-----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, Pluzz8Bs8frPobgLCDBtcAfty+wv+3N52Yp4DwMuSsvytXijper6E24fKO2KN6fw plvYEK4yk/z2e/l4oYxabg== 0000310354-00-000029.txt : 20000515 0000310354-00-000029.hdr.sgml : 20000515 ACCESSION NUMBER: 0000310354-00-000029 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000512 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: 627274 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 March 31, 2000 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 March 31, 2000 was 12,565,445. STANDEX INTERNATIONAL CORPORATION I N D E X Page No. PART I. FINANCIAL INFORMATION: Item 1. Statements of Consolidated Income for the Three and Nine Months Ended March 31, 2000 and 1999 2 Consolidated Balance Sheets, March 31, 2000 and June 30, 1999 3 Statements of Consolidated Cash Flows for the Nine Months Ended March 31, 2000 and 1999 4 Notes to Financial Information 5-6 Item 2. Management's Discussion and Analysis 7-9 Item 3. Quantitative and Qualitative Disclosures About Market Risk 10 PART II. OTHER INFORMATION: Item 6. Exhibits and Reports on Form 8-K 11 PART I. FINANCIAL INFORMATION
STANDEX INTERNATIONAL CORPORATION Statements of Consolidated Income (000 Omitted) Three Months Ended Nine Months Ended March 31 March 31 2000 1999 2000 1999 Net Sales $158,158 $152,247 $479,011 $480,795 Cost of Products Sold 106,234 101,592 322,139 321,612 Gross Profit Margin 51,924 50,655 156,872 159,183 Other Costs/(Income): Selling, General and Administrative Expenses 37,838 37,240 112,665 111,808 Restructuring Credit 0 (700) 0 (700) Total 37,838 36,540 112,665 111,108 Income from Operations 14,086 14,115 44,207 48,075 Other Income/(Expense): Gain on Stock Received 0 0 2,734 0 Interest Expense (2,820) (2,721) (8,291) (8,524) Interest Income 83 78 307 305 Other Income/(Expense) - net (2,737) (2,643) (5,250) (8,219) Income Before Income Taxes 11,349 11,472 38,957 39,856 Provision for Income Taxes 4,889 4,841 15,367 15,864 Net Income $ 6,460 $ 6,631 $23,590 $23,992 Earnings Per Share: Basic $ .52 $ .52 $ 1.85 $ 1.85 Diluted $ .51 $ .51 $ 1.84 $ 1.84 Cash Dividends Per Share $ .20 $ .19 $ .59 $ .57
STANDEX INTERNATIONAL CORPORATION Consolidated Balance Sheets (000 Omitted) March 31 June 30 2000 1999 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 9,280 $ 5,909 Receivables, net of allowances for doubtful accounts 97,555 97,871 Inventories (approximately 45% finished goods, 20% work in process, and 35% raw materials and supplies) 115,865 119,955 Prepaid expenses 7,824 4,774 Total current assets 230,524 228,509 PROPERTY, PLANT AND EQUIPMENT 259,379 248,913 Less accumulated depreciation 148,705 144,130 Property, plant and equipment, net 110,674 104,783 OTHER ASSETS: Prepaid pension cost 36,224 32,624 Goodwill, net 31,702 32,110 Other 12,679 12,370 Total other assets 80,605 77,104 TOTAL $421,803 $410,396 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Notes payable and current portion of long-term debt $ 3,714 $ 3,963 Accounts payable 34,522 35,975 Income taxes 8,062 6,202 Accrued expenses 35,523 35,855 Total current liabilities 81,821 81,995 LONG-TERM DEBT (less current portion included above) 152,283 148,111 DEFERRED INCOME TAXES AND OTHER LIABILITIES 17,802 17,989 STOCKHOLDERS' EQUITY: Common stock 41,976 41,976 Additional paid-in capital 9,347 9,159 Retained earnings 361,651 345,613 Cumulative translation adjustment (5,345) (3,478) Less cost of treasury shares (237,732) (230,969) Total stockholders' equity 169,897 162,301 TOTAL $ 421,803 $410,396
STANDEX INTERNATIONAL CORPORATION
STATEMENTS OF CONSOLIDATED CASH FLOWS (000 OMITTED) Nine Months Ended March 31 2000 1999 Cash Flows from Operating Activities: Net income $ 23,590 $ 23,992 Depreciation and amortization 10,355 10,292 Net changes in assets and liabilities (4,011) (8,215) Net Cash Provided by Operating Activities 29,934 26,069 Cash Flows from Investing Activities: Expenditures for property and equipment (16,213) (11,665) Expenditures for acquisitions and other 208 1,554 Net Cash Used for Investing Activities (16,005) (10,111) Cash Flows from Financing Activities: Proceeds from additional borrowings 11,537 26,376 Net payments of debt (7,614) (32,176) Cash dividends paid (7,552) (7,432) Purchase of treasury stock (8,190) (6,712) Other, net 1,614 1,324 Net Cash Used for Financing Activities (10,205) (18,620) Effect of Exchange Rate Changes on Cash (353) 38 Net Change in Cash and Cash Equivalents 3,371 (2,624) Cash and Cash Equivalents at Beginning of Year 5,909 9,256 Cash and Cash Equivalents at March 31 $ 9,280 $ 6,632 Supplemental Disclosure of Cash Flow Information: Cash paid during the nine months for: Interest $ 8,854 $ 8,861 Income taxes $ 13,507 $ 13,584
NOTES TO FINANCIAL INFORMATION 1. Management Statement The financial statements as reported in this 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 nine months ended March 31, 2000 and 1999. These financial statements should be read in conjunction with the audited financial statements as of June 30, 1999. Accordingly, footnote disclosures that would substantially duplicate the disclosures contained in the latest audited financial statements have been omitted from this filing. 2. Per Share Calculation
The following table sets forth the number of shares (in thousands) used in the computation of basic and diluted earnings per share: Three Months Ended Nine Months Ended March 31 March 31 2000 1999 2000 1999 Basic - Average Shares Outstanding 12,649 12,946 12,779 12,999 Effect of Dilutive Securities: Stock Options 72 59 74 65 Diluted - Average Shares Outstanding 12,721 13,005 12,853 13,064 Both basic and diluted incomes are the same for computing earnings per share.
Cash dividends per share have been computed based on the shares outstanding at the time the dividends were paid. The shares (in thousands) used in this calculation for the three and nine months ended March 31, 2000 and 1999 were as follows: 2000 1999 Quarter 12,665 13,024 Year-to-date 12,801 13,039
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.Comprehensive Income In addition to net income, the only item which would be included in comprehensive income is foreign currency translation adjustments. For the nine months ended March 31, 2000 and 1999, comprehensive income totaled approximately $21,723,000 and $24,430,000, respectively. 5. Industry Segment Information
The Company is composed of three product segments. Net sales include only transactions with unaffiliated customers and include no intersegment sales. Operating income by segment excludes general corporate expenses, interest expense and income, and the gain on stock received. Net Sales Three Months Ended Nine Months Ended March 31 March 31 Segment 2000 1999 2000 1999 Food Service $ 35,730 $ 34,27 $107,571 $110,514 Industrial 68,864 66,727 202,484 204,127 Consumer 53,564 51,244 168,956 166,154 Total $158,158 $152,247 $479,011 $480,795
Income From Operations Three Months Ended Nine Months Ended March 31 March 31 Segment 2000 1999 2000 1999 Food Service $ 3,169 $ 4,052 $ 8,997 $ 12,453 Industrial 7,688 7,156 22,282 22,948 Consumer 5,929 5,675 20,723 19,372 Corporate (2,700) (2,768) (7,795) (6,698) Total $14,086 $14,115 $44,207 $48,075
6. Other Income During the quarter ended September 30, 1999, the Company received marketable stock of an insurance company in which Standex owned life policies. The stock was received pursuant to a plan to "demutualize" the insurance company by converting from a mutual company to a stock company. The stock receipt resulted in recognition of an unusual gain of $2,734,000 ($1,668,000 net of taxes or 13 cents per share). 7.Restructuring Credit In June 1998, the Company recorded a restructuring charge of $12,758,000 before taxes. The charge was recorded in the line item "Restructuring Charge" on the Statement of Consolidated Income of the 1998 Annual Report. In the quarter ended March 31, 1999, the restructuring reserve was reduced by $700,000 to reflect a reduction in estimated costs. This credit is shown in the Statements of Consolidated Income as "Restructuring Credit." STANDEX INTERNATIONAL CORPORATION 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. MATERIAL CHANGES IN FINANCIAL CONDITION During the first nine months of fiscal 2000 the Company invested $16.2 million in plant and equipment, purchased $8.2 million of the Company's Common Stock and paid out $7.6 million in cash dividends to the Company's shareholders. These expenditures were funded with net operating cash flows of $29.9 million and $3.9 million of net additional borrowings. 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. New Accounting Pronouncements - In June 1998 the Financial Accounting Standards Board released Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 establishes new standards of accounting and reporting for derivative instruments and hedging activities and will be effective for the Company in fiscal 2001. Management is currently evaluating the effect of adopting SFAS No. 133 on its consolidated financial statements. OPERATIONS Quarter Ended March 31, 2000 As compared to the Quarter Ended March 31, 1999 Net Sales for the quarter ended March 31, 2000 increased by approximately $5.9 million or 3.9% from sales of $152.2 million for the quarter ended March 31, 1999. The previous year's quarter included $1.2 million of sales from divisions that were disposed in fiscal 1999. The effect, on Net Sales, of changes in the average foreign exchange rates was not significant. Net Sales in the Food Service segment were approximately $1.5 million or 4.2% more than the prior year. The increase was the result of increased customer demand in the Master-Bilt and Federal Industries divisions. However, the segment continues to be negatively impacted by supermarket consolidations and delays in healthcare projects. After adjusting for divisions disposed of in fiscal 1999, Consumer segment Net Sales increased by $3.6 million or 7.1%. The increases are attributable to additional stores in the Berean division, and increased customer demand throughout the other Consumer segment divisions. Industrial segment Net Sales increased by $2.1 million or 3.2%. Increased customer demand in the Jarvis Caster, Custom Hoists, and Electronics divisions coupled with some improvement in the texturizing operations in this segment accounted for the increased sales. The Gross Profit Margin Percentage (GPMP) decreased slightly to 32.8% for the quarter ended March 31, 2000 from 33.3% for the quarter ended March 31, 1999. The Food Service segment GPMP decreased to 30.1% from 33.2% in the prior year due to the sales shortfalls caused by the supermarket consolidations and delays in healthcare industry projects. The Consumer segment GPMP decreased slightly to 37.5% from the prior year's 38.6% and the Industrial segment GPMP increased to 30.6% from the prior year's 29.2% due primarily to sales growth. Consolidated Selling, General and Administrative expenses remained stable overall at approximately 24% of Net Sales. None of the segment changes were individually significant. A restructuring credit of $700,000 that relates to a $12.8 million restructuring charge (which was recognized in the fourth quarter of fiscal 1998) was recorded in the third quarter of fiscal 1999. This credit is more fully described in the Notes to Financial Information. An increase of 3.6% in Interest Expense for the quarter was a result of an increase in interest rates as compared to the previous year partially offset by a decrease in debt. Pre-tax income was $11.3 million compared to $11.5 million in the prior year. The effective tax rate was 43.1% compared to 42.2% in the prior year since a larger portion of the Company's income this year was generated in higher taxed countries than last year. As a result of the above, net income for the quarter ended March 31, 2000 was $6.5 million compared to $6.6 million for the quarter ended March 31, 1999. Nine Months Ended March 31, 2000 As Compared to the Nine Months Ended March 31, 1999 For the nine months ended March 31, 2000, sales totaled $479.0 million compared to $480.8 million for the previous fiscal year, which included $10.5 million from divisions which were disposed of in fiscal 1999. After adjusting for the $10.5 million decrease due to dispositions, sales increased by $8.7 million or 1.8%. The effect of changes in average foreign exchange rates between periods was not significant. Net Sales in the Food Service segment decreased by $2.9 million or 2.7% due to delays in healthcare projects caused by funding constraints and a slowdown in orders resulting from consolidations within the supermarket industry. After adjusting for divisions disposed of in fiscal 1999, Consumer segment Net Sales increased by $6.8 million or 4.2% and Industrial segment Net Sales increased by $4.8 million or 2.4%. The Consumer segment increases are the result of additional stores in the Berean division and increased customer demand throughout the other Consumer segment divisions. In the Industrial segment, increased customer demand in the Spincraft, Custom Hoists, Jarvis Caster, and Electronics divisions accounted for the increase in sales. The Company's Gross Profit Margin Percentage (GPMP) remained stable at approximately 33%. The Food Service segment GPMP decreased from 31.8% to 29.4% due to the decline of sales activity within the segment. The Consumer segment GPMP increased to 37.7% from 37.2% in the prior year and the Industrial segment GPMP decreased to 30.4% from 30.6% in the prior year. Consolidated Selling, General and Administrative expenses (SG&A) remained unchanged as a percentage of Net Sales at just over 23%. None of the segments reported significant variations from the prior year. As stated in the discussion of quarterly results, the Company recorded a $700,000 restructuring credit in the third quarter of the prior year. As a result of the above, operating income was $44.2 million as compared to $48.1 million in the prior year, a decrease of 8.1%. During the first quarter of this year, other income showed a gain of $2.7 million 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. This gain is more fully described in the Notes to Financial Information. A decline of 2.7% in Interest Expense was registered in the latest nine- month period as compared to the same period last year. The reduction is the result of a decrease in debt offset somewhat by an increase in interest rates. Pre-tax income was $39.0 million compared to $39.9 million in the prior year. The effective tax rate decreased only slightly to 39.4% in the current period from 39.8% in the prior year. Due to the above factors, net income was $23.6 million compared to $24.0 million for the prior year. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company is exposed to a number of market risks, primarily the effects of changes in foreign currency exchange rates and interest rates. Investments in foreign subsidiaries and branches, and their resultant operations, denominated in foreign currencies, create exposures to changes in exchange rates. The Company's use of its bank credit agreements creates an exposure to changes in interest rates. The effect of changes in exchange rates and interest rates on the Company's earnings has been relatively insignificant compared to other factors that also affect earnings, such as business unit sales and operating margins. The Company does not hold or issue financial instruments for trading, profit or speculative purposes. There have been no significant changes in the exposure to changes in both foreign currency and interest rates from June 30, 1999 to March 31, 2000. PART II. OTHER INFORMATION 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 March 31, 2000. ALL OTHER ITEMS ARE INAPPLICABLE 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: May 12, 2000 /s/ Robert R. Kettinger Robert R. Kettinger Corporate Controller Date: May 12, 2000 /s/ Edward F. Paquette Edward F. Paquette Vice President/CFO EX-27 2
5 1,000 9-MOS JUN-30-2000 MAR-31-2000 9,280 0 101,604 4,049 115,865 230,524 259,379 148,705 421,803 81,821 152,283 0 0 41,976 127,921 421,803 479,011 482,052 322,139 322,139 0 0 8,291 38,957 15,367 23,590 0 0 0 23,590 1.85 1.84
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