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, 1995 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,
1995 was 14,108,060.
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, 1995 and 1994 ..................... 2
Consolidated Balance Sheet, March 31, 1995 and
June 30, 1994 ............................................ 3
Statement of Changes in Consolidated Cash Flows for the
Nine Months Ended March 31, 1995 and 1994 ............... 4
Notes to Financial Information. ........................... 5
Management's Discussion and Analysis....................... 6-8
PART II. OTHER INFORMATION.................................. 9
Form 10-Q
PART I. FINANCIAL INFORMATION
<TABLE>
STANDEX INTERNATIONAL CORPORATION
Statement of Consolidated Income
(000 Omitted)
<CAPTION>
Three Months Ended Nine Months Ended
March 31 March 31
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net Sales $141,575 $130,892 $426,103 $391,723
Cost of Products Sold 94,730 88,855 282,778 262,891
Gross Profit Margin 46,845 42,037 143,325 128,832
Selling, General & Adminis-
trative Expenses 32,987 31,182 98,486 94,041
Income from Operations 13,858 10,855 44,839 34,791
Other Income/(Expense):
Net gain on Disposition of
Businesses and Product Lines - - 5,426 -
Interest Expense (2,130) (1,446) (5,934) (4,296)
Interest Income 159 118 438 315
Other Income/(Expense) - net (1,971) (1,328) (70) (3,981)
Income Before Income Taxes 11,887 9,527 44,769 30,810
Provision for Income Taxes 3,829 3,296 15,884 11,182
Net Income $ 8,058 $ 6,231 $ 28,885 $ 19,628
Earnings Per Share $ .56 $ .41 $ 1.98 $ 1.28
Cash Dividends per Share $ .16 $ .13 $ .46 $ .38
</TABLE>
<TABLE>
STANDEX INTERNATIONAL CORPORATION
Consolidated Balance Sheet
(000 Omitted)
<CAPTION>
March 31 June 30
1995 1994
ASSETS
<PAGE>
CURRENT ASSETS:
<S> <C> <C>
Cash $ 10,916 $ 5,023
Receivables, net of allowances for doubtful accounts 87,405 83,381
Inventories (approximately 45% finished goods, 20% work
in process, and 35% raw material and supplies) 110,854 104,561
Prepaid expenses 6,011 3,988
Total current assets 215,186 196,953
PROPERTY, PLANT AND EQUIPMENT 207,582 213,563
Less accumulated depreciation 123,093 123,866
Total 84,489 89,697
OTHER ASSETS
Goodwill, net 15,237 16,257
Prepaid pension and other 21,309 20,814
Total 36,546 37,071
TOTAL $336,221 $323,721
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable and current portion of long-term debt $ 1,403 $ 9,576
Accounts payable 28,969 28,711
Income taxes 3,841 2,773
Accrued expenses 31,742 29,090
Total current liabilities 65,955 70,150
LONG-TERM DEBT (less current portion included above) 121,974 112,854
DEFERRED INCOME TAXES AND OTHER LIABILITIES 20,977 21,785
STOCKHOLDERS' EQUITY
Common stock 41,976 41,976
Paid-in Capital 1,802 871
Retained earnings 268,989 246,705
Cumulative translation adjustment (1,188) (3,414)
Less cost of treasury shares (184,264) (167,206)
TOTAL STOCKHOLDERS' EQUITY 127,315 118,932
TOTAL $336,221 $323,721
</TABLE>
<TABLE>
STANDEX INTERNATIONAL CORPORATION
STATEMENT OF CONSOLIDATED CASH FLOWS
(000 OMITTED)
<CAPTION>
Nine Months Ended
March 31
1995 1994
Cash Flows from Operating Activities:
<S> <C> <C>
Net income $ 28,885 $ 19,628
Depreciation and amortization 9,146 9,170
Net gain on dispositions of businesses and
product lines (5,426) -
Net changes in assets and liabilities (10,293) (15,421)
Net Cash Provided by Operating Activities 22,312 13,377
Cash Flows from Investing Activities:
Expenditures on property and equipment (9,292) (9,256)
Proceeds from sale of businesses and product lines 13,589 1,470
Other 480 23
Net Cash Used for Investing Activities 4,777 (7,763)
Cash Flows from Financing Activities:
Proceeds from additional borrowings 14,495 15,882
Payments of debt (13,547) (3,587)
Cash dividends paid (6,599) (5,740)
Purchase of treasury stock (19,365) (18,772)
Other, net 3,237 2,740
Net Cash Used by Financing Activities (21,779) (9,477)
Effect of Exchange Rate Changes on Cash 583 (419)
Net Change in Cash 5,893 (4,282)
Cash at Beginning of Year 5,023 7,518
Cash at March 31 $ 10,916 $ 3,236
Supplemental Disclosure of Cash Flows Information:
Cash paid during the nine months for:
Interest 5,707 4,254
Income taxes 13,991 11,251
</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 nine months ended March 31, 1995 and 1994.
2. Per Share Calculation
Shares (in thousands) used in per share data are as follows:
March 31
1995 1994
Earnings 14,620 15,394
Cash Dividends 14,346 15,105
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 net proceeds of $13.6 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. Revolving Credit Agreement
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 CONSOLIDATION AND RESULTS OF OPERATIONS
MATERIAL CHANGES IN FINANCIAL CONDITION
During the nine months ended March 31, 1995, 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 $22.3 million and net proceeds from bank credit agreements of
$14.5 million, were used to purchase $19.4 million of the Company's Common
Stock, pay $13.5 million of long term debt, fund plant and equipment
expenditures of $9.3 million and pay out $6.6 million in cash dividends to
the Company's shareholders. 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 March 31, 1995
as compared to the Quarter Ended March 31, 1994
Net Sales reached record levels for the quarter ended March 31, 1995. Net
Sales rose $10.7 million, or 8.2%, when compared to the same period of the
prior year. The Institutional segment reported the largest increase in Net
Sales of $8.6 million resulting from improved customer demand. Growth in
Net Sales of $1.4 million was reported by the Graphics/Mail Order segment
primarily due to improvement in the European economy. The Industrial
segment registered only a slight gain in Net Sales. Although several
operations within this segment reported significant improvements in Net
Sales, these gains were partially offset by the absence of a German
subsidiary which was sold in the first quarter of fiscal 1995.
The Gross Profit Margin Percentage increased to 33.1% for the third quarter
of fiscal 1995 as compared to 32.1% in the same period of the prior year.
The largest increase in the Gross Profit Margin Percentage was reported by
the Industrial segment due primarily to the growth in Net Sales reported by
many divisions within this segment. The other segments had no significant
changes.
OPERATIONS (Continued)
For the quarter ended March 31, 1995, Selling, General and Administrative
Expenses (SG&A) rose $1.8 million, or 5.8%. The Graphics/Mail Order and
Institutional segments reported an increase in SG&A while the Industrial
segment registered a decline in SG&A due mainly to the sale of a German
subsidiary in the first quarter of fiscal 1995. However, as a percentage
of Net Sales, SG&A decreased from 23.8% of Net Sales in the third quarter
of fiscal 1994 to 23.3% of Net Sales for the same period of fiscal 1995.
The Graphics/Mail Order segment reported a slight increase in SG&A as a
percentage of Net Sales primarily attributable to increased marketing
efforts. The Institutional and Industrial segments reported a decline in
SG&A as a percentage of Net Sales due mainly to increased business
activity.
In the third quarter of fiscal 1995, Interest Expense increased $684,000 as
compared to the same period of fiscal 1994 as a result of increased
borrowings at higher interest rates than those experienced during the same
period of the prior year.
The above factors resulted in a $2.4 million, or 24.8%, increase in Income
Before Income Taxes as compared to the same period of the prior year. The
effective tax rate in the third quarter decreased to 32.2% from 34.6%
reported in the same period of fiscal 1994 primarily due to an increase in
foreign tax credits and tax benefits generated by a UK subsidiary.
For the third quarter of fiscal 1995, Net Income reached record levels. Net
Income increased $1.8 million, or 29.3%, when compared to the same period
of the prior year as a result of the factors described above.
Nine Months Ended March 31, 1995
as compared to Nine Months Ended March 31, 1994
Net Sales for the nine months ended March 31, 1995 reached record levels
for any first nine month period in the Company's history. A $34.4 million
increase, or an 8.8% improvement, in Net Sales was recorded as compared to
the same period of the prior year. All three segments reported gains in
Net Sales attributable to improved demand worldwide. The Institutional and
Graphics/Mail Order segments recorded growth in Net Sales of $22.1 million
and $10.9 million, respectively. Despite the absence of a German
subsidiary which was sold in the first quarter of fiscal 1995, the
Industrial segment reported a $1.4 million increase in Net Sales.
For the nine months ended March 31, 1995, the Gross Profit Margin
Percentage rose to 33.6% as compared to 32.9% in the same period of the
prior year. All three segments registered improvements in their Gross
Profit Margin Percentages. However, the largest increase was reported by
the Industrial segment primarily due to the growth in Net Sales reported by
many of this segment's operations.
OPERATIONS (Continued)
Selling, General and Administrative Expenses (SG&A) increased $4.4 million,
or 4.7%, for the nine months ended March 31, 1995 when compared to the same
period last year. The Graphics/Mail Order and Institutional segments
reported an increase in SG&A while the Industrial segment registered a
decline in SG&A due mainly to the sale of a German subsidiary in the first
quarter of fiscal 1995. However, as a percentage of Net Sales, SG&A for
the nine months ended March 31, 1995 decreased from 24% of Net Sales in
fiscal 1994 to 23.1% of Net Sales in fiscal 1995. All three segments
reported a decrease in SG&A as a percentage of Net Sales due mainly to
increased business activity.
Interest Expense rose $1.6 million for the nine months ended March 31,
1995, when compared to the same period of the prior year for the reasons
presented in the discussion of quarterly results.
The above factors, along with the $5.4 million net gain from the
disposition of businesses and product lines, resulted in a $14.0 million,
or 45.3%, 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,
1995 decreased to 35.5% as compared to 36.3% in the same period of fiscal
1994 due mainly to the factors described in the analysis of quarterly
results.
For the nine months ended March 31, 1995, Net Income reached record levels.
Net Income increased $9.3 million, or 47.2%, when compared to the same
period of the prior year due to the factors described above.
PART II. OTHER INFORMATION
NO APPLICABLE ITEMS.
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 10, 1995 /s/ Robert R. Kettinger
Robert R. Kettinger, Corporate Controller
Date: May 10, 1995 /s/ Lindsay M. Sedwick
Lindsay M. Sedwick, Vice President/Treasurer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> MAR-31-1995
<CASH> 10,916
<SECURITIES> 0
<RECEIVABLES> 90,456
<ALLOWANCES> 3,051
<INVENTORY> 110,854
<CURRENT-ASSETS> 215,186
<PP&E> 207,582
<DEPRECIATION> 123,093
<TOTAL-ASSETS> 336,221
<CURRENT-LIABILITIES> 65,955
<BONDS> 121,974
<COMMON> 41,976
0
0
<OTHER-SE> 85,339
<TOTAL-LIABILITY-AND-EQUITY> 336,221
<SALES> 426,103
<TOTAL-REVENUES> 431,967
<CGS> 282,778
<TOTAL-COSTS> 282,778
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,934
<INCOME-PRETAX> 44,769
<INCOME-TAX> 15,884
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 28,885
<EPS-PRIMARY> 1.98
<EPS-DILUTED> 0
</TABLE>
