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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 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:
Name of Each
Title of Each Class Exchange on Which Registered
------------------- ----------------------------
Common Stock, Par Value $1.50 Per Share New York Stock Exchange
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. [X]
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
31, 2001 was approximately $258,175,000 Registrant's closing price as
reported on the New York Stock Exchange for July 31, 2001 was $23.35 per
share.
The number of shares of Registrant's Common Stock outstanding on
September 12, 2001 was 12,223,487.
Portions of the Proxy Statement of Registrant dated September 20,
2001 are incorporated in Part III of this report.
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PART I
ITEM 1. BUSINESS
Standex(1) 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, 2001, the Company had approximately
5,200 employees.
The principal products and the major markets for the Company's
products and services are set forth below. Sales are made both directly to
customers and by or through manufacturers representatives, dealers and
distributors.
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(TM), Can-Am Casters and Wheels(TM) and PEMCO(R) casters and
wheels and industrial hardware for general industry, hospitals,
supermarkets, hotels and restaurants. National Metal fabricated metal
products, including specialty hardware and metal furniture for the food
service industry, retail stores, office furniture markets, stationery
supply houses and other industries.
<FN>
--------------------
<F1> References in this Annual Report on Form 10-K to "Standex" or the
"Company" shall mean Standex International Corporation and its
subsidiaries.
</FN>
2
* Roehlen(R) embossing rolls, texturizing and laser engraving systems,
machines and plates; Mold-Tech(R) mold engraving; 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 and ATC-Frost
transformers and magnetic components 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(R) Publishing religious periodicals, curricula, Sunday school
literature, children's books and supplies published and marketed to
Sunday schools, churches, vacation Bible schools and Christian
bookstores and printing for general commerce and industry.
* Berean(R) Christian Stores, a chain of 21 Berean(R) Christian
bookstores, serving 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; Red Cooper's Onion Store onions
for mail order consumer direct sales.
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.
3
Backlog
Backlog orders believed to be firm at June 30, 2001 and 2000 are as
follows (in thousands):
2001 2000
--------------------
<s> <c> <c>
Food Service $ 17,996 $ 22,562
Industrial 108,515 116,941
Consumer 6,543 7,276
--------------------
Total $133,054 $146,779
====================
All but approximately $52,939,000 of the 2001 backlog, and
$64,758,000 of the 2000 backlog, was expected to be realized as sales in
the following fiscal year.
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 2001, the Company
invested $13,832,000 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. See the notes to the Consolidated Financial
Statements for international operations financial data.
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.
4
ITEM 2. PROPERTIES
At June 30, 2001, Standex operated a total of 90 principal plants,
stores and warehouses located through the United States, Western Europe,
Canada, Australia, Singapore and Mexico. The Company owned 46 of the
facilities and the balance were leased. The Company operated 21 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, 2001 is as follows (in thousands):
Area in Square Feet
-------------------
Owned Leased
-------------------
<s> <c> <c>
Food Service 702 228
Industrial 1,365 424
Consumer 1,119 353
General Corporate 29 -
-------------------
Total 3,215 1,005
===================
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.
5
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
-------------------------------------------------------------------------------------------------
<s> <c> <c>
Thomas L. King 71 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 61 Chief Executive Officer of the Company since July 1995; Presi-
dent of the Company since July 1994; Chief Operating Officer of
the Company from July 1994 to June 1995; and Vice President of
the Company from July 1992 to July 1994.
David R. Crichton 63 Executive Vice President/Operations of the Company since June
1989.
Edward F. Paquette 65 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 46 Vice President of the Company since July 1999; General Counsel
of the Company since January 1998; Secretary of the Company
since October 1997; Assistant General Counsel and Assistant Sec-
retary of the Company from January 1997 to December 1997 and
prior thereto Senior Corporate Attorney and Assistant Secretary of
the Company.
Daniel C. Potter 45 Treasurer of the Company since August 1998; Assistant Treasurer
from July 1997 to July 1998; Corporate Tax Manager of the Com-
pany since February 1997; Tax Manager of the Company from
August 1996 to January 1997 and prior thereto Tax Manager/In-
ternational.
Robert R. Kettinger 59 Corporate Controller of the Company since July 1991.
Jerry G. Griffin 51 Group Vice President, Food Service Group since July 1998; Presi-
dent of Standex Commercial Products from 1990 to 1998; and prior
thereto Vice President of Finance and Administration of Standex
Commercial Products.
Peter G. Gerstberger 59 Group Vice President, Consumer Group since April 1999; prior
thereto Founder and President of The Berwick Group, a manage-
ment consulting group.
Other than Messrs. Griffin and Gerstberger, who are not corporate
officers, 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 among any of the directors or executive officers of the
Company.
6
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 as follows:
Common Stock Prices and Dividends Paid
Common Stock Price Range Dividends
2001 2000 per Share
Year Ended June 30 High Low High Low 2001 2000
------------------ -----------------------------------------------------
<s> <c> <c> <c> <c> <c> <c>
First quarter $19.44 $16.50 $29.00 $22.44 $0.20 $0.19
Second quarter 20.63 16.63 27.00 19.50 0.21 0.20
Third quarter 25.76 19.75 21.25 14.34 0.21 0.20
Fourth quarter 24.30 20.75 18.00 15.19 0.21 0.20
The approximate number of stockholders of record on September 12,
2001 was 3,080.
7
ITEM 6. SELECTED FINANCIAL DATA
Selected financial data for the five years ended June 30, 2001 is as
follows:
(In thousands, except per share data) 2001 2000 1999 1998 1997
------------------------------------- --------------------------------------------------------
<s> <c> <c> <c> <c> <c>
Net sales $600,152 $637,049 $641,400 $616,180 $564,623
Gross profit margin 198,149 209,338 210,126 200,548 186,131
Interest expense 11,897 11,337 11,156 10,779 8,497
Income before income taxes 42,465 46,853 51,491 33,064 43,516
Provision for income taxes 17,568 19,150 20,130 12,915 16,597
Net income 24,897 27,703 31,361 20,149 26,919
PER SHARE DATA
Net sales (diluted) 48.64 49.91 49.20 46.61 41.85
Earnings:
Basic 2.05 2.19 2.42 1.54 2.02
Diluted 2.02 2.17 2.41 1.52 2.00
Dividends paid 0.83 0.79 0.76 0.76 0.75
Book value 14.16 13.37 12.59 11.19 10.75
Average shares outstanding
Basic 12,172 12,672 12,972 13,072 13,337
Diluted 12,338 12,763 13,037 13,219 13,491
JUNE 30 FINANCIAL CONDITION
Working capital 139,807 145,009 146,514 148,943 136,946
Current ratio 2.86 2.68 2.79 2.73 2.95
Property, plant and equipment-net 113,844 112,137 104,783 102,973 85,598
Total assets 424,264 424,200 410,042 411,242 341,038
Long-term debt 153,019 153,436 148,111 163,448 112,347
Stockholders' equity 172,174 164,814 162,301 146,197 141,185
See notes to consolidated financial statements.
8
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
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, 2001, the Company paid $15.0
million for acquisitions, invested $13.8 million in plant and equipment,
purchased $12.5 million of its common stock and paid out $10.1 million in
cash dividends to shareholders. These expenditures were primarily funded by
net operating cash flows.
Net cash provided by operating activities was $42.1 million in 2001,
a decrease of $2.1 million as compared to $44.2 million in 2000. A decrease
of $15.5 million in the amount of cash used to fund accounts receivable and
a decrease of $2.9 million in cash used for inventories were offset by an
$18.3 million increase in the amount of cash used for accounts payable,
other accrued liabilities and income taxes.
As of June 30, 2001, the Company had the ability to borrow an
additional $84.7 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.
In September 2000, the Company sold its Keller-Dorian subsidiary and
in April 2001 the Company acquired ATC-Frost Magnetics, Inc. These
transactions are described more fully in the Notes to the Consolidated
Financial Statements. The Company intends to continue its 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.
Fiscal 2001 as Compared to Fiscal 2000
Net sales for the year ended June 30, 2001 of $600.2 million
represents a decrease of $36.9 million or 5.8% from sales of $637.0 million
for the year ended June 30, 2000. The effect, on net sales, of changes in
the average foreign exchange rates was not significant.
For the year ended June 30, 2001 net sales in the Food Service
Segment increased by $2.7 million or 1.9% from the prior year. Net sales in
the Consumer Segment decreased by $8.0 million or 3.6% from the prior year.
The decrease is primarily the result of the impact of lower housing starts
on our Standex Air Distribution Products division. Net sales in the
Industrial Segment were $240.6 million for the year ended June 30, 2001
compared to $272.2 million for 2000. The Industrial Group continues to be
adversely affected by the slowdown in the automotive, trucking, aerospace
and telecommunications markets as several relatively larger customer
program commitments and orders have been delayed.
9
The overall gross profit margin percentage ("GPMP") remained
essentially the same (33.0% vs. 32.9%) for the current and prior year. All
segments recorded similar GPMPs in 2001 as compared to 2000.
Consolidated selling, general and administrative ("SG&A") expenses
were 24.0% of net sales, up slightly from 23.4% in the prior year. However,
SG&A declined $4.7 million. None of the 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 charge of $5.4 million was recorded in the previous
year. Additionally, a gain on stock received was reported in the previous
year. Both these items are more fully described below and in the Notes to
the Consolidated Financial Statements.
An increase of $560,000 in interest expense for the year was due
primarily to a small increase in average net borrowings.
As a result of the above factors, income before income taxes was
$42.5 million compared to $46.9 million in the prior year. The effective
tax rate increased to 41.4% as compared to 40.9% in the prior year since a
greater portion of the Company's income was generated in higher taxed
countries. Net income decreased $2.8 million or 10.1% from the prior year.
Fiscal 2000 as Compared to Fiscal 1999
Net sales for the year ended June 30, 2000 of $637 million represents
a decrease of $4.4 million or 0.7% from sales of $641.4 million for the
year ended June 30, 1999. Fiscal 1999 included $10.8 million of sales from
divisions that were disposed of. The effect, on net sales, of changes in
the average foreign exchange rates was not significant.
For the year ended June 30, 2000, net sales in the Food Service
Segment decreased by $7.7 million or 5.1% from 1999. The decrease was, to a
large extent, due to delays in healthcare projects caused by funding
constraints and a slowdown in orders resulting from consolidations within
the supermarket industry. Net sales in the Consumer Segment increased by
$4.5 million or 2.1% from 1999, which included $4.3 million in sales of a
division which was disposed of. The increase is the result of additional
stores in the Berean division and increased customer demand in the Standard
Publishing and Standex Air Distribution Products divisions. Net sales in
the Industrial Segment were $272.2 million for the year ended June 30, 2000
compared to $273.3 million for 1999. Fiscal Year 1999 included $6.5 million
in sales of divisions that were disposed of. Customer demand increases in
the Spincraft, Custom Hoists, Standex Electronics, and North American Mold-
Tech divisions, were offset by weakening demand in the James Burn, Jarvis
Caster Group, and European Mold-Tech divisions.
The overall gross profit margin percentage ("GPMP") remained
essentially the same (32.9% vs. 32.8%) for 2000 and 1999. The Food Service
Segment GPMP decreased to 29.3% from 31.0% in 1999 primarily due to the
sales shortfalls described above. The Consumer Segment GPMP remained
virtually the same at 37.2% in 2000 versus 37.1% in 1999, and the
Industrial Segment GPMP increased slightly to 30.6% from 1999's 30.1%.
Consolidated selling, general and administrative ("SG&A") expenses
remained stable overall at approximately 23% of net sales. None of the
fluctuations in SG&A reported by the Company's three segments were
individually significant and corresponded with the changes in net sales
discussed above.
10
In June 2000, the Company recorded a restructuring charge of $5.4
million before taxes. The restructuring plan involved the: (1) disposal,
closing or elimination of certain under-performing and unprofitable
operating plants, product lines, manufacturing processes and business; (2)
realignment and consolidation of certain marketing and distribution
activities; and (3) other cost containment actions, including selective
personnel reductions. This charge, a significant portion of which was non-
cash, is more fully described in the Notes to the Consolidated Financial
Statements. Also, during fiscal 2000, other income of $2.7 million was
recorded resulting from the receipt of marketable stock of an insurance
company, in which Standex owned life policies, that "demutualized" by
converting from a mutual company to a stock company.
An increase of less than $200,000 in interest expense for 2000 was
due primarily to a slight increase in average net borrowings.
As a result of the above factors, income before income taxes was
$46.9 million compared to $51.5 million in 1999. The effective tax rate
increased to 40.9% as compared to 39.1% in 1999 since a greater portion of
the Company's income was generated in higher taxed countries. Net income
decreased $3.7 million or 11.7% from 1999.
Other Matters
Inflation-Inflation has not been a significant factor in fiscal 2001,
2000 and 1999 mainly due to fairly stable labor and material costs.
Environmental Matter-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.
New Accounting Pronouncements
Effective July 1, 2000, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities". The adoption of SFAS No. 133, which
did not have a material effect on the Company's financial position or
results of operations, is more fully described in the Notes to the
Consolidated Financial Statements.
In December 1999, the Securities and Exchange Commission (the "SEC")
released Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in
Financial Statements." SAB No. 101 summarizes certain of the SEC's views in
applying generally accepted accounting principles to revenue recognition in
financial statements and was effective for the Company in fiscal 2001. The
adoption of SAB No. 101 did not have a material effect on the Company's
Consolidated Financial Statements.
In June 2001, the SEC issued SFAS No. 141 "Business Combinations" and
No. 142 "Goodwill and Other Intangible Assets". SFAS No. 141 eliminates the
use of pooling of interest accounting. SFAS No. 142 addresses the
accounting for goodwill and other intangible assets. Under SFAS No. 142,
goodwill will be subject to periodic evaluation of recoverability and will
no longer be required to be amortized. The Company will be required to
adopt these accounting standards in fiscal 2002 (SFAS No. 141) and fiscal
2003 (SFAS No. 142). Management is currently evaluating the effect of
adopting SFAS No. 141 and No. 142 on the consolidated financial statements.
11
ITEM 7A. 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, 2001, 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 borrowings. As of June 30, 2001, a
hypothetical 10% immediate increase in interest rates would increase the
Company's annual interest expense by $421,000. The Company has interest
rate swap agreements to fix the interest rate on $35 million of its
variable rate borrowings. At June 30, 2001, the fair value of the Company's
interest rate swap agreements would not be materially affected by a 10%
change in interest rates.
In addition to the $35 million of variable rate borrowings covered by
interest rate swap agreements, the Company also has $61 million of long-
term debt at fixed interest rates as of June 30, 2001. 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 million as of June 30, 2001. Such fair value changes may affect the
Company's determination as to whether to retain, replace or retire its
long-term debt.
12
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Standex International Corporation and Subsidiaries
Statements of Consolidated Income
Year Ended June 30 (In thousands, except per share data) 2001 2000 1999
-------------------------------------------------------- --------------------------------
<s> <c> <c> <c>
Net Sales $600,152 $637,049 $641,400
Cost of Products Sold 402,003 427,711 431,274
--------------------------------
Gross profit 198,149 209,338 210,126
Selling, General and Administrative 144,086 148,770 148,790
Restructuring charge (credit) - 5,408 (1,016)
--------------------------------
Income from Operations 54,063 55,160 62,352
--------------------------------
Other income (expense):
Interest expense (11,897) (11,337) (11,156)
Interest and other income 299 319 295
Gain on stock received - 2,711 -
--------------------------------
Total (11,598) (8,307) (10,861)
--------------------------------
Income Before Income Taxes 42,465 46,853 51,491
Provision for Income Taxes 17,568 19,150 20,130
--------------------------------
Net Income $ 24,897 $ 27,703 $ 31,361
================================
EARNINGS PER SHARE
Basic $ 2.05 $ 2.19 $ 2.42
Diluted $ 2.02 $ 2.17 $ 2.41
--------------------------------
See notes to consolidated financial statements.
13
Standex International Corporation and Subsidiaries
Statements of Consolidated Stockholders' Equity
Unamortized Accumulated
Additional Value of Other Total
Common Paid-in Restricted Retained Comprehensive Treasury Stock Stockholders'
Year End (In thousands) Stock Capital Stock Awards Earnings Income Shares Amount Equity
----------------------- ---------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c> <c> <c> <c>
Balance, June 30, 1998 $41,976 $ 8,516 $324,130 $ (2,729) 14,918 $(225,697) $146,196
Stock issued for employee stock
options and stock purchase plan,
net of related income tax benefit 641 (143) 2,182 2,823
Treasury stock acquired 314 (7,454) (7,454)
Comprehensive income
Net income 31,361 31,361
Foreign currency
translation adjustment (749) (749)
--------
Total comprehensive income 30,612
Dividends paid ($.76 per share) (9,878) (9,878)
-------------------------------------------------------------------------------------------
Balance, June 30, 1999 41,976 9,157 345,613 (3,478) 15,089 (230,969) 162,299
Stock issued for employee stock
options and stock purchase plan,
net of related income tax benefit 117 (127) 1,952 2,069
Treasury stock acquired 698 (12,757) (12,757)
Comprehensive income
Net income 27,703 27,703
Foreign currency
translation adjustment (4,487) (4,487)
--------
Total comprehensive income 23,216
Dividends paid ($.79 per share) (10,013) (10,013)
Balance, June 30, 2000 41,976 9,274 363,303 (7,965) 15,660 (241,774) 164,814
Stock issued for employee stock
options and stock purchase plan,
net of related income tax benefit 1,372 (311) 4,828 6,200
Restricted stock awards 111 $(1,450) (86) 1,339 0
Amortization of restricted
stock awards 401 401
Stock issued in conjunction
with acquisition 193 (29) 446 639
Treasury stock acquired 587 (12,483) (12,483)
Comprehensive income
Net income 24,897 24,897
Foreign currency
translation adjustment (1,109) (1,109)
Interest rate swap liability (1,060) (1,060)
--------
Total comprehensive income 22,728
--------
Dividends paid ($.83 per share) (10,125) (10,125)
-------------------------------------------------------------------------------------------
Balance, June 30, 2001 $41,976 $10,950 $(1,049) $378,075 $(10,134) 15,821 $(247,644) $172,174
===========================================================================================
See notes to consolidated financial statements.
14
Standex International Corporation and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share data) 2001 2000
--------------------------------- ----------------------
<s> <c> <c>
June 30
ASSETS
Current Assets
Cash and cash equivalents $ 8,955 $ 10,438
Receivables-less allowance of $3,433 in 2001 and $3,400 in 2000 98,470 104,431
Inventories 102,674 112,201
Prepaid expenses 4,845 4,316
----------------------
Total current assets 214,944 231,386
----------------------
Property, Plant and Equipment
Land and buildings 86,246 83,589
Machinery and equipment 177,367 176,053
----------------------
Total 263,613 259,642
Less accumulated depreciation 149,769 147,505
----------------------
Property, plant and equipment-net 113,844 112,137
----------------------
Other Assets
Prepaid pension cost 43,625 38,334
Goodwill-net 41,069 31,184
Other 10,782 11,159
----------------------
Total other assets 95,476 80,677
----------------------
Total $ 424,264 $ 424,200
======================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of debt $ 2,532 $ 2,357
Accounts payable 33,554 36,495
Accrued payroll and employee benefits 16,118 18,857
Income taxes 4,296 5,357
Other 18,637 23,311
----------------------
Total current liabilities 75,137 86,377
----------------------
Long-Term Debt-less current portion 153,019 153,436
----------------------
Deferred Income Taxes 19,831 16,610
----------------------
Other Non-current Liabilities 4,103 2,963
----------------------
Commitments and Contingencies
Stockholders' Equity
Common stock-authorized, 60,000,000 shares in 2001 and 2000; par
value, $1.50 per share; issued 27,984,278 shares in 2001 and 2000 41,976 41,976
Additional paid-in capital 10,950 9,274
Retained earnings 378,075 363,303
Unamortized Value of Restricted Stock (1,049) -
Accumulated other comprehensive income (10,134) (7,965)
Less cost of treasury shares: 15,821,421 shares in 2001 and
15,659,551 shares in 2000 (247,644) (241,774)
----------------------
Total stockholders' equity 172,174 164,814
----------------------
Total $ 424,264 $ 424,200
======================
See notes to consolidated financial statements.
15
Standex International Corporation and Subsidiaries
Statement of Consolidated Cash Flows
Year Ended June 30 (In thousands) 2001 2000 1999
--------------------------------- --------------------------------
<s> <c> <c> <c>
Cash Flows from Operating Activities
Net Income $ 24,897 $ 27,703 $ 31,361
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 13,680 13,622 13,770
Amortization of restricted stock awards 401 - -
Profit improvement incentive plan - (40) 286
Deferred income taxes 3,118 1,874 2,799
Net pension credit (3,608) (1,998) (1,793)
(Gain) Loss on sale of investments, real estate and equipment 182 203 205
Increase (Decrease) in cash from changes in assets and
liabilities, net of effects from acquisitions & dispositions:
Receivables-net 8,160 (7,303) (1,337)
Inventories 10,867 7,924 (219)
Prepaid expenses and other (2,743) (3,209) (1,005)
Accounts payable (3,342) 334 (1,509)
Accrued payroll, employee benefits and other liabilities (8,455) 5,647 (5,767)
Income taxes (1,059) (549) 332
--------------------------------
Net cash provided by operating activities 42,098 44,208 37,123
--------------------------------
Cash Flows from Investing Activities
Expenditures for property and equipment (13,832) (22,787) (16,824)
Expenditures for acquisitions, net of cash acquired (15,048) - (796)
Proceeds from sale of investments, real estate and equipment 1,906 858 1,517
Proceeds from disposition of businesses 532 - 5,092
--------------------------------
Net cash used for investing activities (26,442) (21,929) (11,011)
--------------------------------
Cash Flows from Financing Activities
Proceeds from additional borrowings 7,051 12,828 25,000
Payments of debt (7,292) (9,110) (39,869)
Stock issued under employee stock option and purchase plans 6,199 2,068 2,823
Cash dividends paid (10,125) (10,013) (9,878)
Purchase of treasury stock (12,483) (12,757) (7,453)
--------------------------------
Net cash used for financing activities (16,650) (16,984) (29,377)
--------------------------------
Effect of Exchange Rate Changes on Cash and
Cash Equivalents (489) (766) (82)
Net Changes in Cash and Cash Equivalents (1,483) 4,529 (3,347)
Cash and Cash Equivalents at Beginning of Year 10,438 5,909 9,256
--------------------------------
Cash and Cash Equivalents at End of Year $ 8,955 $ 10,438 $ 5,909
--------------------------------
Supplemental Disclosure of Cash Flow Information
Issued for acquisitions:
Stock $ 639 $ - $ -
Notes payable - - 500
Cash paid during the year for:
Interest 12,094 11,566 11,063
Income taxes 15,408 17,766 16,883
================================
See notes to consolidated financial statements.
16
Standex International Corporation and Subsidiaries
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 and is
prepared in accordance with generally accepted accounting principles in the
United States of America.
Revenue Recognition
The Company generally recognizes product and related services revenue
when the price to the customer is fixed or determinable, the collectibility
of the invoice is evaluated and delivery has occurred. Revenues under
certain fixed price contracts are generally recorded at the time deliveries
are made or, in some cases, on a percentage of completion basis.
Cash and Cash Equivalents
Cash and cash equivalents include highly liquid investments purchased
with a 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 basises of assets and liabilities using enacted tax rates.
Goodwill
The excess of purchase price of acquired businesses over the fair
value of net identifiable assets at 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 $12,184,000 and
$11,102,000 at June 30, 2001 and 2000, 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.
17
Research and Development
Research and development expenditures are expensed as incurred.
Foreign Currency Translation
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.
Derivative Instruments and Hedging Activities
Effective July 1, 2000, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities." Standex manages its debt portfolio by
using interest rate swaps to achieve an overall desired position of fixed
and floating rate debt to reduce certain exposures to interest rate
fluctuations. Standex designates its interest rate swaps as cash flow hedge
instruments, whose recorded value in the consolidated balance sheet
approximates fair market value. The Company assesses the effectiveness of
its hedge instruments on a quarterly basis. For the year ended June 30,
2001, the Company completed an assessment of the cash flow hedge
instruments and determined these hedges to be highly effective. The Company
also determined the ineffective portion of the hedge to be immaterial.
Forward foreign currency exchange 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 enters into such contracts for hedging purposes only.
The Company does not hold or issue derivative instruments for trading
purposes. The cumulative effect of a change in accounting principles due to
adoption of SFAS No. 133 as of July 1, 2000 did not have a significant
impact on earnings for the year ended June 30, 2001.
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
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.
18
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.
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:
2001 2000 1999
--------------------------
<s> <c> <c> <c>
Basic-Average Shares Outstanding 12,172 12,672 12,972
Effect of Dilutive Securities-Stock Option 166 91 65
--------------------------
Diluted-Average Shares Outstanding 12,338 12,763 13,037
==========================
Both basic and dilutive income are the same for computing earnings
per share. Options, which were not included in the computation of diluted
earnings per share because to do so would have had an anti-dilutive effect,
totaled 565,091; 731,103; and 407,015 for the years ended June 30, 2001,
2000 and 1999, respectively.
Reclassifications
Certain prior years' amounts have been reclassified to conform to the
2001 financial statement presentation.
New Accounting Pronouncements
In December 1999, the Securities and Exchange Commission (the "SEC")
released Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in
Financial Statements" SAB No. 101 summarizes certain of the SEC's views in
applying generally accepted accounting principles to revenue recognition in
financial statements and was effective for the Company in fiscal 2001. The
adoption of SAB No. 101 did not have a material effect on the Company's
Consolidated Financial Statements.
In June 2001, the SEC issued SFAS No. 141 Business Combinations and
No. 142 Goodwill and Other Intangible Assets. SFAS No. 141 eliminates the
use of pooling of interest accounting. SFAS No. 142 addresses the
accounting for goodwill and other intangible assets. Under SFAS No. 142,
goodwill will be subject to periodic evaluation of recoverability and will
no longer be required to be amortized. The Company will be required to
adopt these accounting standards in fiscal 2002 (SFAS No. 141) and fiscal
2003 (SFAS No. 142). Management is currently evaluating the effect of
adopting SFAS No. 141 and No. 142 on the consolidated financial statements.
19
Inventories
Inventories are comprised of (in thousands):
June 30 2001 2000
------- --------------------
<s> <c> <c>
Raw materials $ 35,724 $ 38,887
Work in process 20,678 22,365
Finished goods 46,272 50,949
--------------------
Total $102,674 $112,201
====================
Debt
Debt is comprised of (in thousands):
June 30 2001 2000
------- --------------------
<s> <c> <c>
Bank credit agreements $ 90,297 $ 83,069
Institutional investors 6.8% to 7.13% (due 2002-2008) 60,714 67,857
Other 3.0% to 4.85% (due 2002-2018) 4,540 4,867
--------------------
Total 155,551 155,793
Less current portion 2,532 2,357
--------------------
Total long-term debt $153,019 $153,436
====================
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, 2001, the effective rate of interest under the agreement was 4.30%. The
Company is required to pay a commitment fee of 0.2% on the average daily-
unused amount. As of June 30, 2001 and 2000 the Company had borrowings of
$65 million and $35 million, respectively, 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 and
varied from 4.50% to 7.81% during 2001. Available borrowings under the
revolving credit agreement described above are reduced by unsecured short-
term borrowings. At June 30, 2001, the Company had the ability to borrow an
additional $84,703,000 under the aforementioned bank credit agreements.
Institutional Investor Agreements
At June 30, 2001, the Company had 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 note purchase agreement with two institutional investors with a
balance of $35,714,000 which bears interest at 7.13% annually and is
payable in annual installments of $7,143,000.
Interest Rate Swap Agreements
The Company manages its debt portfolio by using interest rate swaps
to achieve an overall desired position of fixed and floating rate debt to
reduce certain exposures to interest rate fluctuations.
20
At June 30, 2001, the Company had three interest rate swap contracts
with an aggregate notional amount of $35.0 million. These agreements
convert variable rates to fixed rates ranging from 6.2% to 7.5% on
aggregate notional amounts of $25 million and $10 million maturing in 2002
and 2003, respectively.
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, 2001, 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. This
review revealed that the interest rates swaps were highly effective for
fiscal 2001. Gains or losses associated with interest rates swaps
determined to be ineffective will result in the reclassification into
earnings of the gains/losses previously reported in Other Comprehensive
Income. Management believes that the fair values of the rate swap
agreements approximate the recorded amounts.
Loan Covenants and Repayment Schedule
The Company's loan agreements contain a limited number of provisions
relating to the maintenance of certain financial ratios and restrictions on
additional borrowings and investments.
The principal payments due under the institutional investor
agreements are expected to be funded through additional unsecured short-
term borrowings. Such borrowings, and the unsecured short-term borrowings
outstanding at June 30, 2001, 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: 2002, $2,532,000; 2003, $102,732,000;
2004, $7,501,000; 2005, $7,143,000; 2006, $7,143,000; and thereafter,
$28,500,000.
Accrued Payroll and Employee Benefits
This current liability caption consists of (in thousands):
June 30 2001 2000
------- ------------------
<s> <c> <c>
Payroll $13,484 $14,776
Benefits 2,227 3,141
Taxes 407 940
------------------
Total $16,118 $18,857
==================
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, 2001, 2000 and 1999 was approximately $7,500,000;
$8,000,000; and $7,900,000, respectively. At June 30, 2001, the minimum
annual rental commitments under noncancelable operating leases, principally
real estate, were approximately: 2002, $5,000,000; 2003, $4,200,000; 2004,
$3,700,000; 2005, $2,900,000; 2006, $2,100,000; and thereafter, $6,100,000.
21
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.
Income Taxes
The provision for income taxes consists of (in thousands):
2001 2000 1999
-----------------------------
<s> <c> <c> <c>
Current:
Federal $11,244 $13,088 $10,583
State 1,023 1,304 2,838
Non-U.S. 2,080 2,884 3,910
-----------------------------
Total 14,347 17,276 17,331
Deferred 3,221 1,874 2,799
-----------------------------
Total $17,568 $19,150 $20,130
=============================
The components of income before income taxes are as follows (in
thousands):
2001 2000 1999
-----------------------------
<s> <c> <c> <c>
U.S. Operations $36,357 $42,694 $43,954
Non-U.S. Operations 6,108 4,159 7,537
-----------------------------
Total $42,465 $46,853 $51,491
=============================
A reconciliation of the U.S. Federal income tax rate to the effective
income rate is as follows:
2001 2000 1999
----------------------
<s> <c> <c> <c>
Statutory tax rate 35.0% 35.0% 35.0%
Non-U.S. 2.9 2.6 (0.2)
State taxes 3.0 3.8 3.9
Other items, net 0.5 (0.5) 0.4
----------------------
Effective income tax rate 41.4% 40.9% 39.1%
======================
22
Significant components of the company's net deferred tax liabilities
are as follows (in thousands):
2001 2000
------------------
<s> <c> <c>
Deferred tax liabilities:
Accelerated depreciation $ 9,040 $ 8,933
Net pension credit 15,098 13,086
Other items 352 1,120
Deferred tax assets:
Expense accruals (4,051) (5,544)
Restructuring charge 0 (456)
Compensation costs (608) (529)
------------------
Net deferred tax liability $19,831 $16,610
==================
2001 2000 1999
-----------------------------
<s> <c> <c> <c>
Deferred taxes:
Accelerated deprecation $ 1,163 $ 983 $(1,575)
Net pension credit 2,011 1,517 1,491
Compensation costs (79) (220) 89
Restructuring charge 456 (456) 2,846
Expense accruals (82) (13) (600)
Other items (248) 63 548
-----------------------------
Total $ 3,221 $ 1,874 $ 2,799
=============================
At June 30, 2001, accumulated retained earnings of non-U.S.
subsidiaries totaled $35,557,000. 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 unrecognized deferred tax liability on these
unremitted earnings is not practicable.
23
Industry Segment Information
The Company is composed of three product groups. These groups are
described on pages 1 and 2.
The Company has determined that it has three distinct reportable
segments: Food Service, Consumer and Industrial. These three segments 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.
Depreciation and
Net Sales Amortization
Year Ended June 30
(In thousands) 2001 2000 1999 2001 2000 1999
------------------ -------------------------------- -----------------------------
<s> <c> <c> <c> <c> <c> <c>
Food Service $146,793 $144,089 $151,782 $ 2,105 $ 2,120 $ 2,134
Consumer 212,737 220,724 216,272 3,556 3,765 3,800
Industrial 240,622 272,236 273,346 7,798 7,504 7,584
Corporate and Other - - - 221 233 252
-------------------------------- -----------------------------
Total $600,152 $637,049 $641,400 $13,680 $13,622 $13,770
================================ =============================
Assets Employed Capital Expenditures
As of and Year Ended June 30
(In thousands) 2001 2000 1999 2001 2000 1999
---------------------------- -------------------------------- -----------------------------
<s> <c> <c> <c> <c> <c> <c>
Food Service $ 73,927 $ 75,018 $ 77,331 $ 1,644 $ 2,018 $ 1,416
Consumer 118,224 122,287 123,287 3,577 2,988 3,900
Industrial 190,865 184,457 176,853 8,434 17,604 11,048
Corporate and Other 41,248 42,438 32,571 177 177 460
-------------------------------- -----------------------------
Total $424,264 $424,200 $410,042 $13,832 $22,787 $16,824
================================ =============================
Income from
Operations
Year Ended June 30
(In thousands) 2001 2000 1999
------------------ -----------------------------
<s> <c> <c> <c>
Food Service $13,870 $12,165 $17,600
Consumer 21,899 25,446 24,198
Industrial 25,551 32,059 28,019
Corporate and Other (7,257) (9,102) (8,481)
Restructuring credit (charge) - (5,408) 1,016
-----------------------------
Total $54,063 $55,160 $62,352
=============================
24
Product Net Sales Information:
Year Ended June 30 (In thousands) 2001 2000 1999
--------------------------------
<s> <c> <c> <c>
Food preparation, storage and presentation products $217,749 $225,768 $234,609
Printing and publishing products 126,115 134,198 133,774
Home and road construction products 118,483 130,985 123,796
Aerospace, automotive and electronic products 117,612 126,639 118,842
Miscellaneous 20,193 19,459 30,379
--------------------------------
Total $600,152 $637,049 $641,400
================================
Financial Data related to non-U.S. operations:
As of and Year Ended June 30
(In thousands) 2001 2000 1999
---------------------------- -----------------------------
<s> <c> <c> <c>
Net Sales $72,911 $89,496 $98,937
Income from Operations 6,330 8,032 9,580
Long-Lived Assets 32,511 23,072 24,218
=============================
The applicable restructuring charge and credit are excluded from the
above table.
Employee Benefit Plans
Retirement Plans
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 2001 2000 1999
------------------ ----------------------------------
<s> <c> <c> <c>
Service cost $ 4,687 $ 5,329 $ 5,049
Interest cost 10,949 10,357 9,616
Expected return on plan assets (17,874) (16,526) (15,283)
Amortization of prior service cost 214 248 247
Recognized actuarial loss 153 340 326
Amortization of transition asset (1,738) (1,746) (1,748)
----------------------------------
Total (3,609) (1,998) (1,793)
Curtailment/settlement - 5 87
----------------------------------
Net pension credit $ (3,609) $ (1,993) $ (1,706)
==================================
25
The following table sets forth the funded status and amounts
recognized as of June 30, 2001 and 2000 for the Company's U.S. and non-U.S.
defined benefit pension plans (in thousands):
Year Ended June 30 2001 2000
------------------ --------------------
<s> <c> <c>
Change in benefit obligation:
Benefit obligation, beginning of year $143,197 $148,170
Service cost 4,687 5,329
Interest cost 10,949 10,357
Employee contributions 239 270
Amendments/settlements/curtailments (85) 400
Actuarial (gain)/loss 7,993 (11,442)
Foreign currency exchange rate changes (1,007) (1,711)
Benefits paid (8,890) (8,176)
--------------------
Benefit obligation, end of year $157,083 $143,197
====================
Year Ended June 30 2001 2000
------------------ --------------------
<s> <c> <c>
Change in plan assets:
Fair value of plan assets, beginning of year $183,822 $180,604
Return on plan assets (5,411) 9,714
Employer contribution 933 1,867
Employee contributions 239 270
Foreign currency exchange rate changes (683) (1,152)
Benefits paid (8,197) (7,481)
--------------------
Fair value of plan assets, end of year $170,703 $183,822
====================
Funded status $ 13,622 $ 40,625
Unrecognized transition asset (1,370) (3,144)
Unrecognized net actuarial loss/(gain) 26,115 (4,898)
Unrecognized prior service cost 2,215 2,788
--------------------
Net amount recognized 40,582 35,371
--------------------
Amounts recognized in the balance sheet consist of:
Prepaid benefit cost 43,625 38,334
Accrued benefit liability (3,043) (2,963)
--------------------
Net amount recognized $ 40,582 $ 35,371
====================
Year Ended June 30 2001 2000
------------------ ----------------------------
<s> <c> <c>
Weighted average assumptions as of June 30
Discount rate 6.00 - 7.75% 6.25 - 8.00%
Expected return on assets 8.50 -10.00% 8.75 -10.00%
Rate of compensation increase 3.50 - 4.50% 4.00 - 4.50%
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 $6,606,000, $5,867,000 and $0,
respectively, as of June 30, 2001 and $7,436,000, $6,656,000 and $0,
respectively as of June 30, 2000.
26
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 $1,953,000;
$1,863,000; and $1,967,000 in 2001, 2000 and 1999, respectively.
Employees' Stock Ownership Plan
The Company had an Employee Stock Ownership Plan (ESOP) covering
certain salaried employees. Amounts provided for this plan are approved by
the Board of Directors and aggregated $1,500,000 for the year ended June
30, 1999. Effective July 1, 1999, the Board of Directors approved the
merger of the ESOP and the Employee Savings Plans. The amount provided for
the ESOP component of the merged plan aggregated $800,000 and $1,200,000
for the years ended June 30, 2001 and 2000, respectively.
Employee Savings Plan
The Company has established 401(k) savings plans covering
substantially all of the Company's full-time domestic employees. Under the
provisions of the plans, 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 these plans. Such contributions, if any, become fully vested
immediately. The Company contributions were approximately $871,000 during
1999. Effective July 1, 1999, the Board of Directors approved the merger of
the ESOP and the Employee Savings Plans. The amount provided for the
Employee Savings Plans component of the merged plan aggregated $975,000 and
$919,000 for the years ended June 30, 2001 and 2000, respectively.
Profit Improvement Participation Share Plan
The Company has maintained a profit improvement incentive plan in
which certain officers and employees participate. The plan has been phased-
out and, consequently, no new units have been awarded since 1995. Units
under this plan were issued at the discretion of the Compensation 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
(credited) charged to operations for the years ended June 30, 2000 and 1999
were $(40,000) and $286,000, 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 health care and
life insurance benefits) during the years an employee provides services.
27
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 2001 2000
------------------ -------------------
<s> <c> <c>
Change in benefit obligation:
Benefit obligation, beginning of year $ 7,743 $ 7,961
Service cost 86 137
Interest cost 476 638
Participant contributions 221 -
Actuarial loss (gain) 908 (532)
Benefits paid (742) (461)
-------------------
Benefit obligation, end of year 8,692 7,743
Fair value of plan assets - -
-------------------
Funded status (8,692) (7,743)
Unrecognized net actuarial gain (743) (1,859)
Unrecognized transition obligation 5,331 5,800
-------------------
Net amount recognized $(4,104) $(3,802)
===================
The assumed weighted average discount rate as of June 30, 2001 and
2000 was 7.75% and 8.00% respectively. The annual assumed rate of increase
in the per capita cost of covered health care benefits is 10.0% for
retirees under age 65 in 2001 and 4.0% in 2000, trending down to 5.0% in
2006 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 $909,000 and the net postretirement cost
by $61,000 in 2001.
Net postretirement benefit costs are as follows (in thousands):
Year Ended June 30 2001 2000 1999
------------------ --------------------------
<s> <c> <c> <c>
Service cost $ 131 $ 137 $ 77
Interest cost 653 638 558
Amortization of transition obligation 445 444 446
Net amortization and deferral (37) - (45)
--------------------------
Net postretirement benefit cost $1,192 $1,219 $1,036
==========================
Stock Based Compensation and Purchase Plans
Stock Based Compensation Plans
Under incentive compensation plans, the Company is authorized to, and
has made grants of, stock options, restricted stock and performance share
units to provide equity incentive compensation to key employees. At June
30, 2001, 1,056,229 shares of common stock were reserved for issuance under
these plans. Of this amount, and as noted in the table below, 772,357
shares are for options granted but unexercised and 140,375 shares are for
restricted stock grants outstanding.
28
Stock Option Plans
The Company has chosen to account for stock based compensation using
the intrinsic value method prescribed in Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees," and related
interpretations. Accordingly, the compensation cost of stock options is
measured as the excess, if any, of the quoted market price of the Company's
stock at the date of the grant over the option exercise price and is
charged to operations over the vesting period. Income tax benefits
attributable to stock options exercised are credited to capital in excess
of par value.
At June 30, 2001, the Company has made grants of options under
various Stock Option Plans. Generally, these 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 Compensation Committee of the Board of
Directors at the time of grant but no later than ten years from the date of
grant. Certain options granted at fair value can be exercised anytime after
six months from the date of grant, and other options can only be exercised
in accordance with the vesting schedules prescribed by the Committee.
Restricted Stock Awards
The Company may award shares of restricted stock to eligible
employees at no cost, giving them in most instances all of the rights of
stockholders, except that they may not sell, assign, pledge or otherwise
encumber such shares and rights. Such shares and rights are subject to
forfeiture if certain employment conditions are not met. During the
restriction period, recipients of the shares are entitled to dividends on
such shares, providing that such shares are not forfeited. Dividends are
accumulated and paid out at the end of the restriction period. During 2001
and 2000, the Company granted 19,051 and 123,814 shares, respectively, of
restricted stock to eligible employees. At June 30, 2001, restrictions on
the stock lapse between 2002 through 2010. Through June 30, 2001,
restrictions on 2,335 shares have lapsed. Upon granting of the shares, an
unamortized compensation expense on the dates of the grant was charged to
stockholders' equity and will be amortized over the restriction period. For
the years ended June 30, 2001 and 2000, $771,695 and $610,000,
respectively, was recognized as compensation expense.
Executive Compensation Program
The Company operates a compensation program for key employees. The
plan contains both an annual component as well as long-term component.
Under the annual component, participants are required to receive 20% (and
may elect to receive up to 50%) of their annual incentive compensation in
restricted stock which is purchased at a discount to the market based on
the lower closing price on the date of the grant or the date the award is
paid out. Restrictions on the stock expire after three years. During the
restriction period, recipients of the shares are entitled to dividends on
such shares, providing that such shares are not forfeited. Dividends are
accumulated and paid out at the end of the restriction period. At June 30,
2001 and 2000, respectively, 44,452 and 11,726 shares of restricted stock
are outstanding under this plan and subject to restrictions that lapse
between 2002 and 2003. The compensation expense associated with this short-
term incentive program is charged to income ratably over the restriction
period. The Company recorded compensation expense related to this program
of $70,000 and $29,000 for the years ended June 30, 2001 and 2000,
respectively.
29
Under the long-term component, grants of incentive performance share
units ("PSU's") are made annually to key employees and are earned based on
the achievement of certain overall corporate financial performance targets
over a three-year period. In addition, stock options are awarded under this
program at the fair market value as of the date of grant. These options
vest ratably over five years and must be exercised within seven years. In
certain circumstances, such as retirement or a change in control, vesting
of the options granted are accelerated and PSU's are paid off on a pro-rata
basis. At June 30, 2001, under this program 50,300 shares were subject to
the restrictions related to the PSU's. Compensation expense, if any,
associated with the PSU's is recorded to expense as the achievement of
future performance objectives appears likely. Recipients of the PSU's do
not receive dividend rights until such time as the shares have been issued.
A summary of stock options issued under the above plans is as
follows:
Number Weighted Average
Year Ended June 30 of Options Exercise Price
------------------ ------------------------------
<s> <c> <c>
Outstanding, June 30, 1998
($7.50 to $32.1875 per share) 591,786 $23.89
Granted ($21.875 to $25.875 per share) 92,700 25.64
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
($9.00 to $32.1875 per share) 630,655 24.81
Granted ($16.4375 to $23.375 per share) 228,700 22.82
Exercised ($9.00 to $15.8125 per share) (31,550) 12.09
Canceled ($23.00 to $31.5625 per share) (40,242) 27.91
-----------------------
Outstanding, June 30, 2000
($10.315 to $32.1875 per share) 787,563 24.58
Granted ($16.6875 to $18.6875 per share) 186,500 18.68
Exercised ($10.315 to $23.375 per share) (161,562) 19.09
Canceled ($23.00 to $31.5625 per share) (40,144) 27.16
-----------------------
Outstanding, June 30, 2001
($16.4375 to $32.1875 per share) 772,357 24.17
-----------------------
Exercisable, June 30, 2001
($16.4375 to $32.1875 per share) 420,432 $26.92
=======================
30
The following table sets forth information regarding options
outstanding at June 30, 2001:
Weighted
Weighted Average
Weighted Average Number Exercise Prices
Number Range of Average Remaining Currently for Currently
of Options Exercise Prices Exercise Price Life (Years) Exercisable Exercisable
------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c>
197,166 $16.4375 - $18.6875 $18.56 6 7,769 $17.92
124,334 20.75 - 23.00 22.83 5 47,929 22.60
110,934 23.375 - 25.125 23.60 5 49,829 23.84
117,483 25.875 - 28.00 26.34 5 92,465 26.47
222,440 28.375 - 32.1875 29.03 6 222,440 29.03
--------------------------------------------------------------------------------------------
772,357 $16.4375 - $32.1875 $24.17 6 420,432 $26.92
============================================================================================
As discussed above, the Company has chosen to continue to account for
stock based compensation using the intrinsic value method to measure
compensation expense. 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) 2001 2000 1999
--------------------------------- ----------------------------------
<s> <c> <c> <c>
Income Before Income Tax Provision $ 40,839 $ 45,361 $ 50,009
Income Tax Provision (17,389) (19,008) (20,030)
----------------------------------
Net Income $ 23,450 $ 26,353 $ 29,979
----------------------------------
Earnings Per Share
Basic $ 1.93 $ 2.08 $ 2.31
Diluted $ 1.90 $ 2.07 $ 2.30
==================================
Options granted during 2001, 2000 and 1999 had a weighted average
grant date fair value of $5.13, $6.59 and $8.87, 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 2001 2000 1999
------------------ ----------------------------------------------------
<s> <c> <c> <c>
Range of risk-free interest rates 4.29% to 6.18% 5.72% to 6.83% 4.84% to 5.53%
Range of expected life of option
grants (in years) 3 to 7 3 to 7 2 to 7
Expected volatility of underlying
stock 34.4% to 35.8% 30.6% to 33.6% 29.0% to 32.2%
Range of expected quarterly
dividends (per share) $0.20 to $0.21 $0.19 to $0.20 $0.19
====================================================
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.
31
Employee Stock Purchase Plan
The Company has an Employee Stock Purchase Plan that 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 97,825 at June 30,
2001. Shares purchased under this plan aggregated 76,081; 92,568; and
106,506; in 2001, 2000 and 1999, 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
ATC-Frost Magnetics, Inc. was purchased for a total of $15,700,000 in
cash and stock in April 2001. ATC-Frost is a leading manufacturer of custom
magnetic components in Canada. This transaction was accounted for as a
purchase and, accordingly, the consolidated financial statements include
the results of the acquired company from its acquisition date. The purchase
price of the acquisition was allocated to the assets acquired based on
their fair market values and resulted in the recognition of goodwill of
approximately $11,300,000. If the acquisition had occurred as of July 1,
1999 consolidated results would not have been materially affected.
During fiscal 1998, the Company purchased two companies and a product
line for a total of $52,800,000 in 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.
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 $18,500,000. If the acquisitions
had occurred as of July 1, 1997, the unaudited pro forma consolidated
results of operations would have been as follows:
Year Ended June 30, 1998
(In thousands, except per share data)
-------------------------------------
<s> <c>
Net sales $632,771
Net income 20,702
Earnings per share:
Basic 1.58
Diluted 1.57
========
32
As part of its two restructuring plans, the Company sold its Keller-
Dorian subsidiary in September 2000 and three divisions in fiscal 1999. In
February 1998, the Company sold a division for net proceeds of
approximately $2,600,000 and a net loss of $350,000. These transactions are
more fully described in the Restructuring footnote below.
Restructuring
In June 2000, the Company recorded a restructuring charge of
$5,408,000 before taxes. The restructuring plan involved the: (1) disposal,
closing or elimination of certain under-performing and unprofitable
operating plants, product lines, manufacturing processes and businesses;
(2) realignment and consolidation of certain marketing and distribution
activities; and (3) other cost containment actions, including selective
personnel reductions. The charge was recorded in the line item
"Restructuring charge (credit)" on the Statements of Consolidated Income.
As part of this restructuring the Company sold for cash and a note the
assets and operations of its Keller-Dorian and Goyot subsidiaries in
September.
The following schedule reflects the Company's restructuring
activities (in thousands) since the charge was recorded:
Involuntary
Employee
Severance and Asset Shutdown
Benefits Costs Impairment Costs Total
--------------------------------------------------
<s> <c> <c> <c> <c>
Reserve beginning balance $1,036 $ 3,775 $ 597 $ 5,408
-----------------------------------------------
Expended:
Cash 1,013 - 775 1,788
Non-cash (disposals and write-offs) - 3,620 3,620
-----------------------------------------------
Total expenditures 1,013 3,620 775 5,408
-----------------------------------------------
Expenditures under (over) reserve $ 23 $ 155 $ (178) $ 0
===============================================
During fiscal 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 under-performing 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.
The following schedule reflects the Company's restructuring
activities in fiscal 1999 (in thousands):
Involuntary
Employee
Severance and Asset Shutdown
Benefits 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
===============================================
33
The restructuring credit of $1,015,762 noted above is shown in the
line item "Restructuring charge (credit)" in the Statements of Consolidated
Income.
Quarterly Results of Operations (Unaudited)
The unaudited quarterly results of operations for the years ended
June 30, 2001 and 2000 are as follows:
Sales and Earnings by Quarter (Unaudited)
Year Ended June 30 2001
(In thousands, except per share data) First Second Third Fourth
------------------------------------- --------------------------------------------
<s> <c> <c> <c> <c>
Net sales $151,279 $158,652 $140,233 $149,988
Gross profit margin 48,065 54,483 44,841 50,760
Net income 7,038 7,553 4,037 6,269
EARNINGS PER SHARE
Basic 0.57 0.62 0.34 0.52
Diluted 0.57 0.61 0.33 0.51
Year Ended June 30 2000
(In thousands, except per share data) First Second Third Fourth
------------------------------------- --------------------------------------------
<s> <c> <c> <c> <c>
Net sales $157,803 $163,050 $158,158 $158,038
Gross profit margin 49,693 55,255 51,924 52,466
Net income 9,517 7,613 6,460 4,113
EARNINGS PER SHARE
Basic 0.74 0.59 0.52 0.34
Diluted 0.74 0.59 0.51 0.33
============================================
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, 17 through 18 and page 26
of the Proxy Statement of the Company, dated September 20, 2001 (the "2001
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 7 through 15 of the 2001 Proxy Statement.
34
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 2001 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 5 of the 2001 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS
Information regarding certain relationships and related transactions
is incorporated by reference to pages 18 through 19 of the 2001 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 required in response to this
item are listed in response to Part II, Item 8 of this
Annual Report on Form 10-K.
(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, 2001.
(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.
35
(c) Exhibits (Continued)
(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 May 1, 2000, between the
Company and David R. Crichton is incorporated by
this reference to the exhibits to the Annual Report
on Form 10-K for the fiscal year ended June 30,
2000 (the "2000 10-K").*
(b) Employment Agreement dated May 1, 2000, between the
Company and Edward J. Trainor is incorporated by
this reference to the exhibits to the 2000 10-K.*
(c) Employment Agreement dated May 1, 2000, between the
Company and Edward F. Paquette is incorporated by
this reference to the exhibits to the 2000 10-K.*
(d) Employment Agreement dated May 1, 2000, between the
Company and Deborah A. Rosen is attached hereto and
incorporated by this reference to the exhibits to
the 2000 10-K.*
(e) Employment Agreement dated April 1, 2001 between
the Company and Daniel C. Potter is attached hereto
and incorporated by this reference to the exhibits
to this Annual Report on Form 10-K for the fiscal
year ended June 30, 2001 (the "2001 10-K").*
(f) Standex International Corporation 1998 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.*
(g) 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 (the "1995 10-K").*
(h) 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.*
(i) Standex International Corporation Executive
Security Program, as amended and restated on
January 31, 2001 is incorporated by reference to
the exhibits to the Quarterly Report of Standex on
Form 10-Q for the fiscal quarter ended March 31,
2001 (the "March 2001 10-Q").*
36
(c) Exhibits (Continued)
(j) 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.*
(k) Standex International Corporation Executive Life
Insurance Plan effective April 27, 1994 and as
amended and restated on April 25, 2001 is
incorporated by reference to the exhibits to the
2001 10-K.*
(l) Standex International Corporation 1994 Stock Option
Plan effective July 27, 1994 is incorporated by
reference to the exhibits to the 1994 10-K.*
(m) 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, 2001 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, 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.
(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.
<FN>
--------------------
* Management contract or compensatory plan or arrangement.
</FN>
37
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 20, 2001.
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 20, 2001:
Signature Title
--------- -----
/s/ Edward J. Trainor President/Chief Executive Officer
---------------------------
Edward J. Trainor
/s/ Christian Storch Vice President/Chief Financial Officer
---------------------------
Christian Storch
/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
20, 2001 as attorney-in-fact for the following directors of the Registrant:
David R. Crichton Thomas L. King
John Bolten, Jr. C. Kevin Landry
William R. Fenoglio H. Nicholas Muller, III, Ph.D.
Walter F. Greeley Edward F. Paquette
Daniel B. Hogan Sol Sackel
/s/ Edward J. Trainor
---------------------------------
Edward J. Trainor
38
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
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.
39
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Board of Directors and Stockholders of
STANDEX INTERNATIONAL CORPORATION
Salem, New Hampshire
We have audited the accompanying consolidated balance sheets of Standex
International Corporation and subsidiaries as of June 30, 2001 and 2000,
and the related consolidated statements of income, stockholders' equity,
and cash flows for each of the three years in the period ended June 30,
2001. Our audits also included the financial statement schedules listed in
the Index at Item 14(a)(ii). These financial statements and financial
statement schedules are the responsibility of the Corporation's management.
Our responsibility is to express an opinion on the financial statements and
financial statement schedules 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 Standex International
Corporation and subsidiaries as of June 30, 2001 and 2000, and the results
of their operations and their cash flows for each of the three years in the
period ended June 30, 2001, in conformity with accounting principles
generally accepted in the United States of America. Also, in our opinion,
such financial statement schedules, when considered in relation to the
basic consolidated financial statements taken as a whole, present fairly in
all material respects the information set forth therein.
/s/ DELOITTE & TOUCHE LLP
-------------------------
DELOITTE & TOUCHE LLP
Boston, Massachusetts
August 14, 2001
40
SCHEDULE VIII
STANDEX INTERNATIONAL CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended June 30, 2001, 2000 and 1999
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Additions
Balance at ----------------------------------
Beginning Charged to Costs Charged to Balance at
Description of Year and Expenses Other Accounts Deductions End of Year
-------------------------------------------------------------------------------------------------------------
<s> <c>
Allowances deducted from
assets to which they
apply-for doubtful
accounts receivable:
June 30, 2001 $3,397,174 $1,825,947 $(1,789,678)(1) $3,433,443
June 30, 2000 $3,590,395 $1,412,681 $(1,605,902)(1) $3,397,174
June 30, 1999 $3,550,685 $1,984,598 $(1,944,888)(1) $3,590,395
<FN>
--------------------
<F1> Accounts written off-net of recoveries
</FN>
41
INDEX TO ITEMS INCORPORATED BY REFERENCE
Page No.
Proxy
Statement ("P")
---------------
PART III
Item 10 Directors and Executive Officers of Standex P 2 - 5; 17-18; 26
Item 11 Executive Compensation P 7 - 15
Item 12 Security Ownership of Certain Beneficial Owners
and Management P 3 - 5
Item 13 Certain Relationships and Related Transactions P 18-19