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, 2001 Commission File No. 1-367
THE L.S. STARRETT COMPANY
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-1866480
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
121 CRESCENT STREET, ATHOL, MASSACHUSETTS 01331
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 978-249-3551
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Class A Common - $1.00 Per Share Par Value New York Stock Exchange
Class B Common - $1.00 Per Share Par Value Not applicable
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.
Yes X No
The Registrant had 5,016,375 and 1,439,885 shares, respectively, of its $1.00
par value Class A and B common stock outstanding on July 27, 2001. On that
date, the aggregate market value of the common stock held by nonaffiliates was
approximately $128,000,000.
The exhibit index is located on page 22.
Documents incorporated by reference
Proxy Statement dated August 17, 2001 - Part III
PART I
Item I - Business
The Company was founded in 1880 and incorporated in 1929 and is engaged in the
business of manufacturing industrial, professional, and consumer products. The
total number of different items made and sold by the Company exceeds 5,000.
Among the items produced are precision tools, tape measures, levels,
electronic gages, dial indicators, gage blocks, digital readout measuring
tools, granite surface plates, optical measuring projectors, coordinate
measuring machines, vises, M1 lubricant, hacksaw blades, hole saws, band saw
blades, jig saw blades, reciprocating saw blades, and precision ground flat
stock. Much of the Company's production is concentrated in hand measuring
tools (such as micrometers, steel rules, combination squares and many other
items for the individual craftsman) and precision instruments (such as vernier
calipers, height gages, depth gages and measuring instruments that
manufacturing companies buy for the use of their employees).
These tools and instruments are sold throughout the United States and Canada
and over 100 foreign countries, primarily through distributors. By far the
largest consumer of these products is the metalworking industry, but other
important consumers are automotive, aviation, marine and farm equipment shops,
do-it-your-selfers and tradesmen such as builders, carpenters, plumbers and
electricians. One retailer, Sears, accounted for approximately 13% of the
Company's sales in fiscal 2001.
Most of the Company's products are made from steel purchased from steel mills.
Forgings, castings, and a few small finished parts are purchased from other
manufacturers. Raw materials have always been readily available to the Company
and, in most cases, the Company does not rely on sole sources. In the event of
unavailability of purchased materials, the Company would be adversely
affected, as would its competitors. Similarly, the ability of the Company to
pass along raw material price increases is dependent on the competitive
situation and cannot be assured.
At June 30, 2001, the Company had 2,713 employees, approximately 70% of whom
were domestic. None of the Company's operations are subject to collective
bargaining agreements. In general, the Company considers its relations with
its employees to be excellent. Because of various stock ownership plans,
Company domestic personnel hold a large share of Company stock and this dual
role of owner-employee has been good for morale over the years.
The Company is one of the largest producers of mechanics' hand measuring tools
and precision instruments. In the United States, there are three other major
companies and numerous small competitors in the field, including direct
foreign competitors. As a result, the industry is highly competitive. During
the fiscal year ended June 30, 2001, there were no material changes in the
Company's competitive position. During recent years, changes in the volume of
sales of the Company have, in general, corresponded with changes throughout
the industry. In saws and precision ground flat stock, the Company in the
United States competes with many manufacturers. The Company competes
principally through the high quality of its products and the service it
provides its customers.
The operations of the Company's foreign subsidiaries are consolidated in its
financial statements. The subsidiaries located in Brazil, Scotland, and China
are actively engaged in the manufacture of hacksaw and band saw blades and a
limited line of precision tools and measuring tapes. A subsidiary in Australia
and a subsidiary in Germany are engaged in distribution of the Company's
products. The Company expects its foreign subsidiaries to continue to play a
significant role in its overall operations. A summary of the Company's foreign
operations is contained in the footnotes to the Company's fiscal 2001
financial statements under the caption "OPERATING DATA" found in item 8 of
this Form 10K and is hereby incorporated by reference.
The Company generally fills orders from finished goods inventories on hand.
Sales order backlog of the Company at any point in time is negligible. Total
inventories amounted to $84,834,000 at June 30, 2001, and $79,890,000 at June
24, 2000. The Company uses the last-in, first-out (LIFO) method of valuing
most inventories, which results in more realistic operating costs and profits.
Inventory amounts are $22,685,000 and $22,683,000 lower, respectively, than if
determined on a first-in, first-out (FIFO) basis.
The Company does apply for patent protection on new inventions and presently
owns a number of patents. Its patents are considered important in the
operation of the business, but no single patent is of material importance when
viewed from the standpoint of its overall business. The Company relies on its
continuing product research and development efforts, with less dependence on
its present patent position. It has for many years maintained engineers and
supporting personnel engaged in research, product development, and related
activities. The expenditures for these activities during fiscal years 2001,
2000 and 1999 were approximately $2,663,000, $3,111,000 and $2,860,000,
respectively, all of which was expensed in the Company's financial statements.
The Company uses trademarks with respect to its products. All of its
important trademarks are registered.
Compliance with federal, state and local provisions that have been enacted or
adopted regulating the discharge of materials into the environment or
otherwise relating to protection of the environment is not expected to have a
material effect on the capital expenditures, earnings and competitive position
of the Company. Specifically, the Company has taken steps to reduce and
control water discharges and air emissions.
The Company's business is to a small extent seasonal, with sales and earnings
generally at the lowest level during the first and third quarters of the
fiscal year.
Item 2 - Properties
The Company's principal plant is located in Athol, Massachusetts on about 15
acres of Company-owned land. The plant consists of 25 buildings, mostly of
brick construction of varying dates, with approximately 535,000 square feet of
production and storage area. An additional 9,000 square feet of leased space
in Gardner, Massachusetts is considered part of this plant.
The Webber Gage Division, Cleveland, Ohio, owns and occupies two buildings
totaling approximately 50,000 square feet.
The Company-owned facility in Mt. Airy, North Carolina consists of two
buildings totaling approximately 356,000 square feet. It is occupied by the
Company's Saw Division, Granite Surface Plate Division, Coordinate Measuring
Machine and Optical Comparator Division, and Ground Flat Stock Division.
The Company's Evans Rule Division, located in North Charleston, South
Carolina, owns and occupies a 173,000 square foot building. In addition, this
division leases 35,000 square feet of manufacturing space in Mayaguez, Puerto
Rico.
The Company's Exact Level Division is located in Alum Bank, Pennsylvania and
owns and occupies a 50,000 square foot building.
The Company's Brazil subsidiary owns and occupies several buildings totaling
209,000 square feet. The Company's Scotland subsidiary owns and occupies a
187,000 square foot building and also a 33,000 square foot building in
Skipton, England, where its wholly owned subsidiary manufactures optical
measuring projectors. A second wholly owned subsidiary located in Skipton
performs calibration services and leases about 4,000 square feet. Two wholly
owned subsidiaries in the People's Republic of China lease approximately
40,000 square feet and 2,000 square feet.
In addition, the Company operates warehouses/sales-support offices in
Glendale, Arizona; Elmhurst, Illinois; Atlanta, Georgia; Mississauga, Canada;
Sydney, Australia; and Schmitten, Germany.
In the Company's opinion, all of its property, plant and equipment is in good
operating condition, well maintained and adequate for its needs.
Item 3 - Legal Proceedings
The Company is not involved in any material pending legal proceedings.
Item 4 - Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year ended June 30, 2001.
Executive Officers of the Registrant
The information under the caption Executive Officers of the Registrant in item
10 of this Form 10K is hereby incorporated by reference.
PART II
Item 5 - Market for the Registrant's Common Equity and Related
Stockholder Matters
The Company's Class A common stock is traded on the New York Stock Exchange.
Quarterly dividend and high/low closing market price information is presented
in the table below. The Registrant's Class B common stock is generally
nontransferable, except to lineal descendants, and thus has no established
trading market, but it can be converted into Class A common stock at any time.
The Class B common stock was issued on October 5, 1988, and the Registrant has
paid the same dividends thereon as have been paid on the Class A common stock
since that date. At July 27, 2001, there were 2,088 registered holders of
Class A common stock and 1,699 registered holders of Class B common stock.
Quarter ended Dividends High Low
September 1999 $ 0.20 $ 29.44 $ 24.25
December 1999 0.20 24.88 21.25
March 2000 0.20 24.75 20.50
June 2000 0.20 24.25 18.50
September 2000 0.20 19.44 16.88
December 2000 0.20 22.94 16.69
March 2001 0.20 23.85 19.75
June 2001 0.20 22.74 17.45
Item 6 - Selected Financial Data
Years ended in June ($000 except per share data)
2001 2000 1999 1998 1997
Net sales $225,857 $235,169 $232,385 $262,340 $250,503
Net earnings 8,097 11,489 16,696 23,009 19,859
Basic earnings per share 1.26 1.73 2.44 3.34 2.84
Diluted earnings per share 1.25 1.73 2.44 3.33 2.84
Long-term debt 7,000 3,000 3,300 3,900 6,500
Total assets 248,532 250,418 245,728 250,263 238,746
Dividends per share 0.80 0.80 0.80 0.77 0.72
Item 7 - Management's Discussion and Analysis of Financial Condition
and Results of Operations
RESULTS OF OPERATIONS
SALES
Sales decreased 4% in fiscal 2001 following a 1% increase in fiscal 2000. The
decrease is both domestic and foreign, 5% and 1%, respectively, before
eliminations, although foreign sales were actually up 7% in fiscal 2001 when
measured in local currencies. In fiscal 2000, the 1% increase all came on the
domestic side, with foreign sales being flat. For the past three years, sales
of our Scotland subsidiary have been adversely affected by the weak euro,
which hurts business in terms of export pricing and import price competition.
In addition, the flat foreign sales in fiscal 2000 disguise the fact that
Brazil overcame a significant currency devaluation in January 1999 with
increased unit volume. The decrease in domestic sales reflects the continued
weakened demand for our industrial products, particularly during the third
quarter, as well as weak consumer demand during the second quarter holiday
season. Last year's slight increase in domestic sales was largely a result of
product mix.
EARNINGS BEFORE TAXES
Pretax earnings are down 34% for the current year and were down 27% in
fiscal 2000. Cost of sales was 71.1% in 2001, 71.7% in 2000, and 69.3% in
1999. Changes in these rates are mainly impacted by the manufacturing
efficiencies that are gained or lost as a result of increased or decreased
production levels, but also by pricing, product mix, and overhead spending.
In 2001, Brazil wage increase and domestic employee benefit expense
increases kept the cost of sales rate from improving. Product mix played an
important part in the increase in the cost of sales percent in 2000. The
decrease in pretax earnings in fiscal 2001 is also attributable to an
increase in our selling and general expenses to 23% of sales compared to 21%
in 2000 and 1999. This is a result of increased expenditures on advertising,
data processing, and employee benefits. In addition, the weakness in
Brazil's currency compared to the dollar resulted in losses on their dollar
denominated debts during fiscal 2001.
INCOME TAXES
The effective income tax rate was 29% in 2001 compared to 33% in 2000 and
29% in 1999. Tax exempt interest on short-term investments in municipal
bonds, Puerto Rico tax incentives, and somewhat lower foreign income tax
rates all contribute to an overall effective tax rate that is slightly lower
than the combined U.S. state and federal rate. Nonrecurring permanent
differences between book and taxable income for dividends paid from Brazil
to the U.S. in all years, but particularly in 1999, have reduced their
effective tax rate substantially when reported in U.S. dollars. Higher than
usual foreign tax credits and a refund of prior year state taxes is causing
the 2001 overall rate to be lower than in 2000.
EARNINGS PER SHARE
As a result of the above, earnings per share were down 27% in fiscal 2001 when
compared to 2000, and 2000 earnings per share were down 29% when compared to
1999.
MARKET RISK
Market risk is the potential change in a financial instrument's value caused
by fluctuations in interest and currency exchange rates, and equity and
commodity prices. The Company's operating activities expose it to many risks
that are continually monitored, evaluated, and managed. Proper management of
these risks helps reduce the likelihood of earnings volatility. At June 2001
and 2000, the Company was not a party to any derivative arrangement and the
Company does not engage in trading, market-making or other speculative
activities in the derivatives markets. In addition, the Company does not enter
into long-term supply contracts with either fixed prices or quantities.
The Company does not engage in regular hedging activities to minimize the
impact of foreign currency fluctuations. Net monetary assets in Scotland and
Brazil total approximately $3 million. Inflation in Brazil has decreased to
about 10% today from over 2000% in 1994 when their current economic plan was
initiated. As a consequence, their economy ceased to be considered
hyperinflationary as of January 1998.
A 10% change in interest rates would not have a significant impact on the
aggregate net fair value of the Company's interest rate sensitive financial
instruments (primarily variable rate investments of $5,400,000 and debt of
$12,000,000 at June 30, 2001) or the cash flows or future earnings associated
with those financial instruments. A 10% change in interest rates would impact
the fair value of the Company's fixed rate investments of approximately
$4,800,000 by $200,000.
LIQUIDITY AND CAPITAL RESOURCES
Years ended In June ($000)
2001 2000 1999
Cash provided by operations $12,499 $18,822 $16,309
Cash used in investing activities (9,496) (9,267) (10,278)
Cash used in financing activities (3,138) (7,892) (9,389)
Effect of translation rate
changes on cash 72 74 (76)
Increase (decrease) in cash $ (63) $ 1,737 $(3,434)
Cash flows from operating activities decreased $6 million from 2000, and in
2000 increased $3 million from 1999. Increasing inventories was the main
reason for the reduced cash flow from operations in 2001.
The Company's investing activities consist mainly of expenditures for
property, plant and equipment and the investment of cash not immediately
needed for operations. Plant expenditures of $13 million in 2001 and $14
million in 2000 are less than the $20 million experienced in 1999, but are
more normal than 1999, which contained a major building expansion.
Cash flows from financing activities are primarily the payment of dividends,
which tend to be quite steady from year to year. The Company requires little
debt to finance day to day operations and the proceeds from the sale of stock
under the various stock plans tend to be used to purchase treasury shares.
Treasury share purchases were $3.8 million in 2001 compared to $9.0 million in
2000 and $9.9 million in 1999.
The Company maintains sufficient liquidity and has the resources to fund its
operations under current business conditions. The Company maintains a line of
credit as discussed in the notes to the financial statements. The Company has
not made significant borrowings under this line during the past three years.
The Company continues to maintain a strong financial position with a working
capital ratio of 5.4 to 1 as of June 30, 2001 and 4.7 to 1 as of June 24,
2000. Cash not immediately required for working capital is invested in high
grade money market instruments with maturities generally less than one year
(however, see the notes to the financial statements regarding investments in
Puerto Rico). Certain cash and investment balances of foreign subsidiaries may
not be repatriated without adverse tax consequences and in certain cases may
be subject to regulatory restriction.
SAFE HARBOR STATEMENT
UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This document and the 2001 Annual Report, including the Chairman's letter to
stockholders, include forward-looking statements about the Company's business,
sales, expenditures, environmental regulatory compliance, foreign operations,
interest rate sensitivity, debt service, liquidity and capital resources, and
other operating and capital requirements. In addition, forward-looking
statements may be included in future Company documents and in oral statements
by Company representatives to security analysts and investors. The Company is
subject to risks that could cause actual events to vary materially from such
forward-looking statements, including the following risk factors:
Risks Related to Technology: Although the Company's strategy includes
investment in research and development of new and innovative products to meet
technology advances, there can be no assurance that the Company will be
successful in competing against new technologies developed by competitors.
Risks Related to Adoption of the Euro: The new European currency (the Euro)
began being used by the eleven participating European countries January 1,
1999. Although the United Kingdom is not currently a Euro country, the
Company's Scottish subsidiary does a significant amount of business with Euro
countries. Management believes it has the necessary systems and business
processes to deal with what is, in effect, one more foreign currency. There
can be no assurance, however, that there will not be unforeseen economic
effects of this change that affect the Company's business. Indeed, the current
weakness of the euro as compared to the British pound and U.S. dollar has had
an adverse impact on the Company's sales and margins on business done with
Euro countries.
Risks Related to Foreign Operations: For the period ended June 30, 2001,
approximately a third of the Company's sales and net assets relate to foreign
operations. Foreign operations are subject to special risks that can
materially affect the sales, profits, cash flows, and financial position of
the Company, including taxes and other restrictions on distributions and
payments, currency exchange rate fluctuations, political and economic
instability, inflation, minimum capital requirements, and exchange controls.
In particular, the Company's Brazilian operations, which constitute over half
of the Company's revenues from foreign operations, can be very volatile,
changing from year to year due to the political situation and economy. As a
result, the future performance of the Brazilian operations is inherently
unpredictable.
Risks Related to Cyclical Nature of the Industry: The market for most of the
Company's products is subject to economic conditions affecting the industrial
manufacturing sector, including the level of capital spending by industrial
companies. Accordingly, economic weakness in the industrial manufacturing
sector will result in decreased demand for the Company's products and will
adversely affect performance. Economic weakness in the consumer market also
impacts the Company's performance.
Risks Related to Competition: The Company's business is subject to direct and
indirect competition from both domestic and foreign firms. In particular,
low-wage foreign sources have created severe competitive pricing pressures.
Under certain circumstances, including significant changes in U.S. and foreign
currency relationships, such pricing pressures might reduce unit sales and/or
adversely affect the Company's margins.
Item 8 - Financial Statements and Supplementary Data
Contents: Page
Report of Independent Auditors 9
Consolidated Statements of Earnings and Cash Flows 10
Consolidated Balance Sheets 11
Consolidated Statements of Stockholders' Equity 12
Notes to Consolidated Financial Statements 13-19
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Directors of
The L.S. Starrett Company
We have audited the accompanying consolidated balance sheets of The L.S.
Starrett Company and subsidiaries as of June 30, 2001 and June 24, 2000, and
the related consolidated statements of earnings, cash flows and changes in
stockholders' equity for each of the three years in the period ended June 30,
2001. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. 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 the Company and subsidiaries as
of June 30, 2001 and June 24, 2000, and the results of their operations and
their cash flows for each of the three fiscal years in the period ended June
30, 2001, in conformity with accounting principles generally accepted in the
United States of America.
S/DELOITTE & TOUCHE LLP
Boston, Massachusetts
August 3, 2001
THE L.S. STARRETT COMPANY
Consolidated Statements of Earnings and Cash Flows
For the years ended in June (in thousands of dollars except per share data)
2001 2000 1999
EARNINGS
Net sales $225,857 $235,169 $232,385
Cost of goods sold (160,562) (168,648) (160,984)
Selling, general and administrative expense (52,223) (49,788) (49,393)
Other income and expense (1,640) 496 1,618
Earnings before income taxes 11,432 17,229 23,626
Income taxes 3,335 5,740 6,930
Net earnings $ 8,097 $ 11,489 $ 16,696
Basic earnings per share, based on
average outstanding shares of
6,446,457, 6,645,019 and 6,840,283 $ 1.26 $ 1.73 $ 2.44
Diluted earnings per share, based on
average outstanding shares of
6,457,554, 6,652,796 and 6,846,406 $ 1.25 $ 1.73 $ 2.44
CASH FLOWS
Cash flows from operating activities:
Net earnings $ 8,097 $ 11,489 $ 16,696
Noncash expenses:
Depreciation and amortization 11,662 11,380 11,207
Deferred taxes 97 2,108 2,058
Unrealized translation losses 748
Working capital changes:
Receivables 707 (1,189) 2,809
Inventories (9,261) (3,357) (9,110)
Other current assets and liabilities 1,665 1,293 (2,824)
Prepaid pension and other (1,216) (2,902) (4,527)
Net cash from operating activities 12,499 18,822 16,309
Cash flows from investing activities:
Additions to plant and equipment (13,198) (13,974) (20,319)
Decrease in investments 3,702 4,707 10,041
Net cash used in investing activities (9,496) (9,267) (10,278)
Cash flows from financing activities:
Short-term borrowing, net (1,645) 3,090 2,599
Debt repayments, net 4,000 (300) (600)
Common stock issued 3,444 3,665 3,968
Treasury shares purchased (3,792) (9,045) (9,894)
Dividends (5,145) (5,302) (5,462)
Net cash used in financing activities (3,138) (7,892) (9,389)
Effect of translation rate changes on cash 72 74 (76)
Net increase (decrease) in cash (63) 1,737 (3,434)
Cash beginning of year 2,008 271 3,705
Cash end of year $ 1,945 $ 2,008 $ 271
Supplemental cash flow information:
Interest paid $ 950 $ 844 $ 577
Taxes paid $ 1,688 $ 4,190 $ 5,822
See notes to consolidated financial statements
THE L.S. STARRETT COMPANY
Consolidated Balance Sheets
(in thousands of dollars)
June 30 June 24
ASSETS 2001 2000
Current assets:
Cash $ 1,945 $ 2,008
Investments 8,238 12,043
Accounts receivable (less allowance for doubtful
accounts of $1,976,000 and $1,790,000) 34,080 36,509
Inventories 84,834 79,890
Prepaid expenses and other current assets 5,830 7,269
Total current assets 134,927 137,719
Property, plant and equipment, at cost:
Land 1,902 1,764
Buildings (less accumulated depreciation of
$16,469,000 and $15,855,000) 23,272 25,301
Machinery and equipment (less accumulated
depreciation of $57,142,000 and $54,613,000) 50,031 48,618
Total property, plant and equipment 75,205 75,683
Cost in excess of net assets acquired (less accumu-
lated amortization of $3,947,000 and $4,534,000) 6,354 6,667
Prepaid pension cost 30,953 29,238
Other assets 1,093 1,111
$248,532 $250,418
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current maturities $ 5,045 $ 6,690
Accounts payable and accrued expenses 14,358 16,315
Accrued salaries and wages 4,827 5,590
Taxes payable 291 285
Employee deposits for stock purchase plan 625 518
Total current liabilities 25,146 29,398
Deferred income taxes 15,218 13,969
Long-term debt 7,000 3,000
Accumulated postretirement benefit obligation 16,347 16,029
Stockholders' equity:
Class A common stock $1 par (20,000,000 shrs. auth.;
5,017,569 outstanding in 2001, excluding
1,470,544 held in treasury; 4,978,276 outstanding
in 2000, excluding 1,461,002 held in treasury) 5,018 4,978
Class B common stock $1 par (10,000,000 shrs. auth.;
1,440,006 outstanding in 2001, excluding
325,688 held in treasury; 1,495,474 outstanding
in 2000, excluding 308,284 held in treasury) 1,440 1,495
Additional paid-in capital 45,112 43,273
Retained earnings reinvested and employed in
the business 156,626 155,846
Accumulated other comprehensive income (loss) (23,375) (17,570)
Total stockholders' equity 184,821 188,022
$248,532 $250,418
See notes to consolidated financial statements
THE L.S. STARRETT COMPANY
Consolidated Statements of Stockholders' Equity
For the years ended in June, 1999 through 2001
(in thousands)
Common Addi- Accumulated
Stock Out- tional Other Com-
standing Paid-in Retained prehensive
($1 Par) Capital Earnings Income Total
Balance, June 27, 1998 $ 6,897 $ 41,263 $151,317 $ (4,183) $195,294
Comprehensive income:
Net earnings 16,696 16,696
Unrealized net loss
on investments (123) (123)
Translation loss, net (10,443) (10,443)
Total comprehensive income 6,130
Dividends ($0.80) (5,462) (5,462)
Treasury shares:
Purchased (329) (2,363) (7,202) (9,894)
Issued 118 3,368 3,486
Options exercised 20 462 482
Balance, June 26, 1999 6,706 42,730 155,349 (14,749) 190,036
Comprehensive income:
Net earnings 11,489 11,489
Unrealized net loss
on investments (113) (113)
Translation loss, net (2,708) (2,708)
Total comprehensive income 8,668
Dividends ($0.80) (5,302) (5,302)
Treasury shares:
Purchased (399) (2,956) (5,690) (9,045)
Issued 161 3,400 3,561
Options exercised 5 99 104
Balance, June 24, 2000 6,473 43,273 155,846 (17,570) 188,022
Comprehensive income:
Net earnings 8,097 8,097
Unrealized net loss
on investments (38) (38)
Translation loss, net (5,767) (5,767)
Total comprehensive income 2,292
Dividends ($0.80) (5,145) (5,145)
Treasury shares:
Purchased (192) (1,428) (2,172) (3,792)
Issued 166 3,078 3,244
Options exercised 11 189 200
Balance, June 30, 2001 $ 6,458 $ 45,112 $156,626 $(23,375) $184,821
See notes to consolidated financial statements
THE L. S. STARRETT COMPANY
Notes to Consolidated Financial Statements
SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation: The consolidated financial statements include
the accounts of The L. S. Starrett Company and subsidiaries, a manu-
facturer of industrial, professional and consumer products. All
subsidiaries are wholly-owned and all significant intercompany items have
been eliminated. Since the Company's fiscal year ends on the last Saturday
in June, the 2001 fiscal year contains 53 weeks compared to 52 weeks in
2000 and 1999. The fiscal years of the Company's major foreign
subsidiaries end in May.
Financial instruments and derivatives: The Company's financial instruments
consist primarily of current assets, except inventory, current
liabilities, and long-term debt. Current assets and liabilities, except
investments, are stated at cost, which approximates fair market value.
Long-term debts, which are at current market interest rates, also
approximate fair market value. Statement of Financial Accounting Standards
(SFAS) No. 133, "Accounting for Derivative Instruments and Hedging
Activities," was effective June 25, 2000 and requires all derivatives and
any hedging assets or liabilities to be accounted for at fair value. The
effect of adopting SFAS No. 133 was not significant.
Investments: Investments consist primarily of marketable securities, including
treasury bills, certificates of deposit and municipal securities. The
Company considers all its investments available for sale. As such, these
investments are carried at market, which approximates cost, with unrealized
temporary gains and losses recorded as a component of stockholders' equity.
Included in investments at June 30, 2001 is $4.8 million of liquid AAA
rated Puerto Rico debt obligations. These investments were made for the
purpose of reducing repatriation taxes and have maturities of up to eight
years. Most other investments have maturities of less than one year.
Long-lived assets: Buildings and equipment are depreciated using straight-line
and accelerated methods over estimated useful lives as follows: buildings
15 to 50 years, building improvements 10 to 40 years, machinery and
equipment 5 to 12 years, motor vehicles 3 to 5 years, computer hardware and
software 3 to 7 years. Costs in excess of net assets acquired are being
amortized on a straight-line basis over 5 to 40 years.
Inventories: Inventories are stated at the lower of cost or market. For
approximately 70% of all inventories, cost is determined on a last-in,
first-out (LIFO) basis. For all other inventories, cost is determined on a
first-in, first-out (FIFO) basis. LIFO inventories are $52,799,000 and
$46,584,000 at the end of 2001 and 2000, respectively, such amounts being
$22,685,000 and $22,683,000 less than if determined on a FIFO basis. Total
inventories at year end are as follows (in thousands):
Goods in Pro-
cess and Raw Materials
Finished Goods Finished Parts and Supplies Total
2001 $38,346 $27,811 $18,677 $84,834
2000 $36,121 $26,752 $17,017 $79,890
Income taxes: Deferred tax expense results from differences in the timing of
certain transactions for financial reporting and tax purposes. Deferred
taxes have not been recorded on undistributed earnings of foreign
subsidiaries (approximately $40,000,000 at June 2001) or the related
unrealized translation adjustments because such amounts are considered
permanently invested and, if remitted, the resulting taxes would be offset
by foreign tax credits.
Research and development: Research and development costs were expensed as
follows: $2,663,000 in 2001, $3,111,000 in 2000 and $2,860,000 in 1999.
Earnings per share (EPS): Basic EPS excludes dilution and is computed by
dividing earnings available to common shareholders by the weighted average
number of common shares outstanding for the period. Diluted EPS reflects
the potential dilution by securities that could share in the earnings. The
Company had 11,097, 7,777 and 6,123 of additional potential common shares
in 2001, 2000 and 1999 resulting from shares issuable under its stock
option plan.
Translation of foreign currencies: Assets and liabilities are translated at
exchange rates in effect on reporting dates, and income and expenses items
are translated at rates in effect on transaction dates. The resulting
differences due to changing exchange rates are charged or credited directly
to the "accumulated other comprehensive income" account included as part
of stockholders' equity.
Use of accounting estimates: The preparation of the financial statements in
conformity with accounting principles generally accepted in the U.S.
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of sales and expenses during the
reporting period. Amounts ultimately realized could differ from those
estimates.
ACCOUNTING PRONOUNCEMENTS
The Company is considering the early adoption of SFAS 142 as of July 1, 2001.
SFAS 142 requires goodwill no longer be amortized, but instead tested for
impairment. Any goodwill impairment loss at transition is recognized as the
cumulative effect of a change in accounting principle. The Company has net
goodwill of $6.4 million and related annual amortization expense of
$268,000.
OTHER INCOME AND EXPENSE
Other income and expense consists of the following (in thousands):
2001 2000 1999
Interest income, net $ 131 $ 660 $ 1,366
Realized and unrealized translation gains
and (losses) (1,859) (101) 112
Other 88 (63) 140
$(1,640) $ 496 $ 1,618
INCOME TAXES
The provision for income taxes consists of the following (in thousands):
2001 2000 1999
Current:
Federal $ 1,600 $ 1,581 $ 2,851
Foreign 1,271 1,582 1,337
State 367 469 684
Deferred 97 2,108 2,058
$ 3,335 $ 5,740 $ 6,930
Pretax domestic income as reportable to the IRS was $9,000,000, $7,704,000 and
$22,840,000 in 2001, 2000 and 1999, respectively.
A reconciliation of expected tax expense at the U.S. statutory rate to actual
tax expense is as follows (in thousands):
2001 2000 1999
Expected tax expense $ 4,001 $ 6,030 $ 8,269
Increase (decrease) from:
State and Puerto Rico taxes, net
of federal benefit (588) (210) (32)
Foreign taxes, net of federal credits (17) (247) (1,161)
Nontaxable investment income (21) (43) (111)
Other (40) 210 (35)
Actual tax expense $ 3,335 $ 5,740 $ 6,930
Deferred income taxes at year end are attributable to the following (in
thousands):
2001 2000
Deferred assets:
Retiree medical benefits $(6,716) $(6,587)
Inventories (1,335) (1,286)
Net operating loss carryforward (915) (122)
Other (1,155) (1,229)
(10,121) (9,224)
Deferred liabilities:
Prepaid pension 12,625 11,953
Other employee benefits 459 547
Depreciation 8,252 7,614
Other 1.057 990
22,393 21,104
Net deferred tax liability $12,272 $11,880
Long-term portion $15,218 $13,969
EMPLOYEE BENEFIT PLANS
The Company has several pension plans, both defined benefit and defined
contribution, covering all of its domestic and most of its nondomestic
employees. In addition, certain domestic employees participate in an Employee
Stock Ownership Plan (ESOP). Ninety percent of the actuarially determined
annuity value of their ESOP shares is used to offset retirement benefits
otherwise due under the domestic noncontributory defined benefit pension plan.
The total cost (benefit) of all such plans for 2001, 2000 and 1999,
considering the combined projected benefits and funds of the ESOP as well as
the other plans, was $(462,000), $(1,608,000) and $(2,567,000), respectively.
Under both domestic and foreign defined benefit plans, benefits are based on
years of service and final average earnings. Plan assets, including those of
the ESOP, consist primarily of investment grade debt obligations, marketable
equity securities and approximately 1,000,000 shares of the Company's common
stock. The status of these defined benefit plans, including the ESOP, is as
follows (in thousands):
2001 2000 1999
Change in benefit obligation:
Benefit obligation at beginning of year $ 87,893 $ 88,088 $ 87,242
Service cost 2,887 3,263 2,672
Interest cost 5,950 6,172 6,185
Participant contributions 242 247 286
Plan amendments 481
Exchange rate changes (1,942) (1,016) (826)
Benefits paid (3,393) (3,315) (3,048)
Actuarial gain (8,434) (5,546) (4,904)
Benefit obligation at end of year $ 83,203 $ 87,893 $ 88,088
Change in plan assets:
Fair value of plan assets at beginning
of year $120,861 $137,578 $148,861
Actual return on plan assets 12,213 (12,557) (7,549)
Participant contributions 242 247 286
Benefits paid (3,393) (3,315) (3,048)
Exchange rate changes (1,885) (1,092) (972)
Fair value of plan assets at end of year $128,038 $120,861 $137,578
Reconciliation of funded status:
Funded status $ 44,835 $ 32,968 $ 49,490
Unrecognized actuarial gain (14,555) (3,858) (22,861)
Unrecognized transition asset (3,869) (4,818) (5,774)
Unrecognized prior service cost 4,542 4,946 5,357
Prepaid pension cost $ 30,953 $ 29,238 $ 26,212
Amounts recognized in statement of financial
Position:
Prepaid pension cost $ 32,390 $ 30,513 $ 27,559
Accrued benefit liability (1,558) (1,397) (1,523)
Intangible asset 121 122 176
Prepaid pension cost $ 30,953 $ 29,238 $ 26,212
Components of net periodic benefit cost:
Service cost $ 2,887 $ 3,263 $ 2,672
Interest cost 5,950 6,172 6,185
Expected return on plan assets (9,986) (11,432) (11,241)
Amortization of prior service cost 404 409 414
Amortization of transition asset (949) (956) (963)
Recognized actuarial gain (20) (352) (1,250)
Net periodic benefit cost $ (1,714) $ (2,896) $ (4,183)
Weighted average assumptions:
Discount rate 7.50% 7.75% 7.00%
Expected long-term rate of return 8.50% 8.50% 8.50%
Rate of compensation increase 4.00% 4.50% 5.00%
The Company provides certain medical and life insurance benefits for most
retired employees in the United States. The status of these plans at year end
is as follows (in thousands):
2001 2000 1999
Change in benefit obligation:
Benefit obligation at beginning of year $ 15,101 $ 13,668 $ 17,707
Service cost 509 457 427
Interest cost 1,122 914 911
Plan amendments (4,732)
Benefits paid (1,071) (1,170) (1,135)
Actuarial (gain) or loss (464) 1,232 490
Benefit obligation at end of year $ 15,197 $ 15,101 $ 13,668
Reconciliation of funded status:
Funded status $(15,197) $(15,101) $(13,668)
Unrecognized actuarial gain 2,523 3,098 1,896
Unrecognized prior service cost (3,673) (4,026) (4,379)
Accrued benefit liability $(16,347) $(16,029) $(16,151)
Components of net periodic benefit cost:
Service cost $ 509 $ 457 $ 427
Interest cost 1,122 914 911
Amortization of prior service cost (353) (353) (353)
Recognized actuarial gain 111 30 32
Net periodic benefit cost $ 1,389 $ 1,048 $ 1,017
Weighted average assumptions:
Discount rate 7.50% 7.75% 7.00%
Rate of compensation increase 4.00% 4.50% 5.00%
For measurement purposes, a 10.0% annual rate of increase in the per capita
cost of covered health care benefits was assumed for 2001. The rate was
assumed to decrease gradually to 5.0% for 2008 and remain at that level
thereafter.
Assumed health care cost trend rates have a significant effect on the amounts
reported for the health care plans. A one percentage point change in assumed
health care cost trend rates would have the following effects (in thousands):
1% 1%
Increase Decrease
Effect on total of service and interest cost $ 86 $ (78)
Effect on postretirement benefit obligation 575 (533)
DEBT
At year end, long-term debt consists of the following (in thousands):
2001 2000
Industrial revenue bond $ 300
Note payable due 12/03, 8.3% $ 4,000
Revolving credit agreement 3,000 3,000
7,000 3,300
Less current maturities 300
$ 7,000 $ 3,000
The revolving credit agreement is for $25,000,000 and expires June 13, 2004.
The credit agreement requires commitment fees of .25%. Interest rates vary,
but approximate LIBOR plus .50% (4.6% as of June 30, 2001). All debt
agreements contain financial covenants, the most restrictive of which is that
at June 30, 2001 the Company must have tangible net worth of $164,000,000.
Annual principal payments on debt are required as follows: 2004, $7,000,000.
Current notes payable carry interest at a rate of LIBOR plus 1 - 4%.
Interest expense, prior to capitalization of interest on self-constructed
assets was $973,000, $877,000 and $465,000 in 2001, 2000 and 1999.
COMMON STOCK
Class B common ctock is identical to Class A except that it has 10 votes per
share, is generally nontransferable except to lineal descendants, cannot
receive more dividends than Class A, and can be converted to Class A at any
time. Class A common ctock is entitled to elect 25% of the directors to be
elected at each meeting with the remaining 75% being elected by Class A and
Class B voting together. In addition, the Company has a stockholder rights
plan to protect stockholders from attempts to acquire the Company on
unfavorable terms not approved by the Board of Directors. Under certain
circumstances, the plan entitles each Class A or Class B share to additional
shares of the Company or an acquiring company, as defined, at a 50% discount
to market. Generally, the rights will be exercisable if a person or group
acquires 15% or more of the Company's outstanding shares. The rights trade
together with the underlying common stock. They can be redeemed by the
Company for $.01 per right and expire in the year 2010.
The Company accounts for stock based compensation under the provisions of
Accounting Principles Board Opinion No. 25. Under the Company's stock
purchase plans, the purchase price of the optioned stock is 85% of the lower
of the market price on the date the option is granted or the date it is
exercised. Options become exercisable exactly two years from the date of
grant and expire if not exercised. Therefore, no options are exercisable at
the end of 2001, 2000, or 1999. A summary of option activity is as follows:
Weighted
Average
Exercise Shares
Shares Price Available
On Option At Grant For Grant
Balance, June 27, 1998 45,800 $27.96 778,346
Options granted 55,474 24.97 (55,474)
Options exercised ($23.17 and $25.03) (20,369) 23.70
Options canceled (29,102) 25,325
Balance, June 26, 1999 51,803 24.63 748,197
Options granted 69,122 19.56 (69,122)
Options exercised ($20.30 and $17.00) (5,315) 19.50
Options canceled (43,632) 43,632
Balance, June 24, 2000 71,978 20.26 722,707
Options granted 53,285 17.14 (53,285)
Options exercised ($15.52 and $18.96) (10,771) 18.55
Options canceled (41,156) 41,156
Balance, June 30, 2001 73,336 $18.22 710,578
At June 30, 2001, a total of 783,914 shares of common stock are reserved for
issuance under the plan. The following information relates to outstanding
options as of June 30, 2001:
Weighted average remaining life 1.5 years
Weighted average fair value on grant date
of options granted in:
1999 $7.50
2000 6.00
2001 5.50
The fair value of each option grant was estimated on the date of grant using
the Black-Scholes options pricing model with the following weighted average
assumptions: volatility - 16% to 28%, interest - 4.3% to 6.5%, and expected
lives - 2 years. The pro forma, after tax effect of any compensation costs
related to use of SFAS No. 123, "Accounting for Stock Based Compensation,"
is as follows: 2001 $170,000, 2000 $200,000 and 1999 $150,000, or
approximately $.03, $.03, and $.02 per share.
In addition 218,371 shares of common stock are reserved for the Company's
401(k) plan at June 30, 2001. Since inception in 1986, 1,279,938 Class A and
44,155 Class B shares have been issued under this plan.
OPERATING DATA
The Company believes it has no significant concentration of credit risk as
of June 30, 2001. Trade receivables are dispersed among a large number of
retailers, distributors and industrial accounts in many countries. One
customer accounted for approximately 13% of sales in 2001 and 2000, and 11%
in 1999.
The Company is engaged in the single business segment of producing and
marketing industrial, professional and consumer products. It manufactures
over 5,000 items, including precision measuring tools, tape measures, gages
and saw blades. Operating segments are identified as components of an
enterprise about which separate discrete financial information is used by
the chief operating decision maker in how to allocate assets and assess
performance of the Company.
The Company's operations are primarily in North America, Brazil, and the
United Kingdom. Geographic information about the Company's sales and long-
lived assets are as follows:
2001 2000 1999
Sales:
North America $ 164,572 $ 172,542 $ 171,176
United Kingdom 30,520 33,064 33,249
Brazil 43,421 41,926 40,104
Eliminations and other (12,656) (12,363) (12,144)
Total $ 225,857 $ 235,169 $ 232,385
Long-lived assets:
North America $ 97,656 $ 95,343
United Kingdom 7,655 8,054
Brazil 6,037 7,028
Other 2,257 2,274
Total $ 113,605 $ 112,699
QUARTERLY FINANCIAL DATA (UNAUDITED)(in thousands except per share data)
Earnings Basic
Before Earnings
Net Gross Income Net Per
Quarter Ended Sales Profit Taxes Earnings Share
September 1999 $58,412 $16,145 $ 4,317 $ 2,875 $ 0.43
December 1999 61,245 18,195 5,556 3,817 0.57
March 2000 58,860 15,753 3,519 2,451 0.37
June 2000 56,652 16,428 3,837 2,346 0.36
$235,169 $66,521 $17,229 $11,489 $ 1.73
September 2000 $58,842 $17,101 $ 4,234 $ 2,895 $ 0.45
December 2000 60,650 17,121 3,664 2,583 0.40
March 2001 50,637 14,201 1,622 950 0.15
June 2001 55,728 16,872 1,912 1,669 0.26
$225,857 $65,295 $11,432 $ 8,097 $ 1.26
In the fourth quarter of fiscal 2001, the Company recorded a benefit related
primarily to prior year state taxes and foreign tax credits.
The Company's Class A Common Stock is traded on the New York Stock Exchange.
Item 9 - Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
The Company had no such changes in or disagreements with its independent
auditors.
PART III
Item 10 - Directors and Executive Officers of the Registrant
Directors
The information concerning the Directors of the Registrant is contained on
pages 1 through 5 in the Company's definitive Proxy Statement for the Annual
Meeting of Stockholders to be held on September 19, 2001, and is hereby
incorporated by reference.
Executive Officers of the Registrant
Held Present
Name Age Office Since Position
Douglas R. Starrett 81 1995 Chairman and CEO and
Director
Douglas A. Starrett 49 1995 President and Director
George B. Webber 80 1962 Vice President
Webber Gage Division
and Director
Anthony M. Aspin 48 2000 Vice President Sales
Roger U. Wellington, Jr. 60 1984 Treasurer and Chief
Financial Officer and
Director
Steven A. Wilcox 46 1997 Clerk
Douglas R. Starrett, Douglas A. Starrett (son of Douglas R. Starrett), George
B. Webber and Roger U. Wellington, Jr. have served in the same capacities as
listed above for at least the past five years. Anthony M. Aspin was previously
a divisional sales manager with the Company. Except in the case of Steven
Wilcox, the positions listed above represent their principal occupations and
employment during the last five years. Steven Wilcox, elected clerk in 1997,
has been a partner in Ropes & Gray, counsel for the Company, throughout that
period.
The President, Treasurer and Clerk hold office until the first meeting of the
directors following the next annual meeting of stockholders and until their
respective successors are chosen and qualified, and each other officer holds
office until the first meeting of directors following the next annual meeting
of stockholders, unless a shorter period shall have been specified by the
terms of his election or appointment or, in each case, until he sooner dies,
resigns, is removed or becomes disqualified.
There have been no events under any bankruptcy act, no criminal proceedings
and no judgments or injunctions material to the evaluation of the ability and
integrity of any director or executive officer during the past five years.
Item 11 - Executive Compensation
The information concerning management remuneration is contained on pages 6
through 11 in the Company's definitive Proxy Statement for the Annual Meeting
of Stockholders to be held on September 19, 2001 and, except for the
information under the captions "Compensation Committee Report," is hereby
incorporated by reference.
Item 12 - Security Ownership of Certain Beneficial Owners and
Management
(a) Security ownership of certain beneficial owners:
The information concerning a more than 5% holder of any class of the
Company's voting shares is contained on page 4 of the Company's
definitive Proxy Statement for the Annual Meeting of Stockholders to be
held on September 19, 2001, and is hereby incorporated by reference.
(b) Security ownership of management:
The information concerning the beneficial ownership of each class of
equity securities by all directors, and all directors and officers of
the Company as a group, is contained on pages 2 through 4 of the
Company's definitive Proxy Statement for the Annual Meeting of
Stockholders to be held on September 19, 2001, and is hereby
incorporated by reference.
(c) The Company knows of no arrangements that may, at a subsequent date,
result in a change in control of the Company.
Item 13 - Certain Relationships and Related Transactions
(a) Transactions with management and others: None
(b) Certain business relationships: Not applicable
(c) Indebtedness of management: None
(d) Transactions with promoters: Not applicable
PART IV
Item 14 - Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
(a) 1. Financial statements filed in item 8 of this annual report:
Consolidated Statements of Earnings and Cash Flows for the
Three Years in the Period ended June 30, 2001
Consolidated Balance Sheets at June 30, 2001 and June 24, 2000
Consolidated Statements of Stockholders' Equity for the Three
Years in the Period Ended June 30, 2001
Notes to Consolidated Financial Statements
2. All other financial statements and schedules are omitted because
they are inapplicable, not required under the instructions, or the
information is reflected in the financial statements or notes
thereto.
3. See Exhibit Index below.
(b) There were no reports on Form 8-K filed in the last quarter of the
period covered by this report.
(c) See Exhibit Index below.
(d) Not applicable.
THE L.S. STARRETT COMPANY AND SUBSIDIARIES - EXHIBIT INDEX
(3i) Restated Articles of Organization dated December 20, 1989, filed
with Form 10-Q for the quarter ended December 23, 1989, are hereby
incorporated by reference.
(3ii) Bylaws as amended September 16, 1999, filed with Form 10-Q for the
quarter ended September 24, 1999, are hereby incorporated by
reference.
(4a) Loan Agreement and related documents, relative to $7,500,000
Industrial Revenue Bond financing dated as of September 1, 1985,
between The Surry County Industrial Facilities and Pollution
Control Financing Authority and The L.S. Starrett Company will be
furnished to the Commission upon request.
(4b) Common Stock Rights Agreement, dated as of May 23, 2000, between
the Company and Fleet National Bank, as Rights Agent, including
Form of Common Stock Purchase Rights Certificate, filed on May 23,
2000 with the Company's Form 8-A, is hereby incorporated by
reference.
(10a) $25,000,000 Revolving Credit Agreement dated as of June 13, 2000,
among The L.S. Starrett Company and Fleet National Bank filed with
Form 10-K for the year ended June 24, 2000 is hereby incorporated
by reference.
(21) Subsidiaries of the Registrant. See page 23.
(23) Independent Auditors' Consent. See page 24.
Exhibit 21
THE L.S. STARRETT COMPANY AND SUBSIDIARIES
SUBSIDIARIES OF THE REGISTRANT
JUNE 30, 2001
The parent company, The L.S. Starrett Company, incorporated in Massachusetts,
has the following subsidiaries, all of which are wholly owned:
Fiscal
Year End
Starrett Securities Corporation Incorporated in Last Sat
Massachusetts in June
Evans Rule Company, Inc. Incorporated in Last Sat.
New Jersey in June
The L.S. Starrett Co. of Canada Incorporated in Last Sat.
Limited Canada in June
The L.S. Starrett International Incorporated in Last Sat.
Company Barbados in June
The L.S. Starrett Company Incorporated in May 31
Limited Scotland
Starrett Industria e Incorporated in May 31
Comercio Ltda. Brazil
Level Industries, Inc. Incorporated in Last Sat.
Massachusetts in June
Starrett Tools (Suzhou) Co., Ltd. Incorporated in Dec. 31
China
Starrett Tools (Shanghai) Co., Ltd. Incorporated in Dec. 31
China
The L.S. Starrett Company of Incorporated in June 30
Australia Pty. Ltd. Australia
Exhibit 23
INDEPENDENT AUDITORS' CONSENT
The L.S. Starrett Company
We consent to the incorporation by reference in the Registration Statements
No. 33-55623, No. 333-12997 and No. 333-89965 of The L.S. Starrett Company,
all on Form S-8, of our report dated August 3, 2001, appearing in the Annual
Report on Form 10-K of The L.S. Starrett Company for the year ended June 30,
2001.
S/DELOITTE & TOUCHE LLP
Boston, Massachusetts
September 19, 2001
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
THE L.S. STARRETT COMPANY
(Registrant)
By S/ROGER U. WELLINGTON, JR.
Roger U. Wellington, Jr.,
Treasurer and Chief Financial Officer
Date: September 19, 2001
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated:
S/DOUGLAS R. STARRETT S/DOUGLAS A. STARRETT
Douglas R. Starrett, Sept. 19, 2001 Douglas A. Starrett, Sept. 19, 2001
Chairman and CEO and Director President and Director
S/THOMAS E. MAHONEY S/WILLIAM S. HURLEY
Thomas E. Mahoney, Sept. 19, 2001 William S. Hurley, Sept. 19, 2001
Director Director
S/RICHARD B. KENNEDY S/GEORGE B. WEBBER
Richard B. Kennedy, Sept. 19, 2001 George B. Webber, Sept. 19, 2001
Director Vice President Webber Gage Division
and Director
S/STEVEN G. THOMSON S/ROGER U. WELLINGTON, JR.
Steven G. Thomson, Sept. 19, 2001 Roger U. Wellington,Jr.,Sept.19, 2001
Chief Accounting Officer Treasurer and Chief Financial Officer
and Director