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 March 31, 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
March 31, 1994 was 14,704,317.
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STANDEX INTERNATIONAL CORPORATION
I N D E X
Page No.
PART I. FINANCIAL INFORMATION:
Statements of Consolidated Income for the Three and Nine
Months Ended March 31, 1994 and 1993 ..................... 2
Consolidated Balance Sheet, March 31, 1994 and
June 30, 1993 ............................................ 3
Statement of Changes in Consolidated Cash Flows for the
Nine Months Ended March 31, 1994 and 1993 ............... 4
Notes to Financial Information. ........................... 5
Management's Discussion and Analysis....................... 6-8
PART II. OTHER INFORMATION.................................. 9
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Form 10-Q
PART I. FINANCIAL INFORMATION
STANDEX INTERNATIONAL CORPORATION
Statement of Consolidated Income
(000 Omitted)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31 March 31
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net Sales $130,892 $117,532 $391,723 $380,743
Cost of Products Sold 88,855 79,305 262,891 253,562
Gross Profit Margin 42,037 38,227 128,832 127,181
Selling, General & Adminis-
trative Expenses 31,182 29,444 94,041 96,103
Income from Operations 10,855 8,783 34,791 31,078
Other Income/(Expense):
Interest Expense (1,446) (1,616) (4,296) (4,638)
Interest Income 118 343 315 717
Other Income/(Expense) - net (1,328) (1,273) (3,981) (3,921)
Income Before Income Taxes 9,527 7,510 30,810 27,157
Provision for Income Taxes 3,296 2,23
Net Income $ 6,231 $ 5,277 $ 19,628 $ 17,394
Earnings Per Share $ .41 $ .32 $ 1.28 $ 1.05
Cash Dividends per Share $ .13 $ .105 $ .38 $ .305
</TABLE>
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STANDEX INTERNATIONAL CORPORATION
Consolidated Balance Sheet
(000 Omitted)
<TABLE>
<CAPTION>
March 31 June 30
1994 1993
ASSETS
CURRENT ASSETS:
<S> <C> <C>
Cash $ 3,236 $ 7,518
Receivables, net of allowances for doubtful accounts 81,647 75,451
Inventories (approximately 45% finished goods, 20% work
in process, and 35% raw material and supplies) 101,547 95,478
Prepaid expenses 6,401 3,904
Total current assets 192,831 182,351
PROPERTY, PLANT AND EQUIPMENT 210,223 207,421
Less accumulated depreciation 121,883 116,502
Total 88,340 90,919
OTHER ASSETS
Goodwill, net 16,337 17,288
Prepaid pension and other 19,437 18,011
Total 35,774 35,299
TOTAL $316,945 $308,569
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable and current portion of long-term debt $ 7,473 $ 10,714
Accounts payable 31,334 28,234
Income taxes 4,344 4,413
Accrued expenses 28,271 29,862
Total current liabilities 71,422 73,223
LONG-TERM DEBT (less current portion included above) 109,952 94,416
DEFERRED INCOME TAXES AND OTHER LIABILITIES 19,733 19,406
STOCKHOLDERS' EQUITY
Common stock 41,976 41,976
Paid-in Capital 154 -
Retained earnings 241,247 227,358
Cumulative translation adjustment (4,489) (946)
Less cost of treasury shares (163,050) (146,780)
Less loan to Stock Ownership Trust - (84)
TOTAL STOCKHOLDERS' EQUITY 115,838 121,524
TOTAL $316,945 $308,569
</TABLE>
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STANDEX INTERNATIONAL CORPORATION
STATEMENT OF CONSOLIDATED CASH FLOWS
(000 OMITTED)
<TABLE>
<CAPTION>
Nine Months Ended
March 31
1994 1993
Cash Flows from Operating Activities:
<S> <C> <C>
Net income 19,628 17,394
Depreciation and amortization 9,170 10,074
Net changes in assets and liabilities (15,421) (1,495)
Net Cash Provided by Operating Activities 13,377 25,973
Cash Flows from Investing Activities:
Expenditures on property and equipment (9,256) (8,424)
Other 1,493 365
Net Cash Used for Investing Activities (7,763) (8,059)
Cash Flows from Financing Activities:
Proceeds from additional borrowings 15,882 890
Payments of debt (3,587) (6,965)
Cash dividends paid (5,740) (4,967)
Purchase of treasury stock (18,772) (16,778)
Stock issued under employee stock option
and stock purchase plans 2,502 3,219
Other, net 2,740 419
Net Cash Used by Financing Activities (9,477) (24,182)
Effect of Exchange Rate Changes on Cash (419) (560)
Net Change in Cash (4,282) (6,828)
Cash at Beginning of Year 7,518 10,891
Cash at March 31 3,236 4,063
Supplemental Disclosure of Cash Flows Information:
Cash paid during the nine months for:
Interest 4,254 4,693
Income taxes 11,251 11,505
</TABLE>
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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 nine months ended March 31, 1994 and 1993.
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>
March 31
1994 1993
<S> <C> <C>
Earnings 15,394 16,525
Cash Dividends 15,105 16,286
</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 in fiscal 1994. "Accounting
for Income Taxes" (SFAS No. 109) did not have a material effect on the
Company's financial statements.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONSOLIDATION AND RESULTS OF OPERATIONS
MATERIAL CHANGES IN FINANCIAL CONDITION
During the nine months ended March 31, 1994, the Company repurchased $18.8
million of its common stock, expended $9.3 million in plant and equipment and
paid out $5.7 million in cash dividends to its shareholders. The increase in
cash flows from operating activities for the nine months ending March 31, 1994
was generated by Net income and Depreciation and amortization. This was,
however, partially off-set by a net increase in operating assets and
liabilities since Accounts Receivable and Inventories increased $6.2 million
and $6.1 million, respectively, resulting from increased business activity in
the Institutional segment which is described below.
These transactions were financed primarily from operating cash flows and from
borrowings under the Company's existing bank credit agreements. 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 in fiscal 1994. 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 March 31, 1994
as compared to the Quarter Ended March 31, 1993
Net sales reached record levels for the quarter ended March 31, 1994. Net
Sales increased $13.4 million, or 11.4%, when compared to the same period of
the prior year. The Institutional and Graphics/Mail Order segments reported
increased Net Sales of $11.9 million and $1.9 million, respectively. These
improvements were offset by a modest decline ($400,000) in Net Sales reported
by the Industrial segment. Within the Institutional segment, gains in Net
Sales were reported by the majority of divisions. However, this segment's
Master-Bilt division reported the single greatest improvement due to increased
sales strength of a new product line which was introduced during fiscal year
1993.
In the third quarter of fiscal 1994, a Gross Profit Margin Percentage of 32.1%
was reported which is consistent with the percentage reported in the same
period of the prior year of 32.5%. The Company's three segments reported only
minor variations in Gross Profit Margin Percentages.
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OPERATIONS (Continued)
Quarter Ended March 31, 1994
as compared to the Quarter Ended March 31, 1993
For the quarter ended March 31, 1994, Selling, General and Administrative
Expenses increased $1.7 million, or 5.9%, to represent 23.8% of Net Sales as
compared to 25.1% of Net Sales for the same period of the prior year. Due to
the increased business activity in the Institutional segment, this segment's
variable expenses increased $1.7 million for the quarter ended March 31, 1994.
In the third quarter of fiscal 1994, Interest Expense decreased $170,000 as
compared to the same period of fiscal 1993. Although borrowings have increased
in fiscal 1994, interest expenses have declined due to the source of debt.
Last year, a higher proportion of debt was serviced from outside the United
States at higher interest rates. In the current year, a greater share of
borrowings is serviced from the United States at lower interest rates.
The above factors resulted in a $2.0 million, or 26.9%, increase in Income
Before Taxes as compared to the same period of the prior year. The effective
tax rate in the third quarter increased to 34.6% versus 29.7% reported in the
same period of fiscal 1993. In the prior year, tax benefits generated by a
U.K. subsidiary and foreign tax credits were greater than those experienced in
the current quarter. As a result, the effective tax rate in the prior year was
lower than the current quarter's effective tax rate.
Net Income for the third quarter of fiscal 1994 increased $1 million, or 18.1%,
when compared to the same period of the prior year due to the factors described
above.
Nine Months Ended March 31, 1994
as compared to Nine Months Ended March 31, 1993
Net Sales for the nine months ended March 31, 1994 reached a record level for
any first nine month period in the Company's history. An $11 million increase,
or a 2.9% improvement, in Net Sales was recorded as compared to the same period
last year. The Institutional segment reported an increase in Net Sales of
$20.3 million while the Graphics/Mail Order and Industrial segments each
reported a decline in Net Sales of $7.6 and $1.7 million, respectively. The
reason for the Institutional segment's improvement is the same as that
described in the above discussion of quarterly results. The decline in Net
Sales for the nine month period reported by the Graphics/Mail Order segment is
primarily caused by the cyclical nature of one of its divisions. The European
recession, particularlyin the automotive industry, and the weakness in the U.S.
defense related industries are the primary reasons for the decreased Net Sales
reported by the Industrial segment.
For the nine months ended March 31, 1994, a Gross Profit Margin Percentage of
32.9% was reported as compared to 33.4% reported in the same period of the
prior year. The Company's three segments reported only minor variations in
Gross Profit Margin Percentages.
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OPERATIONS (Continued)
Nine Months Ended March 31, 1994
as compared to Nine Months Ended March 31, 1993
Selling, General and Administrative Expenses (SG&A) decreased $2.1 million for
the nine months ended March 31, 1994 when compared to the same period last
year. Greater variable expenses reported by the Institutional segment were
partially offset by cost reductions implemented by the Graphic/Mail Order
segment due to this segment's decrease in Net Sales for the current nine month
period. Also, non-recurring expenses of $1 million, none of which were
individually significant, were recorded in the prior year.
For the reasons described in the above discussion of quarterly results,
Interest Expenses declined $342,000 for the nine months ended March 31, 1994,
when compared to the same period of the prior year.
The above factors resulted in a $3.7 million, or 13.5%, increase in Income
Before Taxes as compared to the same period of the prior year. The effective
tax rate for the nine months ended March 31, 1994, increased slightly to 36.3%
as compared to 35.9% in the same period of fiscal 1993.
The above caused an increase in Net Income of $2.2 million, or 12.8%, for the
nine months ended March 31, 1994, as compared to the same period of the prior
year.
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PART II. OTHER INFORMATION
NO APPLICABLE ITEMS.
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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: May 11, 1994 /s/ Robert R. Kettinger
Robert R. Kettinger, Corporate Controller
Date: May 11, 1994 /s/ Lindsay M. Sedwick
Lindsay M. Sedwick, Vice President/Treasurer
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