FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended September 30, 1996 Commission File Number 1-7233
STANDEX INTERNATIONAL CORPORATION
(Exact name of Registrant as specified in its Charter)
DELAWARE 31-0596149
(State of incorporation) (I.R.S. Employer Identification No.)
6 MANOR PARKWAY, SALEM, NEW HAMPSHIRE 03079
(Address of principal executive offices) (Zip Code)
(603) 893-9701
(Registrant's telephone number, including area code)
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 reports), 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, 1996 was 13,373,624.
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, 1996 and 1995 . . . . . . . . . . . . . . . . . 2
Consolidated Balance Sheet, September 30, 1996 and
June 30, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . 3
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Statement of Changes in Consolidated Cash Flows for the
Three Months Ended September 30, 1996 and 1995 . . . . . . . . . . 4
Notes to Financial Information . . . . . . . . . . . . . . . . . . 5
Management's Discussion and Analysis . . . . . . . . . . . . . . . 6-7
PART II. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . 8
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Form 10-Q
PART I. FINANCIAL INFORMATION
STANDEX INTERNATIONAL CORPORATION
<CAPTION>
Statement of Consolidated Income
(000 Omitted)
Three Months Ended
September 30
1996 1995
<S> <C> <C>
Net Sales $140,199 $142,235
Cost of Products Sold 95,579 94,949
Gross Profit Margin 44,620 47,286
Selling, General & Administrative
Expenses 30,242 30,319
Income from Operations 14,378 16,967
Other (Expense)/Income:
Interest Expense (2,123) (2,183)
Interest Income 72 122
Other (Expense)/Income - net (2,051) (2,061)
Income before Income Taxes 12,327 14,906
Provision for Income Taxes 4,785 5,596
Net Income $ 7,542 $ 9,310
Earnings per Share $ .56 $ .66
Cash Dividends per Share $ .18 $ .17
</TABLE>
<TABLE>
STANDEX INTERNATIONAL CORPORATION
<CAPTION>
Consolidated Balance Sheet
(000 Omitted)
<PAGE>
September 30 June 30
1996 1996
ASSETS
CURRENT ASSETS:
<S> <C> <C>
Cash $ 5,709 $ 5,147
Receivables, net of allowance for doubtful accounts 92,193 88,567
Inventories (approximately 45% finished goods, 20%
work in process, and 35% raw materials and supplies) 110,680 109,720
Prepaid expenses 9,895 3,958
Total current assets 218,477 207,392
PROPERTY, PLANT AND EQUIPMENT 220,450 217,478
Less accumulated depreciation 133,913 130,862
Total property, plant and equipment 86,537 86,616
OTHER ASSETS:
Prepaid pension cost 21,158 20,744
Goodwill, net 14,541 14,656
Other 7,818 5,925
Total other assets 43,517 41,325
TOTAL $348,531 $335,333
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable and current portion of long-term debt $ 2,830 $ 5,287
Accounts payable 32,701 29,202
Income taxes 6,599 1,567
Accrued expenses 29,293 32,476
Total current liabilities 71,423 68,532
LONG-TERM DEBT (less current portion included above) 122,724 113,822
DEFERRED INCOME TAXES AND OTHER LIABILITIES 16,363 18,288
STOCKHOLDERS' EQUITY:
Common stock 41,976 41,976
Paid-in capital 3,615 3,378
Retained earnings 302,115 296,991
Cumulative translation adjustment (10) (572)
Less cost of treasury shares (209,675) (207,082)
Total stockholders' equity 138,021 134,691
TOTAL $348,531 $335,333
</TABLE>
<TABLE>
STANDEX INTERNATIONAL CORPORATION
<CAPTION>
Statement of Consolidated Cash Flows
(000 Omitted)
Three Months Ended
September 30
1996 1995
Cash Flows from Operating Activities:
<S> <C> <C>
Net income $ 7,542 $ 9,310
Depreciation and amortization 3,181 3,000
Net changes in assets and liabilities (9,376) (19,533)
<PAGE>
Net Cash Provided by/(Used for) Operating Activities 1,347 (7,223)
Cash Flows from Investing Activities:
Expenditures for property and equipment (2,586) (5,678)
Other 18 72
Net Cash Used for Investing Activities (2,568) (5,606)
Cash Flows from Financing Activities:
Proceeds from additional borrowings 9,036 51,219
Net payments of debt (2,592) (36,170)
Cash dividends paid (2,418) (2,380)
Purchase of treasury stock (2,982) (4,014)
Other, net 627 724
Net Cash Provided by Financing Activities 1,671 9,379
Effect of Exchange Rate Changes on Cash 112 (121)
Net Change in Cash and Cash Equivalents 562 (3,571)
Cash and Cash Equivalents at Beginning of Year 5,147 9,543
Cash and Cash Equivalents at September 30 $ 5,709 $ 5,972
Supplemental Disclosure of Cash Flow Information:
Cash paid during the three months for:
Interest $ 3,025 $ 2,204
Income taxes $ 1,353 $ 4,595
</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, 1996 and 1995.
2. Per Share Calculation
Shares (in thousands) used in per share data are as follows:
September 30
1996 1995
Earnings 13,574 14,207
Cash Dividends 13,436 14,002
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 and other matters generally incidental to its
business. Management has evaluated each matter based, in part, upon
the advice of its independent environmental consultants and in-house
counsel and has recorded an appropriate provision for the resolution of
such matters in accordance with Statement of Financial Accounting
Standards No. 5, "Accounting for Contingencies." Management believes
that such provision is sufficient to cover any future payments,
<PAGE>
including legal costs, under such proceedings.
STANDEX INTERNATIONAL CORPORATION
Management's Discussion and Analysis of
Financial Condition and Results of Operations
MATERIAL CHANGES IN FINANCIAL CONDITION
During the quarter ended September 30, 1996, net operating cash flows of
$1.3 million and net proceeds from additional borrowings of $6.4 million
were used to purchase $3.0 million of the Company's Common Stock, invest
$2.6 million in plant and equipment and pay out $2.4 million of cash
dividends to the Company's shareholders.
During the first quarter of fiscal 1997, the Company acquired certain assets
of two companies: The Vidalia Onion Store and Salsa Express. On October
28, 1996, the Company acquired 100% of the Common Stock of Fellowship
Bookstores. These purchases were primarily financed from operating cash
flows and from the issuance of Standex stock. Aggregate annual net sales
for these three acquisitions are approximately $9.1 million.
The Company intends to continue its policy of using its funds to acquire
property, plant and equipment, pay dividends, purchase its Common Stock and
make acquisitions when conditions are favorable.
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 121, "Accounting for the
Impairment of Long-Lived Assets to be Disposed of." The Company has
evaluated this standard and determined that it will not materially affect
the Company's financial condition or operating results.
In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, "Accounting for Stock-Based Compensation." This standard requires
expanded disclosure of stock-based compensation arrangements with employees
and encourages (but does not require) that such compensation costs be
measured based on the fair value of stock options awarded. The Company is
required to adopt this standard during fiscal year 1997. The Company does
not intend to adopt that portion of the standard which is voluntary, but
rather will continue the application of APB Opinion No. 25, since management
has determined that the latter provides the more accurate presentation of
costs associated with stock based compensation awards to employees. As a
result, compliance with this standard will have no impact on the Company's
1997 financial statements, other than the required additional footnote
disclosure of the proforma effect of SFAS No. 123 on net income and earnings
per share.
OPERATIONS
Quarter Ended September 30, 1996
as Compared to the Quarter Ended September 30, 1995
For the first quarter ended September 30, 1996, Net Sales declined $2.0
million as compared to the first quarter of the prior year. Management
believes the majority of the fluctuations in Net Sales reported by each
segment are primarily due to changes in unit volumes. In addition, although
changes in the average foreign exchange rates from September 30, 1995 to
September 30, 1996 have had a negative impact on Net Sales during the
quarter, the total effect was not significant.
The Graphics/Mail Order segment reported a $1.0 million increase in Net
Sales for the quarter ended September 30, 1996 for a variety of factors,
none of which was individually significant. However, the Institutional
<PAGE>
segment registered a $2.6 million decrease in Net Sales due primarily to
softness in the food service sector and a decline in demand for products for
the Christmas season. The Industrial segment reported a slight decline in
Net Sales due to sluggish European economic conditions.
The Gross Profit Margin Percentage decreased from 33.2% for the same quarter
of the prior year to 31.8% for the first quarter of fiscal 1997. The
Graphics/Mail Order segment reported no change in the Gross Profit Margin
Percentage. However, the Industrial and Institutional segments reported
declines in the Gross Profit Margin Percentages of 1.8% and 1.7%,
respectively, due primarily to reduced sales volume and competitive
pressures on pricing.
Selling, General and Administrative Expense (SG&A) decreased slightly for
the three months ended September 30, 1996. SG&A as a percentage of Net
Sales was unchanged from the prior year. None of the fluctuations reported
by the Company's three segments were individually significant. The
increases and decreases that were registered were in line with the changes
in Net Sales discussed above.
Interest Expense dropped 2.7%, or $60,000, as compared to the first quarter
of fiscal 1996 due to reduced borrowings and lower interest rates than those
experienced during the same period of the prior year.
Due to the factors described above, Income Before Income Taxes for the
quarter ended September 30, 1996 decreased $2.6 million, or 17.3%. The
effective tax rate increased from 37.5% for the first quarter of fiscal 1996
to 38.8% for the three months ended September 30, 1996 due to reduced
availability of foreign tax credits.
As a result of the above, Net Income for the first quarter of fiscal 1997
decreased $1.8 million, or 19.0%, as compared to the same period of the
prior 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, 1996.
Form 10-Q
STANDEX INTERNATIONAL CORPORATION
S I G N A T U R E S
<PAGE>
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 13, 1996 /s/ Robert R. Kettinger
Robert R. Kettinger
Corporate Controller
Date: November 13, 1996 /s/ Lindsay M. Sedwick
Lindsay M. Sedwick
Sr. Vice President of Finance/CFO
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> SEP-30-1996
<CASH> 5,709
<SECURITIES> 0
<RECEIVABLES> 94,969
<ALLOWANCES> 2,776
<INVENTORY> 110,681
<CURRENT-ASSETS> 218,477
<PP&E> 220,450
<DEPRECIATION> 133,913
<TOTAL-ASSETS> 348,531
<CURRENT-LIABILITIES> 71,423
<BONDS> 122,723
0
0
<COMMON> 41,976
<OTHER-SE> 96,045
<TOTAL-LIABILITY-AND-EQUITY> 348,531
<SALES> 140,199
<TOTAL-REVENUES> 140,271
<CGS> 95,579
<TOTAL-COSTS> 95,579
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,123
<INCOME-PRETAX> 12,327
<INCOME-TAX> 4,785
<INCOME-CONTINUING> 7,542
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,542
<EPS-PRIMARY> 0.56
<EPS-DILUTED> 0.56
</TABLE>
