decreases in Net Sales reported by the Graphics/Mail
Order and Industrial segments of $9.5 and $1.3 million, respectively. The
reasons for the decline and improvement in Net Sales reported by each
segment are the same as those described in the above discussion of
quarterly results.
For the six months ended December 31, 1993, the Gross Profit Margin
Percentage decreased to 33.3% as compared to 33.8% in the same period of
the prior year. This reduction was caused by declines of less than 1% in
the Gross Profit Margin Percentage reported by both the Graphics/Mail Order
and Industrial segments which was primarily due to the decrease in Net
Sales reported by these two segments.
Selling, General and Administrative Expenses decreased $3.8 million, to
24.1% of Net Sales for the six months ended December 31, 1993 as compared
to 25.3% of Net Sales for the same period in the prior year. This change
is partly associated with the Corporation's Profit Improvement Incentive
Plan, and partly to divisional cost reduction measures combined with
certain non-recurring expenses recorded in the prior year.
The above factors have resulted in a 8.3%, or $1.6 million, increase in
Income Before Income Taxes as compared to the six months ended December 31,
1992. The effective tax rate for the six months ended December 31, 1993
decreased to 37.1% versus 38.3% in the same period of the prior year for
the same reasons described above in the discussion of quarterly results.
Net Income for the first six months of fiscal 1994 increased $1.3 million,
or 10.6%, versus the same period of the prior year.
<PAGE7>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Annual Meeting of Shareholders of the Company was held on October 26,
1993. Two matters were voted upon at the meeting: the election of
directors and the approval of the appointment of independent auditors of
the Company. The name of each director elected at the meeting and the
number of votes cast as to each matter are as follows:
<TABLE>
<CAPTION>
Proposal 1 (Election of Directors)
Nominee For Withheld
<S> <C> <C>
John Bolten, Jr. 12,109,885 189,375
David R. Crichton 12,099,623 199,637
Samuel S. Dennis 3d 12,106,056 193,205
Daniel B. Hogan, Ph.D. 12,110,587 188,673
<CAPTION>
Proposal 2 (Appointment of Auditors)
For Against Abstain
<C> <C> <C>
12,180,053 20,038 99,169
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(b) The Company did not file any reports with the Securities and Exchange
Commission on Form 8-K during the quarter ended December 31, 1992.
ALL OTHER ITEMS ARE INAPPLICABLE
<PAGE8>
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: February 11, 1994 /s/ Robert R. Kettinger
Robert R. Kettinger, Corporate Controller
Date: February 11, 1994 /s/ Lindsay M. Sedwick
Lindsay M. Sedwick, Vice President/Treasurer
