FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended September 30, 1997 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 offices) (Zip Code)
(603) 893-9701
(Registrant's telephone number, including area code)
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 __
The number of shares of Registrant's Common Stock outstanding
on September 30, 1997 was 13,107,285.
STANDEX INTERNATIONAL CORPORATION
I N D E X
PART I.
FINANCIAL INFORMATION: Page No.
Statements of Consolidated Income for the
Three Months Ended September 30, 1997 and 1996 2
Consolidated Balance Sheets, September 30,
1997 and June 30, 1997 3
Statements of Consolidated Cash Flows for the
Three Months Ended September 30, 1997 and 1996 4
Notes to Financial Information 5
Management's Discussion and Analysis 6-7
PART II. OTHER INFORMATION: 8
Form 10-Q
PART I. FINANCIAL INFORMATION
STANDEX INTERNATIONAL CORPORATION
Statements of Consolidated Income
(000 Omitted)
Three Months Ended
September 30
1997 1996
Net Sales $141,061 $140,199
Cost of Products Sold 95,196 95,579
Gross Profit Margin 45,865 44,620
Selling, General & Administrative Expenses 31,473 30,242
Income from Operations 14,392 14,378
Other Income/(Expense):
Interest Expense (2,092) (2,123)
Interest Income 119 72
Other Income/(Expense) - net (1,973) (2,051)
Income Before Income Taxes 12,419 12,327
Provision for Income Taxes 4,760 4,785
Net Income $7,659 $ 7,542
Earnings Per Share $ .58 $ .56
Cash Dividends Per Share $ .19 $ .18
STANDEX INTERNATIONAL CORPORATION
Consolidated Balance Sheets
(000 Omitted)
September 30 June 30
1997 1997
ASSETS
CURRENT ASSETS:
Cash $8,917 $6,149
Receivables net of allowances for
doubtful accounts 90,758 86,852
Inventories (approximately 45%
finished goods, 25% work in
process, and 30% raw material and
supplies) 111,434 109,454
Prepaid expenses 10,198 4,631
Total current assets 221,307 207,086
PROPERTY, PLANT AND EQUIPMENT 223,700 223,519
Less accumulated depreciation 139,416 137,921
Property, plant and equipment, net 84,284 85,598
OTHER ASSETS:
Prepaid pension cost 24,823 24,320
Goodwill, net 14,896 15,195
Other 10,698 8,839
Total other assets 50,417 48,354
TOTAL $356,008 $341,038
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable and current portion
of long-term debt $ 2,704 $2,030
Accounts payable 35,259 31,380
Income taxes 8,489 4,481
Accrued expenses and other 28,377 32,249
Total current liabilities 74,829 70,140
LONG-TERM DEBT (less current portion
included above) 120,975 112,347
DEFERRED INCOME TAXES AND OTHER LIABILITIES 16,662 17,366
STOCKHOLDERS' EQUITY:
Common stock 41,976 41,976
Paid-in capital 5,822 5,663
Retained earnings 319,075 313,908
Cumulative translation adjustment (2,996) (1,082)
Less cost of treasury shares (220,335) (219,280)
Total stockholders' equity 143,542 141,185
TOTAL $356,008 $341,038
STANDEX INTERNATIONAL CORPORATION
STATEMENTS OF CONSOLIDATED CASH FLOWS
(000 OMITTED)
Three Months Ended
September 30
1997 1996
Cash Flows from Operating Activities:
Net income $ 7,659 $7,542
Depreciation and amortization 3,262 3,181
Net changes in assets and liabilities (11,386) (9,376)
Net Cash (Used for) Provided by
Operating Activities (465) 1,347
Cash Flows from Investing Activities:
Expenditures for property and equipment (2,319) (2,586)
Other (10) 18
Net Cash Used for Investing Activities (2,329) (2,568)
Cash Flows from Financing Activities:
Proceeds from additional borrowings 9,437 9,036
Net payments of debt (135) (2,592)
Cash dividends paid (2,492) (2,418)
Purchase of treasury stock (1,417) (2,982)
Other, net 521 627
Net Cash Provided by Financing Activities 5,914 1,671
Effect of Exchange Rate Changes on Cash (352) 112
Net Change in Cash and Cash Equivalents 2,768 562
Cash and Cash Equivalents at Beginning of Year 6,149 5,147
Cash and Cash Equivalents at September 30 $8,917 $5,709
Supplemental Disclosure of Cash Flow Information:
Cash paid during the three months for:
Interest $3,011 $3,025
Income taxes $ 752 $1,353
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
months ended September 30, 1997 and 1996.
2. Per Share Calculation
Shares (in thousands) used in per share data are as
follows:
September 30
1997 1996
Earnings 13,278 13,574
Cash Dividends 13,115 13,436
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 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 Statement
of Financial Accounting Standards No. 5, "Accounting for
Contingencies." Management believes that such provision
is sufficient to cover any future payments, including
legal costs, under such proceedings.
4. Acquisition
On October 6, 1997, the Company completed the acquisition of
the net assets of ACME Manufacturing Company for an
undisclosed amount of cash. ACME Manufacturing is a
manufacturer of heating, ventilation, and air conditioning
pipe, duct, and fittings for the home building industry in the
Northeast, Mid-West, and Southern United States. ACME, with
annual sales of approximately $60 million, has seven
manufacturing facilities. The acquisition will be accounted
for as a purchase and was not significant with respect to the
Company's consolidated financial statements.
STANDEX INTERNATIONAL CORPORATION
Management's Discussion and Analysis of
Financial Condition and Results of Operations
MATERIAL CHANGES IN FINANCIAL CONDITION
During the quarter ended September 30, 1997, net proceeds from
additional borrowings of $9.4 million were used to purchase $1.4
million of the Company's Common Stock, invest $2.3 million in
plant and equipment and pay out $2.5 million of cash dividends to
the Company's shareholders.
On October 6, 1997, the Company acquired the net assets of ACME
Manufacturing Company for an undisclosed amount of cash (see
Footnote 4). The acquisition of this operation was financed from
existing bank credit agreements.
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.
In February 1997, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standard (SFAS) No. 128
"Earnings per Share." This standard changes the method of
calculating earnings per share and is effective December 15,
1997. The Company has evaluated this standard and does not
expect its adoption to have a significant effect on the Company's
earnings per share.
In June 1997, the FASB issued SFAS No. 130, "Reporting
Comprehensive Income," and SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information." The Company
has reviewed both of these standards and does not expect their
adoption to have a significant effect on the Company's operating
results or disclosure requirements.
OPERATIONS
Quarter Ended September 30, 1997
as compared to the Quarter Ended September 30, 1996
For the first quarter ended September 30, 1997, Net Sales
increased by $862,000 as compared to the first quarter of the
prior year. Management believes the majority of fluctuations in
Net Sales reported by each segment are primarily due to changes
in unit volumes. In addition, although changes in the average
foreign exchange rates from September 30, 1996 to September 30,
1997 have had a positive impact on Net Sales for the quarter, the
total effect was not significant.
Net Sales in the Food Service segment remained flat as compared
to the prior year. However, there was significant growth in
sales at one division due to increased demand which was offset by
the absence of sales from a division which was disposed of in the
second half of fiscal 1997. The Consumer segment reported an
increase of $1.4 million in Net Sales due to improved demand and
acquisitions made during fiscal 1997. The Industrial segment
reported a reduction of $1 million in Net Sales due primarily to
the disposition of two product lines in the second half of fiscal
1997 and continued sluggishness in some of the Company's European
operations.
The Gross Profit Margin Percentage increased to 32.5%, as
compared to the prior year's percentage of 31.8%. The Consumer
and Industrial segments reported minor changes in their Gross
Profit Margin Percentages none of which was individually
significant. However, the Food Service segment reported a Gross
Profit Margin of 28.7% versus the prior year's 27.2% primarily
due to reduced costs.
For the three months ended September 30, 1997, Selling, General
and Administrative Expenses increased by $1.2 million, or 4.1%.
None of the fluctuations reported by the Company's three segments
were individually significant and corresponded respectively to
the changes in Net Sales discussed above.
Interest income and interest expense for the first quarter of
fiscal 1998, remained approximately the same as reported in the
prior year.
The above factors resulted in a $92,000 increase in Income Before
Income Taxes as compared to the same period of the prior year.
The effective tax rate in the first quarter decreased from 38.8%
in fiscal 1997 to 38.3% in fiscal 1998 due to several factors,
none of which was individually significant.
As a result of the above, Net Income for the first quarter of
fiscal 1998 increased $117,000, or 1.6%, over the same period in
the prior year.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10(n) Employment Agreement, effective September
1, 1997, between the Company and Edward F. Paquette
27 Financial Data Schedule
(b) Standex filed no reports on Form 8-K with the
Securities and Exchange Commission during the first
quarter of the fiscal year ended September 30, 1997.
ALL OTHER ITEMS ARE INAPPLICABLE.
Form 10-Q
STANDEX INTERNATIONAL CORPORATION
S I G N A T U R E S
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: November 12, 1997 /s/ Robert R. Kettinger
Robert R. Kettinger
Corporate Controller
Date: November 12, 1997 /s/ Lindsay M. Sedwick
Lindsay M. Sedwick
Sr. Vice President of Finance/CFO