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, 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
December 31, 1994 was 14,279,229.
STANDEX INTERNATIONAL CORPORATION
<PAGE>
I N D E X
Page No.
PART I. FINANCIAL INFORMATION:
Statements of Consolidated Income for the Three and Six
Months Ended December 31, 1994 and 1993 ................. 2
Consolidated Balance Sheet, December 31, 1994 and
June 30, 1994 ........................................... 3
Statement of Changes in Consolidated Cash Flows for the
Six Months Ended December 31, 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
Statement of Consolidated Income
(000 Omitted)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31 December 31
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net Sales $143,937 $133,493 $284,528 $260,831
Cost of Products Sold 93,412 87,720 188,048 174,036
Gross Profit Margin 50,525 45,773 96,480 86,795
Selling, General & Adminis-
trative Expenses 35,125 33,522 65,499 62,859
Income from Operations 15,400 12,251 30,981 23,936
Other Income/(Expense):
Net gain on Disposition of
Businesses and Product Lines 346 - 5,426 -
Interest Expense (1,951) (1,388) (3,804) (2,850)
Interest Income 160 22 279 197
Other Income/(Expense) - net (1,445) (1,366) 1,901 (2,653)
Income Before Income Taxes 13,955 10,885 32,882 21,283
Provision for Income Taxes 4,929 3,798 12,055 7,886
Net Income $ 9,026 $ 7,087 $ 20,827 $ 13,397
Earnings Per Share $ .62 $ .46 $ 1.42 $ .87
Cash Dividends per Share $ .16 $ .13 $ .30 $ .25
</TABLE>
<TABLE>
STANDEX INTERNATIONAL CORPORATION
Consolidated Balance Sheet
(000 Omitted)
<CAPTION>
December 31 June 30
1994 1994
<PAGE>
ASSETS
CURRENT ASSETS:
<S> <C> <C>
Cash $ 8,352 $ 5,023
Receivables, net of allowances for doubtful accounts 84,007 83,381
Inventories (approximately 45% finished goods, 20% work
in process, and 35% raw material and supplies) 108,779 104,561
Prepaid expenses 6,378 3,988
Total current assets 207,516 196,953
PROPERTY, PLANT AND EQUIPMENT 206,859 213,563
Less accumulated depreciation 121,416 123,866
Total 85,443 89,697
OTHER ASSETS
Goodwill, net 15,441 16,257
Prepaid pension and other 21,424 20,814
Total 36,865 37,071
TOTAL $329,824 $323,721
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable and current portion of long-term debt $ 1,459 $ 9,576
Accounts payable 32,665 28,711
Income taxes 3,321 2,773
Accrued expenses 29,409 29,090
Total current liabilities 66,854 70,150
LONG-TERM DEBT (less current portion included above) 115,074 112,854
DEFERRED INCOME TAXES AND OTHER LIABILITIES 19,976 21,785
STOCKHOLDERS' EQUITY
Common stock 41,976 41,976
Paid-in Capital 1,132 871
Retained earnings 263,200 246,705
Cumulative translation adjustment (1,239) (3,414)
Less cost of treasury shares (177,149) (167,206)
Total stockholders' equity 127,920 118,932
TOTAL $329,824 $323,721
</TABLE>
<TABLE>
INTERNATIONAL CORPORATION
Statement of Consolidated Cash Flows
(000 Omitted)
<CAPTION>
Six Months Ended
December 31
1994 1993
Cash Flows from Operating Activities:
<S> <C> <C>
Net income $ 20,827 $ 13,397
Depreciation and amortization 6,040 6,076
Net gain on dispositions of business and
product lines (5,426) -
Net changes in assets and liabilities (5,261) (10,446)
Net Cash Provided by Operating Activities 16,180 9,027
Cash Flows from Investing Activities:
Expenditures on property and equipment (7,090) (7,111)
<PAGE>
Proceeds from sale of businesses and product lines 13,589 77
Other 123 21
Net Cash Provided by/(Used for) Investing Activities 6,622 (7,013)
Cash Flows from Financing Activities:
Net proceeds from bank credit agreements 7,495 12,850
Payments of debt (13,391) (2,706)
Cash dividends paid (4,332) (3,797)
Purchase of treasury stock (11,014) (6,928)
Other, net 1,336 1,665
Net Cash Provided/(Used for) by Financing Activities (19,906) 1,084
Effect of Exchange Rate Changes on Cash 433 (432)
Net Change in Cash 3,329 2,666
Cash at Beginning of Year 5,023 7,518
Cash at December 31 $ 8,352 $ 10,184
Supplemental Disclosure of Cash Flow Information:
Cash paid during the six months for:
Interest 3,565 2,812
Income taxes 10,682 7,711
</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 and six
months ended December 31, 1994 and 1993.
2. Per Share Calculation
Shares (in thousands) used in per share data are as follows:
<TABLE>
<CAPTION>
December 31
1994 1993
<S> <C> <C>
Earnings 14,717 15,487
Cash Dividends 14,438 15,189
</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.
<PAGE>
4. Dispositions
In August, 1994 the Company sold its Standex International Engraving GmbH
subsidiary for a total consideration of $18.9 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 $5.4 million 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 six months ended December 31, 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 $5.4
million. The net proceeds from the sale, as well as net operating cash flows
of $16.2 million, were used to purchase $11.0 million of Treasury Stock, fund
plant and equipment expenditures of $7.1 million and pay out $4.3 million
in cash dividends to the Company's shareholders. The remaining net proceeds
from the sale as well as the balance of net operating cash flows 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 enhance the Company's financial flexibility.
OPERATIONS
Quarter Ended December 31, 1994
as compared to the Quarter Ended December 31, 1993
Net Sales reached record levels for the quarter ended December 31, 1994. As
compared to the same quarter of fiscal 1994, Net Sales increased $10.4
million. Due to improved customer demand, the Company's Institutional and
Graphics/Mail Order segments registered gains in Net Sales of $6.5 and
$6.1 million, respectively. A decline in Net Sales of $2.2 million was
reported by the Industrial segment. Although improvement in Net Sales was
reported by many divisions within this segment, these gains were offset by
the absence of a German subsidiary which was sold in the first quarter of
fiscal 1995.
For the three months ended December 31, 1994, the Gross Profit Margin
Percentage rose to 35.1% as compared to 34.3% in the same quarter of the prior
year. The Institutional and Graphics/Mail Order segments reported a slight
increase in the Gross Profit Margin Percentage primarily due to the growth in
Net Sales reported for the latest quarter. The Industrial segment experienced
a reduction in the Gross Profit Margin Percentage due mainly to the sale of a
German subsidiary in the first quarter of fiscal 1995.
Selling, General and Administrative Expenses (SG&A) rose 4.8%, or $1.6 million,
for the three months ended December 31, 1994 when compared to the same period
of fiscal 1994. However, as a percentage of Net Sales, SG&A decreased from
25.1% of Net Sales in the second quarter of fiscal 1994 to 24.4% for the same
period of fiscal 1995. The Graphics/Mail Order and Institutional segments
reported modest growth in SG&A primarily due to increased business activity.
The Industrial segment experienced a decline in SG&A due mainly to the
sale of a German subsidiary in the first quarter of fiscal 1995.
Interest Expense rose 40.6%, or $563,000, as compared to the second quarter of
fiscal 1994 due to increased borrowings at higher interest rates than those
experienced during the same period of the prior year.
The above factors resulted in a $3.1 million, or 28.2%, increase in Income
Before Income Taxes as compared to the same period of the prior year. The
effective tax rate increased slightly from 34.9% for the second quarter of
fiscal 1994 to 35.3% for the same period of fiscal 1995.
Net Income for the second quarter of fiscal 1995 increased $1.9 million, or
27.4%, versus the same quarter last year due to the factors described above.
Six Months Ended December 31, 1994
as compared to the Six Months Ended December 31, 1993
Net Sales for the six months ended December 31, 1994 reached record levels. An
increase in Net Sales of $23.7 million was reported with all segments
registering an improvement. Net Sales for the Institutional and Graphics/Mail
Order segments rose $13.4 and $9.5 million, respectively, for the reasons
described in the discussion of quarterly results. Despite gains reported by
several divisions, the Industrial segment experienced only a slight increase in
Net Sales due to the sale of a German subsidiary as previously discussed.
The Gross Profit Margin Percentage for the six month period increased modestly
from 33.3% for the same period of fiscal 1994 to 33.9% in fiscal 1995. All
three segments registered improvement in the Gross Profit Margin Percentage
over the six month period due mainly to the increase in Net Sales.
Selling, General and Administrative Expenses (SG&A) increased $2.6 million for
the six months ended December 31, 1994. However, as a percentage of Net Sales,
SG&A decreased from 24.1% of Net Sales in fiscal 1994 to 23.0% of Net Sales in
fiscal 1995. All segments reported a decrease in SG&A as a percentage of Net
Sales with no individual decrease being significant.
Interest Expense rose 33.5%, or $954,000, for the six months ended December 31,
1994 due to increased borrowings at higher interest rates than those
experienced in the same period of fiscal 1994.
The above factors, along with the $5.4 million gain from the disposition of a
German subsidiary, resulted in a 54.5%, or $11.6 million, increase in Income
Before Income Taxes for the six months ended December 31, 1994. The effective
tax rate during this period decreased slightly to 36.7% as compared to 37.1% in
the same period of the prior year. Net Income for the first six months of
fiscal 1995 increased $7.4 million, or 55.5%, as compared to the six months
ended December 31, 1993.
<PAGE>
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 25,
1994. Three matters were voted upon at the meeting: the election of
directors, the approval of the appointment of independent auditors of the
Company and the approval of the 1994 Standex International Corporation Stock
Option Plan. The name of each director elected at the meeting and the number
of votes cast as to each matter are as follows:
Proposal 1 (Election of Directors)
<TABLE>
<CAPTION>
Nominee For Withheld
<S> <C> <C>
Thomas H. DeWitt 11,882,088 62,626
Walter F. Greeley 11,888,928 55,786
C. Kevin Landry 11,841,238 103,476
H. Nicholas Muller, III 11,874,159 70,555
Edward J. Trainor 11,830,651 114,063
</TABLE>
Proposal 2 (Appointment of Auditors)
<TABLE>
<CAPTION>
For Against Abstain
<C> <C> <C>
11,856,919 25,035 62,760
</TABLE>
Proposal 3 (Approval of Stock Option Plan)
<TABLE>
<CAPTION>
For Against Abstain
<C> <C> <C>
9,461,160 2,355,495 128,059
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(b) The Company did not file any reports with the Securities and Exchange
Commission of Form 8-K during the quarter ended December 31, 1994.
ALL OTHER ITEMS ARE INAPPLICABLE
Form 10-Q
<PAGE>
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 9, 1995 /s/ Robert R. Kettinger
Robert R. Kettinger, Corporate Controller
Date: February 9, 1995 /s/ Lindsay M. Sedwick
Lindsay M. Sedwick, Vice President/Treasurer
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> QTR-2
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> DEC-31-1994
<CASH> 8352
<SECURITIES> 0
<RECEIVABLES> 87106
<ALLOWANCES> 3099
<INVENTORY> 108779
<CURRENT-ASSETS> 207516
<PP&E> 206859
<DEPRECIATION> 121416
<TOTAL-ASSETS> 329824
<CURRENT-LIABILITIES> 66854
<BONDS> 115074
<COMMON> 41976
0
0
<OTHER-SE> 85944
<TOTAL-LIABILITY-AND-EQUITY> 329824
<SALES> 284528
<TOTAL-REVENUES> 290233
<CGS> 188048
<TOTAL-COSTS> 188048
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3804
<INCOME-PRETAX> 32882
<INCOME-TAX> 12055
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20827
<EPS-PRIMARY> 1.42
<EPS-DILUTED> 0
</TABLE>
