FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended December 31, 1995 Commission file number 1-7233
Standex International Corporation
(Exact name of Registrant as specified in its charter)
Delaware 31-0596149
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
6 Manor Parkway, Salem, New Hampshire 03079
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (603) 893-9701
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 report), and (2) has been subject to such
filing requirements for the past 90 days. Yes X . No .
The number of shares of Registrant's Common Stock outstanding on
December 31, 1995 was 13,853,222.
STANDEX INTERNATIONAL CORPORATION
I N D E X
Page No.
PART I. FINANCIAL INFORMATION:
Statements of Consolidated Income for the Three and Six
Months Ended December 31, 1995 and 1994 ................. 2
Consolidated Balance Sheet, December 31, 1995 and
June 30, 1995 ........................................... 3
Statement of Consolidated Cash Flows for the Six Months
Ended December 31, 1995 and 1994 ........................ 4
Notes to Financial Information. ........................... 5
Management's Discussion and Analysis....................... 6-8
PART II. OTHER INFORMATION.................................. 9
Form 10-Q
PART I. FINANCIAL INFORMATION
STANDEX INTERNATIONAL CORPORATION
Statement of Consolidated Income
(000 Omitted)
Three Months Ended Six Months Ended
December 31 December 31
Net Sales $154,101 $143,937 $296,336 $284,528
Cost of Products Sold 102,675 93,412 197,624 188,048
Gross Profit Margin 51,426 50,525 98,712 96,480
Selling, General & Adminis-
trative Expenses 34,872 35,125 65,191 65,499
Income from Operations 16,554 15,400 33,521 30,981
Other Income/(Expense):
Net gain on Disposition of
Businesses and Product Lines - 346 - 5,426
Interest Expense (2,513) (1,951) (4,696) (3,804)
Interest Income 120 160 242 279
Other Income/(Expense) - net (2,393) (1,445) (4,454) 1,901
Income Before Income Taxes 14,161 13,955 29,067 32,882
Provision for Income Taxes 4,984 4,929 10,580 12,055
Net Income $ 9,177 $ 9,026 $ 18,487 $ 20,827
Earnings Per Share $ .65 $ .62 $ 1.31 $ 1.42
Cash Dividends per Share $ .18 $ .16 $ .35 $ .30
STANDEX INTERNATIONAL CORPORATION
Consolidated Balance Sheet
(000 Omitted)
December 31 June 30
1995 1995
ASSETS
CURRENT ASSETS:
Cash $ 5,951 $ 9,543
Receivables, net of allowances for doubtful accounts 91,961 90,492
Inventories (approximately 40% finished goods, 25% work
in process, and 35% raw material and supplies) 110,055 116,417
Prepaid expenses 6,876 3,895
Total current assets 214,843 220,347
PROPERTY, PLANT AND EQUIPMENT 217,123 210,139
Less accumulated depreciation 129,406 125,611
Total 87,717 84,528
OTHER ASSETS
Goodwill, net 15,063 15,297
Prepaid pension and other 24,448 22,530
Total 39,511 37,827
TOTAL $342,071 $342,702
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable and current portion of long-term debt $ 2,054 $ 3,321
Accounts payable 32,656 36,414
Income taxes 4,508 4,472
Accrued expenses 33,201 33,005
Total current liabilities 72,419 77,212
LONG-TERM DEBT (less current portion included above) 111,265 111,845
DEFERRED INCOME TAXES AND OTHER LIABILITIES 17,902 21,293
STOCKHOLDERS' EQUITY
Common stock 41,976 41,976
Paid-in Capital 2,740 2,129
Retained earnings 289,632 276,031
Cumulative translation adjustment 1,025 338
Less cost of treasury shares (194,888) (188,122)
Total stockholders' equity 140,485 132,352
TOTAL $342,071 $342,702
INTERNATIONAL CORPORATION
Statement of Consolidated Cash Flows
(000 Omitted)
Six Months Ended
December 31
1995 1994
Cash Flows from Operating Activities:
Net income $ 18,487 $ 20,827
Depreciation and amortization 6,059 6,040
Net gain on dispositions of business and
product lines - (5,426)
Net changes in assets and liabilities (6,685) (5,261)
Net Cash Provided by Operating Activities 17,861 16,180
Cash Flows from Investing Activities:
Expenditures for property and equipment (8,764) (7,090)
Proceeds from dispositions of businesses - 13,589
Other 86 123
Net Cash (Used for)/Provided by Investing Activities (8,678) 6,622
Cash Flows from Financing Activities:
Proceeds from additional borrowings 50,000 7,495
Net Payments of debt (51,846) (13,391)
Cash dividends paid (4,886) (4,332)
Purchase of treasury stock (7,721) (11,014)
Other, net 1,566 1,336
Net Cash Used for Financing Activities (12,887) (19,906)
Effect of Exchange Rate Changes on Cash 112 433
Net Change in Cash and Cash Equivalents (3,592) 3,329
Cash and Cash Equivalents at Beginning of Year 9,543 5,023
Cash and Cash Equivalents at December 31 $ 5,951 $ 8,352
Supplemental Disclosure of Cash Flow Information:
Cash paid during the six months for:
Interest 4,069 3,565
Income taxes 10,544 10,682
NOTES TO FINANCIAL INFORMATION
1. Management Statement
The financial statements as reported in Form 10-Q reflect all
adjustments (including those of a normal recurring nature) which are,
in the opinion of management, necessary to a fair statement of results
for the three and six months ended December 31, 1995 and 1994.
2. Per Share Calculation
Shares (in thousands) used in per share data are as follows:
December 31
1995 1994
Earnings 14,164 14,717
Cash Dividends 13,960 14,438
Earnings per share have been computed according to generally accepted
accounting principles.
Cash dividends per share have been computed based on the shares
outstanding at the time the dividends were paid.
3. Contingencies
The Company is a party to various claims and legal proceedings related
to environmental matters generally incidental to its business.
Management has evaluated each matter based, in part, upon the advice
of its independent environmental consultants and has recorded an
appropriate provision for the resolution of such matters in accordance
with Statement of Financial Accounting Standards (SFAS) No. 5,
"Accounting for Contingencies." Management believes that such
provision is sufficient to cover any future payments, including legal
costs, under such proceedings.
4. Additional Borrowings
In September, the Company negotiated a $50,000,000 unsecured loan
agreement with an institutional lender. The loan has a fixed interest
rate of 7.13% and is repayable in level, annual principal payments
beginning September, 1999 and ending September, 2005. The financial
covenants of the new loan agreement are similar to those under the
Company's revolving credit agreement. The proceeds of the loan were
used to reduce borrowings under the revolving credit agreement.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MATERIAL CHANGES IN FINANCIAL CONDITION
During the six months ended December 31, 1995, the Company negotiated a $50
million unsecured loan agreement with an institutional lender. The loan has a
fixed interest rate of 7.13% and is repayable in level, annual principal
payments beginning September, 1999 and ending September, 2005. The financial
covenants of the new loan agreement are similar to those under the Company's
revolving credit agreement.
Net Income of $18.5 million and the proceeds from the new loan agreement were
used to reduce borrowings under the Company's revolving credit agreement, fund
operating activities, invest $8.8 million in plant and equipment, purchase $7.7
million of the Company's Common Stock and pay out $4.9 million of cash dividends
to the Company's shareholders. The Company believes that existing cash flows,
along with current credit and loan agreements, are sufficient to meet its
anticipated cash requirements for the foreseeable future.
In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based
Compensation." Although this standard will require additional disclosure within
the Company's financial statements, it will not affect the Company's financial
condition or operating results.
OPERATIONS
Quarter Ended December 31, 1995
as compared to the Quarter Ended December 31, 1994
Net Sales reached record levels for the quarter ended December 31, 1995. As
compared to the same quarter of fiscal 1995, Net Sales rose $10.2 million. In
the latter portion of the prior fiscal year, a number of divisions raised sales
prices to help offset material price increases. Although it is difficult to
quantify the impact of the sales price increases on Net Sales, management
believes the majority of the growth in Net Sales is due to growth in unit
volumes. In addition, although changes in the average foreign exchange rates
from December 31, 1994 to December 31, 1995 have had a positive impact on Net
Sales during the quarter, the total effect was not significant.
The Company has experienced some softening in domestic business. However, all
three of the Company's segments reported growth in Net Sales due mainly to
improvements in customer demand reported by the foreign divisions. The
Graphics/Mail Order segment registered an increase in Net Sales of $4.5 million
with the Institutional segment reporting growth of $3.2 million. Net Sales for
the Industrial segment rose $2.5 million.
OPERATIONS (Continued)
The Gross Profit Margin Percentage declined 1.7% from 35.1% reported in the
second quarter of fiscal 1995 to 33.4% for the three months ended December 31,
1995. All three segments registered a modest decline in the Gross Profit Margin
Percentage due to higher material costs at some units along with a few instances
of increased competitive pressures on pricing.
Selling, General and Administrative Expenses (SG&A) decreased slightly for the
three months ended December 31, 1995 when compared to the same period of fiscal
1995. All three segments reported only slight increases and decreases in SG&A,
none of which was individually significant.
Interest Expense rose 28.8%, or $562,000, as compared to the second quarter of
fiscal 1995 due to higher interest rates than those experienced during the same
period of the prior year.
The above factors resulted in a $205,000, or 1.5%, increase in Income Before
Income Taxes as compared to the same period of the prior year. The effective
tax rate for the quarter ended December 31, 1995 is equal to that reported in
the same period of fiscal 1995.
Net Income for the second quarter of fiscal 1996 rose $151,000, or 1.7%, over
the same quarter last year due to the factors described above.
Six Months Ended December 31, 1995
as compared to the Six Months Ended December 31, 1994
Net Sales for the six months ended December 31, 1995 reached record levels. An
increase in Net Sales of $11.8 million was reported. As indicated in the
discussion of quarterly results, management believes the majority of this growth
is related to increases in unit volumes. Also, the effect of changes in average
foreign exchange rates on operating results was not significant.
Net Sales for the Institutional and Graphics/Mail Order segments rose $7.3 and
$5.4 million, respectively, for the reasons described in the discussion of
quarterly results. Despite gains reported by several foreign divisions within
the Industrial segment, a slight decline in Net Sales was reported due to the
sale of a German subsidiary in the first quarter of the prior fiscal year.
The Gross Profit Margin Percentage for the six month period declined modestly
from 33.9% for the same period of fiscal 1995 to 33.3% for the six months ended
December 31, 1995. All three segments registered slight declines in the Gross
Profit Margin Percentage, none of which was individually significant.
Selling, General and Administrative Expenses (SG&A) declined slightly for the
six months ended December 31, 1995 when compared to the same period of fiscal
1995. All three segments reported only slight increases and decreases in SG&A,
none of which was individually significant.
OPERATIONS (Continued)
Interest Expense rose 23.4%, or $892,000, for the six months ended December 31,
1995 due to higher interest rates than those experienced in the same period of
the prior fiscal year.
During the six months ended December 31, 1994, a net gain of $5.4 million was
reported due to the disposition of certain businesses and product lines. This
prior year gain, in addition to the factors described above, resulted in a $3.8
million decrease in Income Before Income Taxes for the six months ended December
31, 1995.
The effective tax rate for the six months ended December 31, 1995 is slightly
less than that reported in the same period of fiscal 1995.
Due to the factors described above, Net Income for the six months ended December
31, 1995 decreased $2.3 million, or 11.2%, over the same period of the prior
year.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Annual Meeting of Shareholders of the Company was held on October 31,
1995. Two matters were voted upon at the meeting: the election of directors
and the approval of the appointment of independent auditors of the Company.
The name of each director elected at the meeting and the number of votes cast
as to each matter are as follows:
Proposal 1 (Election of Directors)
Nominee For Withheld
William L. Brown 11,221,858 145,941
Thomas L. King 11,113,062 254,737
Sol Sackel 11,187,755 180,044
Lindsay M. Sedwick 11,112,506 255,293
Proposal 2 (Appointment of Auditors)
For Against Abstain
11,306,783 14,516 46,500
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K
The Company filed no reports on Form 8-K with the Securities and Exchange
Commission during the quarter ended December 31, 1995.
ALL OTHER ITEMS ARE INAPPLICABLE
Form 10-Q
STANDEX INTERNATIONAL CORPORATION
SIGNATURES
Pursuant to the Requirements of the Securities Exchange Act of 1934 the
Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
STANDEX INTERNATIONAL CORPORATION
Date: February 12, 1996 /s/ Robert R. Kettinger
Robert R. Kettinger, Corporate Controller
Date: February 12, 1996 /s/ Lindsay M. Sedwick
Lindsay M. Sedwick, Senior Vice President of
Finance/CFO