UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1999 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 office) (Zip Code)
(603) 893-9701
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE
SECURITIES EXCHANGE ACT OF 1934:
Title of Each Class Name of Each Exchange on Which Registered
Common Stock, New York Stock Exchange
Par Value $1.50 Per Share
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
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein and
will not be contained, to the best of Registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the voting and non-voting
common equity held by non-affiliates of the Registrant at the
close of business on July 30, 1999 was approximately $337,560,000.
Registrant's closing price as reported on the New York Stock
Exchange for July 30, 1999 was $26.50 per share.
The number of shares of Registrant's Common Stock outstanding
on September 8, 1999 was 12,927,778.
Portions of the 1999 Annual Report to Shareholders of
Registrant are incorporated in Parts I, II and IV of this report.
Portions of the Proxy Statement of Registrant dated September 16,
1999 are incorporated in Part III of this report.
PART I
ITEM 1. BUSINESS
Standex1 is a diversified manufacturing and marketing
company with operations in three product segments: Food Service,
Industrial and Consumer. Standex was incorporated in 1975 and is
the successor of a corporation organized in 1955.
The business of the Company is carried on within the three
segments by a number of operating units, each with its own
organization. The management of each operating unit has
responsibility for product development, manufacturing, marketing
and for achieving a return on investment in accordance with the
standards established by Standex. Overall supervision,
coordination and financial control are maintained by the executive
staff from its corporate headquarters located at 6 Manor Parkway,
Salem, New Hampshire. As of June 30, 1999, the Company had
approximately 5,400 employees.
The principal products produced and services rendered by each
of the segments of Standex are incorporated herein by reference to
pages 4 through 15 of the Annual Report to Shareholders for the
fiscal year ended June 30, 1999 (the "1999 Annual Report"). Sales
are made both directly to customers and by or through
manufacturers representatives, dealers and distributors.
<F1>References in this Annual Report on Form 10-K to "Standex" or
the "Company" shall mean Standex International Corporation and its
subsidiaries.
The major markets for the Company's products and services are
as follows:
Food Service Products
Master-Bilt(R) refrigerated cabinets, cases, display units,
modular structures, coolers and freezers; Barbecue King(R) and
BKI(R) commercial cook and hold units, rotisseries, pressure
fryers, ovens and baking equipment; and Federal Industries bakery
and deli heated and refrigerated display cases for hospitals,
schools, fast food industry, restaurants, hotels, clubs,
supermarkets, bakeries, convenience stores and delicatessens.
USECO food service equipment and patient feeding systems for
hospitals, schools, nursing homes, correctional facilities and
restaurants; H. F. Coors hotel restaurant china and cookware; and
Mason candlelamps and candles for restaurants, hotels and
commercial industries.
Procon(R) rotary vane pumps for the carbonated beverage industry,
espresso coffee machine markets, water purification industry and
coolant recirculation systems.
Industrial Products
Spincraft(R) power metal spinning, custom formed components for
aircraft engines, space launch vehicles, gas turbines, nuclear
reactors, military ordnance, commercial satellites and similar
products for OEMs, U.S. Government, energy, aircraft, aerospace
and commercial satellite industry and other commercial industries.
Jarvis, Can-Am Casters and Wheels(TM) and PEMCO(R) casters and
wheels and industrial hardware for general industry, hospitals,
supermarkets, hotels and restaurants.
Roehlen(R) embossing rolls, texturizing systems, machines and
plates; Mold-Tech(R) mold engraving; Keller-Dorian print rolls and
calendering equipment; Mullen(R) Burst Testers; Perkins converting
and finishing machinery and systems for general industry (e.g.,
automotive, plastics, textiles, paper, building products,
synthetic materials, OEMs, converting, textile and paper industry,
computer, housewares and construction industries).
Custom Hoists single and double acting telescopic and piston rod
hydraulic cylinders for dump trucks and trailers used in the
construction and waste hauling industries.
Standex Electronics reed switches, electrical connectors, sensors,
toroids and relays, fixed and variable inductors and electronic
assemblies, fluid sensors and tunable inductors for
telecommunications, consumer electronics, automotive, security
systems, communications equipment, computers, air conditioning and
refrigeration industries.
James Burn Wire-O(R) double looped wire and machinery and complete
binding system for printers, publishers and binders of checkbooks,
calendars, diaries, appointment books, cookbooks, catalogs and
manuals.
Consumer Products
Standard Publishing(R) publishes and markets religious
periodicals, curricula, Sunday school literature, children's books
and supplies for Sunday schools, churches, vacation Bible schools
and Christian bookstores and prints for general commerce and
industry.
Berean(R) Christian Stores, a chain of 22 Berean(R) Christian
bookstores, which serve as distribution centers and retail outlets
for religious books and merchandise.
Snappy(R), ACME and ALCO metal ducting and fittings for heating,
ventilating and air conditioning distributors throughout the
continental United States.
Frank Lewis(R) Grapefruit Club gift packages, Red Cooper(R) fresh
grapefruit, Harry's Crestview Groves(R) grapefruit packages,
grapefruit juice, grapefruit sections, onions, melons and roses;
Salsa Express(R) salsas and other related food products; The
Vidalia(R)2 Onion Store Vidalia(R)F2 onions for mail order
consumer direct sales.
National Metal fabricated metal products, including specialty
hardware and metal furniture for the food service industry, retail
stores, office furniture markets, stationary supply houses and
other industries.
<F2>A registered trademark of the Georgia Department of
Agriculture.
Financial information on each of the product groups of
Standex as well as financial information of non-U.S. operations is
incorporated by reference to the note to the consolidated
financial statements entitled Industry Segment Information on page
27 of the 1999 Annual Report.
Raw Materials
Raw materials and components necessary for the fabrication of
products and the rendering of services for the Company are
generally available from numerous sources. The Company does not
foresee any unavailability of materials or components which would
have any material adverse effect on its overall business, or any
of its business segments, in the near term.
Patents and Trademarks
The Company owns or is licensed under a number of patents and
trademarks in each of its product groups. However, the loss of
any single patent or trademark would not, in the opinion of the
Company, materially affect any segment or the overall business.
<TABLE>
Backlog
<CAPTION>
Backlog orders believed to be firm at June 30, 1999 and 1998
are as follows (in thousands):
1999 1998
<S> <C> <C>
Food Service $21,379 $22,242
Industrial 122,337 68,726
Consumer 6,636 11,352
Total $150,352 $102,320
All but approximately $70,415,000 of the 1999 backlog, and
$17,024,000 of the 1998 backlog, was expected to be realized as
sales in the following fiscal year.
</TABLE>
Competition
Standex manufactures and markets products many of which have
achieved a unique or leadership position in their market.
However, the Company encounters competition in varying degrees in
all product groups and for each product line. Competitors include
domestic and foreign producers of the same and similar products.
The principal methods of competition are price, delivery schedule,
quality of services, product performance and other terms and
conditions of sale. During fiscal 1999, the Company invested
$16,824,000 in new plant and equipment in order to upgrade
facilities to become more competitive in all segments.
International Operations
Substantially all international operations of the Company are
related to domestic operations and are included in the Food
Service and Industrial business segments. International
operations are conducted at 34 plants, principally in Western
Europe. The industry segment information regarding non-U.S.
operations on page 27 of the 1999 Annual Report is incorporated
herein by reference.
Research and Development
Due to the nature of the manufacturing operations of Standex
and the types of products manufactured, expenditures for research
and development are not material to any segment.
Environmental and Other Matters
To the best of its knowledge, the Company believes that it is
presently in substantial compliance with all existing applicable
environmental laws and does not anticipate that such compliance
will have a material effect on its future capital expenditures,
earnings or competitive position.
ITEM 2. PROPERTIES
At June 30, 1999, Standex operated a total of 92 principal
plants, stores and warehouses located through the United States,
Western Europe, Canada, Australia, Singapore and Mexico. The
Company owned 50 of the facilities and the balance were leased.
The Company operated 22 retail stores in various sections of the
United States, of which all were leased. The approximate building
space utilized by each product group of Standex at June 30, 1999
is as follows (in thousands):
Area in Square Feet
Owned Leased
Food Service 679 228
Industrial 1,067 394
Consumer 1,445 362
General Corporate 29 -
Total 3,220 984
In general, the buildings are in good condition, are
considered to be adequate for the uses to which they are being put
and are in regular use.
The Company utilizes machinery and equipment which is
necessary to conduct its operations. Substantially all of such
machinery and equipment is owned by Standex.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS
No matters were submitted to stockholders during the fourth
quarter of the fiscal year.
EXECUTIVE OFFICERS OF STANDEX
Name Age Principal Occupation During
the Past Five Years
Thomas L. King 69 Chairman of the Board of
the Company since January 1992;
President of the Company from
August 1984 to July 1994; and
Chief Executive Officer of the
Company from July 1985 to June
1995.
Edward J. Trainor 59 Chief Executive Officer of
the Company since July 1995;
President of the Company since
July 1994; Chief Operating
Officer of the Company from July
1994 to June 1995; Vice
President of the Company from
July 1992 to July 1994; and
President of the Standex
Institutional Products Group of
the Company from February 1987
to July 1994.
David R. Crichton 61 Executive Vice
President/Operations of the
Company since June 1989.
Edward F. Paquette 63 Vice President/CFO of the
Company since July 1998;
Assistant to the President/CEO
of the Company from September
1997 to June 1998 and prior
thereto Partner of Deloitte &
Touche LLP.
Deborah A. Rosen 44 General Counsel of the
Company since January 1998;
Secretary of the Company since
October 1997; Assistant General
Counsel and Assistant Secretary
of the Company from January 1997
to December 1997 and prior
thereto Senior Corporate
Attorney and Assistant Secretary
of the Company.
Daniel C. Potter 43 Treasurer of the Company
since August 1998; Assistant
Treasurer from July 1997 to July
1998; Corporate Tax Manager of
the Company since February 1997;
Tax Manager of the Company from
August 1996 to January 1997 and
prior thereto Tax
Manager/International.
Robert R. Kettinger 57 Corporate Controller of the
Company since July 1991.
The executive officers are elected each year by the Board of
Directors to serve for one-year terms of office. There are no
family relationships between any of the directors or executive
officers of the Company.
PART II
ITEM 5. MARKET FOR STANDEX COMMON STOCK
AND RELATED STOCKHOLDER MATTERS
The principal market in which the Common Stock of Standex is
traded is the New York Stock Exchange. The high and low sales
prices for the Common Stock on the New York Stock Exchange and the
dividends paid per Common Share for each quarter in the last two
fiscal years are incorporated by reference to page 20 of the 1999
Annual Report. The approximate number of stockholders of record
on September 8, 1999 was 3,350.
ITEM 6. SELECTED FINANCIAL DATA
Selected financial data for the five years ended June 30,
1999 is incorporated by reference to the table entitled "Five-Year
Financial Review" on page 20 of the 1999 Annual Report. This
summary should be read in conjunction with the consolidated
financial statements and related notes included in the 1999 Annual
Report on pages 21 through 31.
ITEM 7. MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Management's discussion and analysis of financial condition
and results of operations of the Company is incorporated by
reference to pages 16 and 19 of the 1999 Annual Report.
ITEM 7A. QUANTITATIVE AND
QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
Quantitative and qualitative disclosures about market risk
are incorporated by reference to Page 19 of the 1999 Annual
Report.
ITEM 8. FINANCIAL STATEMENTS
AND SUPPLEMENTARY DATA
The information required by this item is incorporated by
reference to pages 20 through 32 of the 1999 Annual Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
OF STANDEX
Certain information concerning the directors of the Company
is incorporated by reference to pages 2 through 5 and pages 13
through 14 of the Proxy Statement of the Company, dated September
16, 1999 (the "1999 Proxy Statement"). Certain information
concerning the executive officers of the Company is set forth in
Part I under the caption "Executive Officers of Standex."
ITEM 11. EXECUTIVE COMPENSATION
Information regarding executive compensation is incorporated
by reference to pages 9 through 13 of the 1999 Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The stock ownership of each person known to Standex to be the
beneficial owner of more than 5% of its Common Stock and the stock
ownership of all directors and executive officers of Standex as a
group are incorporated by reference to pages 3 through 5 of the
1999 Proxy Statement. The beneficial ownership of Standex Common
Stock of all directors and executive officers of the Company is
incorporated by reference to pages 3 through 4 of the 1999 Proxy
Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS
Information regarding certain relationships and related
transactions is incorporated by reference to pages 13 through 14
of the 1999 Proxy Statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT
SCHEDULES, AND REPORTS ON FORM 8-K
(a) Financial Statements and Schedule
(i) The financial statements listed in the
accompanying index to the Consolidated Financial
Statements and Schedules are incorporated by
reference into this Item 14.
(ii) The financial statement schedule listed
in the accompanying index to the Consolidated
Financial Statements and Schedules is filed as part
of this Annual Report on Form 10-K.
(b) Reports on Form 8-K
Standex filed no reports on Form 8-K with the Securities and
Exchange Commission during the last quarter of the fiscal year
ended June 30, 1999.
(c) Exhibits
3. (i) Restated Certificate of Incorporation
of Standex, dated October 27, 1998, is
incorporated by reference to the exhibits to the
Quarterly Report of Standex on Form 10-Q for the
fiscal quarter ended December 31, 1998.
(ii) By-Laws of Standex, as amended, and
restated on July 27, 1994 are incorporated by
reference to the exhibits to the Annual Report of
Standex on Form 10-K for the fiscal year ended
June 30, 1994 (the "1994 10-K").
4. (a) Agreement of the Company, dated
September 15, 1981, to furnish a copy of any
instrument with respect to certain other long-
term debt to the Securities and Exchange
Commission upon its request is incorporated by
reference to the exhibits to the Annual Report of
Standex on Form 10-K for the fiscal year ended
June 30, 1981.
(b) Rights Agreement of the Company is
incorporated by reference to Form 8A filed with
the Securities and Exchange Commission on
December 18, 1998 and to the Form 8-K filed with
the Securities and Exchange Commission on
December 18, 1998.
10. (a) Employment Agreement dated February 1,
1998, between the Company and David R. Crichton
is incorporated by reference to the exhibits to
the Quarterly Report of Standex on Form 10-Q for
the fiscal quarter ended March 31, 1998.
(b) Employment Agreement dated January 29,
1993, between the Company and Edward J. Trainor
is incorporated by reference to the exhibits to
the 1993 10-K.
(c) Employment Agreement dated September
20, 1997 between the Company and Edward F.
Paquette is incorporated by reference to the
exhibits to the Quarterly Report of Standex on
Form 10-Q for the fiscal quarter ended September
30, 1997.
(d) Standex International Long-Term
Incentive Plan, effective October 27, 1998 is
incorporated by reference to the exhibits to the
Quarterly Report of Standex on Form 10-Q of the
fiscal quarter ended December 31, 1998.
(e) Standex International Corporation
Profit Improvement Participation Shares Plan as
amended and restated on April 26, 1995 is
incorporated by reference to the exhibits to the
Annual Report of Standex on Form 10-K for the
fiscal year ended June 30, 1995 ("1995 10-K").
(f) Standex International Corporation Stock
Option Loan Plan, effective January 1, 1985, as
amended and restated on January 26, 1994, is
incorporated by reference to the exhibits to the
1994 10-K.
(g) Standex International Corporation
Executive Security Program, as amended and
restated on July 27, 1994, and as further amended
and restated on October 29, 1996 is incorporated
by reference to the exhibits to the Quarterly
Report of Standex on Form 10-Q for the fiscal
quarter ended December 31, 1996 (the "December
31, 1996 10-Q").
(h) Standex International Corporation 1985
Stock Option Plan effective July 31, 1985, as
amended on October 30, 1990, is incorporated by
reference to the exhibits to the Annual Report of
Standex on Form 10-K for the fiscal year ended
June 30, 1991.
(i) Standex International Corporation
Executive Life Insurance Plan effective April 27,
1994 and amended on April 24, 1996 and as further
amended and restated on October 29, 1996 is
incorporated by reference to the exhibits to the
December 31, 1996 10-Q.
(j) Standex International Corporation 1994
Stock Option Plan effective July 27, 1994 is
incorporated by reference to the exhibits to the
1994 10-K.
(k) Standex International Corporation
Supplemental Retirement Plan adopted April 26,
1995 and amended on July 26, 1995 is incorporated
by reference to the exhibits to the 1995 10-K.
13. The Annual Report to Shareholders of the
Company for the fiscal year ended June 30, 1999
(except for the pages and information thereof
expressly incorporated by reference in this Form 10-
K, the Annual Report to Shareholders) is provided
solely for the information of the Securities and
Exchange Commission and is not deemed "filed" as
part of this Form 10-K.
21. Subsidiaries of Standex.
23. Independent Auditors' Consent.
24. Powers of Attorney of John Bolten, Jr., David
R. Crichton, Samuel S. Dennis 3d, William R.
Fenoglio, Walter F. Greeley, Daniel B. Hogan, Thomas
L. King, C. Kevin Landry, H. Nicholas Muller, III,
Ph.D., Edward F. Paquette and Sol Sackel.
27. Financial Data Schedule.
(d) Schedule
The schedule listed in the accompanying Index to the
Consolidated Financial Statements and Schedules is filed as part
of this Annual Report on Form 10-K.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, Standex International Corporation
has duly caused this Annual Report on Form 10-K to be signed on
its behalf by the undersigned, thereunto duly authorized, on
September 22, 1999.
STANDEX INTERNATIONAL CORPORATION
(Registrant)
By: /s/ Edward J. Trainor
Edward J. Trainor, President/
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of Standex International Corporation and in the
capacities indicated on September 22, 1999:
Signature Title
/s/ Edward J. Trainor President/Chief Executive Officer
Edward J. Trainor
/s/ Edward F. Paquette Vice President/Chief Financial Officer
Edward F. Paquette
/s/ Robert R. Kettinger Corporate Controller (Chief Accounting Officer)
Robert R. Kettinger
Edward J. Trainor, pursuant to powers of attorney which are
being filed with this Annual Report on Form 10-K, has signed below
on September 22, 1999 as attorney-in-fact for the following
directors of the Registrant:
John Bolten, Jr. Daniel B. Hogan
David R. Crichton Thomas L. King
Samuel S. Dennis 3d C. Kevin Landry
William R. Fenoglio H. Nicholas Muller, III, Ph.D.
Walter F. Greeley Edward F. Paquette
Sol Sackel
/s/ Edward J. Trainor
Edward J. Trainor
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
Page No. in
Annual Report
("AR")
Financial Statements
Statements of Consolidated Income for the
Years Ended June 30, 1999, 1998 and 1997 AR 21
Consolidated Balance Sheets at June 30, 1999 and 1998 AR 22
Statements of Consolidated Stockholders' Equity for
the Years Ended June 30, 1999, 1998 and 1997 AR 21
Statements of Consolidated Cash Flows for
the Years Ended June 30, 1999, 1998 and 1997 AR 23
Notes to Consolidated Financial Statements. AR 24 - 31
Independent Auditors' Report relating to the
Consolidated Financial Statements and Notes thereto AR 32
Schedule
Schedule VIII Valuation and Qualifying Accounts
Independent Auditors' Report relating to Schedule VIII
Schedules (consolidated) not listed above are omitted because
of the absence of conditions under which they are required or
because the required information is included in the financial
statements submitted.
INDEX TO ITEMS INCORPORATED BY REFERENCE
Page No. in
Annual Report
("AR") or Proxy
Statement ("P")
PART I
Item 1 Business AR 4 - 15
Industry Segment Information AR 27
INDEX TO ITEMS INCORPORATED BY REFERENCE
Page No. in
Annual Report
("AR") or Proxy
Statement ("P")
PART II
Item 5 Market for Standex Common Stock and Related
Stockholder Matters AR 20
Item 6 Selected Financial Data AR 20
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations AR 16 - 19
Item 7A Quantitative and Qualitative Disclosures About
Market Risk AR 19
Item 8 Financial Statements and Supplementary Data AR 20 - 32
PART III
Item 10 Directors and Executive Officers of Standex P 2 - 5;
and 13 - 14
Item 11 Executive Compensation P 9 - 13
Item 12 Security Ownership of Certain Beneficial Owners and
Management P 3 - 5
Item 13 Certain Relationships and Related Transactions P 13 - 14
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
STANDEX INTERNATIONAL CORPORATION
Salem, New Hampshire
We have audited the consolidated financial statements of Standex
International Corporation and subsidiaries as of June 30, 1999 and
1998, and for each of the three years in the period ended June 30,
1999, and have issued our report thereon dated August 17, 1999;
such consolidated financial statements and report are included in
your 1999 Annual Report to Shareholders and are incorporated
herein by reference. Our audits also included the consolidated
financial statement schedule of Standex International Corporation
and subsidiaries, listed in Item 14 (a)(ii). This consolidated
financial statement schedule is the responsibility of the
Corporation's management. Our responsibility is to express an
opinion based on our audits. In our opinion, such consolidated
financial statement schedule, when considered in relation to the
basic consolidated financial statements taken as a whole, presents
fairly in all material respects the information set forth therein.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Boston, Massachusetts
August 17, 1999
<TABLE>
Schedule VIII
STANDEX INTERNATIONAL CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended June 30, 1999, 1998 and 1997
<CAPTION>
Column A Column B Column C Column D Column E
Balance at Additions
Beginning Charged to Costs Charged to Balance at
Description of Year and Expenses Other Accounts Deductions End of Year
Allowances deducted from assets
to which they apply--for
doubtful accounts receivable:
<S> <C> <C> <C> <C> <C>
June 30, 1999 $3,550,685 $1,984,598 $(1,944,888) (1) $3,590,395
June 30, 1998 $2,535,535 $2,587,540 $(1,572,390) (1) $3,550,685
June 30, 1997 $2,666,005 $2,276,847 $(2,407,317) (1) $2,535,535
(1) Accounts written off--net of recoveries.
</TABLE>
INDEX TO EXHIBITS
PAGE
13. The Annual Report to Shareholders of the
Company for the fiscal year ended June
30, 1999 (except for the pages and
information thereof expressly
incorporated by reference in this Form
10-K, the Annual Report to Shareholders)
is provided solely for the information
of the Securities and Exchange
Commission and is not deemed "filed" as
part of this Form 10-K
21. Subsidiaries of Registrant
23. Independent Auditors' Consent
24. Powers of Attorney of John Bolten, Jr.,
David R. Crichton, Samuel S. Dennis 3d,
William R. Fenoglio, Walter F. Greeley,
Daniel B. Hogan, Thomas L. King, C.
Kevin Landry, H. Nicholas Muller, III,
Ph.D., Edward F. Paquette and Sol Sackel
27. Financial Data Schedule
IMAGINE.
Standex 1999 Annual Report to Shareholders
Caption: The cover of this annual report was embossed using a plate made by
Standex's Mold-Tech Northeast unit.
As you read our annual report, Imagine how your life has been enriched by
the essential products made by Standex.
FINANCIAL HIGHLIGHTS
1999 HIGHLIGHTS
Standex is a global, multi-industry company that manufactures and markets
products through 16 business units and 92 facilities in 14 countries. Our
strategy is to make synergistic acquisitions and invest in businesses that
generate solid revenues and earnings streams, and then to reinvest for long-
term growth - while providing attractive current returns to our
shareholders.
We operate in three broad business segments. Our Food Service and Consumer
businesses are well positioned to capitalize on trends that reflect new
ways of living, working, and shopping. Our Industrial businesses typically
serve niche OEM markets, so many of our products and services are invisible
to consumers and end-users. Yet we typically add functionality, competitive
advantage and market appeal that are critical to the quality and value of
the finished product.
Standex International. We make essential products that add value to your
world.
<TABLE>
Year Ended June 30 1999 1998 1997 1996 1995
OPERATIONS
<S> <C> <C> <C> <C> <C>
Net Sales $641,399,507 $616,180,090 $564,623,458 $562,678,620 $569,292,824
Net Income** 31,361,263 20,148,905 26,918,588 30,713,794 34,976,944
Return on Sales** 4.9% 3.3% 4.8% 5.5% 6.1%
Return on Equity** 19.3% 13.8% 19.1% 22.8% 26.4%
Depreciation 13,769,691 13,851,599 12,777,339 12,497,148 12,355,863
Interest Expense 11,154,869 10,779,015 8,497,425 9,047,701 8,367,075
PER SHARE DATA
Net Sales* $49.20 $46.61 $41.85 $40.40 $39.15
Earnings:**
Basic 2.42 1.54 2.02 2.24 2.45
Diluted 2.41 1.52 2.00 2.21 2.41
Book Value 12.59 11.19 10.75 10.01 9.45
Dividends .76 .76 .75 .71 .63
Average Shares
Outstanding:
Basic 12,971,613 13,072,105 13,337,197 13,735,643 14,281,363
Diluted 13,037,423 13,218,892 13,490,810 13,927,223 14,540,476
*Amounts calculated using average diluted shares outstanding.
**Fiscal 1995 amounts exclude a non-recurring net after tax gain from the
disposition of businesses and product lines of $3,343,000 or $.23 per share
(both basic and diluted).
</TABLE>
LETTER TO OUR SHAREHOLDERS
[Photo: Thomas L. King and Edward J. Trainor]
Caption: Thomas L. King, Chairman of the Board
Edward J. Trainor, President and Chief Executive Officer
[Photo: Edward F. Paquette, Deborah A. Rosen and David R. Crichton]
Caption: Edward F. Paquette, Vice President and Chief Financial Officer
Deborah A. Rosen, Vice President, General Counsel and Secretary
David R. Crichton, Executive Vice President/Operations
To Our Shareholders,
HIGHLIGHTS
Record sales ($641.4 million) and the second highest historical earnings
($31.4 million) highlighted Fiscal 1999. Last year we indicated that 1998
was a transition year and the refocusing should begin to manifest itself in
Fiscal 1999. It did. We have assimilated the acquisitions of ACME
Manufacturing and ATR Coil Company, divested three business units and
closed one manufacturing plant. Management realignment has been
accomplished and a new performance driven management planning and
compensation program has been implemented.
The Stock Market made a major adjustment to small capitalization stocks
like Standex, which dropped small cap values as much as 50% in just a few
weeks. While our stock has recovered some of its lost value, we have not
returned to our year ago levels in spite of improved performance. We
believe that over time the market cycle will improve and our stock should
rebound accordingly. In the meantime, we must concentrate on continuous
productivity improvements, increasing sales and earnings from existing
operations, and finding synergistic strategic acquisitions to fuel our
growth in the years ahead.
FINANCIAL PERFORMANCE
Book Value Per Share reached a new record at $12.59 and the debt-to-capital
ratio was reduced from 53.2% to 48.4%. Return on Sales was 4.9% and Return
on Equity was 19.3%. Cash Flow as measured by EBITDA, improved $18.7
million and the current ratio stands at 2.8 to 1.
Capital Expenditures needed to provide growth and support our existing
business units remained relatively high at $16.8 million, and we
repurchased 314,000 shares of Standex Common Stock. While considerable time
was allocated to the reorganization and refocusing discussed above; we did
make two small acquisitions that should improve the technological base of
our operating businesses in the near future. We have delivered nine
consecutive quarters of increased year over year earnings comparisons and
have paid continuous quarterly dividends for 35 years. The financial
strength of the Company is very solid going into the new century.
OUTLOOK
The business climate at the present time is a two-edged sword. The economy
is strong, creating demand; inflation is low which keeps raw materials
prices down but makes price increases difficult for us to obtain. In fact,
major consolidations and the lower cost of imports due to Asian
overcapacity has many US manufacturers in a deflationary cycle.
Unemployment is low making it difficult to find qualified labor and
pressure on higher wages is building. Nevertheless, we have shown that by
prudent investments and a disciplined acquisition policy we can maintain or
improve our Gross Profit Margins which this year overall remained stable at
33% of sales in spite of an earnings problem at one of our larger
divisions. The focus for FY 2000 will be on solidifying the changes already
implemented, and providing strategic direction that will emphasize growth
in the years ahead.
We would be remiss if we did not recognize the contributions of our
employees and the guidance of our directors in making 1999 a successful
year.
/s/Edward J. Trainor
Edward J. Trainor
President and Chief Executive Officer
/s/Thomas L. King
Thomas L. King
Chairman of the Board
ESSENTIAL PRODUCTS FOR THE WORLD OF FOOD SERVICE
[Photo: Chef Harry Green in the kitchen of St. Francis Hospital]
Imagine how food freshness, flavor, texture and appeal are enhanced by
Standex...
...adding to your enjoyment of a soft drink, delight in a pastry or
satisfaction and convenience when you purchase a prepared meal at your
supermarket. You may not even realize how often you're being served with
the help of a Standex product: that your pastry was displayed in a case
made by a Standex company, that your espresso was brewed with the help of
one of our pumps or that the ready-to-eat dinner you brought home last
night was prepared using Standex food preparation equipment.
Chances are good that Standex companies help you savor life a bit more
every day.
[Photo: Seattle's Best Coffee shop showing a Federal Industries Case,
an espresso machine, and customers.]
Caption: Seattle's Best Coffee shops feature Federal Industries'
refrigerated cases and espresso machines using Procon pumps.
[Photo: Chef Thomas Vieli carving chicken with the oven rotissery in the
background.]
Caption: BKI's corporate chef, Thomas Vieli, demonstrates a parallel
between the use of quality cooking equipment and the serving of fine food.
You'll find the products of the Standex Food Service Group in supermarkets,
gourmet shops, convenience stores, bakeries, and even institutional
kitchens, satisfying the changing tastes and more sophisticated palettes of
today's time-pressed, convenience-oriented consumers.
For example, today's dual-earner families typically enjoy higher incomes,
but they also have less and less time for shopping, cooking and traditional
family meals. The result: a growing trend in the US and Europe called home
meal replacement (HMR). If you've ever stopped at a market or restaurant
after work to "pick up supper" and brought home a complete meal to go,
you're part of the HMR trend. And your meal may have been prepared with the
help of commercial food preparation equipment made by our BKI unit -
including ovens/rotisseries, pressure fryers, and low-temperature cook-and-
hold ovens and heated display cases. Today, these systems are installed in
thousands of supermarkets, restaurants, institutional food kitchens,
delicatessens and convenience stores. Managed as a single global business,
BKI Worldwide has manufacturing locations in the US and England, as well as
distribution networks in dynamic Far Eastern and South American markets.
You may also have benefited from Standex food preparation technology at
breakfast or lunch. Did you have an espresso or soft drink? The dispensing
machines may have used a pump from our Procon Products unit. This global
company, with operations in Europe and the US, uses state-of-the-art
manufacturing techniques, including robotic systems and direct numerical
control computer technologies, to maximize efficiency and quality and
provide additional capacity to meet rising demand.
If you selected a food item from a refrigerated or heated display case,
Standex's Master-Bilt or Federal Industries units may well have built that
system. Master-Bilt's refrigerated cabinets, cases, display units and
modular walk-in refrigerators/freezers can be found in restaurants,
supermarkets, pharmacies and convenience stores across the country. One of
the first companies to provide precise temperature control for truly
healthful refrigeration, Master-Bilt is a leader in designing equipment
that maximizes food safety by minimizing temperature fluctuations in all
types of merchandising and storage environments.
Federal Industries is an established leader in merchandising and display
cases for restaurants, supermarkets, convenience stores, bakeries, delis
and confectionery shops. For over 60 years, the company has built a strong
market position by custom designing and manufacturing modular merchandising
and presentation centers that match the retailer's concept. The result: our
customers increase sales because their products are presented distinctively
and attractively.
We're even helping to increase the appeal of the food served by hospitals,
schools and colleges, correctional facilities and other institutions where
food may be prepared at one location and served at another. Our Unitron V
Feeding System manufactured by our USECO division was the first US system
to introduce convection reheating technology, which uses circulating air to
reheat chilled foods, combined with standard conduction techniques, which
heat the serving plate. Not only are more of the food's texture and flavor
preserved, but both hot and cold food temperatures can be maintained on the
same tray.
Standex Food Service Companies:
BKI Worldwide
Master-Bilt Products
Federal Industries
United Service Equipment Company
H.F. Coors China/Mason Candlelight
Procon Products
ESSENTIAL PRODUCTS FOR THE WORLD OF INDUSTRY
[Photo: A man using a cell phone with a car next to him and a factory
and street behind him.]
Imagine the many ways that Standex makes your industrial products more
useful and competitive...with textures that make your products more
appealing and distinctive, electronic devices that make the OEM components
you manufacture more functional and easier to assemble, including exotic
metals and precisely machined fuel tank domes for satellite launch
vehicles. The things we make and do - and the quality and innovation that
distinguish us - add value and functionality to industrial products in a
host of settings, from the construction and automotive industries, to
aerospace, telecommunications, packaging and consumer goods.
The Standex name may be invisible to the end-user, but the functionality
and value we add give products a distinctive edge.
[Photo: An airplane service truck next to a plane.]
Caption: Airplane service trucks utilize Custom Hoists cylinders.
[Photo: A communications satellite]
Caption: Communications satellites are launched using Spincraft fuel tank
domes.
[Photo: Luggage cart]
Caption: Jarvis casters move your luggage at major hotels worldwide.
Caption: Eastern Engraving's matched metal rolls and print-to-register
embossing systems apply decorative embossed patterns to a variety of
products we use everyday.
[Photo: Artistry cosmetic boxes, Hawaiian Tropic bottle, Carefree and
Icebreakers imprinted foil wrapping, Klondike bar foil wrapping, Titanic
embossed video cassette box, White Diamonds perfume box, Hanes Silk
Reflections hosiery package, and foil wrapping paper.]
Regardless of the industry, companies are faced with a daily challenge: how
to compete effectively in an environment that is increasingly
sophisticated, constantly accelerating and always cost-conscious. The
companies of the Standex Industrial Group understand the challenge - and
deliver customer solutions everyday that can enhance the appeal of our
customers' products, enhance the speed and efficiency of the manufacturing
process and help add value to our customers' products in the marketplace.
Consider one of the most basic - but subtle - of all product
characteristics: texture. Standex is the world leader in texturizing:
creating the three-dimensional surfaces that make products more appealing,
easier to grasp and use - and sell. We not only understand current end-user
needs and expectations, but also the competitive environment in which our
customers operate. To help our customers compete, we've shortened the time
it takes for us to apply a texture to their product, or to deliver a
complete, new texturizing system for use in the customer's own plant.
For example, our Roehlen Embossing unit creates and delivers texturizing
systems that produce textured designs: rolls, plates and machines apply
textures and patterns to products like vinyl siding, wall coverings, fine
writing papers, even the leather basketballs and footballs that are used by
professionals and neighborhood kids alike. Similarly, our Mold-Tech unit -
with 18 facilities and 3 licensees in 15 countries, the only truly global
texturizing resource - has installed the industry's most advanced optical
imaging systems, allowing OEMs and marketers to incorporate new patterns
and textures into their designs in a matter of days.
Another Standex unit, James Burn, is a leader in the related graphic arts
area. The Unit's premier brand Wire-O(R) double-loop wire binding system is
specified by designers worldwide, who use it to add a creative edge as well
as flexibility to manuals, calendars, diaries, brochures and other printed
materials. Chances are, there is a Wire-O(R) bound publication in your office
right now.
Automated assembly has become an important strategy in many of the OEM
markets we serve, as companies strive to increase productivity and
reliability. Designing and manufacturing electronic products that meet the
demands of automated assembly are core competencies of Standex Electronics,
which makes reed switches, sensors, miniature coils, magnetic components
and connectors that are found in a wide range of applications. The last
time your windshield washer low fluid light flashed, or the streetlight
outside your house switched on, it was probably triggered by a Standex
sensor or ignitor.
Contrast the tiny components of Standex Electronics with the products of
Standex's Spincraft unit. Home of the world's largest aluminum quenching
furnace and the world's most powerful spin lathes, Spincraft transforms
multi-ton sheets of metal into fuel tank domes for the rockets that carry
communications satellites aloft, a capability that makes Spincraft a major
supplier of high-tech components to the global aerospace industry.
Standex is well positioned to capitalize on the boom in infrastructure
construction now underway in both developed and emerging economies. Our
Custom Hoists unit makes hydraulic telescopic cylinders for dump trucks and
trailers. And think for a moment about the last time a luggage cart brought
your bags up to your hotel room. Chances are it rolled on wheels made by
the Jarvis Caster Group, another Standex unit. With more than 6,000 items
in its product catalogs, Jarvis casters provide mobility to almost anything
that rolls.
Standex Industrial Companies:
Jarvis Caster Group
Standex Electronics
James Burn
Custom hoists
Spincraft
Roehlen Industries
ESSENTIAL PRODUCTS FOR THE WORLD OF CONSUMER PRODUCTS
[Photo: A woman and child at the kitchen table reading a bible with
Standex Direct products on the table.]
Imagine the many ways that Standex touches your home and family life...by
helping you explore, live and pass on your religious values to your
children, shop for the finest specialty food products without leaving your
home, even live more comfortably with quality heating and air conditioning
products. The things we do are an ideal fit with the lifestyle and
aspirations of today's families. Although you'll never see our name on a
religious book, gourmet food or air distribution product, we're there -
adding convenience, saving you time and enhancing the quality of your life.
[Photo: A Berean Christian Store]
Caption: Our Berean(R) Christian Stores provide the best in bookstores today.
[Photo: Construction workers using duct work from Snappy.]
Caption: High quality heating and air conditioning ductwork from Standex
Air Distribution being installed to bring comfort to your home.
Our understanding of our market trends makes us a leader in a range of
attractive consumer businesses.
Amidst our society's affluence, many would ask only for more time to spend
at home with family. We are increasingly concerned with how well we invest
our time and energies - how we live our lives and fulfill our most
important values. Virtually all of the companies in the Standex Consumer
Group offer exceptional benefits and advantages to families and individuals
facing these challenges.
For example, your family may welcome the offerings of catalogue companies
as a way to discover new products or purchase favorite products with new
convenience. Through the six catalogue units of Standex Direct, we offer
consumers the ability to place an order for Texas Ruby Red Grapefruit,
Vidalia(R)* onions from Georgia, and some of the Southwest's most appetizing
salsas, in minutes without leaving home. You can shop by phone or by
Internet, whenever you want, 24 hours a day.
Each product individually enjoys a unique and attractive niche in its
marketplace. We aggressively manage the individual mailing lists for the
six product lines to exploit cross-selling opportunities through our direct
mail and telemarketing activities. Furthermore, our integrated fulfillment
and logistics capabilities help us lower our costs and ensure that
perishable items are delivered to you fresh from the farm.
Ownership of the dream home has become a reality for an ever-widening
segment of our society. We also see a growing number of homeowners invest
in their current properties to transform them into ones that offer many
modern day comforts and amenities. If you've recently built or remodeled,
there's an excellent chance that a Standex company manufactured the
products for improving the air quality in your home. Our Standex Air
Distribution unit designs and manufactures products that help keep you warm
in the winter, cool in the summer and breathing fresh air by exchanging the
stale air that accumulates in today's better insulated residences.
Delivering fresh air while conserving energy helps mitigate the risks of
radon and other forms of air pollution in an effective and economical
manner. We operate nine manufacturing facilities across the US to ensure
superior service to national and regional HVAC distributors.
Among the oldest of all our businesses are our Standard Publishing and
Berean(R) Christian Stores units. Propelled by the reemergence of religion in
the US, both units are premier franchises in their respective markets, and
both are a steady and increasing source of cash flow and earnings.
Long the leading publisher of non-denominational religious materials,
Vacation Bible School programs and children's books, Standard Publishing
also publishes magazines with a weekly circulation exceeding 170,000.
Building on strength in traditional media, the unit has become a leader in
new products and packaging designed to appeal to an increasingly youthful,
computer-oriented religious audience. By combining the traditional with the
power of new media, we have developed a range of CD-ROM/book combinations
that are changing the landscape of religious publishing. Standard's
children's bible storybooks consistently appear on the industry's
bestseller list.
Enter a Berean(R) store and you might think you'd walked into one of the
superstores of another major national bookseller. Large and modern, the
stores average over 15,000 square feet - typically much larger than our
competitors and offering a much wider selection. Berean(R) stores also
reflect the latest trends in book and retail merchandising. For example, as
parents' concerns about recent events in public schools drive a greater
interest in home schooling, our stores are either adding or expanding a
home schooling section. Here, the concerned parent can find books,
educational aids and other supporting material for teaching children in the
home. This material focuses both on the ABCs and the Christian values that
our customers have embraced.
*A registered trademark of the Georgia Department of Agriculture.
Standex Consumer Companies:
Standard Publishing
Berean(R) Christian Stores
Standex Direct
Standex Air Distribution Products
MANAGEMENT'S DISCUSSION AND ANALYSIS
Statements contained in the following "Management's Discussion and
Analysis" that are not based on historical facts are "forward-looking
statements" within the meaning of the Private Securities Litigation Reform
Act of 1995. Forward-looking statements may be identified by the use of
forward-looking terminology such as "may," "will," "expect," "believe,"
"estimate," "anticipate," "continue," or similar terms or variations of
those terms or the negative of those terms. There are many factors that
affect the Company's business and the results of its operations and may
cause the actual results of operations in future periods to differ
materially from those currently expected or desired. These factors include
uncertainties in competitive pricing pressures, general domestic and
international business and economic conditions and market demand.
LIQUIDITY AND CAPITAL RESOURCES
During the fiscal year ended June 30, 1999, the Company invested $16.8
million in plant and equipment, purchased $7.5 million of the Company's
Common Stock, paid out $9.9 million in cash dividends to the Company's
shareholders and paid down debt by a net amount of $14.9 million. The
Company primarily funded these expenditures with its net operating cash
flows which aggregated $37.1 million.
In June of fiscal year 1998, the Company recorded a restructuring charge of
$12.8 million before taxes. This action was intended to close, dispose of,
or liquidate certain small underperforming and unprofitable operating
plants, product lines and businesses. The charge was recorded in the line
item "Restructuring (credit) charge" on the Statements of Consolidated
Income. This charge and the related reserve activity are discussed in the
Notes to the Consolidated Financial Statements. During fiscal 1999, as part
of this restructuring, the Company sold its Christmas Tree Stand product
line in the second quarter, its SXI Technologies division in January 1999
and its Williams Healthcare division in April 1999.
Net Cash Provided by Operating Activities was $37.1 million in 1999, an
increase of $4.9 million as compared to $32.2 million in 1998. This
increase was primarily due to $2.5 million expended relative to
restructuring activities in 1999 and other changes in working capital
accounts.
In October, the Company negotiated unsecured loan agreements with two
institutional lenders in the amount of $25 million. The loans have a fixed
interest rate of 6.8% and are repayable in lump-sum payments in October
2008. These unsecured notes are more fully described in the Notes to the
Consolidated Financial Statements.
As of June 30, 1999, the Company had the ability to borrow an additional
$103.2 million under existing bank credit agreements. The Company believes
that this resource, along with the Company's internally generated funds,
will be sufficient to meet anticipated cash funding needs for the
foreseeable future. The Company's existing bank credit agreements are
described in the Notes to the Consolidated Financial Statements.
The Company's policy of using its funds to make acquisitions when
conditions are favorable, invest in property, plant and equipment, pay
dividends and purchase its Common Stock is expected to continue.
FISCAL 1999 AS COMPARED TO FISCAL 1998
Net Sales for the year ended June 30, 1999 increased $25.2 million as
compared to the same period in the prior year. The majority of this
increase came from the added sales of ACME Manufacturing Company (ACME)
which was acquired in October 1997. These added sales were partially offset
by the absence of sales from the Doubleday Bros. product lines that were
disposed of in the prior year. Excluding the acquisition and dispositions,
management believes the majority of fluctuations in Net Sales reported by
each segment are a result of changes in unit volumes and consumer demand.
In addition, although changes in the average foreign exchange rates from
1998 to 1999 had a negative effect on Net Sales in 1999, the total effect
of such changes was not significant.
For the year ended June 30, 1999, the Food Service Segment reported a
slight decrease in Net Sales as compared to the prior year. This decline
was mainly due to the closure of a Nevada operation and sluggish demand in
the beverage dispensing industry. Net Sales in the Industrial Segment were
flat as compared to the same period in the prior year. While most divisions
in the Industrial Segment posted solid increases over last year, the poor
performance of our binding division and the absence of sales from the
disposition of Doubleday Bros. in the second half of fiscal 1998 offset
these gains. The Consumer Segment's Net Sales increased by $26.0 million
when compared to fiscal 1998 due to the acquisition of ACME, as noted
above, and improved demand. Except for a small decline in one unit, all
Consumer divisions experienced improved customer demand.
The Gross Profit Margin Percentage ("GPMP") remained essentially the same
(32.8% vs. 32.5%) for both the current and prior year. The Food Service
Segment reported a GPMP of 31.3%, as compared to the prior year percentage
of 29.7%; this was the result of the disposition of a Nevada operation and
reduced costs at several companies. The GPMP reported in the Industrial
Segment was 31.1%, a small decline from the previous year's percentage of
31.9%. Continued poor performance from the Company's binding division
offset solid positive performances at most of the other Industrial
divisions. The Consumer Segment's GPMP remained relatively unchanged at
35.4% in fiscal 1999 versus 35.6% last year.
Selling, General and Administrative Expenses ("SG&A") increased by $3.6
million when compared to the same period in the prior year. The majority of
this increase ($2.9 million) was from the additional SG&A expenses of ACME
and the remainder due primarily to the addition of two Berean Bookstores
during fiscal 1998. None of the remaining fluctuations in SG&A reported by
the Company's three segments were individually significant and corresponded
with the changes in Net Sales discussed above.
A restructuring credit of $1,016,000 was recorded in the second half of
fiscal 1999 and relates to a $12.8 million restructuring charge recorded in
the fourth quarter of fiscal 1998. This credit is more fully described in
the Notes to the Consolidated Financial Statements.
Interest Expense increased by 3.5%, or $376,000, when compared to fiscal
1998 as the Company incurred a full year of interest charges on the
increased borrowings related to the ACME acquisition as compared to nine
months in the prior year and moderately higher interest rates.
The above factors resulted in an $18.4 million increase in Income Before
Income Taxes for the year ended June 30, 1999. The effective tax rate in
fiscal 1999 did not vary from what was reported in fiscal 1998 (39.1%); as
a result, Net Income rose $11.2 million or 55.6% when compared to the same
period in the prior year.
FISCAL 1998 AS COMPARED TO FISCAL 1997
Net Sales increased by $51.6 million, or 9.1%, for the year ended June 30,
1998 as compared to the fiscal 1997. Substantially all of this increase
came from acquisitions, primarily ACME, and was partially offset by the
absence of sales from businesses disposed of in the prior year. Excluding
these acquisitions, management believes that the majority of fluctuations
in Net Sales reported by each segment are primarily due to changes in unit
volumes and market demand. In addition, although changes in the average
foreign exchange rates from June 30, 1997 to June 30, 1998 also had a
negative impact on Net Sales, the total effect was not significant.
The Consumer Segment reported the largest segment increase in Net Sales of
$46.9 million for the year ended June 30, 1998. Standex Air Distribution
Products Divisions accounted for the majority of this sales growth, as a
result of the ACME acquisition. Also, Berean Christian Stores' Net Sales
increased 10% due to new stores and improved consumer demand.
The Food Service Segment registered a $6.3 million, or 4.2%, rise in Net
Sales for the year ended June 30, 1998 as compared to the prior fiscal
year. Several divisions reported significant gains in Net Sales due to
increased customer demand and the market's acceptance of new products.
However, the full impact of the growth in Net Sales was reduced slightly
due to the absence of sales from the disposition of the Toastswell Company
made in the second half of fiscal 1997.
In the Industrial Segment Net Sales declined by $1.7 million as compared to
the prior year. While increased demand resulted in higher sales at several
divisions, these increases were offset by the absence of sales from the
disposition of Doubleday product lines made in 1997 and continued
sluggishness in some of our European companies.
The GPMP registered a slight decrease in 1998 to 32.5% from 33% in 1997.
The GPMP reported in the Consumer Segment fell to 35.6%, a decline from the
prior year's percentage of 39.0% primarily due to lower initial margins at
ACME. The GPMP reported in the Industrial Segment remained relatively
constant at 31.9% versus 32.1% in 1997. The Food Service Segment reported
an increase in GPMP from 27.9% in 1997 to 29.7% in 1998 as a result of
reduced costs at several divisions.
The SG&A increased by $9.5 million in fiscal 1998 when compared to the
prior year primarily due to the additional SG&A expenses from acquisitions.
Excluding acquisitions, the fluctuations reported in both the Consumer and
Food Service Segments were in direct proportion to their growth in Net
Sales. These increases were partially offset by a reduction in SG&A
reported in the Industrial Segment where dispositions in the second halves
of both fiscal 1998 and fiscal 1997 accounted for most of the decline in
these expenses in this Segment. None of the remaining fluctuations reported
by the Company's three segments were individually significant.
Interest Expense rose by $2.3 million due to increased borrowings to
finance acquisitions and due to higher interest rates.
A restructuring charge of $12.8 million was recorded in the fourth quarter
of fiscal 1998 in connection with the implementation of a restructuring
plan. This plan involves the closing, disposal and liquidation of certain
relatively small under-performing and unprofitable operating plants,
product lines and businesses. This charge is more fully described in the
Notes to the Consolidated Financial Statements.
The above factors resulted in a decline in Income Before Income Taxes of
$10.5 million, or 24.0%. The effective tax rate increased in 1998 to 39.1%
versus 38.1% in 1997 due to several factors, the most significant being the
absence in the fiscal 1998 of certain foreign tax credits. None of the
remaining factors were individually significant.
Due to the above factors, Net Income declined $6.8 million, or 25.1%.
OTHER MATTERS
Inflation - Inflation has not been a significant factor in fiscal 1999,
1998 and 1997 mainly due to fairly stable labor and material costs.
Environmental Matters - The Company is party to various claims and legal
proceedings, generally incidental to its business and has recorded an
appropriate provision for the resolution of such matters. As explained more
fully in the Notes to the Consolidated Financial Statements, the Company
does not expect the ultimate disposition of these matters to have a
material adverse effect on its financial statements.
Year 2000 Computer Issues - Under a program started in November 1997, the
Company conducted a review of its computer systems and identified the
programs and applications that were affected by the widely discussed
software problems associated with the Year 2000. As of June 30,1999, the
Company's critical systems have either been appropriately modified and
tested or have been replaced with software that is Year 2000 compliant. The
total cost of modifying all programs, which has been charged to expense
(primarily in fiscal year 1998), was approximately $600,000.
The Company has also communicated with key suppliers, financial
institutions and others with which it and its various operating units do
business, to assure that such third parties are also timely addressing and
rectifying their "Year 2000" issues. However, the Company believes it has
alternate vendors who could provide for the Company's needs if current
vendors are negatively impacted.
NEW ACCOUNTING PRONOUNCEMENTS
As discussed in the Notes to the Consolidated Financial Statements in
fiscal 1999, the Company adopted the provisions of Statement of Financial
Accounting Standards ("SFAS") Nos. 130, 131 and 132, as well as Statement
of Position No. 98-1.
In June 1998, Financial Accounting Standards Board released SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities". SFAS No.
133 establishes new standards of accounting and reporting for derivative
instruments and hedging activities and will be effective for the Company in
fiscal 2001. Management is currently evaluating the effect of adopting SFAS
No. 133 on the Consolidated Financial Statements.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is subject to market risk associated with changes in foreign
currency exchange rates and interest rates. The Company mitigates certain
of its foreign currency exchange rate risk by entering into forward foreign
currency contracts. These contracts are primarily used as a hedge against
anticipated foreign cash flows, such as dividend and loan payments, and are
not used for trading or speculative purposes. The fair value of the forward
foreign currency exchange contracts is sensitive to changes in foreign
currency exchange rates, as an adverse change in foreign currency exchange
rates from market rates would decrease the fair value of the contracts.
However, any such losses or gains would generally be offset by
corresponding gains and losses respectively, on the related hedged asset or
liability. Due to the absence of forward foreign currency contracts at June
30, 1999, the Company did not have any fair value exposure.
The Company's interest rate exposure is limited primarily to interest rate
changes on its variable rate revolving credit agreement (the "Credit
Agreement"). As of June 30, 1999, a hypothetical 10% immediate increase in
interest rates would increase the Company's annual interest expense by
$387,000. In June 1999, the Company entered into interest rate swap
agreements to fix the interest rate on its short-term borrowings. At June
30, 1999, the fair value of the Company's interest rate swap agreements
would not be materially affected by a 10% adverse change in interest rates.
Approximately $75.0 million of the Company's long-term debt at June 30,
1999 is at fixed interest rates. Accordingly, there would be no immediate
impact on the Company's interest expense associated with its long-term debt
due to fluctuations in market interest rates. However, based on a
hypothetical 10% immediate decrease in market interest rates, the fair
value of the Company's long-term debt, would be increased by approximately
$3.9 million as of June 30, 1999. Such fair value changes may affect the
Company's determination as to whether to retain, replace or retire its long-
term debt.
<TABLE>
FIVE-YEAR FINANCIAL REVIEW
<CAPTION>
Standex International Corporation and Subsidiaries
(In thousands, except per share data) 1999 1998 1997 1996 1995
Year Ended June 30
Summary of Operations
<S> <C> <C> <C> <C> <C>
Net sales $641,400 $616,180 $564,623 $562,679 $569,293
Gross profit 210,126 200,548 186,131 185,267 192,540
Interest expense 11,155 10,779 8,497 9,048 8,367
Income before income taxes 51,491 33,064 43,516 48,124 57,803
Provision for income taxes 20,130 12,915 16,597 17,410 19,483
Net income 31,361 20,149 26,919 30,714 38,320
Per Share Data
Net sales (diluted) 49.20 46.61 41.85 40.40 39.15
Earnings:
Basic 2.42 1.54 2.02 2.24 2.68
Diluted 2.41 1.52 2.00 2.21 2.64
Dividends paid 0.76 0.76 0.75 0.71 0.63
Book value 12.59 11.19 10.75 10.01 9.45
Average shares outstanding:
Basic 12,972 13,072 13,337 13,736 14,281
Diluted 13,037 13,219 13,491 13,927 14,540
June 30 Financial Condition
Working capital 146,514 148,943 136,946 138,860 143,135
Current ratio 2.79 2.73 2.95 3.03 2.85
Property, plant and equipment - net 104,783 102,973 85,598 86,616 84,528
Total assets 410,396 411,242 341,038 335,333 342,702
Long-term debt 148,111 163,448 112,347 113,822 111,845
Stockholders' equity 162,301 146,197 141,185 134,691 132,352
</TABLE>
<TABLE>
Sales and Earnings By Quarter
<CAPTION>
Year Ended June 30 (Unaudited)
(In thousands, except per share data) 1999 1998
First Second Third Fourth First Second Third Fourth
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $157,377 $171,171 $152,247 $160,605 $141,061 $168,090 $148,549 $158,480
Gross profit 49,917 58,611 50,655 50,943 45,865 56,781 47,987 49,915
Net income (loss) 7,957 9,404 6,631 7,369 7,659 8,322 4,987 (819)
Earnings (loss)
per share:
Basic 0.61 0.72 0.52 0.57 0.58 0.64 0.38 (0.06)
Diluted 0.61 0.72 0.51 0.57 0.58 0.63 0.38 (0.07)
</TABLE>
<TABLE>
Common Stock Prices and Dividends Paid
<CAPTION>
Common Stock Price Range
Year Ended June 30 1999 1998
Dividends Per Share
High Low High Low 1999 1998
<S> <C> <C> <C> <C> <C> <C>
First quarter $29-9/16 $21-3/16 $32-1/4 $28-1/16 $0.19 $0.19
Second quarter 28-1/8 19-3/8 36-13/16 32 0.19 0.19
Third quarter 27-1/4 21-5/8 35-1/4 27-1/4 0.19 0.19
Fourth quarter 28-9/16 21-3/16 31-1/2 29-1/2 0.19 0.19
</TABLE>
<TABLE>
Distribution of the 1999 Sales Dollar
<S> <C> <C>
Materials and services $365,324,000 57%
Wages, salaries and employee benefits 199,660,000 31
Depreciation and amortization 13,770,000 2
Interest on borrowed money 11,155,000 2
Income taxes 20,130,000 3
Reinvested in the Company 21,483,000 3
Dividends to stockholders 9,878,000 2
Total $641,400,000 100%
</TABLE>
<TABLE>
STATEMENTS OF CONSOLIDATED INCOME
<CAPTION>
Standex International Corporation and Subsidiaries
Year Ended June 30 1999 1998 1997
<S> <C> <C> <C>
Net Sales $641,399,507 $616,180,090 $564,623,458
Cost of Products Sold 431,273,630 415,632,167 378,492,546
Gross profit 210,125,877 200,547,923 186,130,912
Selling, General and Administrative Expenses 149,197,179 145,590,536
136,059,197
Restructuring (credit) charge (1,015,762) 12,758,000 -
Income from Operations 61,944,460 42,199,387 50,071,715
Other Income (Expense):
Interest expense (11,154,869) (10,779,015) (8,497,425)
Interest and other income 701,672 1,993,533 906,371
Net (loss) gain on disposition of
businesses and product lines - (350,000) 1,034,927
Total other expense, net (10,453,197) (9,135,482) (6,556,127)
Income Before Income Taxes 51,491,263 33,063,905 43,515,588
Provision for Income Taxes 20,130,000 12,915,000 16,597,000
Net Income $ 31,361,263 $ 20,148,905 $ 26,918,588
Earnings Per Share:
Basic $ 2.42 $ 1.54 $ 2.02
Diluted $ 2.41 $ 1.52 $ 2.00
See notes to consolidated financial statements.
</TABLE>
<TABLE>
STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY
<CAPTION>
Accumulated
Additional Other Total
Paid-in Retained Comprehensive Treasury Stock Stockholders'
Year Ended June 30 Common Stock Capital Earnings Income Shares Amount Equity
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, July 1, 1996 $41,976,417 $3,377,698 $296,991,372 $(571,833) 14,534,837 $(207,082,935) $134,690,719
Stock issued for employee stock
options and stock purchase plan,
net of related income tax benefit 959,999 (113,900) 1,641,943 2,601,942
Stock issued in conjunction with
acquisition 1,325,527 (79,616) 1,142,569 2,468,096
Treasury stock acquired 513,251 (14,981,914) (14,981,914)
Comprehensive income:
Net income 26,918,588 26,918,588
Foreign currency translation
adjustment (510,568) (510,568)
Total comprehensive income 26,408,020
Dividends paid (75 cents per share) (10,001,657) (10,001,657)
Balance, June 30, 1997 41,976,417 5,663,224 313,908,303 (1,082,401) 14,854,572 (219,280,337) 141,185,206
Stock issued for employee stock
options and stock purchase plan,
net of related income tax benefit 1,329,545 (150,813) 2,251,057 3,580,602
Stock issued in conjunction with
acquisition 1,523,575 (100,418) 1,509,691 3,033,266
Treasury stock acquired 314,604 (10,177,761) (10,177,761)
Comprehensive income:
Net income 20,148,905 20,148,905
Foreign currency translation
adjustment (1,646,188) (1,646,188)
Total comprehensive income 18,502,717
Dividends paid (76 cents per share) (9,926,801) (9,926,801)
Balance, June 30, 1998 41,976,417 8,516,344 324,130,407 (2,728,589) 14,917,945 (225,697,350) 146,197,229
Stock issued for employee stock
options and stock purchase plan,
net of related income tax benefit 641,320 (143,303) 2,181,706 2,823,026
Treasury stock acquired 314,074 (7,453,147) (7,453,147)
Comprehensive income:
Net income 31,361,263 31,361,263
Foreign currency translation
adjustment (749,567) (749,567)
Total comprehensive income 30,611,696
Dividends paid (76 cents per share) (9,878,260) (9,878,260)
Balance, June 30, 1999 $41,976,417 $9,157,664 $345,613,410 $(3,478,156) 15,088,716 $(230,968,791) $162,300,544
See notes to consolidated financial statements.
</TABLE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
<CAPTION>
Standex International Corporation and Subsidiaries
June 30 1999 1998
Assets
Current Assets
<S> <C> <C>
Cash and cash equivalents $ 5,909,283 $ 9,256,316
Receivables - less allowance of $3,590,000
in 1999 and $3,551,000 in 19989 7,871,014 98,530,861
Inventories 119,955,298 122,949,519
Prepaid expenses 4,773,403 4,493,110
Total current assets 228,508,998 235,229,806
Property, Plant and Equipment
Land and buildings 76,098,470 74,432,382
Machinery and equipment 172,814,389 177,916,799
Total 248,912,859 252,349,181
Less accumulated depreciation 144,129,886 149,375,776
Property, plant and equipment - net 104,782,973 102,973,405
Other Assets
Prepaid pension cost 32,623,677 29,254,916
Goodwill - net 32,110,262 33,148,961
Other 12,370,530 10,634,968
Total other assets 77,104,469 73,038,845
Total $410,396,440 $411,242,056
Liabilities and Stockholders' Equity
Current Liabilities
Current portion of debt $ 3,962,765 $ 2,995,231
Accounts payable 35,975,395 37,747,901
Accrued payroll and employee benefits 18,221,481 17,667,979
Income taxes 6,202,160 5,754,464
Other 17,633,469 22,121,209
Total current liabilities 81,995,270 86,286,784
Long-Term Debt - less current portion 148,111,366 163,447,647
Deferred Income Taxes 14,736,000 11,937,000
Other Non-current Liabilities 3,253,260 3,373,396
Commitments and Contingencies
Stockholders' Equity
Common stock - authorized, 60,000,000 shares
in 1999 and 30,000,000 shares in
1998; par value, $1.50 per share;
issued 27,984,278 shares in 1999 and 1998 41,976,417 41,976,417
Additional paid-in capital 9,157,664 8,516,344
Retained earnings 345,613,410 324,130,407
Accumulated other comprehensive income (3,478,156) (2,728,589)
Less cost of treasury shares: 15,088,716 shares
in 1999 and 14,917,945 in 1998 (230,968,791) (225,697,350)
Total stockholders' equity 162,300,544 146,197,229
Total $410,396,440 $411,242,056
See notes to consolidated financial statements.
</TABLE>
<TABLE>
STATEMENTS OF CONSOLIDATED CASH FLOWS
<CAPTION>
Standex International Corporation and Subsidiaries
Year Ended June 30 1999 1998 1997
Cash Flows from Operating Activities
<S> <C> <C> <C>
Net income $31,361,263 $20,148,905 $26,918,588
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 13,769,691 13,851,599 12,777,339
Profit improvement incentive plan 286,201 780,058 (258,640)
Deferred income taxes 2,799,000 (1,882,000) 1,236,000
Net pension credit (1,793,000) (2,353,000) (1,573,000)
Loss (gain) on sale of investments,
real estate and equipment 205,594 (950,603) 1,758
Loss (gain) on disposition of businesses - 350,000 (1,034,927)
Increase (decrease) in cash from changes in
assets and liabilities, net of effect of
acquisitions and dispositions:
Receivables - net (1,337,293) (2,088,038) 1,296,364
Inventories (219,258) (5,089,382) (384,315)
Prepaid expenses and other assets (1,005,113) 65,390 (4,035,386)
Accounts payable (1,508,909) 2,807,411 2,065,519
Accrued payroll, employee benefits
and other liabilities (5,767,318) 5,389,358 (2,969,247)
Income taxes 332,490 1,215,228 2,889,399
Net cash provided by operating activities 37,123,348 32,244,926 36,929,452
Cash Flows from Investing Activities
Expenditures for property and equipment (16,823,678) (19,849,069) (12,225,849)
Expenditures for acquisitions,
net of cash acquired (796,305) (49,277,002) (2,124,841)
Proceeds from sale of investments,
real estate and equipment 1,517,468 2,483,933 597,769
Proceeds from disposition of businesses 5,091,705 2,583,143 5,190,655
Net cash used for investing activities (11,010,810) (64,058,995) (8,562,266)
Cash Flows from Financing Activities
Proceeds from additional borrowings 25,000,000 52,213,051 160,000
Payments of debt (39,868,747) (418,585) (4,892,436)
Stock issued under employee stock option and
stock purchase plans 2,823,026 3,580,602 2,601,942
Cash dividends paid (9,878,260) (9,926,801) (10,001,657)
Purchase of treasury stock (7,453,147) (10,177,761) (14,981,914)
Net cash (used for) provided by financing
activities (29,377,128) 35,270,506 (27,114,065)
Effect of Exchange Rate Changes on Cash and
Cash Equivalents (82,443) (348,909) (251,276)
Net Changes in Cash and Cash Equivalents (3,347,033) 3,107,528 1,001,845
Cash and Cash Equivalents at Beginning of Year 9,256,316 6,148,788
5,146,943
Cash and Cash Equivalents at End of Year $ 5,909,283 $ 9,256,316 $ 6,148,788
Supplemental Disclosure of Cash Flow Information
Issued for acquisitions:
Stock $ - $ 3,033,266 $ 2,468,096
Notes payable 500,000 271,704 -
Cash paid during the year for:
Interest 11,063,038 10,495,183 8,465,024
Income taxes 16,883,304 13,523,666 14,046,417
See notes to consolidated financial statements.
</TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Summary of Accounting Policies
Basis of Consolidation
The accompanying consolidated financial statements include the accounts of
Standex International Corporation and its subsidiaries.
Cash and Cash Equivalents
Cash and cash equivalents include highly liquid investments purchased with
a remaining maturity of three months or less. Such investments are carried
at cost, which approximates fair value, due to the short period of time
until maturity.
Inventories
Inventories are stated at the lower of first-in, first-out cost or market.
Property, Plant and Equipment
Property, plant and equipment are depreciated over their estimated useful
lives using primarily the straight-line method.
Income Taxes
Deferred assets and liabilities are recorded for the expected future tax
consequences of events that have been included in the financial statements
or tax returns. Deferred tax assets and liabilities are determined based on
the differences between the financial statements and the tax basis of
assets and liabilities using enacted tax rates.
Goodwill
The excess of purchase price of acquired companies over the fair value of
net identifiable assets at the date of acquisition has been recorded as
goodwill and is being amortized on a straight-line basis over a forty-year
period. Accumulated amortization aggregated $10,016,000 and $9,428,000 at
June 30, 1999 and 1998, respectively. The Company annually evaluates the
net balance of goodwill based on the projected operating income of the
respective businesses on an undiscounted cash flow basis.
Foreign Currency Translation and Transactions
Assets and liabilities of non-U.S. operations are translated into U.S.
dollars at year-end exchange rates. Revenues and expenses are translated
using average exchange rates. The resulting translation adjustment is
reported as a component of comprehensive income in the Statements of
Consolidated Stockholders' Equity. Gains and losses from currency
transactions are included in results of operations.
Forward Foreign Currency Exchange Contracts
Forward foreign currency contracts are used by the Company to protect
certain anticipated foreign cash flows, such as dividends and loan payments
from subsidiaries, against movements in the related exchange rates. The
Company sells the related foreign currency at a fixed price for settlement
on or before the date of the related receipt, and thus protects the dollar
value of the receipt. The Company enters into such contracts for hedging
purposes only. Accordingly, for financial statement purposes, gains or
losses of forward contracts entered into to hedge commitments are deferred
until the position is closed out. At June 30, 1999, the Company had no
significant forward foreign currency contracts.
Interest Rate Swap Agreements
The net differential to be paid or received under the Company's interest
rate swap agreements is accrued as interest rates change and is recognized
over the life of the agreements.
Concentration of Credit Risk
The Company is subject to credit risk through trade receivables and short-
term cash investments. Credit risk with respect to trade receivables is
minimized because of the diversification of the Company's operations, as
well as its large customer base and its geographical dispersion. Short-term
cash investments are placed with high credit-quality financial institutions
or in short-duration, high quality debt securities. The Company limits the
amount of credit exposure in any one institution or type of investment
instrument. The Company is also subject to credit risk exposure relating to
its interest rate swap agreements as described in the debt footnote below.
Accounting Estimates
The preparation of the Company's Consolidated Financial Statements in
conformity with generally accepted accounting principles necessarily
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.
Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, accounts receivable,
accounts payable and accrued expenses approximate fair value because of
their short-term nature. The carrying amount of the Company's debt
instruments approximates fair value.
<TABLE>
Earnings Per Share
The following table sets forth the number of shares (in thousands) used in
the computation of basic and diluted earnings per share:
1999 1998 1997
<S> <C> <C> <C>
Basic - Average Shares Outstanding 12,972 13,072 13,337
Effect of Dilutive Securities - Stock Options 65 147 154
Diluted - Average Shares Outstanding 13,037 13,219 13,491
Both basic and dilutive income are the same for computing earnings per
share.
</TABLE>
Reclassifications
Certain prior year amounts have been reclassified to conform to the 1999
financial statement presentation.
New Accounting Pronouncements
In Fiscal 1999, the Company adopted the provisions of Statements of
Financial Accounting Standards ("SFAS") Nos. 130, 131, 132 and Statement of
Position ("SOP") No. 98-1 relating to comprehensive income, segment
reporting, pension disclosures and accounting for internal use software
costs, respectively. The effect of adopting SFAS No. 130 resulted in the
reporting of total comprehensive income and its components (net income and
foreign currency translation adjustments) within the Statements of
Consolidated Stockholders' Equity for all periods presented. The adoption
of SFAS Nos. 131 and 132 resulted in modified and/or additional disclosures
in the Company's Notes to the Consolidated Financial Statements. The
adoption of SOP No. 98-1 had no effect upon adoption.
In June 1998, the Financial Accounting Standards Board released SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities". SFAS
No.133, as amended, establishes new standards of accounting and reporting
for derivative instruments and hedging activities and will be effective for
the Company in fiscal 2001. Management is currently evaluating the effect
of adopting SFAS No. 133 on the consolidated financial statements.
<TABLE>
Inventories
Inventories are comprised of (in thousands):
June 30 1999 1998
<S> <C> <C>
Raw materials $ 40,180 $ 42,452
Work in process 25,896 26,327
Finished goods 53,879 54,171
Total $119,955 $122,950
</TABLE>
<TABLE>
Debt
Debt is comprised of (in thousands):
June 30 1999 1998
<S> <C> <C>
Bank credit agreements $ 71,847 $111,381
Institutional investors 6.8% to 7.13%
(due 2000-2008) 75,000 50,000
Other 3.0% to 6.875% (due 2000-2018) 5,227 5,062
Total 152,074 166,443
Less current portion 3,963 2,995
Total long-term debt $148,111 $163,448
</TABLE>
Bank Credit Agreements
The Company has a revolving credit agreement with eight banks. The
agreement provides for a maximum credit line of $175,000,000 until May
2003, at which time outstanding loans will be due and payable. As of June
30, 1999, the effective rate of interest under the agreement was 6.0%. The
Company is required to pay a commitment fee of 0.2% on the average daily
unused amount. As of June 30, 1999 and 1998, the Company had no outstanding
borrowings under the agreement.
In addition, the Company has the option to borrow up to $175,000,000 on an
unsecured short-term basis at rates, which are based on LIBOR, varied from
5.25% to 5.83% during 1999. Available borrowings under the revolving credit
agreement described above are reduced by unsecured short-term borrowings.
At June 30, 1999, the Company had the ability to borrow an additional
$103,153,000 under the aforementioned bank credit agreements.
Institutional Investor Agreements
In October 1998, the Company entered into a $25,000,000 note purchase
agreement with two institutional investors. The notes bear interest at 6.8%
annually and are due and payable in October 2008. Additionally, the Company
has a $50,000,000 note purchase agreement which bears interest at 7.13%
annually and is payable in annual installments of $7,143,000 beginning in
September 1999.
Interest Rate Swap Agreements
During 1999, the Company entered into interest rate swap agreements to fix
interest rates on a portion of its variable rate debt and to reduce certain
exposures to interest rate fluctuations. At June 30, 1999, the Company had
interest rate swaps with an aggregate notional amount of $25.0 million.
Under these agreements, the Company has fixed the effective interest rate
on $25,000,000 at 6.8% for a three-year period. The amounts exchanged are
based on the notional amounts and other terms of the swaps.
Neither the Company nor the counterparties to the agreement, which are
prominent financial institutions, are required to collateralize their
respective obligations under these swaps. The Company is exposed to loss if
one or more of the counterparties defaults. At June 30, 1999, Standex had
no exposure to credit loss on interest rate swaps. The Company does not
believe that any likely change in interest rates would have a material
adverse effect on its financial position, results of operations or
cashflows.
Open interest rate contracts are reviewed regularly by the Company to
ensure that they remain effective as hedges of interest rate exposure.
Management believes that the fair value of the rate swap agreements
approximate the recorded amounts.
Loan Covenants and Repayment Schedule
The Company's loan agreements contain limited provisions relating to the
maintenance of certain financial ratios and restrictions on additional
borrowings and investments.
The principal payments due under the institutional investor agreement are
expected to be funded through additional unsecured short-term borrowings.
Such borrowings, and the unsecured short-term borrowings outstanding at
June 30, 1999, may be refinanced by the Company on a long-term basis under
the revolving credit agreement. As such, the short-term outstanding
borrowings, which are not expected to be paid within a year, including
those expected to fund the institutional investor principal payments, are
classified as long-term debt, and the debt repayment schedule as presented
below, is based on the terms of the revolving credit agreement.
Debt is due as follows: 2000, $3,963,000; 2001, $324,000; 2002, $336,000;
2003, $97,163,000; 2004, $7,503,000; and thereafter, $42,785,000.
<TABLE>
Accrued Payroll and Employee Benefits
This current liability caption consists of (in thousands):
June 30 1999 1998
<S> <C> <C>
Payroll $14,989 $14,014
Benefits 2,548 2,756
Taxes 684 898
Total $18,221 $17,668
</TABLE>
Commitments
The Company leases certain property and equipment under agreements with
initial terms ranging from one to twenty years. Rental expense for the
years ended June 30, 1999, 1998 and 1997 was approximately $7,900,000;
$7,500,000; and $6,800,000, respectively. At June 30, 1999, the minimum
annual rental commitments under noncancelable operating leases, principally
real estate, were approximately: 2000, $4,600,000; 2001, $3,300,000; 2002,
$2,400,000; 2003, $2,000,000; 2004, $1,700,000; and thereafter, $5,800,000.
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 SFAS No. 5, "Accounting for Contingencies." Management believes that
such provision is sufficient to cover any future payments, including legal
costs, under such proceedings.
<TABLE>
Income Taxes
The provision for income taxes consists of (in thousands):
Year Ended June 30 1999 1998 1997
Current:
<S> <C> <C> <C>
Federal $10,583 $ 8,014 $ 8,997
State 2,838 1,771 2,122
Non-U.S. 3,910 5,012 4,242
Total 17,331 14,797 15,361
Deferred 2,799 (1,882) 1,236
Total $20,130 $12,915 $16,597
</TABLE>
<TABLE>
The components of income before income taxes are as follows (in thousands):
Year Ended June 30 1999 1998 1997
<S><C> <C> <C> <C>
U.S. Operations $43,954 $23,872 $32,232
Non-U.S. Operations 7,537 9,192 11,284
Total $51,491 $33,064 $43,516
</TABLE>
<TABLE>
A reconciliation of the U.S. Federal income tax rate to the effective rate
is as follows:
Year Ended June 30 1999 1998 1997
<S> <C> <C> <C>
Statutory tax rate 35.0% 35.0% 35.0%
Non-U.S. (.2) (2.5) (.8)
State taxes 3.9 3.0 3.4
Other items, net .4 3.6 .5
Effective income tax rate 39.1% 39.1% 38.1%
</TABLE>
<TABLE>
Significant components of the Company's net deferred tax liability are as
follows (in thousands):
June 30 1999 1998
Deferred tax liabilities:
<S> <C> <C>
Accelerated depreciation $ 7,950 $ 9,525
Net pension credit 11,570 10,079
Other items 1,056 508
Deferred tax assets:
Expense accruals (5,531) (4,931)
Restructuring charge - (2,846)
Compensation costs (309) (398)
Net deferred tax liability $14,736 $11,937
</TABLE>
<TABLE>
Significant components of deferred income taxes impact deferred income tax
expense as follows (in thousands):
Year Ended June 30 1999 1998 1997
<S> <C> <C> <C>
Accelerated depreciation $(1,575) $(1,448) $ (615)
Net pension credit 1,491 1,277 1,160
Compensation costs 89 (15) 887
Restructuring charge 2,846 (2,846) -
Expense accruals (600) 821 (419)
Other items 548 329 223
Total $ 2,799 $(1,882) $1,236
</TABLE>
At June 30, 1999, accumulated retained earnings of non-U.S. subsidiaries
totaled $26,898,000. No provision for U.S. income and foreign withholding
taxes has been made because it is expected that such earnings will be
reinvested indefinitely or the distribution of any remaining amount would
be principally offset by foreign tax credits. The determination of the
withholding taxes that would be payable upon remittance of these earnings
and the amount of the unrecognized deferred tax liability on these
unremitted earnings is not practicable.
Industry Segment Information
The Company is composed of three product groups. These groups are described
on pages 4-15.
Effective July 1, 1998, the Company adopted SFAS No. 131, "Disclosures
about Segments of an Enterprise and Related Information". SFAS No. 131
requires disclosure of segmented information about the Company's operations
based upon how management oversees and evaluates the results of such
operations. Accordingly, the Company has determined that it has three
distinct reportable segments: Food Service, Industrial and Consumer. The
Company considers these three segments reportable as they are managed
separately and the operating results of each segment are regularly reviewed
and evaluated separately by the Company's senior management.
Net sales include only transactions with unaffiliated customers and include
no significant intersegment or export sales. Operating income by segment
and geographic area excludes general corporate and interest expenses.
Assets of the Corporate segment consist primarily of cash, administrative
buildings, equipment, prepaid pension cost, goodwill and other non-current
assets.
<TABLE>
NET SALES DEPRECIATION AND AMORTIZATION
Year Ended June 30 (In thousands) 1999 1998 1997 1999 1998 1997
<S> <C> <C> <C> <C> <C> <C>
Food Service $151,782 $155,706 $149,371 $ 2,134 $ 2,621 $ 2,736
Industrial 254,144 251,015 252,742 7,161 7,062 6,959
Consumer 235,474 209,459 162,510 4,223 3,920 2,842
Corporate - - - 252 249 240
Total $641,400 $616,180 $564,623 $13,770 $13,852 $12,777
</TABLE>
<TABLE>
ASSETS EMPLOYED CAPITAL EXPENDITURES
As of and Year Ended June 30
(In thousands) 1999 1998 1997 1999 1998 1997
<S> <C> <C> <C> <C> <C> <C>
Food Service $ 77,331 $ 79,027 $ 77,906 $ 1,416 $ 2,598 $ 2,182
Industrial 169,378 161,971 154,483 10,911 9,419 7,306
Consumer 130,762 140,631 82,056 4,037 7,662 2,525
Corporate 32,925 29,613 26,593 460 170 213
Total $410,396 $411,242 $341,038 $16,824 $19,849 $12,226
</TABLE>
<TABLE>
INCOME FROM OPERATIONS
Year Ended June 30 (In thousands) 1999 1998 1997
<S> <C> <C> <C>
Food Service $17,498 $ 14,962 $11,679
Industrial 27,155 28,185 25,276
Consumer 24,853 21,090 17,915
Corporate (8,578) (9,280) (4,798)
Restructuring credit (charge) 1,016 (12,758) -
Total $61,944 $ 42,199 $50,072
</TABLE>
<TABLE>
Product Net Sales Information
Year Ended June 30 (In thousands) 1999 1998 1997
Food preparation, storage and
<S> <C> <C> <C>
presentation products $234,609 $234,505 $220,834
Printing and publishing products 133,774 134,752 131,695
Home and road construction products 123,796 98,749 55,735
Aerospace, automotive and
electronic products 118,842 111,432 103,397
Miscellaneous 30,379 36,742 52,962
Total $641,400 $616,180 $564,623
</TABLE>
<TABLE>
Financial Data related to U.S. and non-U.S. operations
U.S. NON-U.S.
As of and Year Ended June 30
(In thousands) 1999 1998 1997 1999 1998 1997
<S> <C> <C> <C> <C> <C> <C>
Net sales $542,463 $517,586 $463,654 $98,937 $98,594 $100,969
Income from operations 59,945 52,604 43,984 9,561 11,633 10,886
Assets employed 301,663 310,101 242,189 75,808 71,528 72,256
The Corporate segment and the restructuring credit and charge are excluded
from the above table.
</TABLE>
Employee Benefit Plans
<TABLE>
Retirement Plans
<CAPTION>
The Company has defined benefit pension plans covering the majority of its
employees, including certain employees in foreign countries. Plan assets
are invested primarily in common stocks and fixed income securities. The
Company makes contributions generally equal to the minimum amounts required
by federal laws and regulations. Foreign plans are funded in accordance
with the requirements of regulatory bodies governing each plan.
The components of net pension credit are as follows (in thousands):
Year Ended June 30 1999 1998 1997
<S> <C> <C> <C>
Service cost $ 5,049 $ 4,064 $ 3,696
Interest cost 9,616 9,055 8,459
Expected return on plan assets (15,283) (13,925) (12,106)
Amortization of prior service cost 247 159 141
Recognized actuarial loss 326 67 13
Amortization of transition asset (1,748) (1,773) (1,776)
Total (1,793) (2,353) (1,573)
Curtailment/settlement 87 (784) -
Net pension credit $(1,706) $(3,137) $(1,573)
</TABLE>
<TABLE>
The following tables sets forth the funded status and amounts recognized as
of June 30, 1999 and 1998 for the Company's U.S. and non-U.S. defined
benefit pension plans (in thousands):
Year Ended June 30 1999 1998
Change in benefit obligation:
<S> <C> <C>
Benefit obligation, beginning of year $134,912 $109,596
Service cost 5,049 4,309
Interest cost 9,616 9,629
Employee contributions 339 350
Amendments/settlements/curtailments 81 131
Actuarial loss 5,084 17,193
Foreign currency exchange rate changes 222 -
Benefits paid (7,133) (6,296)
Benefit obligation, end of year $148,170 $134,912
Change in plan assets:
Fair value of plan assets,
beginning of year $181,017 $145,918
Return on plan assets 4,693 39,808
Employer contributions 960 1,729
Employee contributions 339 350
Foreign currency exchange rate changes 144 -
Benefits paid (6,549) (5,874)
Settlements - (914)
Fair value of plan assets, end of year $180,604 $181,017
</TABLE>
<TABLE>
Year Ended June 30 (In thousands) 1999 1998
<S> <C> <C>
Funded status $ 32,434 $ 46,105
Unrecognized transition asset (4,902) (6,643)
Unrecognized net actuarial gain (802) (16,191)
Unrecognized prior service cost 2,641 2,894
Net amount recognized 29,371 26,165
Amounts recognized in the balance sheet consist of:
Prepaid benefit cost 32,624 29,255
Accrued benefit liability (3,253) (3,090)
Net amount recognized $ 29,371 $ 26,165
</TABLE>
<TABLE>
Year Ended June 30 1999 1998
Weighted average assumptions as of June 30
<S> <C> <C>
Discount rate 5.25-7.75% 5.25-7.75%
Expected return on assets 8.75-10.00% 9.75-10.00%
Rate of compensation increase 3.50-4.50% 4.00-4.50%
</TABLE>
The projected benefit obligation, accumulated benefit obligation and fair
value of plan assets for pension plans with accumulated benefit obligations
in excess of plan assets were $13,555,000, $12,412,000 and $5,802,000,
respectively, as of June 30, 1999 and $9,753,000, $8,521,000 and
$2,330,000, respectively, as of June 30, 1998.
Certain U.S. employees are covered by union-sponsored, collectively
bargained, multi-employer pension plans. Contributions and costs are
determined in accordance with the provisions of negotiated labor contracts
or terms of the plans. Pension expense for these plans was $1,986,000;
$1,726,000 and $1,305,000 in 1999, 1998 and 1997, respectively.
Employees' Stock Ownership Plan
The Company has an Employee Stock Ownership Plan covering certain salaried
employees. Amounts provided for this plan are approved by the Board of
Directors and aggregated $1,500,000, $1,200,000 and $1,000,000 for the
years ended June 30, 1999, 1998, and 1997, respectively.
Employee Savings Plan
Effective July 1, 1997, the Company established a 401(k) savings plan
covering substantially all of the Company's full-time domestic employees.
Under the provisions of the plan, employees may contribute a portion of
their compensation within certain limitations. The Company, at the
discretion of the Board of Directors, may make contributions on behalf of
its employees under this plan. Such contributions, if any, become fully
vested immediately. The Company contributions were approximately $871,000
and $466,000, in 1999 and 1998, respectively.
Profit Improvement Participation Share Plan
The Company has maintained a profit improvement incentive plan in which
certain officers and employees participate. The plan is being phased-out
and, consequently, no new units have been awarded since 1995. Units under
this plan were issued at the discretion of the Salary and Employee Benefits
Committee of the Board of Directors and were assigned a value equal to a
multiple of earnings per share payable in five years based upon the net
increase in earnings per share over the five-year period. Each fiscal year,
amounts are charged or credited to operations to reflect this liability.
Amounts charged (credited) to operations for the years ended June 30, 1999,
1998 and 1997 were $286,000, $780,000, and $(259,000) respectively.
Postretirement Benefits Other Than Pensions
The Company sponsors unfunded postretirement medical and life plans
covering certain full time employees who retire and have attained the
requisite age and years of service. Retired employees are required to
contribute toward the cost of coverage according to various rules
established by the Company.
The Company records postretirement benefits (such as healthcare and life
insurance benefits) during the years an employee provides services.
<TABLE>
The following table sets forth the funded status of the Company's
postretirement benefit plans and accrued postretirement benefit cost
reflected in the Company's balance sheet at year end (in thousands):
Year Ended June 30 1999 1998
Change in benefit obligation:
<S> <C> <C>
Benefit obligation, beginning of year $ 8,017 $ 6,871
Service cost 77 65
Interest cost 558 583
Actuarial loss (gain) (111) 1,067
Benefits paid (580) (558)
Curtailment - (11)
Benefit obligation, end of year 7,961 8,017
Fair value of plan assets - -
Funded status (7,961) (8,017)
Unrecognized net actuarial gain (1,327) (1,261)
Unrecognized transition obligation 6,244 6,690
Net amount recognized $(3,044) $(2,588)
</TABLE>
The assumed weighted average discount rate as of June 30, 1999 and 1998 was
7.25%. The annual assumed rate of increase in the per capita cost of
covered health care benefits is 4.0% for retirees under age 65 in both 1999
and 1998 and is assumed to remain at that level thereafter. A 1% increase
in the assumed health care cost trend rate would have increased the
accumulated benefit obligation by $789,000 and the net postretirement cost
by $56,000 in 1999.
<TABLE>
Net postretirement benefit costs are as follows (in thousands):
Year Ended June 30 1999 1998 1997
<S> <C> <C> <C>
Service cost $ 77 $ 65 $ 77
Interest cost 558 583 559
Amortization of transition
obligation 446 446 446
Net amortization and deferral (45) (129) (137)
Net postretirement benefit cost $1,036 $965 $945
</TABLE>
Stock Option and Stock Purchase Plans
Stock Option Plans
At June 30, 1999, 1,400,106 shares of common stock were reserved for
issuance under the Stock Option Plans. Of this amount, and as noted in the
table below, 638,555 shares are for options granted but unexercised.
Options may be granted at or below fair market value as of the date of
grant and must be exercised within the period prescribed by the Salary and
Employee Benefits Committee of the Board of Directors at the time of grant
but not later than ten years from the date of grant. Certain options
granted at fair market value can be exercised anytime after six months from
the date of grant, and other options can only be exercised in accordance
with vesting schedules prescribed by the Committee.
<TABLE>
A summary of options issued under the plans is as follows:
NumberWeighted Average
Year Ended June 30 of OptionsExercise Price
Outstanding, July 1, 1996
<C> <C> <C>
($7.50 to $31.00 per share) 517,745 $19.98
Granted ($28.00 per share) 5,000 28.00
Exercised ($8.00 to $20.75 per share) (28,685) 11.12
Canceled ($29.75 to $31.00 per share) (4,900) 27.43
Outstanding, June 30, 1997
($7.50 to $31.00 per share) 489,160 20.51
Granted ($27.1875 to $32.1875 per share) 201,150 28.55
Exercised ($7.50 to $31.00 per share) (79,554) 13.55
Canceled ($20.75 to $31.5625 per share) (18,970) 29.54
Outstanding, June 30, 1998
($7.50 to $32.1875 per share) 591,786 23.89
Granted ($0.00 to $25.875 per share) 100,600 23.63
Exercised ($7.50 to $22.50 per share) (36,800) 10.42
Canceled ($24.75 to $31.5625 per share) (17,031) 28.42
Outstanding, June 30, 1999
($0.00 to $32.1875 per share) 638,555 24.50
Exercisable, June 30, 1999
($9.00 to $32.1875 per share) 375,993 $23.41
</TABLE>
<TABLE>
The following table sets forth information regarding options outstanding at June
30, 1999:
Weighted
Weighted Average
Weighted Average Number Exercise Prices
Number Range of Average Remaining Life Currently for Currently
of Options Exercise Prices Exercise Price (Years) Exercisable Exercisable
<C> <C> <C> <C> <C> <C>
118,010 $0.00-22.50 $13.08 2 103,290 $13.48
135,696 23.00-25.875 23.59 4 90,096 23.25
106,400 25.875-28.00 26.40 7 23,933 27.26
176,834 28.375-28.50 28.39 9 66,307 28.39
101,615 29.75-32.1875 30.24 7 92,367 30.11
638,555 $0.00-32.1875 $24.50 6 375,993 $23.41
</TABLE>
<TABLE>
The Company uses the intrinsic value method to measure compensation expense
associated with grants of stock options to employees. Had the Company used
the fair value method to measure compensation for grants, net income and
earnings per share would have been as follows:
Year Ended June 30 (In thousands) 1999 1998 1997
<S> <C> <C> <C>
Income Before Income Tax Provision $50,009 $31,952 $42,815
Income Tax Provision 20,030 12,850 16,410
Net Income $29,979 $19,102 $26,405
Earnings Per Share
Basic $2.31 $1.46 $1.98
Diluted $2.30 $1.45 $1.96
</TABLE>
<TABLE>
Options granted during 1999, 1998 and 1997 had a weighted average grant
date fair value of $8.87, $8.42 and $7.44, respectively. The fair value of
options on the grant date, including the valuation of the option feature
implicit in the Company's stock purchase plan, was measured using the
Binomial option pricing model. Key assumptions used to apply this pricing
model are as follows:
Year Ended June 30 1999 1998 1997
<S> <C> <C> <C>
Range of risk-free 4.84% 5.74% 6.49%
interest rates to 5.53% to 6.4%
Range of expected life of
option grants (in years) 2 to 7 9 8
Expected volatility of 29.0% 17.1% 18.5%
underlying stock to 32.2.% to 23.0%
Range of expected quarterly $0.19 $0.19 $0.18
dividends per share to $0.19
</TABLE>
It should be noted that the option pricing model used was designed to value
readily tradable stock options with relatively short lives. The options
granted to employees are not tradable and have contractual lives of up to
ten years. However, management believes that the assumptions used and the
model to value the awards yields a reasonable estimate of the fair value of
the grants made under the circumstances.
Employee Stock Purchase Plan
The Company has an Employee Stock Purchase Plan which allows employees to
purchase shares of common stock of the Company at a 15% discount from
market value. Shares of stock reserved for the plan were 266,462 at June
30, 1999. Shares purchased under this plan aggregated 106,506; 71,261; and
85,222; in 1999, 1998 and 1997, respectively.
Rights Agreement
The Company has a stock Rights Agreement for which purchase rights have
been distributed as a dividend at the rate of one right for each share of
common stock held. The rights may be exercised only if an entity has
acquired beneficial ownership of 15% or more of the Company's common stock,
or announces an offer to acquire 15% or more of the Company.
Acquisitions And Dispositions
During fiscal 1998, the Company purchased two companies and a product line
for $52,800,000 for cash, stock and a note. In October 1997, the
acquisition of the net assets of ACME Manufacturing Company for cash and a
note was completed. ACME is a manufacturer of heating, ventilation and air
conditioning pipe, duct and fittings for the home building industry. During
the second quarter, the Company purchased a hardware product line, which
included inventory and machinery, of an unrelated company. In March, the
Company acquired ATR Coil Company, Inc. for cash and shares of the
Company's common stock. ATR Coil is a manufacturer of electronic coils and
windings for the industrial, automotive and consumer markets.
During fiscal year 1997, the Company purchased five companies for
$4,800,000 in cash and stock. Acquired were three mail order companies, a
Christian bookstore company, and a publishing company.
<TABLE>
These transactions were accounted for as purchases and, accordingly, the
consolidated financial statements include the results of operations of the
acquired businesses from their respective acquisition dates. The purchase
price of the acquisitions was allocated to the assets acquired based on
their respective fair market values and resulted in the recognition of
goodwill of approximately $18,500,00 and $1,500,000 in fiscal year 1998 and
1997, respectively. If the above acquisitions had occurred as of July 1,
1996, the unaudited pro forma consolidated results of operations would have
been as follows:
Year ended June 30
(in thousands except per share data) 1998 1997
<S> <C> <C>
Net sales $632,771 $624,313
Net income 20,702 26,685
Earnings per share:
Basic 1.58 2.00
Diluted 1.57 1.98
</TABLE>
As part of its restructuring, the Company sold three divisions in fiscal
1999. These transactions are more fully described in the Restructuring
footnote. In February 1998, the Company sold a division for net proceeds of
approximately $2,600,000 and a net loss of $350,000. During fiscal year
1997, the Company sold a division and two product lines for net proceeds of
approximately $5,200,000 and a net gain of approximately $1,035,000.
Restructuring
In June 1998, the Company recorded a restructuring charge of $12,758,000
before taxes. This action was intended to close, dispose of, or liquidate
certain small underperforming and unprofitable plants, product lines and
businesses. As part of this restructuring, the Company sold for
approximately $5,100,000 in cash and notes its Christmas Tree Stand product
line in December 1998, its SXI Technologies division in January 1999 and
its Williams Healthcare division in April 1999.
<TABLE>
The following schedule reflects the Company's restructuring activities (in
thousands):
Involuntary
Employee
Severance and Asset Shutdown
Benefit Costs Impairment Costs Total
<S> <C> <C> <C> <C>
Reserve beginning balance $1,665 $10,061 $1,032 $12,758
Expended:
Cash 1,696 - 840 2,536
Non cash (disposals
and write-offs) - 8,620 587 9,207
Total 1,696 8,620 1,427 11,743
Reduction and changes
in estimated costs $(31) $1,441 $(395) $1,015
</TABLE>
Both the restructuring charge of $12,758,000 and the credit of $1,015,762
noted above are shown on the line item "Restructuring (credit) charge" in
the Statements of Consolidated Income.
Quarterly Results of Operations (Unaudited)
The unaudited quarterly results of operations for the years ended June 30,
1999 and 1998 are set forth on page 20.
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of Standex International
Corporation:
We have audited the accompanying consolidated balance sheets of Standex
International Corporation and subsidiaries as of June 30, 1999 and 1998,
and the related statements of consolidated income, stockholders' equity,
and cash flows for each of the years in the three year period ended June
30, 1999. These financial statements are the responsibility of the
Corporation's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Standex International
Corporation and subsidiaries as of June 30, 1999 and 1998, and the results
of their operations and their cash flows for each of the years in the three
year period ended June 30, 1999 in conformity with generally accepted
accounting principles.
/s/Deloitte & Touche LLP Deloitte & Touche
Deloitte & Touche LLP [logo]
Boston, Massachusetts
August 17, 1999
CORPORATE HEADQUARTERS
Standex International Corporation
6 Manor Parkway
Salem, NH 03079
(603) 893-9701
Facsimile: (603) 893-7324
http://www.standex.com
COMMON STOCK
Listed on the New York Stock
Exchange (Ticker symbol:SXI)
Transfer Agent and Registrar:
BankBoston N.A. c/o EquiServe
P.O. Box 8040
Boston, MA 02266-8040
(781) 575-3400
http://www.equiserve.com
COUNSEL
Hale and Dorr
60 State Street
Boston, MA 02109
INDEPENDENT AUDITORS
Deloitte & Touche LLP
200 Berkeley Street
Boston, MA 02116-5022
SHAREHOLDER SERVICES
Stockholders should contact Standex's Transfer Agent (BankBoston N.A. c/o
EquiServe, P.O. Box 8040, Boston, MA 02266-8040) regarding changes in name,
address or ownership of stock; lost certificates or dividends; and
consolidation of accounts.
FORM 10-K
Shareholders may obtain a copy of Standex's Form 10-K Annual Report, as
filed with the Securities and Exchange Commission without charge by writing
to: Standex Investor Relations Department, 6 Manor Parkway, Salem, NH
03079.
STOCKHOLDER MEETING
The Annual Meeting of Stockholders will be held at 11:00 a.m. on Tuesday,
October 26, 1999 at BankBoston, Auditorium, Main Lobby, 100 Federal Street,
Boston, MA.
Standex International.
We make essential products that add value to your world.
ESSENTIAL PRODUCTS FOR YOUR WORLD
Board of Directors
Thomas L. King*
Chairman of the Board
Edward J. Trainor*
President and Chief Executive Officer
John Bolten, Jr.+
Consultant
David R. Crichton
Executive Vice President/Operations
Samuel S. Dennis 3d*+
Retired Partner,
Hale and Dorr, Attorneys
William R. Fenoglio
Former President and Chief
Executive Officer of Augat Inc.
Walter F. Greeley
Chairman, High Street Associates,
An Investment Partnership
Daniel B. Hogan, Ph.D.
President, The Apollo Group,
Management Consultants
C. Kevin Landry
Managing Partner, T.A. Associates,
A Venture Capital Firm
H. Nicholas Muller, III, Ph.D.
President, CEO
Frank Lloyd Wright Foundation
Edward F. Paquette
Vice President and
Chief Financial Officer
Sol Sackel
Former Senior Vice President
of the Company
Corporate Officers
Thomas L. King
Chairman of the Board
Edward J. Trainor
President and
Chief Executive Officer
David R. Crichton
Executive Vice President/Operations
Edward F. Paquette
Vice President and
Chief Financial Officer
Deborah A. Rosen
Vice President,
General Counsel and Secretary
Daniel C. Potter
Treasurer and Tax Director
Robert R. Kettinger
Corporate Controller
Steven G. Brown
Assistant Secretary
Operating Divisions
Industrial
David R. Crichton
Group Vice President
Industrial Group
Jarvis Caster Group
Can-Am Casters and Wheels
Standex Electronics
ATR Coil Company
James Burn
Custom Hoists
Spincraft
Roehlen Industries
Eastern Engraving
Keller-Dorian
Mold-Tech
Roehlen Engraving
Standex GmbH
Food Service
Jerry G. Griffin
Group Vice President
Food Service Group
BKI Worldwide
BKI USA
BKI Europe
Master-Bilt Products
Federal Industries
United Service Equipment Company
General Slicing
H.F. Coors China
Mason Candlelight
Procon Products
Consumer
Peter G. Gerstberger, Ph.D.
Group Vice President
Consumer Group
Standard Publishing
Berean(R) Christian Stores
Standex Direct
Standex Air Distribution Products
Snappy/ACME/ALCO
* Member of Executive Committee
+ Founder of Company
Design: Benes Brand Imaging Group, Lexington, MA
[LOGO]
6 Manor Parkway Salem, NH 03079 603.893.9701
www.standex.com
931-AR-99
<TABLE>
Exhibit 21
STANDEX INTERNATIONAL CORPORATION AND SUBSIDIARIES
SUBSIDIARIES OF REGISTRANT
Information is set forth below concerning all operating subsidiaries of the
Company as of June 30, 1999 (except subsidiaries which, considered in the
aggregate do not constitute a significant subsidiary):
<CAPTION>
Percentage
Percentage of Voting
of Voting Stock
Stock Owned Owned by
Jurisdiction of by the Immediate
Name of Subsidiary Incorporation Company Parent
<S> <C> <C>
Crest Fruit Company Texas 100%
Custom Hoists, Inc. Ohio 100%
James Burn International, Inc. New York 100%
Standex Air Distribution Products, Inc. Delaware 100%
Standex Financial Corp. Delaware 100%
SXI Limited Canada 100%
Keller-Dorian Graveurs, S.A. France 100%
S. I. de Mexico S.A. de C.V. Mexico 100%
Standex International FSC, Inc. Virgin Islands 100%
Standex International GmbH Germany 100%
Standex Holdings Limited United Kingdom 100%
Standex International Limited United Kingdom 100%
Roehlen Industries Pty. Limited Australia 50% 50%
James Burn International Limited United Kingdom 100%
Standex Electronics (U.K.) Limited United Kingdom 100%
</TABLE>
Exhibit 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in
Registration Statement Nos. 33-2-7706, 33-42954, 33-45054,
33-58835 and 33-344953 of Standex International Corporation
on Form S-8 of our reports dated August 17, 1999, appearing
in and incorporated by reference in the Annual Report on
Form 10-K of Standex International Corporation for the year
ended June 30, 1999.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Boston, Massachusetts
September 22, 1999
EXHIBIT 24
POWER OF ATTORNEY
The undersigned, being a director of Standex International
Corporation ("Standex"), hereby constitutes Edward J. Trainor and
Deborah A. Rosen, and each of them singly, my true and lawful
attorney with full power to them, and each of them singly, to
sign for me and in my name in my capacity as a Director of
Standex, the Annual Report of Standex on From 10-K for the fiscal
year ended June 30, 1999 and any and all amendments thereto and
generally to do such things in my name and behalf to enable
Standex to comply with the requirements of the Securities and
Exchange Commission relating to the Form 10-K.
Witness my signature as of the 2nd day of September, 1999.
/s/ John Bolten, Jr.
by Joan Paolucci, Attorney
_____________________________
John Bolten, Jr.
EXHIBIT 24
POWER OF ATTORNEY
The undersigned, being a director of Standex International
Corporation ("Standex"), hereby constitutes Edward J. Trainor and
Deborah A. Rosen, and each of them singly, my true and lawful
attorney with full power to them, and each of them singly, to
sign for me and in my name in my capacity as a Director of
Standex, the Annual Report of Standex on From 10-K for the fiscal
year ended June 30, 1999 and any and all amendments thereto and
generally to do such things in my name and behalf to enable
Standex to comply with the requirements of the Securities and
Exchange Commission relating to the Form 10-K.
Witness my signature as of the 1st day of September, 1999.
/s/ David R. Crichton
_____________________________
David R. Crichton
EXHIBIT 24
POWER OF ATTORNEY
The undersigned, being a director of Standex International
Corporation ("Standex"), hereby constitutes Edward J. Trainor and
Deborah A. Rosen, and each of them singly, my true and lawful
attorney with full power to them, and each of them singly, to
sign for me and in my name in my capacity as a Director of
Standex, the Annual Report of Standex on From 10-K for the fiscal
year ended June 30, 1999 and any and all amendments thereto and
generally to do such things in my name and behalf to enable
Standex to comply with the requirements of the Securities and
Exchange Commission relating to the Form 10-K.
Witness my signature as of the 1st day of September, 1999.
/s/ Samuel S. Dennis 3d
_____________________________
Samuel S. Dennis 3d
EXHIBIT 24
POWER OF ATTORNEY
The undersigned, being a director of Standex International
Corporation ("Standex"), hereby constitutes Edward J. Trainor and
Deborah A. Rosen, and each of them singly, my true and lawful
attorney with full power to them, and each of them singly, to
sign for me and in my name in my capacity as a Director of
Standex, the Annual Report of Standex on From 10-K for the fiscal
year ended June 30, 1999 and any and all amendments thereto and
generally to do such things in my name and behalf to enable
Standex to comply with the requirements of the Securities and
Exchange Commission relating to the Form 10-K.
Witness my signature as of the 1st day of September, 1999.
/s/ William R. Fenoglio
_____________________________
William R. Fenoglio
EXHIBIT 24
POWER OF ATTORNEY
The undersigned, being a director of Standex International
Corporation ("Standex"), hereby constitutes Edward J. Trainor and
Deborah A. Rosen, and each of them singly, my true and lawful
attorney with full power to them, and each of them singly, to
sign for me and in my name in my capacity as a Director of
Standex, the Annual Report of Standex on From 10-K for the fiscal
year ended June 30, 1999 and any and all amendments thereto and
generally to do such things in my name and behalf to enable
Standex to comply with the requirements of the Securities and
Exchange Commission relating to the Form 10-K.
Witness my signature as of the 1st day of September, 1999.
/s/ Walter F. Greeley
_____________________________
Walter F. Greeley
EXHIBIT 24
POWER OF ATTORNEY
The undersigned, being a director of Standex International
Corporation ("Standex"), hereby constitutes Edward J. Trainor and
Deborah A. Rosen, and each of them singly, my true and lawful
attorney with full power to them, and each of them singly, to
sign for me and in my name in my capacity as a Director of
Standex, the Annual Report of Standex on From 10-K for the fiscal
year ended June 30, 1999 and any and all amendments thereto and
generally to do such things in my name and behalf to enable
Standex to comply with the requirements of the Securities and
Exchange Commission relating to the Form 10-K.
Witness my signature as of the 1st day of September, 1999.
/s/ Daniel B. Hogan
_____________________________
Daniel B. Hogan
EXHIBIT 24
POWER OF ATTORNEY
The undersigned, being a director of Standex International
Corporation ("Standex"), hereby constitutes Edward J. Trainor and
Deborah A. Rosen, and each of them singly, my true and lawful
attorney with full power to them, and each of them singly, to
sign for me and in my name in my capacity as a Director of
Standex, the Annual Report of Standex on From 10-K for the fiscal
year ended June 30, 1999 and any and all amendments thereto and
generally to do such things in my name and behalf to enable
Standex to comply with the requirements of the Securities and
Exchange Commission relating to the Form 10-K.
Witness my signature as of the 1st day of September, 1999.
/s/ Thomas L. King
_____________________________
Thomas L. King
EXHIBIT 24
POWER OF ATTORNEY
The undersigned, being a director of Standex International
Corporation ("Standex"), hereby constitutes Edward J. Trainor and
Deborah A. Rosen, and each of them singly, my true and lawful
attorney with full power to them, and each of them singly, to
sign for me and in my name in my capacity as a Director of
Standex, the Annual Report of Standex on From 10-K for the fiscal
year ended June 30, 1999 and any and all amendments thereto and
generally to do such things in my name and behalf to enable
Standex to comply with the requirements of the Securities and
Exchange Commission relating to the Form 10-K.
Witness my signature as of the 7th day of September, 1999.
/s/ C. Kevin Landry
_____________________________
C. Kevin Landry
EXHIBIT 24
POWER OF ATTORNEY
The undersigned, being a director of Standex International
Corporation ("Standex"), hereby constitutes Edward J. Trainor and
Deborah A. Rosen, and each of them singly, my true and lawful
attorney with full power to them, and each of them singly, to
sign for me and in my name in my capacity as a Director of
Standex, the Annual Report of Standex on From 10-K for the fiscal
year ended June 30, 1999 and any and all amendments thereto and
generally to do such things in my name and behalf to enable
Standex to comply with the requirements of the Securities and
Exchange Commission relating to the Form 10-K.
Witness my signature as of the 1st day of September, 1999.
/s/ H. Nicholas Muller, III
_____________________________
H. Nicholas Muller, III
EXHIBIT 24
POWER OF ATTORNEY
The undersigned, being a director of Standex International
Corporation ("Standex"), hereby constitutes Edward J. Trainor and
Deborah A. Rosen, and each of them singly, my true and lawful
attorney with full power to them, and each of them singly, to
sign for me and in my name in my capacity as a Director of
Standex, the Annual Report of Standex on From 10-K for the fiscal
year ended June 30, 1999 and any and all amendments thereto and
generally to do such things in my name and behalf to enable
Standex to comply with the requirements of the Securities and
Exchange Commission relating to the Form 10-K.
Witness my signature as of the 1st day of September, 1999.
/s/ Edward F. Paquette
_____________________________
Sol Sackel
EXHIBIT 24
POWER OF ATTORNEY
The undersigned, being a director of Standex International
Corporation ("Standex"), hereby constitutes Edward J. Trainor and
Deborah A. Rosen, and each of them singly, my true and lawful
attorney with full power to them, and each of them singly, to
sign for me and in my name in my capacity as a Director of
Standex, the Annual Report of Standex on From 10-K for the fiscal
year ended June 30, 1999 and any and all amendments thereto and
generally to do such things in my name and behalf to enable
Standex to comply with the requirements of the Securities and
Exchange Commission relating to the Form 10-K.
Witness my signature as of the 1st day of September, 1999.
/s/ Sol Sackel
_____________________________
Edward J. Trainor
EXHIBIT 24
POWER OF ATTORNEY
The undersigned, being a director of Standex International
Corporation ("Standex"), hereby constitutes Edward J. Trainor and
Deborah A. Rosen, and each of them singly, my true and lawful
attorney with full power to them, and each of them singly, to
sign for me and in my name in my capacity as a Director of
Standex, the Annual Report of Standex on From 10-K for the fiscal
year ended June 30, 1999 and any and all amendments thereto and
generally to do such things in my name and behalf to enable
Standex to comply with the requirements of the Securities and
Exchange Commission relating to the Form 10-K.
Witness my signature as of the 1st day of September, 1999.
/s/ Edward J. Trainor
_____________________________
Edward F. Paquette
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