-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Tvk6PMSlex+k4GuoB/g2c/utNg58qg4nBTlFEQgh461HigxbZfR7g7TAU5Zg0b/3 anpDZF6oiWN2Q150GvMl7Q== 0000310354-97-000013.txt : 19971114 0000310354-97-000013.hdr.sgml : 19971114 ACCESSION NUMBER: 0000310354-97-000013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971112 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: STANDEX INTERNATIONAL CORP/DE/ CENTRAL INDEX KEY: 0000310354 STANDARD INDUSTRIAL CLASSIFICATION: REFRIGERATION & SERVICE INDUSTRY MACHINERY [3580] IRS NUMBER: 310596149 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-07233 FILM NUMBER: 97713212 BUSINESS ADDRESS: STREET 1: 6 MANOR PKWY CITY: SALEM STATE: NH ZIP: 03079 BUSINESS PHONE: 6038939701 10-Q 1 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 EX-27 2
5 1,000 3-MOS JUN-30-1998 SEP-30-1997 8,917 0 93,309 2,551 111,434 221,307 223,700 139,416 356,008 74,829 120,975 0 0 41,976 101,566 356,008 141,061 141,180 95,196 95,196 0 0 2,092 12,419 4,760 7,659 0 0 0 7,659 .58 .58
EX-10 3 EXHIBIT 10(n) EMPLOYMENT AGREEMENT THIS IS AN AGREEMENT made and entered into as of this 2nd day of June, 1997, by and between STANDEX INTERNATIONAL CORPORATION, a Delaware corporation, with its principal office in Salem, New Hampshire (hereinafter referred to as "Employer"), and - ------------------ EDWARD F. PAQUETTE -------------------- of Milton, Massachusetts (hereinafter referred to as "Executive"). WHEREAS, Employer is desirous of obtaining the services of Executive as Chief Financial Officer when the present Chief Financial Officer retires in June, 1998; and WHEREAS, Executive is desirous of accepting such position; NOW, THEREFORE, in consideration of the mutual covenants and agreements of the parties herein contained, it is agreed by and between the parties as follows: 1. Employment. Employer hereby agrees to employ Executive, and Executive agrees to be so employed, commencing September 1, 1997 on a full-time basis, initially as Assistant to the President and commencing July 1, 1998, as Chief Financial Officer or in such other senior executive, managerial or supervisory capacity, subject to the direction and control of the Chief Executive Officer of Employer, said employment being upon the terms and conditions herein set forth. 2. Term. The term of this Agreement shall be four years from September 1, 1997 to August 31, 2001. 3. Best Efforts. Executive agrees, as long as this Agreement is in effect, to devote his best efforts and his full time and attention to the business of Employer and to the performance of such executive, managerial and supervisory duties assigned to him. 4. Non-Compete. Except as set forth in the third paragraph of this Section 4, Executive shall not, as long as this Agreement is in effect, engage in, or be interested in, in any active capacity, any business other than that of Employer or any affiliate, associate or subsidiary corporation of Employer. In addition, except as set forth in the third paragraph of this Section 4, Executive shall not for a period of two years after the termination of employment with Employer (whether such termination is by reason of the expiration of this Agreement or for any other reason) compete with or directly or indirectly own, control, manage, operate, join or participate in the ownership, control, management or operation of any business which competes with any present or future business of Employer at the time of such termination. No provision contained in this Section 4 shall restrict Executive from making investments in other ventures which are not competitive with Employer, or restrict Executive from engaging, during non-business hours, in any other such non-competitive business or restrict Executive from owning less than five per cent of the outstanding securities of companies which compete with any present or future business of Employer and which are listed on a national stock exchange or actively traded on the NASDAQ National Market System. 5. Compensation; Benefits. Employer agrees to compensate Executive for his services at a minimum annual base salary of $225,000. Such base salary shall be payable at least monthly and shall be increased as determined (in its sole discretion) by Employer. Executive shall also be entitled to participate in the Standex Executive Bonus Program and in such other benefit plans and programs as are made available to executives of the Employer, provided, however, Executive agrees that he will not be entitled to participate in the Standex International Corporation Retirement Plan. Executive shall be entitled to use an automobile furnished at the expense of Employer in accordance with Employer's policy on this subject, as such policy shall be revised from time to time. 6. Stock Options. The Employee agrees to grant the following stock options to Executive: A. Incentive Stock Options. In September, 1997, in January, 1998 and in January, 1999, the Employer will grant an amount of incentive stock options to Executive determined by dividing the applicable market price of Standex Common Stock on the New York Stock Exchange into $100,000 and rounding that result down to the nearest 100 shares. The above options will vest 50% at the end of the first anniversary of the date of grant and 50% at the end of the second anniversary. The terms of each of these options will be five years. B. Non-Statutory. In September, 1997, the Employer will grant a non-statutory stock option to Executive covering 15,000 shares of Standex Common Stock at an exercise price of $5.00 below the market price of the stock at the time. Vesting on this option will occur 1/3 on the first anniversary of the date of grant, 1/3 on the second anniversary and 1/3 on the third anniversary. The term of the option will be ten years. C. Option Grants in Accordance with Plan. All option grants mentioned in A and B above shall be made under the provisions of the Standex International Corporation 1994 Stock Option Plan. 7. Termination. A. Death. Executive's employment shall terminate forthwith upon his death and all liability of Employer under this Agreement or otherwise shall thereupon cease except for any compensation for past services remaining unpaid and for benefits due to Executive's estate or to others under the terms of any benefit plan or agreement then in effect. B. Disability. In the event that Executive becomes substantially disabled during the term of this Agreement for a period of six consecutive months so that he is unable, in the reasonable opinion of Employer, to perform the services as contemplated herein, then Employer, at its option, may terminate Executive's employment and this Agreement upon at least six (6) additional months advance written notification to Executive. Until such termination option is exercised or as otherwise mutually agreed in writing, Executive will continue to receive his full salary and fringe benefits during any period of illness or other disability, regardless of duration. C. Material Breach. In the event of a material breach of the terms of this Agreement by Executive or Employer, the non- breaching party may cause this Agreement to be terminated on ninety days advance written notice, provided, however, that termination by Employer for material breach following a change of control, as defined in Section 15, shall be effective only upon twelve (12) months prior written notice. Employer may remove Executive from all duties and authority commencing on the first day of any such notice period, however, payment of compensation and participation in all benefits shall continue through the last day of such notice period. D. Termination for Convenience by Executive. At any time prior to the commencement of the term of this Agreement as well as during the term, the Executive may terminate this Agreement, for any reason or for no reason, with at least ninety days advance written notice to the Employer. Executive's base salary and benefits shall be continued through his selected date of termination. E. Termination for Convenience by Employer. At any time prior to the commencement of the term of this Agreement as well as during the term, the Employer may terminate this Agreement, for any reason or for no reason, with at least ninety days advance written notice to Executive provided the Employer pays the following severance to Executive (depending on when the termination occurs): (1) If the termination occurs prior to the commencement of the term, one year's base pay shall be paid over the course of the twelve months following termination; (2) If the termination occurs after the commencement of the term, but prior to August 31, 1998, the balance of the base pay which Executive would have earned during the first year of this Agreement (September 1st to August 31st) if he had not been terminated will be paid to Executive over that period of time plus one-half of one year's base pay will be paid over the course of the following six months; (3) If the termination occurs after August 31, 1998, one-half of one year's base pay will be paid to Executive over the course of the six months following the termination. F. Legal Expenses. It is further agreed that Employer will pay all reasonable legal expenses of Executive in the event that Executive defends or brings any action under this Agreement, provided, however, that Employer shall not be obligated to pay the legal expenses of Executive if, in good faith, the Board of Directors determines that, Executive acted in a manner Executive believed to be adverse to the best interests of Employer or that Executive should have known that his conduct was unlawful. Notwithstanding such a determination, the Board shall be obligated to reimburse Executive for said legal expenses if he successfully defends or successfully prosecutes his case. 8. Notices. Any notice to be given pursuant to this Agreement shall be sent by certified mail, postage prepaid, or by fax or delivered in person to the parties at the following addresses or at such other address as either party may from time to time in writing designate: To Executive: Edward F. Paquette 88 Columbine Road Milton, Massachusetts 02186 To Employer: Standex International Corporation 6 Manor Parkway Salem, New Hampshire 03079 Attention: Edward J. Trainor 9. Invention and Trade Secret Agreement. Executive agrees that he will execute an Invention and Trade Secret Agreement simultaneously with the execution of this Agreement. That Invention and Trade Secret Agreement shall remain in full force and effect while this Agreement is in effect and, as provided in the Invention and Trade Secret Agreement, after termination hereof. 10. Specific Performance. It is acknowledged by both parties that damages will be an inadequate remedy to Employer in the event that Executive breaches or threatens to breach his commitments under Section 4 or under the Invention and Trade Secret Agreement. Therefore, it is agreed that Employer, may institute and maintain an action or proceeding to compel the specific performance of the promises of Executive contained herein and therein. Such remedy shall, however, be cumulative, and not exclusive, to any other remedy which Employer may have. 11. Survival. The obligations contained in Sections 4 and 10 shall survive the termination of this Agreement. In addition, the termination of this Agreement shall not affect any of the rights or obligations of either party arising prior to or at the time of the termination of this Agreement or which may arise by any event causing the termination of this Agreement. 12. Covenants Severable. In the event that any covenant of this Agreement shall be determined invalid or unenforceable and the remaining provisions can be given effect, then such remaining provisions shall remain in full force and effect. 13. Entire Agreement; Amendment. This Agreement supersedes any employment understanding or agreement (except the Invention and Trade Secret Agreement) which may have been previously made by Employer or its respective subsidiaries or affiliates with Executive. This Agreement, together with the Invention and Trade Secret Agreement, represents all the terms and conditions and the entire agreement between the parties hereto with respect to the employment of Executive by Employer. This Agreement may be modified or amended only by written agreement signed by Employer and Executive. 14. Assignment. This Agreement is personal between Employer and Executive and may not be assigned; provided, however, that Employer shall have the absolute right at any time, or from time to time, to sell or otherwise dispose of its assets or any part thereof or to reconstitute the same into one or more subsidiary corporations or divisions or to merge, consolidate or enter into similar transactions. In the event of any such transaction, the term "Employer" as used herein shall mean and include such successor corporation. 15. Change of Control. A. In the event of a change in control of Employer required to be reported under Item 6(e) of Schedule 14A of Regulation 14A of the Securities Exchange Act of 1934, Executive may terminate his employment at any time if there is a change in his general area of responsibility, title or place of employment, or if his salary or benefits are lessened or diminished. Following a change of control of Employer, any termination of Executive's employment by Executive pursuant to the immediately preceding sentence, then: (i) Executive shall be promptly paid a lump sum payment equal to his current annual base salary plus the amount of the most recent annual bonus paid to him, if any; and (ii) Executive shall become 100% vested in all options which have been granted to him under the provisions of Section 6; and (iii) All life insurance and medical plan benefits covering the Executive shall be continued at the expense of Employer for the one-year period following such termination. 16. Governing Law; Binding Nature of Agreement. This Agreement shall be construed in accordance with the laws of the State of New Hampshire and shall be binding upon and inure to the benefit of the parties hereto, their respective heirs, executors, administrators, successors and assigns. IN WITNESS WHEREOF, Employer has caused this Agreement to be executed on its behalf by its officers thereunto duly authorized and its corporate seal to be hereto affixed, and Executive has executed the within instrument as a sealed document, all as of the day and year first above written. STANDEX INTERNATIONAL CORPORATION By: /S/ Edward J. Trainor Edward J. Trainor, President Attest: /S/ Deborah A. Rosen Deborah A. Rosen Assistant Secretary /S/ Edward F. Paquette Edward F. Paquette Witness: ______________________________ -----END PRIVACY-ENHANCED MESSAGE-----