[Standex Logo] NEWS RELEASE
STANDEX INTERNATIONAL CORPORATION - SALEM, NH 03079 - TEL (603) 893-
9701 - FAX (603) 893-7324 - WEB www.standex.com
CONTACT:
Daniel C. Potter FOR IMMEDIATE RELEASE
Treasurer
STANDEX REPORTS FIRST-QUARTER EARNINGS FOR FISCAL 2003
Industrial Group is Top Performer; Company Initiates Strategic
Realignment of Businesses
SALEM, NH, OCTOBER 24, 2002 . . . Standex International
Corporation (NYSE:SXI) today reported net income of $4.6 million,
or $0.38 per diluted share, on revenues of $147.2 million for the
first fiscal quarter ended September 30, 2002. This compares with
net income for the first fiscal quarter ended September 30, 2001
(excluding an impairment charge described below) of $5.5 million,
or $0.45 per diluted share, on revenues of $143.7 million.
Standex's first quarter fiscal 2003 revenues include an extra
month of European sales. This was due to an accounting change
whereby Standex conformed the accounting year of its European
operations to the Standex fiscal year ending June 30. The
Company's first quarter net income includes a pretax restructuring
charge related to the consolidation of facilities in its Food
Service Group of $914,000, for an aftertax impact on net income of
$530,000, or 4.3 cents per share.
Excluding the additional month of European sales, Standex would
have reported a slight downturn in the Company's first quarter
fiscal 2003 sales compared with the prior year's first quarter.
Excluding the effect of the restructuring charge, Standex's
earnings per share would have been $0.42, a small decline year
over year.
The results for the prior year's quarter do not reflect the
Company's adoption of Statement of Accounting Standards No. 142
(SFAS No. 142) which relates to goodwill and other intangibles.
The Company recorded a goodwill impairment charge of $3.8 million
(31 cents per share) as of July 1, 2001.
Comments on the First Quarter
Edward J. Trainor, Chairman and CEO of Standex stated, "Both our
Industrial and Food Service Groups produced revenue increases
during the quarter. Operating income of the Industrial Group was
up slightly, and excluding the restructuring charge, Food Service
was about the same as the prior year. The Consumer Group, during
its historically weak first quarter, experienced a 6.7 percent
decline in sales that led to a decline in operating income of 82.0
percent for the quarter. Excluding the restructuring, these mixed
results contributed to declines of 14.3 percent in total operating
income and 6.5 percent in total net income."
(over)
Trainor continued, "Our balance sheet continues to be strong. At
September 30, we have reduced our debt to capital ratio to 41.7
percent from 47.8 percent a year earlier. Net working capital
declined by 6.5 percent for the quarter. Overall, gross profit
margins remain strong at 32 percent for the quarter, the same as
the first quarter of fiscal 2002, and we generated $9.2 million of
operating cash flow for the quarter compared with $ 4.9 million a
year earlier.
Last week, the Company successfully completed a private placement
of $25.0 million of 5.94% 10-year Unsecured Notes with two major
insurance companies. In addition, the Company is working on a new
revolving credit facility expected to close in the third quarter
of fiscal 2003.
Strategic Realignment and Restructuring Program
"Throughout this economic downturn, we have emphasized the
strength Standex has gained from its diversity, even as we have
sought to sharpen the focus of that diversity," said Trainor.
"Many of our businesses have continued to perform admirably during
this difficult economic period. However, several of our divisions
have experienced permanent changes in market and/or economic
conditions, resulting in lower revenues and margins. In fact,
approximately 70 percent of the revenue deterioration Standex has
experienced over the past 9 quarters is limited to four of the
Company's seventeen divisions."
Roger Fix, President and COO of Standex, stated, "As we have
continued implementing our Focused Diversity strategy, we have
organized the Company for planning purposes into three strategic
groups: the growth platform divisions, where we have identified
solid top line expansion prospects; the cash generators; and those
companies where current operating profitability is inadequate.
Consistent with the strategy announced last year, we continue to
seek bolt-on acquisitions for our growth platform companies. As
an example, during the quarter we acquired the Cin-Tran
Corporation and are integrating it into our Electronics division.
At the same time, we will focus during the next 18 months on
improving operating margins by completing a strategic realignment
and restructuring program. This program will include
consolidating some smaller businesses into larger operating units,
disposing of under-performing or underutilized operations and
other cost reduction activities. We expect to generate cash by
selling the underutilized facilities to fund a significant portion
of the restructuring." 1
The restructuring will consist of a series of initiatives that are
expected to yield significant savings and individual pay backs in
the range of 12 to 24 months. Standex expects to report total
pretax restructuring charges in the range of $11 to $12 million,
which includes the $914,000 charge reported in the first quarter
of fiscal 2003.1 Standex has adopted SFAS No. 146, which
generally requires the Company to report restructuring charges as
liabilities are incurred. The charges will be recorded separately
in the Statements of Consolidated Income under the caption
"Restructuring Charges." Accordingly, the remaining restructuring
expenses are expected to be recognized and reported over the next
six quarters. The components of the restructuring charges will
include involuntary severance and benefit costs, recognition of
asset impairments and expenses related to the shutdown of certain
facilities.
(continued)
Conference Call Information
Standex invites you to attend a conference call with Chairman and
Chief Executive Officer Ted Trainor, President and COO Roger Fix,
and Chief Financial Officer Christian Storch at: 11:00 a.m. ET,
today. To join a live web cast of the conference call, please
access the "Investor Relations" section of the Company's Web site,
located at: www.standex.com. For those unable to listen to the
live broadcast of the conference call, an audio playback will be
available beginning at 2:30 p.m. ET on October 24th through
midnight ET on October 31st. To listen to the audio playback from
the United States, please call (800) 475-6701; from outside the
United States, (320) 365-3844; access code is 653805. In
addition, a replay can also be accessed in the "Investor
Relations" section of the Company's Web site, located at
www.standex.com.
About Standex International Corporation
Standex International Corporation is a multi-industry manufacturer
in three broad business segments: Food Service, Industrial and
Consumer with operations in the United States, Europe, Canada,
Australia, Singapore and Mexico.
(over)
CONSOLIDATED SUMMARY OF INCOME
(In thousands except per share data)
First Quarter Ended September 30 2002 2001
NET SALES $147,184 $143,710
INCOME BEFORE TAXES 7,439 9,252
PROVISION FOR TAXES 2,827 3,754
Net Income before impairment charge 4,612 5,498
Goodwill Impairment Charge (3,779)
NET INCOME AFTER IMPAIRMENT CHARGE $4,612 $1,719
EARNINGS PER SHARE (before
impairment charge)
Basic $0.38 $0.45
Diluted $0.38 $0.45
EARNINGS PER SHARE (after
impairment charge)
Basic $0.38 $0.14
Diluted $0.38 $0.14
AVERAGE SHARES OUTSTANDING
Basic 12,096 12,154
Diluted 12,264 12,322
Segment Data NET SALES
Food Service $37,970 $36,373
Consumer 21,304 22,830
Industrial 87,910 84,507
Total $147,184 $143,710
OPERATING INCOME
Food Service $2,292 $3,283
Consumer 204 1,131
Industrial 10,318 10,283
Corporate (3,565) (2,843)
Total $9,249 $11,854
# # #
_______________________________
1 These statements are forward looking and involve certain risks and
uncertainties and assumptions. Factors affecting outcomes and results
include changes in economic growth in the domestic and international
markets, failure to achieve the company's acquisition and disposition
goals in the anticipated timeframes, competitor activities including
pricing pressures or marketing of new products and significant changes
in domestic and international fiscal policies or tax legislation.