-----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, DAWLDTq0aXnZKMHWY5R6WO3RzI6LJMBAGLBdAQxMUIlVMsuBQ4XWayMWUueQUkuR o5Wj01hH3sOOYXw6Ku2Nbg== /in/edgar/work/0000310354-00-000053/0000310354-00-000053.txt : 20000928 0000310354-00-000053.hdr.sgml : 20000928 ACCESSION NUMBER: 0000310354-00-000053 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000926 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STANDEX INTERNATIONAL CORP/DE/ CENTRAL INDEX KEY: 0000310354 STANDARD INDUSTRIAL CLASSIFICATION: [3580 ] IRS NUMBER: 310596149 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-07233 FILM NUMBER: 728692 BUSINESS ADDRESS: STREET 1: 6 MANOR PKWY CITY: SALEM STATE: NH ZIP: 03079 BUSINESS PHONE: 6038939701 10-K 1 0001.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 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 office) (Zip Code) (603) 893-9701 (Registrant's telephone number, including area code) SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE SECURITIES EXCHANGE ACT OF 1934: Title of Each Class Name of Each Exchange on Which Registered Common Stock, Par Value $1.50 Per New York Stock Exchange Share 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 Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant at the close of business on July 31, 2000 was approximately $211,166,000 Registrant's closing price as reported on the New York Stock Exchange for July 31, 2000 was $17.25 per share. The number of shares of Registrant's Common Stock outstanding on September 13, 2000 was 12,419,681. Portions of the 2000 Annual Report to Shareholders of Registrant are incorporated in Parts I, II and IV of this report. Portions of the Proxy Statement of Registrant dated September 21, 2000 are incorporated in Part III of this report. PART I ITEM 1. BUSINESS Standex1 is a diversified manufacturing and marketing company with operations in three product segments: Food Service, Industrial and Consumer. Standex was incorporated in 1975 and is the successor of a corporation organized in 1955. The business of the Company is carried on within the three segments by a number of operating units, each with its own organization. The management of each operating unit has responsibility for product development, manufacturing, marketing and for achieving a return on investment in accordance with the standards established by Standex. Overall supervision, coordination and financial control are maintained by the executive staff from its corporate headquarters located at 6 Manor Parkway, Salem, New Hampshire. As of June 30, 2000, the Company had approximately 5,600 employees. The principal products produced and services rendered by each of the segments of Standex are incorporated herein by reference to pages 4 through 15 of the Annual Report to Shareholders for the fiscal year ended June 30, 2000 (the "2000 Annual Report"). Sales are made both directly to customers and by or through manufacturers representatives, dealers and distributors. References in this Annual Report on Form 10-K to "Standex" or the "Company" shall mean Standex International Corporation and its subsidiaries. The major markets for the Company's products and services are as follows: Food Service Products . Master-Bilt(R) refrigerated cabinets, cases, display units, modular structures, coolers and freezers; Barbecue King(R) and BKI(R) commercial cook and hold units, rotisseries, pressure fryers, ovens and baking equipment; and Federal Industries bakery and deli heated and refrigerated display cases for hospitals, schools, fast food industry, restaurants, hotels, clubs, supermarkets, bakeries, convenience stores and delicatessens. . USECO food service equipment and patient feeding systems for hospitals, schools, nursing homes, correctional facilities and restaurants; H. F. Coors hotel restaurant china and cookware; and Mason candle lamps and candles for restaurants, hotels and commercial industries. . Procon(R) rotary vane pumps for the carbonated beverage industry, espresso coffee machine markets, water purification industry and coolant recirculation systems. Industrial Products . Spincraft(R) power metal spinning, custom formed components for aircraft engines, space launch vehicles, gas turbines, nuclear reactors, military ordnance, commercial satellites and similar products for OEMs, U.S. Government, energy, aircraft, aerospace and commercial satellite industry and other commercial industries. . Jarvis, Can-Am Casters and WheelTM and PEMCO(R) casters and wheels and industrial hardware for general industry, hospitals, supermarkets, hotels and restaurants. . National Metal fabricated metal products, including specialty hardware and metal furniture for the food service industry, retail stores, office furniture markets, stationary supply houses and other industries. . Roehlen(R) embossing rolls, texturizing and laser engraving systems, machines and plates; Mold-Tech(R) mold engraving; Keller- Dorian print rolls and calendering equipment; Mullen(R) Burst Testers; Perkins converting and finishing machinery and systems for general industry (e.g., automotive, plastics, textiles, paper, building products, synthetic materials, OEMs, converting, textile and paper industry, computer, housewares and construction industries). . Custom Hoists single and double acting telescopic and piston rod hydraulic cylinders for dump trucks and trailers used in the construction and waste hauling industries. . Standex Electronics reed switches, electrical connectors, sensors, toroids and relays, fixed and variable inductors and electronic assemblies, fluid sensors and tunable inductors for telecommunications, consumer electronics, automotive, security systems, communications equipment, computers, air conditioning and refrigeration industries. . James Burn Wire-O(R) double looped wire and machinery and complete binding system for printers, publishers and binders of checkbooks, calendars, diaries, appointment books, cookbooks, catalogs and manuals. Consumer Products . Standard Publishing(R) publishes and markets religious periodicals, curricula, Sunday school literature, children's books and supplies for Sunday schools, churches, vacation Bible schools and Christian bookstores and prints for general commerce and industry. . Berean(R) Christian Stores, a chain of 22 Berean(R) Christian bookstores, which serve as distribution centers and retail outlets for religious books and merchandise. . Snappy(R), ACME and ALCO metal ducting and fittings for heating, ventilating and air conditioning distributors throughout the continental United States. . Frank Lewis(R) Grapefruit Club gift packages, Red Cooper(R) fresh grapefruit, Harry's Crestview Groves(R) grapefruit packages, grapefruit juice, grapefruit sections, onions, melons and roses; Salsa Express(R) salsas and other related food products; Red Cooper's Onion Store onions for mail order consumer direct sales. Financial information on each of the product groups of Standex as well as financial information of non-U.S. operations is incorporated by reference to the note to the consolidated financial statements entitled Industry Segment Information on pages 26 and 27 of the 2000 Annual Report. Raw Materials Raw materials and components necessary for the fabrication of products and the rendering of services for the Company are generally available from numerous sources. The Company does not foresee any unavailability of materials or components which would have any material adverse effect on its overall business, or any of its business segments, in the near term. Patents and Trademarks The Company owns or is licensed under a number of patents and trademarks in each of its product groups. However, the loss of any single patent or trademark would not, in the opinion of the Company, materially affect any segment or the overall business. Backlog
Backlog orders believed to be firm at June 30, 2000 and 1999 are as follows (in thousands): 2000 1999 Food Service $22,562 $21,379 Industrial 116,941 122,337 Consumer 7,276 6,636 Total $146,779 $150,352 All but approximately $64,758,000 of the 2000 backlog, and $70,415,000 of the 1999 backlog, was expected to be realized as sales in the following fiscal year.
Competition Standex manufactures and markets products many of which have achieved a unique or leadership position in their market. However, the Company encounters competition in varying degrees in all product groups and for each product line. Competitors include domestic and foreign producers of the same and similar products. The principal methods of competition are price, delivery schedule, quality of services, product performance and other terms and conditions of sale. During fiscal 2000, the Company invested $22,787,000 in new plant and equipment in order to upgrade facilities to become more competitive in all segments. International Operations Substantially all international operations of the Company are related to domestic operations and are included in the Food Service and Industrial business segments. International operations are conducted at 34 plants, principally in Western Europe. The industry segment information regarding non-U.S. operations on page 27 of the 2000 Annual Report is incorporated herein by reference. Research and Development Due to the nature of the manufacturing operations of Standex and the types of products manufactured, expenditures for research and development are not material to any segment. Environmental and Other Matters To the best of its knowledge, the Company believes that it is presently in substantial compliance with all existing applicable environmental laws and does not anticipate that such compliance will have a material effect on its future capital expenditures, earnings or competitive position. ITEM 2. PROPERTIES At June 30, 2000, Standex operated a total of 91 principal plants, stores and warehouses located through the United States, Western Europe, Canada, Australia, Singapore and Mexico. The Company owned 50 of the facilities and the balance were leased. The Company operated 22 retail stores in various sections of the United States, of which all were leased. The approximate building space utilized by each product group of Standex at June 30, 2000 is as follows (in thousands):
Area in Square Feet Owned Leased Food Service 698 228 Industrial 1,429 414 Consumer 1,119 373 General Corporate 55 - Total 3,301 1,015
In general, the buildings are in good condition, are considered to be adequate for the uses to which they are being put and are in regular use. The Company utilizes machinery and equipment which is necessary to conduct its operations. Substantially all of such machinery and equipment is owned by Standex. ITEM 3. LEGAL PROCEEDINGS There are no material pending legal proceedings. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to stockholders during the fourth quarter of the fiscal year. EXECUTIVE OFFICERS OF STANDEX
Name Age Principal Occupation During the Past Five Years Thomas L. King 70 Chairman of the Board of the Company since January 1992; President of the Company from August 1984 to July 1994; and Chief Executive Officer of the Company from July 1985 to June 1995. Edward J. Trainor 60 Chief Executive Officer of the Company since July 1995; President of the Company since July 1994; Chief Operating Officer of the Company from July 1994 to June 1995; and Vice President of the Company from July 1992 to July 1994. David R. Crichton 62 Executive Vice President/Operations of the Company since June 1989. Edward F. Paquette 64 Vice President/CFO of the Company since July 1998; Assistant to the President/CEO of the Company from September 1997 to June 1998 and prior thereto Partner of Deloitte & Touche LLP. Deborah A. Rosen 45 Vice President of the Company since July 1999; General Counsel of the Company since January 1998; Secretary of the Company since October 1997; Assistant General Counsel and Assistant Secretary of the Company from January 1997 to December 1997 and prior thereto Senior Corporate Attorney and Assistant Secretary of the Company. Daniel C. Potter 44 Treasurer of the Company since August 1998; Assistant Treasurer from July 1997 to July 1998; Corporate Tax Manager of the Company since February 1997; Tax Manager of the Company from August 1996 to January 1997 and prior thereto Tax Manager/International. Robert R. Kettinger 58 Corporate Controller of the Company since July 1991. Jerry G. Griffin 50 Group Vice President, Food Service Group since July 1998; President of Standex Commercial Products from 1990 to 1998; and prior thereto Vice President of Finance and Administration of Standex Commercial Products. Peter G. Gerstberger 58 Group Vice President, Consumer Group since April 1999; prior thereto Founder and President of The Berwick Group, a management consulting group. Other than Messrs. Griffin and Gerstberger, who are not corporate officers, the executive officers are elected each year by the Board of Directors to serve for one-year terms of office. There are no family relationships among any of the directors or executive officers of the Company.
PART II ITEM 5. MARKET FOR STANDEX COMMON STOCK AND RELATED STOCKHOLDER MATTERS The principal market in which the Common Stock of Standex is traded is the New York Stock Exchange. The high and low sales prices for the Common Stock on the New York Stock Exchange and the dividends paid per Common Share for each quarter in the last two fiscal years are incorporated by reference to page 19 of the 2000 Annual Report. The approximate number of stockholders of record on September 13, 2000 was 3,200. ITEM 6. SELECTED FINANCIAL DATA Selected financial data for the five years ended June 30, 2000 is incorporated by reference to the table entitled "Five-Year Financial Review" on page 19 of the 2000 Annual Report. This summary should be read in conjunction with the consolidated financial statements and related notes included in the 2000 Annual Report on pages 20 through 31. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management's discussion and analysis of financial condition and results of operations of the Company is incorporated by reference to pages 16 through 18 of the 2000 Annual Report. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Quantitative and qualitative disclosures about market risk are incorporated by reference to page 18 of the 2000 Annual Report. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information required by this item is incorporated by reference to pages 19 through 32 of the 2000 Annual Report. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF STANDEX Certain information concerning the directors of the Company is incorporated by reference to pages 2 through 4 and pages 17 and 20 of the Proxy Statement of the Company, dated September 21, 2000 (the "2000 Proxy Statement"). Certain information concerning the executive officers of the Company is set forth in Part I under the caption "Executive Officers of Standex." ITEM 11. EXECUTIVE COMPENSATION Information regarding executive compensation is incorporated by reference to pages 7 through 15 of the 2000 Proxy Statement. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The stock ownership of each person known to Standex to be the beneficial owner of more than 5% of its Common Stock and the stock ownership of all directors and executive officers of Standex as a group are incorporated by reference to pages 3 through 5 of the 2000 Proxy Statement. The beneficial ownership of Standex Common Stock of all directors and executive officers of the Company is incorporated by reference to pages 3 through 4 of the 2000 Proxy Statement. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Information regarding certain relationships and related transactions is incorporated by reference to page 18 of the 2000 Proxy Statement. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) Financial Statements and Schedule (i) The financial statements listed in the accompanying index to the Consolidated Financial Statements and Schedules are incorporated by reference into this Item 14. (ii) The financial statement schedule listed in the accompanying index to the Consolidated Financial Statements and Schedules is filed as part of this Annual Report on Form 10-K. (b) Reports on Form 8-K Standex filed no reports on Form 8-K with the Securities and Exchange Commission during the last quarter of the fiscal year ended June 30, 2000. (c) Exhibits 3. (i) Restated Certificate of Incorporation of Standex, dated October 27, 1998, is incorporated by reference to the exhibits to the Quarterly Report of Standex on Form 10-Q for the fiscal quarter ended December 31, 1998. (ii) By-Laws of Standex, as amended, and restated on July 27, 1994 are incorporated by reference to the exhibits to the Annual Report of Standex on Form 10-K for the fiscal year ended June 30, 1994 (the "1994 10-K"). 4. (a) Agreement of the Company, dated September 15, 1981, to furnish a copy of any instrument with respect to certain other long-term debt to the Securities and Exchange Commission upon its request is incorporated by reference to the exhibits to the Annual Report of Standex on Form 10- K for the fiscal year ended June 30, 1981. (b) Rights Agreement of the Company is incorporated by reference to Form 8A filed with the Securities and Exchange Commission on December 18, 1998 and to the Form 8-K filed with the Securities and Exchange Commission on December 18, 1998 (c) Exhibits (Continued) 10. (a) Employment Agreement dated May 1, 2000, between the Company and David R. Crichton is incorporated by this reference to the exhibits to this Annual Report on Form 10-K for the fiscal year ended June 30, 2000 (the "2000 10-K"). (b) Employment Agreement dated May 1, 2000, between the Company and Edward J. Trainor is incorporated by this reference to the exhibits to the 2000 10-K. (c) Employment Agreement dated May 1, 2000, between the Company and Edward F. Paquette is incorporated by this reference to the exhibits to the 2000 10-K. (d) Employment Agreement dated May 1, 2000, between the Company and Deborah A. Rosen is attached hereto and incorporated by this reference to the exhibits to the 2000 10-K. (e) Standex International Corporation 1998 Long Term Incentive Plan, effective October 27, 1998 is incorporated by reference to the exhibits to the Quarterly Report of Standex on Form 10-Q of the fiscal quarter ended December 31, 1998. (f) Standex International Corporation Profit Improvement Participation Shares Plan as amended and restated on April 26, 1995 is incorporated by reference to the exhibits to the Annual Report of Standex on Form 10-K for the fiscal year ended June 30, 1995 (the "1995 10-K"). (g) Standex International Corporation Stock Option Loan Plan, effective January 1, 1985, as amended and restated on January 26, 1994, is incorporated by reference to the exhibits to the 1994 10-K. (h) Standex International Corporation Executive Security Program, as amended and restated on July 27, 1994, and as further amended and restated on October 29, 1996 is incorporated by reference to the exhibits to the Quarterly Report of Standex on Form 10-Q for the fiscal quarter ended December 31, 1996 (the "December 31, 1996 10-Q"). (i) Standex International Corporation 1985 Stock Option Plan effective July 31, 1985, as amended on October 30, 1990, is incorporated by reference to the exhibits to the Annual Report of Standex on Form 10-K for the fiscal year ended June 30, 1991. (j) Standex International Corporation Executive Life Insurance Plan effective April 27, 1994 and amended on April 24, 1996 and as further amended and restated on October 29, 1996 is incorporated by reference to the exhibits to the December 31, 1996 10-Q. (c) Exhibits (Continued) (k) Standex International Corporation 1994 Stock Option Plan effective July 27, 1994 is incorporated by reference to the exhibits to the 1994 10-K. (l) Standex International Corporation Supplemental Retirement Plan adopted April 26, 1995 and amended on July 26, 1995 is incorporated by reference to the exhibits to the 1995 10-K. 13. The Annual Report to Shareholders of the Company for the fiscal year ended June 30, 2000 (except for the pages and information thereof expressly incorporated by reference in this Form 10-K, the Annual Report to Shareholders) is provided solely for the information of the Securities and Exchange Commission and is not deemed "filed" as part of this Form 10-K. 21. Subsidiaries of Standex. 23. Independent Auditors' Consent. 24. Powers of Attorney of David R. Crichton, William R. Fenoglio, Walter F. Greeley, Daniel B. Hogan, Thomas L. King, C. Kevin Landry, H. Nicholas Muller, III, Ph.D., Edward F. Paquette and Sol Sackel. 27. Financial Data Schedule. (d) Schedule The schedule listed in the accompanying Index to the Consolidated Financial Statements and Schedules is filed as part of this Annual Report on Form 10-K. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Standex International Corporation has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, on September 26, 2000. STANDEX INTERNATIONAL CORPORATION (Registrant) By:/s/ Edward J. Trainor Edward J. Trainor, President/ Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Standex International Corporation and in the capacities indicated on September 26, 2000: Signature Title /s/ Edward J. Trainor President/Chief Executive Officer Edward J. Trainor /s/ Edward F. Paquette Vice President/Chief Financial Officer Edward F. Paquette /s/ Robert R. Kettinger Corporate Controller (Chief Accounting Officer) Robert R. Kettinger Edward J. Trainor, pursuant to powers of attorney which are being filed with this Annual Report on Form 10-K, has signed below on September 26, 2000 as attorney-in-fact for the following directors of the Registrant: David R. Crichton C. Kevin Landry William R. Fenoglio H. Nicholas Muller, III, Ph.D. Walter F. Greeley Edward F. Paquette Daniel B. Hogan Sol Sackel Thomas L. King /s/ Edward J. Trainor Edward J. Trainor INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE Page No. in Annual Report ("AR") Financial Statements Statements of Consolidated Income for the Years Ended June 30, 2000, 1999 and 1998 AR 20 Consolidated Balance Sheets at June 30, 2000 and 1999 AR 21 Statements of Consolidated Stockholders' Equity for the Years Ended June 30, 2000, 1999 and 1998 AR 20 Statements of Consolidated Cash Flows for the Years Ended June 30, 2000, 1999 and 1998 AR 22 Notes to Consolidated Financial Statements. AR 23 - 31 Independent Auditors' Report relating to the Consolidated Financial Statements and Notes thereto AR 32 Schedule Schedule VIII Valuation and Qualifying Accounts Independent Auditors' Report relating to Schedule VIII Schedules (consolidated) not listed above are omitted because of the absence of conditions under which they are required or because the required information is included in the financial statements submitted. INDEX TO ITEMS INCORPORATED BY REFERENCE Page No. in Annual Report ("AR") or Proxy Statement ("P") PART I Item 1Business AR 4 - 15 Industry Segment Information AR 26 INDEX TO ITEMS INCORPORATED BY REFERENCE Page No. in Annual Report ("AR") or Proxy Statement P") PART II Item 5 Market for Standex Common Stock and Related Stockholder Matters AR 19 Item 6 Selected Financial Data AR 19 Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations AR 16 - 18 Item 7A Quantitative and Qualitative Disclosures About Market Risk AR 18 Item 8 Financial Statements and Supplementary Data AR 19 - 32 PART III Item 10 Directors and Executive Officers of Standex P 2-4; 17; 20 Item 11 Executive Compensation P 7-15 Item 12 Security Ownership of Certain Beneficial Owners and Management P 3-5 Item 13 Certain Relationships and Related Transactions P 18 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Stockholders of STANDEX INTERNATIONAL CORPORATION Salem, New Hampshire We have audited the consolidated financial statements of Standex International Corporation and subsidiaries as of June 30, 2000 and 1999, and for each of the three years in the period ended June 30, 2000, and have issued our report thereon dated August 15, 2000; such consolidated financial statements and report are included in your 2000 Annual Report to Shareholders and are incorporated herein by reference. Our audits also included the consolidated financial statement schedule of Standex International Corporation and subsidiaries, listed in Item 14(a)(ii). This consolidated financial statement schedule is the responsibility of the Corporation's management. Our responsibility is to express an opinion based on our audits. In our opinion, such consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein. /s/ DELOITTE & TOUCHE LLP DELOITTE & TOUCHE LLP Boston, Massachusetts August 15, 2000 INDEX TO EXHIBITS PAGE 10. Employment Agreements of David R. Crichton, Edward J. Trainor, Edward F. Paquette, and Deborah A. Rosen 13. The Annual Report to Shareholders of the Company for the fiscal year ended June 30, 2000 (except for the pages and information thereof expressly incorporated by reference in this Form 10-K, the Annual Report to Shareholders) is provided solely for the information of the Securities and Exchange Commission and is not deemed "filed" as part of this Form 10-K 21. Subsidiaries of Registrant 23. Independent Auditors' Consent 24. Powers of Attorney of David R. Crichton, William R. Fenoglio, Walter F. Greeley, Daniel B. Hogan, Thomas L. King, C Kevin Landry, H. Nicholas Muller, III, Ph.D., Edward F. Paquette and Sol Sackel 27. Financial Data Schedule EX-10 2 0002.txt EXHIBIT 10(a) EMPLOYMENT AGREEMENT THIS AGREEMENT is made and entered into as of this 1st day of May, 2000, by and between STANDEX INTERNATIONAL CORPORATION, a Delaware corporation with its executive offices in Salem, New Hampshire (hereinafter referred to as "Employer"), and DAVID R. CRICHTON of Windham, New Hampshire (hereinafter referred to as "Executive"). WHEREAS, the Executive and the Employer entered into a written Employment Agreement on or about February 1, 1998 (the "February 1998 Agreement") with respect to the Executive's employment for the Employer; and WHEREAS, the February 1998 Agreement at this point in time does not accurately memorialize certain material terms that have subsequently arisen and already been orally agreed upon by the Executive and the Employer; and WHEREAS, the parties desire to enter into this Restated Employment Agreement to supercede the February 1998 Agreement and to accurately memorialize in writing all of the terms and conditions of the Executive's employment by the Employer in a senior executive, managerial and supervisory capacity, which position is currently the Executive Vice President/Operations of Employer. 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 on a full-time basis and Executive agrees to serve Employer on a full-time basis as Executive Vice President/Operations or other senior executive, managerial and 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. It is the intention of the parties that this Agreement supersedes and replaces in its entirety the February 1998 Agreement. 2. Term. The term of this Agreement shall be from the date of execution by the Executive to December 31, 2002 unless otherwise terminated in accordance with the provisions of Sections 6 or 14. 3. Best Efforts. Executive agrees, as long as this Agreement is in effect, to continue to devote his same best efforts and the same time and attention to the business of Employer that he is presently devoting to said business of Employer, and to the performance of such executive, managerial and supervisory duties of a similar nature to those performed for Employer during the period of service preceding this Agreement. 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. It is the express intent of the Employer and the Executive that: (i) the covenants and affirmative obligations in this Section be binding obligations to be enforced to the fullest extent permitted by law; (ii) in the event of any determination of unenforceability of the scope of any covenant or obligation, its limitation which a court of competent jurisdiction deems fair and reasonable, shall be the sole basis for relief from the full enforcement thereof; and (iii) in no event shall the covenants or obligations in this Section be deemed wholly unenforceable. 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 paragraph 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 during any year of this Agreement (January 1 to December 31) of the higher of $393,000 or the base salary at the end of the immediately preceding year of this Agreement. 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 Long Term Incentive Program, the Standex Annual Incentive Program, the Standex Executive Security Program, the Standex Supplemental Executive Retirement Plan ("SERP"), the Standex Retirement Savings Plan and in such other benefit plans and programs as are made available from time to time to executives of the Employer. 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. 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 and the six month period has been satisfied 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 90 days written notice, provided, however, that termination by Employer for material breach following a change of control, as defined in Section 14, 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. For purposes of this Agreement material breach shall be defined as: (i) an act or acts of dishonesty on the Executive's part which are intended to result in his substantial personal enrichment at the expense of the Employer; or (ii) the Executive willfully, deliberately and continuously fails to materially and substantially perform his duties hereunder and which result in material injury to the Employer (other than such failure resulting from the Executive's incapacity due to physical or mental disability) after demand for substantial performance is given by the Employer to the Executive specifically identifying the manner in which the Employer believes the Executive has not materially and substantially performed his duties hereunder. No action, or failure to act, shall be considered "willful" if it is done by the Executive in good faith and with reasonable belief that his action or omission was in the best interest of the Employer. D. 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. 7. Notices. Any notice to be given pursuant to this Agreement shall be sent by certified mail, postage prepaid, or by fax (with a copy mailed via first class mail, postage pre-paid) 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: David R. Crichton 7 Highland Road Windham, NH 03087 To Employer: Standex International Corporation 6 Manor Parkway Salem, New Hampshire 03079 Attention: Edward J. Trainor 8. Invention and Trade Secret Agreement. Executive agrees that the Invention and Trade Secret Agreement dated June 22, 1976, by and between Executive and Standex International Corporation and signed by Executive 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. 9. 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. 10. Survival. The obligations contained in Sections 4 and 8 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. 11. 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. 12. Entire Agreement; Amendment. This Agreement supersedes any employment understanding or agreement (except the Invention and Trade Secret Agreement) that 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. 13. 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. 14. 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: (i) Employer may terminate Executive's employment only upon conclusive evidence of substantial and indisputable intentional personal malfeasance in office such as a conviction for embezzlement of Employer's funds; and (ii) 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. B. Following a change of control of Employer, any termination of Executive's employment either by Executive pursuant to Section 14.A.(ii) or by Employer under any circumstances other than involving conclusive evidence of substantial and indisputable intentional personal malfeasance in office, then: (i) Executive shall be promptly paid a lump sum payment equal to three times his current annual base salary plus three times the most recent annual bonus paid to him; (ii) Executive shall become 100% vested in all benefit plans in which he participates including but not limited to the Standex Retirement Savings Plan, the Management Savings Program portion of the Standex Annual Incentive Program and all restricted stock options and performance share units granted under the Standex Long Term Incentive Program and any other stock option plans of the Employer; (iii) Three years of benefit service shall be added to the years of service credited to Executive under the Standex Retirement Plan; (iv) The salary and bonus paid under Section 8.B.(i) shall be deemed the Executive's compensation during such three additional years for purposes of the computation of his pension under the Standex Retirement Plan; (v) All life insurance and medical plan benefits covering the Executive and his dependents shall be continued at the expense of Employer for the three-year period following such termination as if the Executive were still an employee of the Employer; and (vi) In the event that any payment or distribution of any type to or for the benefit of the Executive made by the Employer, by any of its affiliates, by any person or entity which acquires ownership or effective control or ownership of a substantial portion of the Employer's assets within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended, and all related regulations or any similar federal tax that may hereinafter be imposed, whether paid or payable or distributed or distributable pursuant to this Agreement or otherwise (collectively called the "Total Payments"), would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, and all related regulations or any similar federal tax that may hereinafter be imposed or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest or penalties are hereinafter collectively referred to as the "Excise Tax"), then the Executive shall be entitled to receive from the Employer an additional payment (an "Excise Tax Restoration Payment") in an amount that shall fully fund the payment by the Executive of any Excise Tax on the Total Payments as well as any income taxes imposed on the Excise Tax Restoration Payment, any Excise Tax imposed on the Excise Tax Restoration Payment and any interest or penalties imposed with respect to taxes on the Excise Tax Restoration Payment or any Excise Tax. If the Employer refuses or fails to timely pay the Excise Tax Restoration Payment to the Executive without a good faith lawful justification and such refusal or failure is not corrected within twenty (20) business days after the Executive provides written notice to the Employer concerning the refusal or failure, then the Employer shall immediately pay to the Executive an additional amount equal to 75% of the Executive's last annual base salary as a late fee for the Employer's late payment of the Excise Tax Restoration Payment. The Employer shall furnish to the Executive a written statement setting forth in detail the manner in which the Excise Tax Restoration Payment was calculated and the basis for such calculations, including any opinions or other advice that the Employer received from outside counsel, auditors or consultants. Notwithstanding the foregoing, it is the express intent and desire of the parties that if the Total Payments would trigger an Excise Tax, then the Executive shall be entitled to promptly receive such additional monetary compensation from the Employer as may be necessary to ensure that the Executive's net after tax benefit of the Total Payments would be the same as if no Excise Tax had been imposed upon the Total Payments. In the event of any dispute between the Executive and the Employer involving the Excise Tax Restoration Payment, the matter shall be promptly submitted to binding arbitration on an expedited basis before a mutually acceptable arbitrator at a national accounting firm. 15. 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/CEO ATTEST: /s/Deborah A. Rosen Deborah A. Rosen, Secretary /s/Steven G. Brown /s/David R. Crichton Witness David R. Crichton EXHIBIT 10(b) RESTATED EMPLOYMENT AGREEMENT THIS AGREEMENT is made and entered into as of this 1st day of May, 2000, by and between STANDEX INTERNATIONAL CORPORATION, a Delaware corporation with its executive offices in Salem, New Hampshire (hereinafter referred to as the "Employer"), and EDWARD J. TRAINOR of Salem, New Hampshire (hereinafter referred to as the "Executive"). R E C I T A L S WHEREAS, the Executive and the Employer entered into a written Employment Agreement on or about January 28, 1998 (the "January 1998 Agreement") with respect to the Executive's employment for the Employer; and WHEREAS, the January 1998 Agreement at this point in time does not accurately memorialize certain material terms that have subsequently arisen and already been orally agreed upon by the Executive and the Employer; and WHEREAS, the parties desire to enter into this Restated Employment Agreement to supercede the January 1998 Agreement and to accurately memorialize in writing all of the terms and conditions of the Executive's employment by the Employer in a senior executive, managerial and supervisory capacity, which position is currently the President/CEO of Employer. 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 on a full-time basis and Executive agrees to serve Employer on a full-time basis as President/CEO of Employer and or other senior executive, managerial and supervisory capacity, subject to the direction and control of the Board of Directors of Employer, said employment being upon the terms and conditions herein set forth. It is the intention of the parties that this Agreement supersedes and replaces in its entirety the January 1998 Agreement. 2. Term. The initial term of this Agreement shall be three years from January 1, 2000 to December 31, 2002. Upon the expiration of the initial term on December 31, 2002, this Agreement shall automatically renew for an additional three-year term commencing on January 1, 2003, and upon the expiration of the first renewal term on December 31, 2005, this Agreement shall automatically renew for an additional three-year term commencing on January 1, 2006, provided, however, that neither automatic renewal shall occur if this Agreement has been otherwise terminated in accordance with the provisions of Section 6 and, provided further, that neither automatic renewal shall occur if either party has notified the other in writing at least one year in advance of the end of any three-year term stating its intent to terminate the Agreement at the end of that three-year term. 3. Best Efforts. Executive agrees, as long as this Agreement is in effect, to continue to devote his same best efforts and the same time and attention to the business of Employer that he is presently devoting to said business of Employer, and to the performance of such executive, managerial and supervisory duties of a similar nature to those performed for Employer during the period of service preceding this Agreement. 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. It is the express intent of the Employer and the Executive that: (i) the covenants and affirmative obligations in this Section be binding obligations to be enforced to the fullest extent permitted by law; (ii) in the event of any determination of unenforceability of the scope of any covenant or obligation, its limitation which a court of competent jurisdiction deems fair and reasonable, shall be the sole basis for relief from the full enforcement thereof; and (iii) in no event shall the covenants or obligations in this Section be deemed wholly unenforceable. 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 paragraph 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 during any year of this Agreement (January 1 to December 31) of the higher of $650,000 or the base salary at the end of the immediately preceding year of this Agreement. 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 Long Term Incentive Program, the Standex Annual Incentive Program, the Standex Executive Life Insurance Plan, the Standex Supplemental Executive Retirement Plan ("SERP"), the Standex Retirement Savings Plan and in such other benefit plans and programs as are made available from time to time to executives of the Employer. 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. 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 and the six month period has been satisfied 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 90 days written notice, provided, however, that termination by Employer for material breach following a change of control, as defined in Section 14, 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. For purposes of this Agreement material breach shall be defined as: (i) an act or acts of dishonesty on the Executive's part which are intended to result in his substantial personal enrichment at the expense of the Employer; or (ii) the Executive willfully, deliberately and continuously fails to materially and substantially perform his duties hereunder and which results in material injury to the Employer (other than such failure resulting from the Executive's incapacity due to physical or mental disability) after demand for substantial performance is given by the Employer to the Executive specifically identifying the manner in which the Employer believes the Executive has not materially and substantially performed his duties hereunder. No action, or failure to act, shall be considered "willful" if it is done by the Executive in good faith and with reasonable belief that his action or omission was in the best interest of the Employer. D. 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. 7. Notices. Any notice to be given pursuant to this Agreement shall be sent by certified mail, postage prepaid, or by fax (with a copy mailed via first class mail, postage pre-paid) 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 J. Trainor 14 Copper Beech Road Salem, New Hampshire 03079 To Employer: Standex International Corporation 6 Manor Parkway Salem, New Hampshire 03079 8. Invention and Trade Secret Agreement. Executive agrees that the Invention and Trade Secret Agreement dated June 18, 1985, by and between Executive and Standex International Corporation and signed by Executive 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. 9. 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. 10. Survival. The obligations contained in Sections 4 and 8 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. 11. 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. 12. Entire Agreement; Amendment. This Agreement supersedes any employment understanding or agreement (except the Invention and Trade Secret Agreement) that 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. 13. 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. 14. 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: (i) Employer may terminate Executive's employment only upon conclusive evidence of substantial and indisputable intentional personal malfeasance in office such as a conviction for embezzlement of Employer's funds; and (ii) 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. B. Following a change of control of Employer, any termination of Executive's employment either by Executive pursuant to Section 14.A.(ii) or by Employer under any circumstances other than involving conclusive evidence of substantial and indisputable intentional personal malfeasance in office, then: (i) Executive shall be promptly paid a lump sum payment equal to three times his current annual base salary plus three times the most recent annual bonus paid to him; (ii) Executive shall become 100% vested in all benefit plans in which he participates including but not limited to the Standex Retirement Savings Plan, the Management Savings Program portion of the Standex Annual Incentive Program and all restricted stock options and performance share units granted under the Standex Long Term Incentive Program and any other stock option plans of the Employer; (iii) Three years of benefit service shall be added to the years of service credited to Executive under the Standex Retirement Plan; (iv) The salary and bonus paid under Section 8.B.(i) shall be deemed the Executive's compensation during such three additional years for purposes of the computation of his pension under the Standex Retirement Plan; (v) All life insurance and medical plan benefits covering the Executive and his dependents shall be continued at the expense of Employer for the three-year period following such termination as if the Executive were still an employee of the Employer; and (vi) In the event that any payment or distribution of any type to or for the benefit of the Executive made by the Employer, by any of its affiliates, by any person or entity which acquires ownership or effective control or ownership of a substantial portion of the Employer's assets within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended, and all related regulations or any similar federal tax that may hereinafter be imposed, whether paid or payable or distributed or distributable pursuant to this Agreement or otherwise (collectively called the "Total Payments"), would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, and all related regulations or any similar federal tax that may hereinafter be imposed or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest or penalties are hereinafter collectively referred to as the "Excise Tax"), then the Executive shall be entitled to receive from the Employer an additional payment (an "Excise Tax Restoration Payment") in an amount that shall fully fund the payment by the Executive of any Excise Tax on the Total Payments as well as any income taxes imposed on the Excise Tax Restoration Payment, any Excise Tax imposed on the Excise Tax Restoration Payment and any interest or penalties imposed with respect to taxes on the Excise Tax Restoration Payment or any Excise Tax. If the Employer refuses or fails to timely pay the Excise Tax Restoration Payment to the Executive without a good faith lawful justification and such refusal or failure is not corrected within twenty (20) business days after the Executive provides written notice to the Employer concerning the refusal or failure, then the Employer shall immediately pay to the Executive an additional amount equal to 75% of the Executive's last annual base salary as a late fee for the Employer's late payment of the Excise Tax Restoration Payment. The Employer shall furnish to the Executive a written statement setting forth in detail the manner in which the Excise Tax Restoration Payment was calculated and the basis for such calculations, including any opinions or other advice that the Employer received from outside counsel, auditors or consultants. Notwithstanding the foregoing, it is the express intent and desire of the parties that if the Total Payments would trigger an Excise Tax, then the Executive shall be entitled to promptly receive such additional monetary compensation from the Employer as may be necessary to ensure that the Executive's net after tax benefit of the Total Payments would be the same as if no Excise Tax had been imposed upon the Total Payments. In the event of any dispute between the Executive and the Employer involving the Excise Tax Restoration Payment, the matter shall be promptly submitted to binding arbitration on an expedited basis before a mutually acceptable arbitrator at a national accounting firm. 15. 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/Thomas L. King Thomas L. King Its: Chairman of the Board Attest:/s/Deborah A. Rosen Deborah A. Rosen, Secretary /s/Edward J. Trainor Edward J. Trainor Witness: /s/Colleen R. Saulnier EXHIBIT 10(c) RESTATED EMPLOYMENT AGREEMENT THIS AGREEMENT is made and entered into as of this 1st day of May, 2000, by and between STANDEX INTERNATIONAL CORPORATION, a Delaware corporation, with its executive offices in Salem, New Hampshire (hereinafter referred to as "Employer"), and - -------------------------- EDWARD F. PAQUETTE ------------------- ------- of Milton, Massachusetts (hereinafter referred to as "Executive"). WHEREAS, the Executive and the Employer entered into a written Employment Agreement on or about June 2, 1997 (the "June 1997 Agreement") with respect to the Executive's employment for the Employer; and WHEREAS, the June 1997 Agreement at this point in time does not accurately memorialize certain material terms that have subsequently arisen and already been orally agreed upon by the Executive and the Employer; and WHEREAS, the parties desire to enter into this Restated Employment Agreement to supercede the June 1997 Agreement and to accurately memorialize in writing all of the terms and conditions of the Executive's employment by the Employer in a senior executive, managerial and supervisory capacity, which position is currently the Vice President/Chief Financial Officer of Employer. 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 on a full-time basis and Executive agrees to serve Employer on a full- time basis as Vice President/Chief Financial Officer or other senior executive, managerial and 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. It is the intention of the parties that this Agreement supersedes and replaces in its entirety the June 1997 Agreement 2. Term. The term of this Agreement shall be from the date of execution by the Executive to August 31, 2001 unless otherwise terminated in accordance with the provisions of Sections 7 or 14. 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. It is the express intent of the Employer and the Executive that: (i) the covenants and affirmative obligations in this Section be binding obligations to be enforced to the fullest extent permitted by law; (ii) in the event of any determination of unenforceability of the scope of any covenant or obligation, its limitation which a court of competent jurisdiction deems fair and reasonable, shall be the sole basis for relief from the full enforcement thereof; and (iii) in no event shall the covenants or obligations in this Section be deemed wholly unenforceable. 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 during any year of this Agreement (January 1 to December 31) of the higher of $283,000 or the base salary at the end of the immediately preceding year of this Agreement. 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 Long Term Incentive Program, the Standex Annual Incentive 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 Savings 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 Employer in accordance with the June 1997 Agreement has granted the following stock options to Executive: A. Incentive Stock Options. In September, 1997, in January, 1998 and in January, 1999, the Employer granted 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 granted 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 were 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 and the six month period has been satisfied 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 during the term of this Agreement, 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 as severance to the Executive one-half of one year's base pay 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 (with a copy mailed via first class mail, postage pre-paid) 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 the Invention and Trade Secret Agreement dated June 2, 1997, by and between Executive and Standex International Corporation and signed by the Executive 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 that 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 in all benefit plans in which he participates including but not limited to the Management Savings Program portion of the Standex Annual Incentive Program and all restricted stock options and performance share units granted under the Standex Long Term Incentive Program and any other stock option plans of the Employer; (iii) All life insurance and medical plan benefits covering the Executive and his dependents shall be continued at the expense of Employer for the one-year period following such termination as if the Executive were still an employee of the Employer; and (iv) In the event that any payment or distribution of any type to or for the benefit of the Executive made by the Employer, by any of its affiliates, by any person or entity which acquires ownership or effective control or ownership of a substantial portion of the Employer's assets within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended, and all related regulations or any similar federal tax that may hereinafter be imposed, whether paid or payable or distributed or distributable pursuant to this Agreement or otherwise (collectively called the "Total Payments"), would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, and all related regulations or any similar federal tax that may hereinafter be imposed or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest or penalties are hereinafter collectively referred to as the "Excise Tax"), then the Executive shall be entitled to receive from the Employer an additional payment (an "Excise Tax Restoration Payment") in an amount that shall fully fund the payment by the Executive of any Excise Tax on the Total Payments as well as any income taxes imposed on the Excise Tax Restoration Payment, any Excise Tax imposed on the Excise Tax Restoration Payment and any interest or penalties imposed with respect to taxes on the Excise Tax Restoration Payment or any Excise Tax. If the Employer refuses or fails to timely pay the Excise Tax Restoration Payment to the Executive without a good faith lawful justification and such refusal or failure is not corrected within twenty (20) business days after the Executive provides written notice to the Employer concerning the refusal or failure, then the Employer shall immediately pay to the Executive an additional amount equal to 75% of the Executive's last annual base salary as a late fee for the Employer's late payment of the Excise Tax Restoration Payment. The Employer shall furnish to the Executive a written statement setting forth in detail the manner in which the Excise Tax Restoration Payment was calculated and the basis for such calculations, including any opinions or other advice that the Employer received from outside counsel, auditors or consultants. Notwithstanding the foregoing, it is the express intent and desire of the parties that if the Total Payments would trigger an Excise Tax, then the Executive shall be entitled to promptly receive such additional monetary compensation from the Employer as may be necessary to ensure that the Executive's net after tax benefit of the Total Payments would be the same as if no Excise Tax had been imposed upon the Total Payments. In the event of any dispute between the Executive and the Employer involving the Excise Tax Restoration Payment, the matter shall be promptly submitted to binding arbitration on an expedited basis before a mutually acceptable arbitrator at a national accounting firm. 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/CEO ATTEST: /s/Deborah A. Rosen Deborah A. Rosen, Secretary /s/Steven G. Brown /s/ Edward F. Paquette Witness Edward F. Paquette EXHIBIT 10(d) EMPLOYMENT AGREEMENT THIS AGREEMENT is made and entered into as of this 1st day of May, 2000, by and between STANDEX INTERNATIONAL CORPORATION, a Delaware corporation with its executive offices in Salem, New Hampshire (hereinafter referred to as the "Employer"), and DEBORAH A. ROSEN of Framingham, Massachusetts (hereinafter referred to as the "Executive"). WHEREAS, Executive has heretofore been and is now employed by Employer in a senior executive, managerial and supervisory capacity, currently serving as Vice President, General Counsel and corporate Secretary; and WHEREAS, Employer is desirous of retaining the services of Executive in a senior executive capacity upon the terms and conditions herein set forth; 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 on a full-time basis and Executive agrees to serve Employer on a full-time basis as Vice President, General Counsel and corporate Secretary or other senior executive, managerial and 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 initial term (the "Initial Term") of this Agreement shall commence upon the date it is executed by the Executive and continue through midnight on December 31, 2002, unless otherwise terminated in accordance with the provisions of Sections 6 or 14. Upon the expiration of the Initial Term, this Agreement shall automatically renew for an additional term of three (3) years (the "First Renewal Term") commencing upon January 1, 2003, and upon the expiration of the First Renewal Term, this Agreement shall automatically renew for an additional term of three (3) years (the "Second Renewal Term") commencing upon January 1, 2006. Notwithstanding the foregoing, the First Renewal Term and the Second Renewal Term shall not occur if this Agreement has been otherwise terminated in accordance with the provisions of Sections 6 or 14 and, provided further that neither the First Renewal Term nor the Second Renewal Term shall occur if either party has notified the other in writing at least one (1) year in advance of the end of the existing term of the Agreement stating its intent to terminate the Agreement at the end of that particular term. 3. Best Efforts. Executive agrees, as long as this Agreement is in effect, to continue to devote her same best efforts and the same time and attention to the business of Employer that she is presently devoting to said business of Employer, and to the performance of such executive, managerial and supervisory duties of a similar nature to those performed for Employer during the period of service preceding this Agreement. 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. It is the express intent of the Employer and the Executive that: (i) the covenants and affirmative obligations in this Section be binding obligations to be enforced to the fullest extent permitted by law; (ii) in the event of any determination of unenforceability of the scope of any covenant or obligation, its limitation which a court of competent jurisdiction deems fair and reasonable, shall be the sole basis for relief from the full enforcement thereof; and (iii) in no event shall the covenants or obligations in this Section be deemed wholly unenforceable. 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. Notwithstanding the foregoing restrictions, the Executive, during the two (2) year restriction period shall be entitled to be employed as a private practice attorney in a law firm or corporate environment on the condition and understanding that she will fully abide by and honor the Invention and Trade Secret Agreement referenced in Section 8 below. No provision contained in this paragraph 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 her services at a minimum annual base salary during any year of this Agreement (January 1 to December 31) of the higher of $200,000 or the base salary at the end of the immediately preceding year of this Agreement. 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 Long Term Incentive Program, the Standex Annual Incentive Program, the Standex Supplemental Executive Retirement Plan ("SERP"), the Standex Retirement Savings Plan and in such other benefit plans and programs as are made available from time to time to executives of the Employer. 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. Termination. A. Death. Executive's employment shall terminate forthwith upon her 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 she 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 and the six month period has been satisfied or as otherwise mutually agreed in writing, Executive will continue to receive her 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 90 days written notice, provided, however, that termination by Employer for material breach following a change of control, as defined in Section 14, 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. For purposes of this Agreement material breach shall be defined as: (i) an act or acts of dishonesty on the Executive's part which are intended to result in her substantial personal enrichment at the expense of the Employer; or (ii) the Executive willfully, deliberately and continuously fails to materially and substantially perform her duties hereunder and which result in material injury to the Employer (other than such failure resulting from the Executive's incapacity due to physical or mental disability) after demand for substantial performance is given by the Employer to the Executive specifically identifying the manner in which the Employer believes the Executive has not materially and substantially performed her duties hereunder. No action, or failure to act, shall be considered "willful" if it is done by the Executive in good faith and with reasonable belief that her action or omission was in the best interest of the Employer. D. 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 her conduct was unlawful. Notwithstanding such a determination, the Board shall be obligated to reimburse Executive for said legal expenses if she successfully defends or successfully prosecutes her case. 7. Notices. Any notice to be given pursuant to this Agreement shall be sent by certified mail, postage prepaid, or by fax (with a copy mailed via first class mail, postage pre-paid) 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: Deborah A. Rosen 7 Ford Lane Framingham, MA 01701 To Employer: Standex International Corporation 6 Manor Parkway Salem, New Hampshire 03079 Attention: Edward J. Trainor 8. Invention and Trade Secret Agreement. Executive agrees that the Invention and Trade Secret Agreement dated October 23, 1985, by and between Executive and Standex International Corporation and signed by Executive 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. 9. 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 her 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 that Employer may have. 10. Survival. The obligations contained in Sections 4 and 8 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. 11. 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. 12. Entire Agreement; Amendment. This Agreement supersedes any employment understanding or agreement (except the Invention and Trade Secret Agreement) that 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. 13. 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. 14. 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: (i) Employer may terminate Executive's employment only upon conclusive evidence of substantial and indisputable intentional personal malfeasance in office such as a conviction for embezzlement of Employer's funds; and (ii) Executive may terminate her employment at any time if there is a change in her general area of responsibility, title or place of employment, or if her salary or benefits are lessened or diminished. B. Following a change of control of Employer, any termination of Executive's employment either by Executive pursuant to Section 14.A.(ii) or by Employer under any circumstances other than involving conclusive evidence of substantial and indisputable intentional personal malfeasance in office, then: (i) Executive shall be promptly paid a lump sum payment equal to three times her current annual base salary plus three times the most recent annual bonus paid to her; (ii) Executive shall become 100% vested in all benefit plans in which she participates including but not limited to the Standex Retirement Savings Plan, the Management Savings Program portion of the Standex Annual Incentive Program and all restricted stock options and performance share units granted under the Standex Long Term Incentive Program and any other stock option plans of the Employer; (iii) Three years of benefit service shall be added to the years of service credited to Executive under the Standex Retirement Plan; (iv) The salary and bonus paid under Section 8.B.(i) shall be deemed the Executive's compensation during such three additional years for purposes of the computation of her pension under the Standex Retirement Plan; (v) All life insurance and medical plan benefits covering the Executive and her dependents shall be continued at the expense of Employer for the three-year period following such termination as if the Executive were still an employee of the Employer; and (vi) In the event that any payment or distribution of any type to or for the benefit of the Executive made by the Employer, by any of its affiliates, by any person or entity which acquires ownership or effective control or ownership of a substantial portion of the Employer's assets within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended, and all related regulations or any similar federal tax that may hereinafter be imposed, whether paid or payable or distributed or distributable pursuant to this Agreement or otherwise (collectively called the "Total Payments"), would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, and all related regulations or any similar federal tax that may hereinafter be imposed or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest or penalties are hereinafter collectively referred to as the "Excise Tax"), then the Executive shall be entitled to receive from the Employer an additional payment (an "Excise Tax Restoration Payment") in an amount that shall fully fund the payment by the Executive of any Excise Tax on the Total Payments as well as any income taxes imposed on the Excise Tax Restoration Payment, any Excise Tax imposed on the Excise Tax Restoration Payment and any interest or penalties imposed with respect to taxes on the Excise Tax Restoration Payment or any Excise Tax. If the Employer refuses or fails to timely pay the Excise Tax Restoration Payment to the Executive without a good faith lawful justification and such refusal or failure is not corrected within twenty (20) business days after the Executive provides written notice to the Employer concerning the refusal or failure, then the Employer shall immediately pay to the Executive an additional amount equal to 75% of the Executive's last annual base salary as a late fee for the Employer's late payment of the Excise Tax Restoration Payment. The Employer shall furnish to the Executive a written statement setting forth in detail the manner in which the Excise Tax Restoration Payment was calculated and the basis for such calculations, including any opinions or other advice that the Employer received from outside counsel, auditors or consultants. Notwithstanding the foregoing, it is the express intent and desire of the parties that if the Total Payments would trigger an Excise Tax, then the Executive shall be entitled to promptly receive such additional monetary compensation from the Employer as may be necessary to ensure that the Executive's net after tax benefit of the Total Payments would be the same as if no Excise Tax had been imposed upon the Total Payments. In the event of any dispute between the Executive and the Employer involving the Excise Tax Restoration Payment, the matter shall be promptly submitted to binding arbitration on an expedited basis before a mutually acceptable arbitrator at a national accounting firm. 15. 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/CEO ATTEST: /s/Steven G. Brown Steven G. Brown, Assistant Secretary /s/Donna P. Rodgers /s/Deborah A. Rosen Witness Deborah A. Rosen EX-13 3 0003.txt roastme BKI Worldwide manufactures ovens/rotisseries for supermarkets, restaurants, delicatessens and convenience stores. [photo shows a BKI oven/rotisserie] driveme Standex Engraving provides the rolls and texturizing molds that enhance automotive interiors. [photo shows a Ford dashboard] comfortme Standex Air Distribution Products manufactures high quality heating and air conditioning ductwork for your home. [photo shows duct product] what's essential to you? developme Standard Publishing's Baby Blessings product line not only teaches Christian values to young children, but also provides parents with a powerful developmental tool that is based on pioneering university research findings on how children learn. [photo shows a selection of Baby Blessings books] chillme Master-Bilt Products manufactures a variety of cold cases for the beverage and frozen food industry. [photo shows a reach in freezer case] liftme Custom Hoists manufactures multi stage hydraulic cylinders for construction dump trucks and dump trailers. [photo shows a dump truck in the lift position] Standex 2000 Annual Report to Shareholders FINANCIAL HIGHLIGHTS 2000 Highlights Standex is a global, multi-industry company that manufactures and markets products through 16 business units and 91 facilities in 14 countries. Our strategy is to make synergistic acquisitions and invest in businesses that generate solid revenues and earnings streams, and then to reinvest for long-term growth - while providing attractive current returns to our shareholders. We operate in three broad business segments. Our Food Service and Consumer businesses are well positioned to capitalize on trends that reflect new ways of living, working and shopping. Our Industrial businesses typically serve niche OEM markets, so many of our products and services are invisible to consumers and end-users. Yet we typically add functionality, competitive advantage and market appeal that are critical to the quality and value of the finished product. Standex International. We make essential products that add value to your world. FINANCIAL PERFORMANCE Net Sales 1996 1997 1998 1999 2000 562,679 564,623 616,180 641,400 637,049 Diluted Earnings Per Share 1996 1997 1998 1999 2000 As reported * 2.21 2.00 2.13 2.36 2.39 As adjusted ** 2.21 2.00 1.52 2.41 2.17 EBITDA 1996 1997 1998 1999 2000 As reported * 68,790 62,849 68,809 74,698 73,759 As adjusted ** 68,790 62,849 56,051 75,714 71,062 Return on Equity 1996 1997 1998 1999 2000 As reported * 22.8% 19.1% 19.3% 19.0% 18.5% As adjusted ** 22.8% 19.1% 13.8% 19.3% 16.8% Note A EBITDA consist of earnings before interest expense, income taxes, depreciation and amortization, less interest and other income and loss on disposition of business. EBITDA is presented because we believe it is an indicator of our ability to incur and service debt, and a similar formula is used by our lenders in determining compliance with financial covenants. However, EBITDA should not be considered as an alternative to cash flow from operating activities, as a measure of liquidity or as an alternative to net income as a measure of operating results in accordance with generally accepted accounting principles. * As reported in the Financial Statements ** As adjusted: Fiscal Year 2000 amounts exclude a non-recurring net after tax gain of $1.7 million or 13 cents per share related to the demutualization of an insurance company and Fiscal Years 2000, 1999 and 1998 include a net after tax restructuring of $4.4 million or 35 cents per share charge, a $600,000 or 5 cents per share credit, and an $8.0 million or 61 cents per share charge, respectively.
WHAT'S ESSENTIAL TO YOU? Standex makes over 48,000 Industrial, Food Service and Consumer products that are essential to your everyday life. Standex International 2000 Annual Report 1 WHAT'S ESSENTIAL TO YOU? letter to our shareholders Standex International Corporation experienced a mixed year. Your Company celebrated 30 years on the New York Stock Exchange and increased the quarterly dividend for the 27th time in the past 30 years - an enviable record. A major shift, however, from "old economy" stocks to "new economy" stocks occurred in the financial markets. Prices paid for "old economy" stocks such as Standex declined markedly, while money flowed into high tech investments, many of which were actually reporting losses. This resulted in an extreme disparity in price/earnings relationships which we believe will eventually correct itself. In the meantime, we have been continually examining strategic alternatives in order to release some of the unrecognized value in Standex. For the fiscal year ended June 30, 2000, Standex's annual sales totaled $637.0 million, a slight decline from last year's record shipments of $641.4 million. After taking into account approximately $10.8 million of fiscal 1999 shipments from product lines which were subsequently disposed of, sales for fiscal year 2000 increased approximately 1%. Earnings, prior to accounting for an unusual gain and a restructuring charge, were $2.39 per share compared with $2.36 per share on a comparable basis for the previous fiscal year. The Company experienced solid earnings growth in both our Industrial Group and our Consumer Group, but realized a significant earnings shortfall in the Food Service Group. Overall, our margins remain strong at 33%. We submitted bids on four major acquisition opportunities during the year, none of which were consummated. The prices ultimately paid for these businesses would have been highly dilutive to our earnings and would have taken several years to be accretive with considerable risk. We are continuing to seek larger acquisitions with synergistic and growth possibilities toward our goal of larger, more focused, business units. Standex International 2000 Annual Report 2 industrial food Service consumer Officers and Directors ringing the opening bell commemorating 30 years on the New York Stock Exchange. corporate officers [photo shows Board of Directors, Corporate Officers and the President of the NYSE clapping after the bell ringing ceremony] [number next to name represents their location in the above described photo] 1 Edward J. Trainor President and Chief Executive Officer 2 Thomas L. King Chairman of the Board 3 Edward F. Paquette Vice President and Chief Financial Officer 4 David R. Crichton Executive Vice President/Operations 5 Deborah A. Rosen Vice President, General Counsel and Secretary The Balance Sheet remains strong with a current ratio of 2.7 to 1, and a debt to capital ratio of 48.6%. Book value per share reached a new record of $13.37 per share. A strong cash flow allowed the Corporation to invest $22.8 million in capital expenditures, pay $10.0 million in dividends, and repurchase $12.8 million of Standex common stock while maintaining the debt/capital ratio virtually unchanged. Excluding the restructuring charge of $4.4 million and the $1.7 million demutualization gain, return on sales was 4.8% and return on equity was 18.5%. The future continues to look promising and our backlogs remain strong. Our emphasis on operations improvement and technology development in our Industrial Group is really paying dividends. A modest rebound in the Food Service sector combined with continuing good performance for the Consumer and Industrial Groups, should position us well for the year ahead. The employees of Standex should be complimented for their efforts and dedication this past year during a very difficult market environment. /s/Edward J. Trainor Edward J. Trainor President and Chief Executive Officer /s/Thomas L. King Thomas L. King Chairman of the Board Standex International 2000 Annual Report 3 WHAT'S ESSENTIAL TO YOU? reliability and functionality What does it take to compete in today's OEM marketplace-where customers' expectations and sophistication are constantly increasing? How will you help them maximize manufacturing efficiency, reduce time to market, increase end-user satisfaction, satisfy global demand, and-last but never least-reduce costs? At the Standex Industrial Group, we help our customers address these challenges every day by making their products more useful, appealing and cost-effective to manufacture. From tiny electronic coils and switches, to precisely machined multi-ton rocket components, to hoists and casters, to elegant and distinctive product textures - -Standex innovation, expertise and service can add essential quality and reliability your customers will value. We're proving it daily at businesses like the recently formed Standex Engraving Group, which consolidates the sophisticated capabilities of Roehlen Embossing and our Mold-Tech unit under a single global banner. With 25 plants in 14 countries and a progressive R&D team, the unit is the world's leader in texturizing and the only truly global texturizing resource. We're capitalizing on this position by focusing on comprehensive texturizing solutions, delivered through the industry's most extensive network-and the most advanced technology. A significant portion of the unit's business is the creation and delivery of systems that produce manufacturing rolls, plates and machines that apply textures and patterns to products like vinyl siding, wall coverings, fine writing papers, and even leather basketballs and footballs used by your favorite sports teams-and the kids in the neighborhood. Of increasing importance, however, is the unit's pioneering work in digitized texturizing: capturing or creating Standex International 2000 Annual Report 4 graspme Standex Engraving provides the texture for making mobile phones easier to hold. [photo shows a mobile phone] illuminateme Standex Electronics provides the starters for streetlights throughout the world. [photo shows a street light and street light starter] industrial food service consumer informme Standex Electronics makes a variety of sensors that convey information about fuel, water and oil levels in your automobile. [photo shows a variety of sensors] driveme Standex Engraving texturizes rolls and molds that enhance automotive interiors. [photo shows a family consisting of a father holding a baby with a son, mother and daughter in front of a Ford dashboard] WHAT'S ESSENTIAL TO YOU? digital images of textures using 3-D optical scanning, and using those images to drive lasers that engrave the textures on rolls and molds for companies in the global OEM marketplace. Plans call for the creation of a worldwide network of design centers, which will house the digitizing technology needed to partner with customers and generate highly customized texturizing solutions. Sophisticated CAD modeling technology will allow the customer to view each texture in advance, before a model is made. The software developed at these centers will be transmitted via high speed Internet links to manufacturing centers, where molds, rolls and patterns will be laser- engraved for the customer at a plant close to that customer's own facility. The benefits to the customer are many, but the most significant advantage is dramatically reduced time-to-market, a competitive advantage in the fast-moving consumer world. Patterns and textures that used to take weeks to create will eventually be available on a worldwide basis in a matter of days. One of Standex's most impressive technologies can be found in the Spincraft unit, where multi-ton sheets of metal are precisely formed and machined to create fuel tank domes and other key components for the global aerospace industry. Spincraft recently introduced a patented forming process that allows weld-free domes to be made with significantly smaller blank sizes, reducing raw material costs by up to 50%. It's a technological edge that will serve the unit well in the commercial launch market and Space Shuttle programs, where Spincraft is partnering with global industry leaders in the design and development process. connectme Spincraft provides a variety of launch vehicle components that are critical to placing telecommunication satellites into orbit. [photo shows a satellite] launchme Spincraft manufactures rocket engine combustion chambers and fuel tank components for commercial launch vehicles as well as the Space Shuttle program. [photo shows a combustion chamber and a rocket in launch] deliverme Jarvis Caster Group manufactures casters and wheels for luggage carts for all the major hotels in the world. Brass Birdcager Cart courtesy of Forbes Industries, Ontario, CA. [photo shows the Brass Birdcage Cart] [photo to left -bellman] liftme Custom Hoists manufactures multi stage hydraulic cylinders for construction dump trucks and dump trailers. [photo shows a dumb truck in the up position] reliabilityandfunctionality industrial food service consumer packageme Eastern Engraving, a division of Standex Engraving, provides textured rolls to package designers. [photo shows a variety of products who use the Eastern Engraving textured rolls] bindme James Burn International provides double-loop wire binding products to the printing industry. [photo shows materials with binds from Jams Burn International] gripme Standex Engraving makes the rolls that put the pebbled texture on footballs used by the NFL and the NCAA. [photo shows a football with the pebbled roll ] Another unit undergoing strategic refocusing is James Burn International, the maker of a wide range of binding products, including the Wire-Or double-loop wire binding systems. The emergence of the print-on-demand market has created significant new opportunities for the unit, which is focusing on becoming the low- cost supplier to the trade bindery and digital print markets. Standex Electronics' core competency is in designing and building electronic components that can withstand the rigors of our customers' automated manufacturing processes. The company is a leading supplier of reed switches, sensors, miniature coils, magnetic components and connectors for a wide range of applications. The unit is aggressively expanding into new markets where OEMs are seeking the enhanced productivity that these automated manufacturing techniques offer. At Jarvis Caster Group, we make over 6,000 products that help virtually everything that rolls, roll better-from the luggage carts at hotels to the shopping carts at your local supermarket, and with new lean manufacturing programs at our plants, we're making our products better, faster and more efficiently. A commitment to product and service enhancements is paying off at Custom Hoists, which makes hydraulic telescopic cylinders for dump trucks and trailers. Sales are growing significantly faster than the market as a whole, propelled by the exceptional reliability of new cylinder designs-and a warranty that is twice as long as the industry average. Because downtime can be especially costly to a small trucking or excavating company, the unit provides same-day delivery of replacement cylinders. These factors, coupled with on-time delivery rates for new cylinders of nearly 100%, are winning Custom Hoists a loyal following among distributors and manufacturers as well as operators. Standex International 2000 Annual Report 7 WHAT'S ESSENTIAL TO YOU? flavor and freshness When you pick out a pastry or order an espresso or you pick up a ready-to-eat dinner, it's likely that your enjoyment is being enhanced by a product from the Standex Food Service Group. You'll find Standex products in supermarkets, gourmet shops, convenience stores, bakeries and institutional kitchens across the U.S., and increasingly, worldwide. Our refrigerator cases, cooking equipment, even pumps used in soft drink and espresso machines are all designed to enhance freshness, flavor, texture or appetite appeal, essential factors that contribute to your satisfaction and convenience. chillme Master-Bilt manufactures a variety of cold cases for the beverage and frozen food industry. [photo of a reach in freezer] In fact, Standex products play an essential role in helping consumers adapt to today's busy lifestyles, which leave little time for shopping, cooking and traditional family meals. Among dual-earner families in the U.S. and Europe, home meal replacement (HMR) has provided an answer. You're part of the HMR trend if you've ever stopped by a supermarket or restaurant and brought home a complete meal to go, and given the quality, variety and sophistication of these meals, you've probably done it more than once. One reason for the appeal of these meals: the commercial food preparation equipment made by Standex's BKI Worldwide unit. This global business has manufacturing locations in the U.S. and England, as well as a global distribution Standex International 2000 Annual Report 8 displayme preserveme Federal Industries manufactures a full range of refrigerated display cases used by restaurants, bakeries, and candy stores. [photo shows an Bob Evans employee in front of a refrigerated display case by Federal Industries] warmme BKI Worldwide, in addition to manufacturing ovens/rotisseries, manufactures a full range of cook and hold serving display cases for delis, restaurants and supermarkets. [photo shows a cook and hold serving display case by BKI] industrial food service consumer WHAT'S ESSENTIAL TO YOU? network. BKI systems, which include ovens/rotisseries, pressure fryers, low-temperature cook-and-hold ovens and heated display cases-can be found in thousands of supermarkets, restaurants, institutional food kitchens, delicatessens and convenience stores around the world. But Standex adds enjoyment and convenience to your life in other ways. For example, our Procon Products unit probably made the pump that dispensed your espresso this morning or soft drink at lunch. With state-of-the-art operations in the U.S. and Europe, Procon is a global company that uses robotic systems and direct numerical control technologies to maximize efficiency and quality-and to ensure adequate capacity in a world where demand for gourmet coffee is on the rise. Standex's Master-Bilt Products or Federal Industries units may well have manufactured the refrigerated or heated display case from which you chose your meal. Federal Industries has enjoyed a strong market position for over sixty years, becoming an established leader in merchandising and display cases for restaurants, supermarkets, convenience stores, bakeries, delis and confectionery shops. Our growth and success have been driven by our commitment to customizing and manufacturing modular merchandising and presentation systems that match each retailer's design concept. Because our customers' products are presented more distinctively and attractively, sales increase and satisfied consumers keep coming back for more. roastme BKI Worldwide manufactures ovens/rotisseries for supermarkets, restaurants, delicatessens and convenience stores. [photo of a BKI oven/rotisserie and chef standing to its left] disposeofme USECO's Red Goat Disposers line is a mainstay product in heavy-duty applications. [photo shows a Red Goat Disposer] coolme Master-Bilt makes a large variety of walk-in and reach-in refrigerated display cases for supermarkets, convenience stores and drug stores. [photo shows walk-in refrigerated display cases] flavorandfreshness industrial food service consumer deliverme USECO's Unitron V provides a food delivery system that maintains flavor and freshness for hot and cold products in institutional settings such as hospitals, schools, prisons and nursing homes. [photo shows a USECO Unitron V delivery system] carbonateme Procon Products' pumps are used in carbonated beverage dispensing machines as well as espresso machines. [photo shows a soft drink cup with a Procon pump] prepareme General Slicing provides a variety of products utilized in the preparation and sale of cold cuts, vegetables, cheese, etc. [photo shows a General Slicing food slicer] Master-Bilt was one of the first companies to build refrigeration units with precise temperature control, an essential factor in healthful food storage. A leader in designing equipment that maximizes food safety by minimizing temperature fluctuations, Master- Bilt systems include refrigerated cabinets, cases, display units and modular walk-in refrigerator/freezers-as well as an expansion into refrigerated warehouse systems. You'll see the Master-Bilt name in supermarkets, convenience stores, restaurants and drug stores across the country-and when you do, you'll know that Standex is at work. Our USECO division is even helping to increase the appeal of the food served by hospitals, schools, colleges and correctional facilities. Its Unitron V Feeding System is specifically designed for institutions that prepare food in one location and serve it in another. The system was the first in the U.S. to use convection- reheating technology, which preserves more of the food's texture and flavor. This innovative approach uses circulating air to selectively reheat chilled entrees while preserving the cold items such as salads, juices and desserts. As a result, both hot and cold food temperatures can be maintained on the same tray. Standex International 2000 Annual Report 11 WHAT'S ESSENTIAL TO YOU? home and family The spiritual well being of your family, the comfort of your home, the quality of the products you buy-most people would list all these among their essential concerns. At the Standex Consumer Group, they are our essential concerns as well. Quality-of-life issues are complex and highly personal, and helping consumers successfully address them represents a significant business opportunity for a company that does so responsibly and sensitively. At Standex Consumer Group, we strive to deliver quality products that represent real value-and reflect the most important values-of the majority of American consumers. Nowhere is that commitment more evident-or more completely fulfilled-than in our Standard Publishing and Bereanr Christian Stores units. These businesses are among our oldest, and steadily growing units, melding traditional biblically based values with the most sophisticated of today's merchandising, multimedia and Internet techniques. Together, these businesses place Standex in the forefront of companies that are benefiting from the reemergence of religion in America. Berean's mission is to become "the dominant Christian retailer" in all of its 18 markets, which means providing both churches and the general public with a wide range of products, from best-selling Christian books, gift ideas and music to liturgical supplies. To keep pace with rapidly evolving retailing trends and consumer tastes, Berean has just introduced a new store format. Averaging over 15,000 square feet, Bereanr stores increasingly offer a shopping experience that provides a sense of community and comfort, with cafes, sitting comfortme Standex Air Distribution Products manufactures high quality heating and air conditioning ductwork for your home. [photo shows a construction worker with a blueprint of a house and duct products in the background] industrial food service consumer WHAT'S ESSENTIAL TO YOU? inspireme Berean Christian Stores offers a broad range of products including bibles, books, music gifts, art, clothing and church supplies. [photo is of the Berean Christian Store located in Fresno, CA] entertainme Berean Christian Stores offers its customers a center of knowledge and activity for the Christian community. [photo is the entertainment section of the Berean Christian Store located in Mesa, AZ] readme Standard Publishing is a leading source of bibles and books used by pastors, youth ministers, Sunday school teachers, families and individuals to develop and sustain Christian values. [photo is of the Standard Lesson Commentary books] nourishme Standex Direct offers consumers the convenience of buying farm-fresh fruit, selected produce and specialty packaged foods via direct mail, telephone or the Internet. [photo is of three grapefruit sections] areas and music listening stations-an experience similar in style and quality to that offered by other major national booksellers. The goal is to provide a center of knowledge and activity for the Christian community in an inviting atmosphere where customers will enjoy spending time as well as shopping. A similar strategy can be seen at the unit's Web site: www.bereanchristianstores.com. Filled with news, reviews, and links with a range of other Christian resources, the site is far more than a mere catalogue of products. It is a gateway to a congenial Internet experience-and fully comparable in quality and impact with the best Internet booksellers. Also serving the Christian marketplace is Standard Publishing, one of the country's leading publishers of biblically based books, CDs, videos and study curricula. Its Vacation Bible School programs are among the most widely used, and it publishes magazines with a weekly circulation exceeding 170,000. Among the first Christian publishers to explore the power of new media, the unit has developed a range of CD-ROM/book combinations that have become industry bestsellers. Building on this experience, and its long-standing strength in the children's market, Standard Publishing has adopted a new strategy that emphasizes careful market segmentation, with a special focus on the dynamic childhood and young-adult markets. Standex International 2000 Annual Report 14 homeandfamily industrial food service consumer teachme Standard Publishing creates teaching materials for Vacation Bible Schools (VBS). "Road Rally 2000" was this year's theme. [photo is of the Road Rally 2000 VBS package] developme Standard Publishing's Baby Blessings product line not only teaches Christian values to young children, but also provides parents with a powerful developmental tool that is based on pioneering university research findings on how children learn. [photo shows books from the Baby Blessings product line along with a baby holding Baby Blessings books] If you've recently built or remodeled a home, there's an excellent chance that another Standex business helped your contractor take care of one essential: the heating/air conditioning system. Our Standex Air Distribution Products unit designs and manufactures products for controlling airflows and improving air quality in your home. With nine manufacturing facilities across the U.S., we are in an excellent position to capitalize on the dynamic home building and renovation market-and to offer national and regional HVAC wholesalers and distributors ready availability of top-quality, price-competitive products. Through a "best practices" program developed as part of the integration of recent acquisitions, we have significantly enhanced the efficiency of our manufacturing processes. In addition, new proprietary machine capabilities have enabled us to develop some of the industry's most energy-efficient fittings, an important competitive advantage in a conservation-conscious marketplace with increasingly stringent building codes. Like many families, yours may enjoy the convenience and sense of discovery offered by mail order catalogues. Standex Direct's six catalogue units offer consumers a way to purchase a range of fresh and prepared gourmet foods-by phone or via the Internet, 24 hours a day. Our goal is to realize the marketing and cross-selling opportunities represented by our six mailing lists, and to maximize operating efficiencies by integrating fulfillment and logistics capabilities. Standex International 2000 Annual Report 15 management's discussion and analysis 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. Liquidity and Capital Resources During the fiscal year ended June 30, 2000, the Company invested $22.8 million in plant and equipment, purchased $12.8 million of its common stock and paid out $10.0 million in cash dividends to shareholders. These expenditures were primarily funded by net operating cash flows. Net cash provided by operating activities was $44.2 million in 2000, an increase of $7.1 million as compared to $37.1 million in 1999. An increase of $6.0 million in the amount of cash used to fund accounts receivable was offset by a decrease of $8.1 million in cash used for inventories; a focused effort by management served to partially reduce inventory levels. In addition, a restructuring charge, which is described below and in the Notes to the Consolidated Financial Statements, was recorded in the current year, and affected cash flows by approximately $4.2 million resulting in a reduction in inventories and an increase in accrued liabilities. These were somewhat offset by a decrease in accrued income taxes. As of June 30, 2000, the Company had the ability to borrow an additional $91.9 million under existing bank credit agreements. The Company believes that this resource, along with the Company's internally generated funds, will be sufficient to meet anticipated cash funding needs for the foreseeable future. The Company's existing bank credit agreements are described in the Notes to the Consolidated Financial Statements. 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. Fiscal 2000 as Compared to Fiscal 1999 Net sales for the year ended June 30, 2000 of $637 million represents a decrease of $4.4 million or 0.7% from sales of $641.4 million for the year ended June 30, 1999. The previous year included $10.8 million of sales from divisions that were disposed of in fiscal 1999. The effect, on net sales, of changes in the average foreign exchange rates was not significant. For the year ended June 30, 2000 net sales in the Food Service Segment decreased by $7.7 million or 5.1% from the prior year. The decrease was, to a large extent, due to delays in healthcare projects caused by funding constraints and a slowdown in orders resulting from consolidations within the supermarket industry. Net sales in the Consumer Segment increased by $4.5 million or 2.1% from the prior year, which included $4.3 million in sales of a division which was disposed of in fiscal 1999. The increase is the result of additional stores in the Berean division and increased customer demand in the Standard Publishing and Standex Air Distribution Products divisions. Net sales in the Industrial Segment were $272.2 million for the year ended June 30, 2000 compared to $273.3 million for 1999. Fiscal Year 1999 included $6.5 million in sales of divisions that were disposed of in 1999. Customer demand increases, in the Spincraft, Custom Hoists, Standex Electronics, and North American Mold-Tech divisions, were offset by weakening demand in the James Burn, Jarvis Caster Group, and European Mold-Tech divisions. The overall gross profit margin percentage ("GPMP") remained essentially the same (32.9% vs. 32.8%) for the current and prior year. The Food Service Segment GPMP decreased to 29.3% from 31.0% in the prior year primarily due to the sales shortfalls described above. The Consumer Segment GPMP remained virtually the same at 37.2% in 2000 versus 37.1% in 1999, and the Industrial Segment GPMP increased slightly to 30.6% from the prior year's 30.1%. Consolidated selling, general and administrative ("SG&A") expenses remained stable overall at approximately 23% of net sales. None of the fluctuations in SG&A reported by the Company's three segments were individually significant and corresponded with the changes in net sales discussed above. In June 2000, the Company recorded a restructuring charge of $5.4 million before taxes. The restructuring plan involves the: (1) disposal, closing or elimination of certain under-performing and unprofitable operating plants, product lines, manufacturing processes and businesses; (2) realignment and consolidation of certain marketing and distribution activities; and (3) other cost containment actions, Standex International 2000 Annual Report 16 management's discussion and analysis including selective personnel reductions. This charge, a significant portion of which was non-cash, is more fully described in the Notes to the Consolidated Financial Statements. Also, during the current fiscal year, other income of $2.7 million was recorded 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. An increase of less than $200,000 in interest expense for the year was due primarily to a slight increase in average net borrowings. As a result of the above factors, income before income taxes was $46.9 million compared to $51.5 million in the prior year. The effective tax rate increased to 40.9% as compared to 39.1% in the prior year since a greater portion of the Company's income was generated in higher taxed countries. Net income decreased $3.7 million or 11.7% from the prior year. Fiscal 1999 as Compared to Fiscal 1998 Net sales for the year ended June 30, 1999 increased $25.2 million as compared to the same period in the prior year. The majority of this increase came from the added sales of ACME Manufacturing Company (ACME) which was acquired in October 1997. These added sales were partially offset by the absence of sales from the Doubleday Bros. product lines that were disposed of in the prior year. Excluding the acquisition and dispositions, management believes the majority of fluctuations in net sales reported by each segment were the result of changes in unit volumes and consumer demand. In addition, although changes in the average foreign exchange rates from 1998 to 1999 had a negative effect on net sales in 1999, the total effect of such changes was not significant. For the year ended June 30, 1999, the Food Service Segment reported a slight decrease in net sales as compared to the prior year. This decline was mainly due to the closure of a Nevada operation and sluggish demand in the beverage dispensing industry. Net sales in the Industrial Segment were flat as compared to the same period in the prior year. While most divisions in the Industrial Segment posted solid increases over last year, the poor performance of our binding division and the absence of sales from the disposition of Doubleday Bros. in the second half of fiscal 1998 offset these gains. The Consumer Segment's net sales increased by $26.0 million when compared to fiscal 1998 due to the acquisition of ACME, as noted above, and improved demand. Except for a small decline in one unit, all Consumer divisions experienced improved customer demand. The gross profit margin percentage ("GPMP") remained essentially the same (32.8% vs. 32.5%) for the current and prior year. The Food Service Segment reported a GPMP of 31.3%, as compared to the prior year percentage of 29.7%; this was the result of the disposition of a Nevada operation and reduced costs at several companies. The GPMP reported in the Industrial Segment was 31.1%, a small decline from the previous year's percentage of 31.9%. Continued poor performance from the Company's binding division offset solid positive performances at most of the other Industrial divisions. The Consumer Segment's GPMP remained relatively unchanged at 35.4% in fiscal 1999 versus 35.6% in fiscal 1998. Selling, general and administrative expenses ("SG&A") increased by $3.6 million when compared to the same period in the prior year. The majority of this increase ($2.9 million) was from the additional SG&A expenses of ACME, and the remainder was due primarily to the addition of two Berean Bookstores during fiscal 1998. None of the remaining fluctuations in SG&A reported by the Company's three segments were individually significant and corresponded with the changes in net sales discussed above. A restructuring credit of $1,016,000 was recorded in the second half of fiscal 1999 and related to a $12.8 million restructuring charge recorded in the fourth quarter of fiscal 1998. This credit is more fully described in the Notes to the Consolidated Financial Statements. Interest expense increased by 3.5%, or $376,000, when compared to fiscal 1998 as the Company incurred a full year of interest charges on the increased borrowings related to the ACME acquisition as compared to nine months in the prior year and moderately higher interest rates. The above factors resulted in an $18.4 million increase in income before income taxes for the year ended June 30, 1999. The effective tax rate in fiscal 1999 did not vary from what was reported in fiscal 1998 (39.1%); as a result, net income rose $11.2 million or 55.6% when compared to the same period in the prior year. Other Matters Inflation Inflation has not been a significant factor in fiscal 2000, 1999 and 1998 mainly due to fairly stable labor and material costs. Standex International 2000 Annual Report 17 management's discussion and analysis Environmental Matters The Company is party to various claims and legal proceedings, generally incidental to its business and has recorded an appropriate provision for the resolution of such matters. As explained more fully in the Notes to the Consolidated Financial Statements, the Company does not expect the ultimate disposition of these matters to have a material adverse effect on its financial statements. 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 the Consolidated Financial Statements. In December 1999, the Securities and Exchange Commission (the "SEC") released Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements." SAB No. 101 summarizes certain of the SEC's views in applying generally accepted accounting principles to revenue recognition in financial statements and will be effective for the Company in fiscal 2001. Management is currently evaluating the effect of adopting SAB No. 101 on the Consolidated Financial Statements. Quantitative and Qualitative Disclosures About Market Risk The Company is subject to market risk associated with changes in foreign currency exchange rates and interest rates. The Company mitigates certain of its foreign currency exchange rate risk by entering into forward foreign currency contracts. These contracts are primarily used as a hedge against anticipated foreign cash flows, such as dividend and loan payments, and are not used for trading or speculative purposes. The fair value of the forward foreign currency exchange contracts is sensitive to changes in foreign currency exchange rates, as an adverse change in foreign currency exchange rates from market rates would decrease the fair value of the contracts. However, any such losses or gains would generally be offset by corresponding gains and losses, respectively, on the related hedged asset or liability. Due to the absence of forward foreign currency contracts at June 30, 2000, the Company did not have any fair value exposure. The Company's interest rate exposure is limited primarily to interest rate changes on its variable rate borrowings. As of June 30, 2000, a hypothetical 10% immediate increase in interest rates would increase the Company's annual interest expense by $577,000. The Company has interest rate swap agreements to fix the interest rate on $35 million of its variable rate borrowings. At June 30, 2000, the fair value of the Company's interest rate swap agreements would not be materially affected by a 10% change in interest rates. In addition to the $35 million of variable rate borrowings covered by interest rate swap agreements, the Company also has $69 million of long-term debt at fixed interest rates as of June 30, 2000. There would be no immediate impact on the Company's interest expense associated with its long-term debt due to fluctuations in market interest rates. However, based on a hypothetical 10% immediate decrease in market interest rates, the fair value of the Company's long-term debt would be increased by approximately $4 million as of June 30, 2000. Such fair value changes may affect the Company's determination as to whether to retain, replace or retire its long- term debt. Standex International 2000 Annual Report 18 five-year financial review
Standex International Corporation and Subsidiaries (In thousands, except per share data) 2000 1999 1998 1997 1996 Year Ended June 30 Summary of Operations Net sales $637,049 $641,400 $616,180 $564,623 $562,679 Gross profit margin 209,338 210,126 200,548 186,131 185,267 Interest expense 11,336 11,155 10,779 8,497 9,048 Income before income taxes 46,853 51,491 33,064 43,516 48,124 Provision for income taxes 19,150 20,130 12,915 16,597 17,410 Net income 27,703 31,361 20,149 26,919 30,714 Per Share Data Net sales (diluted) 49.91 49.20 46.61 41.85 40.40 Earnings: Basic 2.19 2.42 1.54 2.02 2.24 Diluted 2.17 2.41 1.52 2.00 2.21 Dividends paid 0.79 0.76 0.76 0.75 0.71 Book value 13.37 12.59 11.19 10.75 10.01 Average shares outstanding Basic 12,672 12,972 13,072 13,337 13,736 Diluted 12,763 13,037 13,219 13,491 13,927 June 30 Financial Condition Working capital 145,009 146,514 148,943 136,946 138,860 Current ratio 2.68 2.79 2.73 2.95 3.03 Property, plant and equipment - net 112,137 104,783 102,973 85,598 86,616 Total assets 424,200 410,042 411,242 341,038 335,333 Long-term debt 153,436 148,111 163,448 112,347 113,822 Stockholders' equity 164,815 162,301 146,197 141,185 134,691
Sales and Earnings by Quarter Year Ended June 30 (Unaudited)
2000 1999 (In thousands, except per share data) FIRST SECOND THIRD FOURTH FIRST SECOND THIRD FOURTH Net sales $157,803 $163,050 $158,158 $158,038 $157,377 $171,171 $152,247 $160,605 Gross profit margin 49,693 55,255 51,924 52,466 49,917 58,611 50,655 50,943 Net income 9,517 7,613 6,460 4,113 7,957 9,404 6,631 7,369 Earnings per share Basic 0.74 0.59 0.52 0.34 0.61 0.72 0.52 0.57 Diluted 0.74 0.59 0.51 0.33 0.61 0.72 0.51 0.57
Common Stock Prices and Dividends Paid
Common Stock Price Range 2000 1999 Divi dends per Share Year Ended June 30 High Low High Low 2000 1999 First quarter $29 $22-7/16 $29-9/16 $21-3/16 $0.19 $0.19 Second quarter 27 19-1/2 28-1/8 19-3/8 0.20 0.19 Third quarter 21-1/4 14-11/32 27-1/4 21-5/8 0.20 0.19 Fourth quarter 18 15-3/16 28-9/16 21-3/16 0.20 0.19
Distribution of the 2000 Sales Dollar (In thousands) Materials and services $364,546 57% Wages, salaries and employee benefits 200,691 31 Depreciation and amortization 13,622 2 Interest on borrowed money 11,336 2 Income taxes 19,150 3 Reinvested in the Company 17,690 3 Dividends to stockholders 10,014 2 Total $637,049 100%
Standex International 2000 Annual Report 19 statements of consolidated income
Standex International Corporation and Subsidiaries Year Ended June 30 2000 1999 1998 Net Sales $637,048,705 $641,399,507 $616,180,090 Cost of Products Sold 427,710,922 431,273,630 415,632,167 Gross profit 209,337,783 210,125,877 200,547,923 Selling, General and Administrative 149,200,556 149,197,179 145,590,536 Restructuring charge (credit) 5,408,065 (1,015,762) 12,758,000 Income from Operations 54,729,162 61,944,460 42,199,387 Other income (expense) Interest expense (11,336,430) (11,154,869) (10,779,015) Interest and other income 749,903 701,672 1,993,533 Gain on stock received 2,710,647 - - Net loss on disposition of a business - - (350,000) Total (7,875,880) (10,453,197) (9,135,482) Income Before Income Taxes 46,853,282 51,491,263 33,063,905 Provision for Income Taxes 19,150,000 20,130,000 12,915,000 Net Income $27,703,282 $31,361,263 $20,148,905 Earnings Per Share Basic $ 2.19 $ 2.42 $ 1.54 Diluted $ 2.17 $ 2.41 $ 1.52 See notes to consolidated financial statements.
statements of consolidated stockholders' equity
Accumulated Additional Other Total Common Paid-In Retained Comprehensive Treasury Stock Stockholders' Year Ended June 30 Stock Capital Earnings Income Shares Amount Equity Balance, June 30, 1997 $41,976,417 $5,663,224 $313,908,303 $(1,082,401) 14,854,572 $(219,280,337) $141,185,206 Stock issued for employee stock options and stock purchase plan, net of related income tax benefit 1,329,545 (150,813) 2,251,057 3,580,602 Stock issued in conjunction with acquisition 1,523,575 (100,418) 1,509,691 3,033,266 Treasury stock acquired 314,604 (10,177,761) (10,177,761) Comprehensive income Net income 20,148,905 20,148,905 Foreign currency translation adjustment (1,646,188) (1,646,188) Total comprehensive income 18,502,717 Dividends paid (76 cents per share) (9,926,801) (9,926,801) Balance, June 30, 1998 41,976,417 8,516,344 324,130,407 (2,728,589) 14,917,945 (225,697,350) 146,197,229 Stock issued for employee stock options and stock purchase plan, net of related income tax benefit 641,320 (143,303) 2,181,706 2,823,026 Treasury stock acquired 314,074 (7,453,147) (7,453,147) Comprehensive income Net income 31,361,263 31,361,263 Foreign currency translation adjustment (749,567) (749,567) Total comprehensive income 30,611,696 Dividends paid (76 cents per share) (9,878,260) (9,878,260) Balance, June 30, 1999 41,976,417 9,157,664 345,613,410 (3,478,156) 15,088,716 (230,968,791) 162,300,544 Stock issued for employee stock options and stock purchase plan, net of related income tax benefit 116,749 (126,628) 1,951,629 2,068,378 Treasury stock acquired 697,463 (12,756,934) (12,756,934) Comprehensive income Net income 27,703,282 27,703,282 Foreign currency translation adjustment (4,486,875) (4,486,875) Total comprehensive income 23,216,407 Dividends paid (79 cents per share) (10,013,536) (10,013,536) Balance, June 30, 2000 $41,976,417 $9,274,413 $363,303,156 $(7,965,031) 15,659,551 $(241,774,096) $164,814,859 See notes to consolidated financial statements.
Standex International 2000 Annual Report 20 consolidated balance sheets
Standex International Corporation and Subsidiaries June 30 2000 1999 Assets Current Assets Cash and cash equivalents $10,437,856 $5,909,283 Receivables-less allowance of $3,400,000 in 2000 and $3,590,000 in 1999 104,430,867 97,871,014 Inventories 112,200,601 120,171,671 Prepaid expenses 4,316,186 4,202,170 Total current assets 231,385,510 228,154,138 Property, Plant and Equipment Land and buildings 83,588,845 76,098,470 Machinery and equipment 176,053,677 172,814,389 Total 259,642,522 248,912,859 Less accumulated depreciation 147,505,496 144,129,886 Property, plant and equipment - net 112,137,026 104,782,973 Other Assets Prepaid pension cost 38,334,036 32,623,677 Goodwill - net 31,184,247 32,110,262 Other 11,159,180 12,370,530 Total other assets 80,677,463 77,104,469 Total $424,199,999 $410,041,580 Liabilities and Stockholders' Equity Current Liabilities Current portion of debt $2,356,563 $3,962,765 Accounts payable 36,494,649 35,975,395 Accrued payroll and employee benefits 18,567,875 18,221,481 Income taxes 5,357,062 5,847,300 Other 23,600,274 17,633,469 Total current liabilities 86,376,423 81,640,410 Long-Term Debt - less current portion 153,436,016 148,111,366 Deferred Income Taxes 16,610,000 14,736,000 Other Non-current Liabilities 2,962,701 3,253,260 Commitments and Contingencies Stockholders' Equity Common stock-authorized, 60,000,000 shares in 2000 and 1999; par value, $1.50 per share; issued 27,984,278 shares in 2000 and 1999 41,976,417 41,976,417 Additional paid-in capital 9,274,413 9,157,664 Retained earnings 363,303,156 345,613,410 Accumulated other comprehensive income (7,965,031) (3,478,156) Less cost of treasury shares: 15,659,551 shares in 2000 and 15,088,716 in 1999 (241,774,096) (230,968,791) Total stockholders' equity 164,814,859 162,300,544 Total $424,199,999 $410,041,580 See notes to consolidated financial statements.
Standex International 2000 Annual Report 21 statement of consolidated cash flows
Standex International Corporation and Subsidiaries Year Ended June 30 2000 1999 1998 Cash Flows from Operating Activities Net income $27,703,282 $31,361,263 $20,148,905 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 13,621,846 13,769,691 13,851,599 Profit improvement incentive plan (40,000) 286,201 780,058 Deferred income taxes 1,874,000 2,799,000 (1,882,000) Net pension credit (1,998,000) (1,793,000) (2,353,000) Loss (gain) on sale of investments, real estate and equipment 203,520 205,594 (950,603) Loss on disposition of business - - 350,000 Increase (decrease) in cash from changes in assets and liabilities, net of effect of acquisitions and dispositions: Receivables - net (7,302,778) (1,337,293) (2,088,038) Inventories 7,924,044 (219,258) (5,089,382) Prepaid expenses and other assets (3,209,182) (1,005,113) 65,390 Accounts payable 333,749 (1,508,909) 2,807,411 Accrued payroll, employee benefits and other liabilities 5,646,776 (5,767,318) 5,389,358 Income taxes (549,444) 332,490 1,215,228 Net cash provided by operating activities 44,207,813 37,123,348 32,244,926 Cash Flows from Investing Activities Expenditures for property and equipment (22,786,886) (16,823,678) (19,849,069) Expenditures for acquisitions, net of cash acquired - (796,305) (49,277,002) Proceeds from sale of investments, real estate and equipment 857,689 1,517,468 2,483,933 Proceeds from disposition of businesses - 5,091,705 2,583,143 Net cash used for investing activities (21,929,197) (11,010,810) (64,058,995) Cash Flows from Financing Activities Proceeds from additional borrowings 12,828,803 25,000,000 52,213,051 Payments of debt (9,110,355) (39,868,747) (418,585) Stock issued under employee stock option and stock purchase plans 2,068,378 2,823,026 3,580,602 Cash dividends paid (10,013,536) (9,878,260) (9,926,801) Purchase of treasury stock (12,756,934) (7,453,147) (10,177,761) Net cash (used for) provided by financing activities (16,983,644) (29,377,128) 35,270,506 Effect of Exchange Rate Changes on Cash and Cash Equivalents (766,399) (82,443) (348,909) Net Changes in Cash and Cash Equivalents 4,528,573 (3,347,033) 3,107,528 Cash and Cash Equivalents at Beginning of Year 5,909,283 9,256,316 6,148,788 Cash and Cash Equivalents at End of Year $10,437,856 $5,909,283 $9,256,316 Supplemental Disclosure of Cash Flow Information Issued for acquisitions: Stock $ - $ - $3,033,266 Notes payable - 500,000 271,704 Cash paid during the year for: Interest 14,842,150 11,063,038 10,495,183 Income taxes 18,121,098 16,883,304 13,523,666 See notes to consolidated financial statements.
Standex International 2000 Annual Report 22 notes to consolidated financial statements Summary of Accounting Policies Basis of Consolidation The accompanying consolidated financial statements include the accounts of Standex International Corporation and its subsidiaries. Revenue Recognition The Company generally recognizes product and related services revenue when the price to the customer is fixed or determinable, the collectibility of the invoice is evaluated and delivery has occurred. Revenues under certain fixed price contracts are generally recorded at the time deliveries are made or, in some cases, on a percentage of completion basis. Cash and Cash Equivalents Cash and cash equivalents include highly liquid investments purchased with a remaining maturity of three months or less. Such investments are carried at cost, which approximates fair value, due to the short period of time until maturity. Inventories Inventories are stated at the lower of first-in, first-out cost or market. Property, Plant and Equipment Property, plant and equipment are depreciated over their estimated useful lives using primarily the straight-line method. Income Taxes Deferred assets and liabilities are recorded for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax assets and liabilities are determined based on the differences between the financial statements and the tax basis of assets and liabilities using enacted tax rates. Goodwill The excess of purchase price of acquired companies over the fair value of net identifiable assets at date of acquisition has been recorded as goodwill and is being amortized on a straight-line basis over a forty-year period. Accumulated amortization aggregated $11,102,000 and $10,016,000 at June 30, 2000 and 1999, respectively. The Company annually evaluates the net balance of goodwill based on the projected operating income of the respective businesses on an undiscounted cash flow basis. Foreign Currency Translation Assets and liabilities of non-U.S. operations are translated into U.S. dollars at year-end exchange rates. Revenues and expenses are translated using average exchange rates. The resulting translation adjustment is reported as a component of comprehensive income in the Statements of Consolidated Stockholders' Equity. Gains and losses from currency transactions are included in results of operations. Forward Foreign Currency Exchange Contracts Forward foreign currency contracts are used by the Company to protect certain anticipated foreign cash flows, such as dividends and loan payments from subsidiaries, against movements in the related exchange rates. The Company sells the related foreign currency at a fixed price for settlement on or before the date of the related receipt, and thus protects the dollar value of the receipt. The Company enters into such contracts for hedging purposes only. Accordingly, for financial statement purposes gains or losses of forward contracts entered into to hedge commitments are deferred until the position is closed out. At June 30, 2000, the Company had no significant forward foreign currency contracts. Interest Rate Swap Agreements The net differential to be paid or received under the Company's interest rate swap agreements is accrued as interest rates change and is recognized over the life of the agreements. Concentration of Credit Risk The Company is subject to credit risk through trade receivables and short-term cash investments. Credit risk with respect to trade receivables is minimized because of the diversification of the Company's operations, as well as its large customer base and its geographical dispersion. Short-term cash investments are placed with high credit-quality financial institutions or in short-duration, high quality debt securities. The Company limits the amount of credit exposure in any one institution or type of investment instrument. The Company is also subject to credit risk exposure relating to its interest rate swap agreements as described in the debt footnote below. Accounting Estimates The preparation of the Company's Consolidated Financial Statements in conformity with generally accepted accounting principles in the United States of America necessarily requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Fair Value of Financial Instruments The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value because of their short-term nature. The carrying amount of the Company's debt instruments approximates fair value. Standex International 2000 Annual Report 23 notes to consolidated financial statements Earnings Per Share
The following table sets forth the number of shares (in thousands) used in the computation of basic and diluted earnings per share: 2000 1999 1998 Basic - Average Shares Outstanding 12,672 12,972 13,072 Effect of Dilutive Securities - Stock Options 91 65 147 Diluted - Average Shares Outstanding 12,763 13,037 13,219 Both basic and dilutive income are the same for computing earnings per share. Options, which were not included in the computation of diluted earnings per share because to do so would have had an anti- dilutive effect, totaled 731,103; 407,015 and 33,880 for the years ended June 30, 2000, 1999 and 1998, respectively.
Reclassifications Certain prior year amounts have been reclassified to conform to the 2000 financial statement presentation. New Accounting Pronouncements In June of 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, as amended, 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 the consolidated financial statements. In December 1999, the Securities and Exchange Commission (the "SEC") released Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements." SAB No. 101 summarizes certain of the SEC's views in applying generally accepted accounting principles to revenue recognition in financial statements and will be effective for the Company in fiscal 2001. Management is currently evaluating the effect of adopting SAB No. 101 on the Consolidated Financial Statements. Inventories
Inventories are comprised of (in thousands): June 30 2000 1999 Raw materials $ 38,887 $ 40,180 Work in process 22,365 26,113 Finished goods 50,949 53,879 Total $112,201 $120,172
Debt
Debt is comprised of (in thousands): June 30 2000 1999 Bank credit agreements $ 83,069 $ 71,847 Institutional investors 6.8% to 7.13% (due 2001-2008) 67,857 75,000 Other 3.0% to 4.85% (due 2001-2018) 4,867 5,227 Total 155,793 152,074 Less current portion 2,357 3,963 Total long-term debt $153,436 $148,111
Bank Credit Agreements The Company has a revolving credit agreement with eight banks. The agreement provides for a maximum credit line of $175,000,000 until May 2003, at which time outstanding loans will be due and payable. As of June 30, 2000, the effective rate of interest under the agreement was 7.19%. The Company is required to pay a commitment fee of 0.2% on the average daily-unused amount. As of June 30, 2000, the Company had borrowed $35 million under the agreement. At June 30, 1999, there were no outstanding borrowings. In addition, the Company has the option to borrow up to $175,000,000 on an unsecured short-term basis at rates which are based on LIBOR and varied from 5.50% to 7.41% during 2000. Available borrowings under the revolving credit agreement described above are reduced by unsecured short-term borrowings. At June 30, 2000, the Company had the ability to borrow an additional $91,931,000 under the aforementioned bank credit agreements. Institutional Investor Agreements At June 30, 2000, the Company had a $25,000,000 note purchase agreement with two institutional investors. The notes bear interest at 6.8% annually and are due and payable in October 2008. Additionally, the Company has a note purchase agreement with a third institutional investor with a balance of $42,857,000 which bears interest at 7.13% annually and is payable in annual installments of $7,143,000. Interest Rate Swap Agreements The Company manages its debt portfolio by using interest rate swaps to achieve an overall desired position of fixed and floating rate debt to reduce certain exposures to interest rate fluctuations. At June 30, 2000, the Company had three interest rate swap contracts with an aggregate notional amount of $35.0 million. These agreements convert variable rates to fixed rates ranging from 6.2% to 7.5% on aggregate notional amounts of $25 million and $10 million maturing in 2002 and 2003, respectively. Neither the Company nor the counterparties to the agreement, which are prominent financial institutions, are required to collateralize their respective obligations under these swaps. The Company is exposed to loss if one or more of the Standex International 2000 Annual Report 24 notes to consolidated financial statements counterparties defaults. At June 30, 2000, Standex had no exposure to credit loss on interest rate swaps. The Company does not believe that any likely change in interest rates would have a material adverse effect on its financial position, results of operations or cashflows. Open interest rate contracts are reviewed regularly by the Company to ensure that they remain effective as hedges of interest rate exposure. Management believes that the fair values of the rate swap agreements approximate the recorded amounts. Loan Covenants and Repayment Schedule The Company's loan agreements contain a limited number of provisions relating to the maintenance of certain financial ratios and restrictions on additional borrowings and investments. The principal payments due under the institutional investor agreements are expected to be funded through additional unsecured short-term borrowings. Such borrowings, and the unsecured short-term borrowings outstanding at June 30, 2000, may be refinanced by the Company on a long-term basis under the revolving credit agreement. As such, the short-term outstanding borrowings, which are not expected to be paid within a year, including those expected to fund the institutional investor principal payments, are classified as long- term debt, and the debt repayment schedule as presented below, is based on the terms of the revolving credit agreement. Debt is due as follows: 2001, $2,357,000; 2002, $335,000; 2003, $102,813,000; 2004, $7,503,000; 2005, $7,143,000; and thereafter, $35,642,000. Accrued Payroll and Employee Benefits
This current liability caption consists of (in thousands): June 30 2000 1999 Payroll $14,776 $14,989 Benefits 3,141 2,548 Taxes 651 684 Total $18,568 $18,221
Commitments The Company leases certain property and equipment under agreements with initial terms ranging from one to twenty years. Rental expense for the years ended June 30, 2000, 1999 and 1998 was approximately $8,000,000; $7,900,000; and $7,500,000, respectively. At June 30, 2000, the minimum annual rental commitments under noncancelable operating leases, principally real estate, were approximately: 2001, $4,700,000; 2002, $3,700,000; 2003, $3,200,000; 2004, $2,800,000; 2005, $2,100,000; and thereafter, $5,800,000. 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 SFAS No. 5, "Accounting for Contingencies." Management believes that such provision is sufficient to cover any future payments, including legal costs, under such proceedings. Income Taxes
The provision for income taxes consist of (in thousands): 2000 1999 1998 Current: Federal $13,088 $10,583 $ 8,014 State 1,304 2,838 1,771 Non-U.S 2,884 3,910 5,012 Total 17,276 17,331 14,797 Deferred 1,874 2,799 (1,882) Total $19,150 $20,130 $12,915
The components of income before income taxes are as follows (in thousands): 2000 1999 1998 U.S. Operations $42,694 $43,954 $23,872 Non-U.S. Operations 4,159 7,537 9,192 Total $46,853 $51,491 $33,064
A reconciliation of the U.S. Federal income tax rate to the effective income rate is as follows: 2000 1999 1998 Statutory tax rate 35.0% 35.0% 35.0% Non-U.S 2.6 (.2) (2.5) State taxes 3.8 3.9 3.0 Other items, net (.5) .4 3.6 Effective income tax rate 40.9% 39.1% 39.1%
Significant components of the company's net deferred tax liability are as follows (in thousands): 2000 1999 Deferred tax liabilities: Accelerated depreciation $ 8,933 $ 7,950 Net pension credit 13,086 11,570 Other items 1,120 1,056 Deferred tax assets: Expense accruals (5,544) (5,531) Restructuring charge (456) - Compensation costs (529) (309) Net deferred tax liability $16,610 $14,736
Standex International 2000 Annual Report 25 notes to consolidated financial statements
Deferred taxes: 2000 1999 1998 Accelerated depreciation $ 983 $(1,575) $(1,448) Net pension credit 1,517 1,491 1,277 Compensation costs (220) 89 (15) Restructuring charge (456) 2,846 (2,846) Expense accruals (13) (600) 821 Other items 63 548 329 Total $1,874 $2,799 $(1,882)
At June 30, 2000, accumulated retained earnings of non-U.S. subsidiaries totaled $28,318,000. No provision for U.S. income and foreign withholding taxes has been made because it is expected that such earnings will be reinvested indefinitely or the distribution of any remaining amount would be principally offset by foreign tax credits. The determination of the withholding taxes that would be payable upon remittance of these earnings and the amount of unrecognized deferred tax liability on these unremitted earnings is not practicable. Industry Segment Information The Company is composed of three product groups. These groups are described on pages 4-15. The Company has determined that it has three distinct reportable segments: Food Service, Consumer and Industrial. These three segments are managed separately, and the operating results of each segment are regularly reviewed and evaluated separately by the Company's senior management. Net sales include only transactions with unaffiliated customers and include no significant intersegment or export sales. Operating income by segment and geographic area excludes general corporate and interest expenses. Assets of the Corporate segment consist primarily of cash, administrative buildings, equipment, prepaid pension cost, goodwill and other non-current assets.
Net Sales Depreciation and Amortization Year Ended June 30 (In thousands) 2000 1999 1998 2000 1999 1998 Food Service $144,089 $151,782 $155,706 $ 2,120 $ 2,134 $ 2,621 Consumer 220,724 216,272 192,051 3,765 3,800 3,291 Industrial 272,236 273,346 268,423 7,504 7,584 7,691 Corporate and Other - - - 233 252 249 Total $637,049 $641,400 $616,180 $13,622 $13,770 $13,852
Assets Employed Capital Expenditures As of and Year Ended June 30 (In thousands) 2000 1999 1998 2000 1999 1998 Food Service $75,018 $77,331 $79,027 $ 2,018 $ 1,416 $ 2,598 Consumer 122,287 123,287 129,716 2,988 3,900 8,177 Industrial 184,457 176,853 172,886 17,604 11,048 8,904 Corporate and Other 42,438 32,571 29,613 177 460 170 Total $424,200 $410,042 $411,242 $22,787 $16,824 $19,849
Income from Operations Year Ended June 30 (In thousands) 2000 1999 1998 Food Service $12,119 $17,498 $14,962 Consumer 25,426 24,171 23,765 Industrial 31,789 27,837 25,510 Corporate and Other (9,197) (8,578) (9,280) Restructuring (charge) credit (5,408) 1,016 (12,758) Total $54,729 $61,944 $42,199
Product Net Sales Information: Year Ended June 30 (In thousands) 2000 1999 1998 Food preparation, storage and presentation products $225,768 $234,609 $234,505 Printing and publishing products 134,198 133,774 134,752 Home and road construction products 130,985 123,796 98,749 Aerospace, automotive and electronic products 126,639 118,842 111,432 Miscellaneous 19,459 30,379 36,742 Total $637,049 $641,400 $616,180
Standex International 2000 Annual Report 26 notes to consolidated financial statements
Financial Data related to U.S. and non-U.S. operations: U.S NON-U.S. As of and Year Ended June 30 (In thousands) 2000 1999 1998 2000 1999 1998 Net Sales $547,553 $542,463 $517,586 $89,496 $98,937 $98,594 Income from Operations 61,320 59,945 52,604 8,014 9,561 11,633 Assets Employed 313,263 301,663 310,101 68,499 75,808 71,528 The Corporate segment and the restructuring credit and charge are excluded from the above table.
Employee Benefit Plans Retirement Plans The Company has defined benefit pension plans covering the majority of its employees, including certain employees in foreign countries. Plan assets are invested primarily in common stocks and fixed income securities. The Company makes contributions generally equal to the minimum amounts required by federal laws and regulations. Foreign plans are funded in accordance with the requirements of regulatory bodies governing each plan.
The components of net pension credit are as follows (in thousands): Year Ended June 30 2000 1999 1998 Service cost $ 5,329 $ 5,049 $ 4,064 Interest cost 10,357 9,616 9,055 Expected return on plan assets (16,526) (15,283) (13,925) Amortization of prior service cost 248 247 159 Recognized actuarial loss 340 326 67 Amortization of transition asset (1,746) (1,748) (1,773) Total (1,998) (1,793) (2,353) Curtailment/settlement 5 87 (784) Net pension credit $(1,993) $(1,706) $(3,137)
The following table sets forth the funded status and amounts recognized as of June 30, 2000 and 1999 for the Company's U.S. and non-U.S. defined benefit pension plans (in thousands): Year Ended June 30 2000 1999 Change in benefit obligation: Benefit obligation, beginning of year $148,170 $134,912 Service cost 5,329 5,049 Interest cost 10,357 9,616 Employee contributions 270 339 Amendments/settlements/curtailments 400 81 Actuarial (gain)/loss (11,442) 5,084 Foreign currency exchange rate changes (1,711) 222 Benefits paid (8,176) (7,133) Benefit obligation, end of year $143,197 $148,170
Year Ended June 30 2000 1999 Change in plan assets: Fair value of plan assets, beginning of year $180,604 $181,017 Return on plan assets 9,714 4,693 Employer contribution 1,867 960 Employee contributions 270 339 Foreign currency exchange rate changes (1,152) 144 Benefits paid (7,481) (6,549) Fair value of plan assets, end of year $183,822 $180,604 Fund status $ 40,625 $ 32,434 Unrecognized transition asset (3,144) (4,902) Unrecognized net actuarial gain (4,898) (802) Unrecognized prior service cost 2,788 2,641 Net amount recognized 35,371 29,371 Amounts recognized in the balance sheet consist of: Prepaid benefit cost 38,334 32,624 Accrued benefit liability (2,963) (3,253) Net amount recognized $ 35,371 $ 29,371
Year Ended June 30 2000 1999 Weighted average assumptions as of June 30 Discount rate 6.25 - 8.00% 5.25 - 7.75% Expected return on assets 8.75 - 10.00% 8.75 - 10.00% Rate of compensation increase 4.00 - 4.50% 3.50 - 4.50%
The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for pension plans with accumulated benefit obligations in excess of plan assets were $7,436,000, $6,656,000 and $0, respectively, as of June 30, 2000 and $13,555,000, $12,412,000 and $5,802,000, respectively, as of June 30, 1999. Certain U.S. employees are covered by union-sponsored, collectively bargained, multi-employer pension plans. Contributions and costs are determined in accordance with the provisions of negotiated labor contracts or terms of the plans. Pension expense for these plans was $1,863,000, $1,967,000 and $1,706,000 in 2000, 1999, and 1998, respectively. Standex International 2000 Annual Report 27 notes to consolidated financial statements Employees' Stock Ownership Plan The Company had an Employee Stock Ownership Plan (ESOP) covering certain salaried employees. Amounts provided for this plan were approved by the Board of Directors and aggregated $1,500,000 and $1,200,000 for the years ended June 30, 1999 and 1998, respectively. Effective July 1, 1999, the Board of Directors approved the merger of the ESOP and the Employee Savings Plans. The amount provided for the ESOP component of the merged plan aggregated $1,200,000 for the year ended June 30, 2000. Employee Savings Plans The Company has established 401(k) savings plans covering substantially all of the Company's full-time domestic employees. Under the provisions of the plans, employees may contribute a portion of their compensation within certain limitations. The Company, at the discretion of the Board of Directors, may make contributions on behalf of its employees under these plans. Such contributions, if any, become fully vested immediately. The Company contributions were approximately $871,000 and $466,000 during 1999 and 1998, respectively. Effective July 1, 1999, the Board of Directors approved the merger of the ESOP and the Employee Savings Plans. The amount provided for the Employee Savings Plans component of the merged plan aggregated $919,000 for the year ended June 30, 2000. Profit Improvement Participation Share Plan The Company has maintained a profit improvement incentive plan in which certain officers and employees participate. The plan is being phased-out and, consequently, no new units have been awarded since 1995. Units under this plan were issued at the discretion of the Compensation Committee of the Board of Directors and were assigned a value equal to a multiple of earnings per share payable in five years based upon the net increase in earnings per share over the five-year period. Each fiscal year, amounts are charged or credited to operations to reflect this liability. Amounts (credited) charged to operations for the years ended June 30, 2000, 1999 and 1998 were $(40,000), $286,000, and $780,000, respectively. Postretirement Benefits Other Than Pensions The Company sponsors unfunded postretirement medical and life plans covering certain full-time employees who retire and have attained the requisite age and years of service. Retired employees are required to contribute toward the cost of coverage according to various rules established by the Company. The Company records postretirement benefits (such as health care and life insurance benefits) during the years an employee provides services.
The following table sets forth the funded status of the Company's postretirement benefit plans and accrued postretirement benefit cost reflected in the Company's balance sheet at year end (in thousands): Year Ended June 30 2000 1999 Change in benefit obligation: Benefit obligation, beginning of year $7,961 $8,017 Service cost 137 77 Interest cost 638 558 Actuarial loss (gain) (532) (111) Benefits paid (461) (580) Benefit obligation, end of year 7,743 7,961 Fair value of plan assets - - Funded status (7,743) (7,961) Unrecognized net actuarial gain (1,859) (1,327) Unrecognized transition obligation 5,800 6,244 Net amount recognized $(3,802) $(3,044)
The assumed weighted average discount rate as of June 30, 2000 and 1999 was 8.00% and 7.25% respectively. The annual assumed rate of increase in the per capita cost of covered health care benefits is 4.0% for retirees under age 65 in both 2000 and 1999 and is assumed to remain at that level thereafter. A 1% increase in the assumed health care cost trend rate would have increased the accumulated benefit obligation by $654,000 and the net postretirement cost by $83,000 in 2000.
Net postretirement benefit costs are as follows (in thousands): Year Ended June 30 2000 1999 1998 Service cost $ 137 $ 77 $ 65 Interest cost 638 558 583 Amortization of transition obligation 444 446 446 Net amortization and deferral - (45) (129) Net postretirement benefit cost $1,219 $1,036 $965
Stock Based Compensation and Purchase Plans STOCK BASED COMPENSATION PLANS Under incentive compensation plans, the Company is authorized to, and has made grants of, stock options, restricted stock and performance share units to provide equity incentive compensation to key employees. At June 30, 2000, 1,369,751 shares of common stock were reserved for issuance under these plans. Of this amount, and as noted in the table below, 787,563 shares are for options granted but unexercised and 131,714 shares are for restricted stock grants outstanding. Stock Option Plans Statement of Financial Accounting Standards No. 123, "Accounting for Stock Based Compensation," encourages, but does not require companies to record compensation cost for stock based employee compensation plans at fair value. The Company has chosen to continue to account for stock based compensation using the intrinsic value method Standex International 2000 Annual Report 28 notes to consolidated financial statements prescribed in Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations. Accordingly, the compensation cost of stock options is measured as the excess, if any, of the quoted market price of the Company's stock at the date of the grant over the option exercise price and is charged to operations over the vesting period. Income tax benefits attributable to stock options exercised are credited to capital in excess of par value. At June 30, 2000, the Company has made grants of options under various Stock Option Plans. Generally, these options may be granted at or below fair market value as of the date of grant and must be exercised within the period prescribed by the Compensation Committee of the Board of Directors at the time of grant but no later than ten years from the date of grant. Certain options granted at fair value can be exercised anytime after six months from the date of grant, and other options can only be exercised in accordance with the vesting schedules prescribed by the Committee. Restricted Stock The Company may award shares of restricted stock to eligible employees at no cost, giving them in most instances all of the rights of stockholders, except that they may not sell, assign, pledge or otherwise encumber such shares and rights. Such shares and rights are subject to forfeiture if certain employment conditions are not met. During 2000 and 1999, the Company granted 123,814 and 7,900 shares, respectively, of restricted stock to eligible employees. At June 30, 2000, restrictions on the stock lapse between 2001 through 2010. Through June 30, 2000 restrictions on 2,400 shares have lapsed. The compensation expense associated with the restricted shares at the date of grant is charged to income ratably over the restriction period. The Company recorded compensation expense related to restricted stock awards of $610,000 and $20,000 for the years ended June 30, 2000 and 1999, respectively. Long-Term Compensation Program Under a long-term compensation program adopted in year 2000, grants of incentive performance share units (PSU's) are made annually to key employees and are earned based on the achievement of certain overall corporate financial performance targets over a three-year period. In addition, stock options are awarded under this program at the fair market value as of the date of grant. These options vest ratably over five years and must be exercised within seven years. In certain circumstances, such as retirement or a change in control, vesting of the options granted are accelerated and PSU's are paid off on a pro- rata basis. At June 30, 2000, under this program 50,300 shares were subject to the restrictions related to the PSU's. Compensation expense, if any, associated with the PSU's at the date of grant is recorded to expense as the achievement of future performance objectives appears likely. A summary of stock options issued under the plans is as follows:
Weighted Average Number Exercise Year Ended June 30 of Options Price Outstanding, June 30, 1997 ($7.50 to $31.00 per share) 489,160 $20.51 Granted ($27.1875 to $32.1875 per share) 201,150 28.55 Exercised ($7.50 to $31.00 per share) (79,554) 13.55 Canceled ($20.75 to $31.5625 per share) (18,970) 29.54 Outstanding, June 30, 1998 ($7.50 to $32.1875 per share) 591,786 23.89 Granted ($21.875 to $25.875 per share) 92,700 25.64 Exercised ($7.50 to $22.50 per share) (36,800) 10.42 Canceled ($24.75 to $31.5625 per share) (17,031) 28.42 Outstanding, June 30, 1999 ($9.00 to $32.1875 per share) 630,655 24.81 Granted ($16.4375 to $23.375 per share) 228,700 22.82 Exercised ($9.00 to $15.8125 per share) (31,550) 12.09 Canceled ($23.00 to $31.5625 per share) (40,242) 27.91 Outstanding, June 30, 2000 ($10.315 to $32.1875 per share) 787,563 24.58 Exercisable, June 30, 2000 ($10.315 to $32.1875 per share) 448,167 $24.83
Standex International 2000 Annual Report 29 notes to consolidated financial statements The following table sets forth information regarding options outstanding at June 30, 2000:
Weighted Weighted Average Weighted Average Number Exercise Prices Number Range of Average Remaining Currently for Currently of Options Exercise Prices Exercise Price Life (Years) Exercisable Exercisable 190,560 $10.315 - $23.00 $19.20 2 175,160 $19.34 204,334 23.00 - 23.375 23.17 6 2,068 23.00 132,017 23.375 - 27.1875 25.83 6 61,845 26.03 149,667 27.875 - 28.375 28.34 10 106,104 28.33 110,985 28.375 - 32.1875 29.86 6 102,990 29.88 787,563 $10.315 - $32.1875 $24.58 6 448,167 $24.83
As discussed above, the Company has chosen to continue to account for stock based compensation using the intrinsic value method to measure compensation expense. Had the Company used the fair value method to measure compensation for grants after fiscal 1995, net income and earnings per share would have been as follows: Year Ended June 30 (In thousands) 2000 1999 1998 Income Before Income Taxes $45,361 $50,009 $31,952 Provision for Income Taxes 19,008 20,030 12,850 Net Income $26,353 $29,979 $19,102 Earnings Per Share Basic $ 2.08 $ 2.31 $ 1.46 Diluted $ 2.07 $ 2.30 $ 1.45
Options granted during 2000, 1999 and 1998 had a weighted average grant date fair value of $11.55, $8.87 and $8.42, respectively. The fair value of options on the grant date, including the valuation of the option feature implicit in the Company's stock purchase plan, was measured using the Binomial option pricing model. Key assumptions used to apply this pricing model are as follows: Year Ended June 30 2000 1999 1998 Range of risk-free interest rates 5.72% 4.84% 5.74% to 6.83% to 5.53% to 6.4% Range of expected life of option grants (in years) 3 to 7 2 to 7 9 Expected volatility of underlying stock 30.6% 29.0% 17.1% to 33.6% to 32.2% to 23.0% Range of expected quarterly dividends $0.19 $0.19 $0.19 (per share) to $0.20
It should be noted that the option pricing model used was designed to value readily tradable stock options with relatively short lives. The options granted to employees are not tradable and have contractual lives of up to ten years. However, management believes that the assumptions used and the model to value the awards yields a reasonable estimate of the fair value of the grants made under the circumstances. STOCK PURCHASE PLANS Short-Term Incentive Program Under an annual incentive program, key employee participants can opt to purchase restricted stock at a discount to the market based on the lower closing price on the date of the grant or the day the award is paid out. The restrictions on the stock expire after three years. At June 30, 2000, 11,726 shares of restricted stock are outstanding and subject to restrictions that lapse between 2000 and 2001. The compensation expense associated with this short-term incentive program is charged to income ratably over the restriction period. The Company recorded compensation expense related to this program of $29,000 for the year ended June 30, 2000. Employee Stock Purchase Plan The Company has an Employee Stock Purchase Plan which allows employees to purchase shares of common stock of the Company at a 15% discount from market value. Shares of stock reserved for the plan were 173,906 at June 30, 2000. Shares purchased under this plan aggregated 92,568, 106,506 and 71,261 in 2000, 1999 and 1998, respectively. Rights Agreement The Company has a stock Rights Agreement for which purchase rights have been distributed as a dividend at the rate of one right for each share of common stock held. The rights may be exercised only if an entity has acquired beneficial ownership of 15% or more of the Company's common stock, or announces an offer to acquire 15% or more of the Company. Standex International 2000 Annual Report 30 notes to consolidated financial statements Acquisitions and Dispositions During fiscal 1998, the Company purchased two companies and a product line for a total of $52,800,000 in cash, stock and a note. In October 1997, the acquisition of the net assets of ACME Manufacturing Company for cash and a note was completed. ACME is a manufacturer of heating, ventilation and air conditioning pipe, duct and fittings for the home building industry. During the second quarter, the Company purchased a hardware product line, which included inventory and machinery, of an unrelated company. In March, the Company acquired ATR Coil Company, Inc. for cash and shares of the Company's common stock. ATR Coil is a manufacturer of electronic coils and windings for the industrial, automotive and consumer markets. These transactions were accounted for as purchases and, accordingly, the consolidated financial statements include the results of operations of the acquired businesses from their respective acquisition dates. The purchase price of the acquisitions was allocated to the assets acquired based on their respective fair market values and resulted in the recognition of goodwill of approximately $18,500,000. If the acquisitions had occurred as of July 1, 1997, the unaudited pro forma consolidated results of operations would have been as follows:
Year Ended June 30, 1998 (In thousands except per share data) Net sales $632,771 Net income 20,702 Earnings per share: Basic 1.58 Diluted 1.57
As part of its restructuring, the Company sold three divisions in fiscal 1999. These transactions are more fully described in the Restructuring footnote below. In February 1998, the Company sold a division for net proceeds of approximately $2,600,000 and a net loss of $350,000. Restructuring In June 2000, the Company recorded a restructuring charge of $5,408,000 before taxes. The restructuring plan involves the: (1) disposal, closing or elimination of certain under-performing and unprofitable operating plants, product lines, manufacturing processes and businesses; (2) realignment and consolidation of certain marketing and distribution activities; and (3) other cost containment actions, including selective personnel reductions. The charge has been recorded in the line item "Restructuring charge (credit)" in the Statements of Consolidated Income. The components of the charge include involuntary employee severance and benefits costs totaling $1,036,000, asset impairments of $3,775,000 and shutdown costs of $597,000. In 2000, $190,000 was paid in cash. During fiscal 1998, the Company recorded a restructuring charge of $12,758,000 before taxes. This action was intended to close, dispose of, or liquidate certain small under-performing and unprofitable plants, product lines and businesses. As part of this restructuring, the Company sold for approximately $5,100,000 in cash and notes its Christmas Tree Stand product line in December 1998, its SXI Technologies division in January 1999 and its Williams Healthcare division in April 1999. The following schedule reflects the Company's restructuring activities in fiscal 1999 (in thousands):
Involuntary Employee Severance and Asset Shutdown Benefits Costs Impairment Costs Total Reserve beginning balance $1,665 $10,061 $1,032 $12,758 Expended: Cash 1,696 - 840 2,536 Non-cash (disposals and write-offs) - 8,620 587 9,207 Total 1,696 8,620 1,427 11,743 Reduction and changes in estimated costs $ (31) $1,441 $(395) $1,015
Both the restructuring charge of $12,758,000 and the credit of $1,015,762 noted above are shown in the line item "Restructuring charge (credit)" in the Statements of Consolidated Income. Quarterly Results of Operations (Unaudited) The unaudited quarterly results of operations for the years ended June 30, 2000 and 1999 are set forth on page 19. Standex International 2000 Annual Report 31 independent auditors' report To the Board of Directors and Stockholders of Standex International Corporation: We have audited the accompanying consolidated balance sheets of Standex International Corporation and subsidiaries as of June 30, 2000 and 1999, and the related consolidated statements of income, stockholders' equity, and cash flows for each of the three years in the period ended June 30, 2000. These financial statements are the responsibility of the Corporation's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Standex International Corporation and subsidiaries as of June 30, 2000 and 1999, and the results of their operations and their cash flows for each of the three years in the period ended June 30, 2000, in conformity with accounting principles generally accepted in the United States of America. /s/Deloitte & Touche Boston, Massachusetts August 15, 2000 Delotitte & Touche [logo] Corporate Headquarters Standex International Corporation 6 Manor Parkway Salem, NH 03079 (603) 893-9701 Facsimile: (603) 893-7324 http://www.standex.com Common Stock Listed on the New York Stock Exchange (Ticker symbol:SXI) Transfer Agent and Registrar: Fleet National Bank c/o Equiserve P.O. Box 8040 Boston, MA 02266-8040 (781) 575-3400 http://www.equiserve.com Counsel Hale and Dorr 60 State Street Boston, MA 02109 Independent Auditors Deloitte & Touche LLP 200 Berkeley Street Boston, MA 02116-5022 Shareholder Services Stockholders should contact Standex's Transfer Agent (Fleet National Bank c/o Equiserve, P. O. Box 8040, Boston, MA 02266-8040) regarding changes in name, address or ownership of stock; lost certificates or dividends; and consolidation of accounts. Form 10K Shareholders may obtain a copy of Standex's Form 10K Annual Report, as filed with the Securities and Exchange Commission without charge by writing to: Standex Investor Relations Department, 6 Manor Parkway, Salem, NH 03079. Stockholder Meeting The Annual Meeting of Stockholders will be held at 11:00 a.m. on Tuesday, October 31, 2000 at FleetBoston, Auditorium, Main Lobby, 100 Federal Street, Boston, MA. Standex International 2000 Annual Report 32 Design: Benes Brand Imaging Group, Lexington, MA essential products for your world BOARD OF DIRECTORS Thomas L. King* Chairman of the Board Edward J. Trainor* President and Chief Executive Officer John Bolten, Jr.+ Consultant David R. Crichton Executive Vice President/Operations Samuel S. Dennis 3d*+ Retired Partner, Hale and Dorr, Attorneys William R. Fenoglio Former President and Chief Executive Officer of Augat Inc. Walter F. Greeley Chairman, High Street Associates, An Investment Partnership Daniel B. Hogan, Ph.D. President, The Apollo Group, Management Consultants C. Kevin Landry* Managing Partner, T.A. Associates, A Venture Capital Firm H. Nicholas Muller, III, Ph.D. President, CEO Frank Lloyd Wright Foundation Edward F. Paquette Vice President and Chief Financial Officer Sol Sackel Former Senior Vice President of the Company CORPORATE OFFICERS Thomas L. King Chairman of the Board Edward J. Trainor President and Chief Executive Officer David R. Crichton Executive Vice President/Operations Edward F. Paquette Vice President and Chief Financial Officer Deborah A. Rosen Vice President, General Counsel and Secretary Daniel C. Potter Treasurer and Tax Director Robert R. Kettinger Corporate Controller Steven G. Brown Assistant Secretary OPERATING DIVISIONS INDUSTRIAL David R. Crichton Group Vice President Industrial Group Jarvis Caster Group Can-Am Casters and Wheels Standex Electronics ATR Coil Company James Burn Custom Hoists Spincraft Standex Engraving Group Eastern Engraving Keller-Dorian Mold-Tech Roehlen Engraving Standex GmbH FOOD SERVICE Jerry G. Griffin Group Vice President Food Service Group BKI Worldwide BKI USA BKI Europe Master-Bilt Products Federal Industries United Service Equipment Company General Slicing H.F. Coors China Mason Candlelight Procon Products CONSUMER Peter G. Gerstberger, Ph.D. Group Vice President Consumer Group Standard Publishing Bereanr Christian Stores Standex Direct Standex Air Distribution Products Snappy/ACME/ALCO *Member of Executive Committee +Founder of Company inspireme Berean Christian Stores offers a broad range of products including bibles, books, music gifts, art, clothing and church supplies. [photo shows the Berean Christian Store located in Fresno, CA] serveme USECO's Unitron V provides a food delivery system that maintains flavor and freshness for hot and cold products in institutional settings such as hospitals, schools, prisons and nursing homes. [photo is of the USECO Unitron V delivery system] carbonateme Procon Products' pumps are used in carbonated beverage dispensing machines as well as espresso machines. [photo shows a Procon pump] bindme James Burn International provides double-loop wire binding products to the printing industry. [photo shows materials with the James Burn International binding products] prepareme General Slicing provides a variety of products utilized in the preparation and sale of cold cuts, vegetables, cheese, etc. [photo is of the General Slicing food] deliverme Jarvis Caster Group manufactures casters and wheels for luggage carts for all the major hotels in the world. Brass Birdcager Cart courtesy of Forbes Industries, Ontario, CA. [photo shows the Brass Birdcage Card] graspme Standex Engraving provides the texture for making mobile phones easier to use. [photo shows a mobile phone] STANDEX 6 MANOR PARKWAY SALEM, NH 03079 603.893.9701 www.standex.com 931-AR-00 EX-21 4 0004.txt Exhibit 21 STANDEX INTERNATIONAL CORPORATION AND SUBSIDIARIES SUBSIDIARIES OF REGISTRANT
Information is set forth below concerning all operating subsidiaries of the Company as of June 30, 2000 (except subsidiaries which, considered in the aggregate do not constitute a significant subsidiary): Percentage Percentage of Voting of Voting Stock Stock Owned Owned by Jurisdiction of by the Immediate Name of Subsidiary Incorporation Company Parent Custom Hoists, Inc. Ohio 100% James Burn International, Inc. New York 100% Snappy Air Distribution Products, Inc. Delaware 100% Standex Air Distribution Products, Inc. Delaware 100% Standex Electronics, Inc. Delaware 100% Standex Financial Corp. Delaware 100% Crest Fruit, L.P. Texas 1% 99% SXI Limited Canada 100% Keller-Dorian Holdings, S.A. France 100% S. I. de Mexico S.A. de C.V. Mexico 100% Standex International FSC, Inc. Virgin Islands 100% Standex International GmbH Germany 100% Standex Holdings Limited United Kingdom 100% Standex International Limited United Kingdom 100% Roehlen Industries Pty. Limited Australia 50% 50% James Burn International Limited United Kingdom 100% Standex Electronics (U.K.) Limited United Kingdom 100%
EX-23 5 0005.txt Exhibit 23 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statement Nos. 333-41534, 333-30008, 33-2- 7706, 33-42954, 33-45054, 33-58835 and 33-344953 of Standex International Corporation on Form S-8 of our reports dated August 15, 2000, appearing in and incorporated by reference in the Annual Report on Form 10-K of Standex International Corporation for the year ended June 30, 2000. /s/ DELOITTE & TOUCHE LLP DELOITTE & TOUCHE LLP Boston, Massachusetts September 26, 2000 EX-24 6 0006.txt EXHIBIT 24 POWER OF ATTORNEY The undersigned, being a director of Standex International Corporation ("Standex"), hereby constitutes Edward J. Trainor and Deborah A. Rosen, and each of them singly, my true and lawful attorney with full power to them, and each of them singly, to sign for me and in my name in my capacity as a Director of Standex, the Annual Report of Standex on Form 10-K for the fiscal year ended June 30, 2000 and any and all amendments thereto and generally to do such things in my name and behalf to enable Standex to comply with the requirements of the Securities and Exchange Commission relating to the Form 10-K. Witness my signature as of the 18th day of September, 2000. /S/ David R. Crichton _____________________________ David R. Crichton EXHIBIT 24 POWER OF ATTORNEY The undersigned, being a director of Standex International Corporation ("Standex"), hereby constitutes Edward J. Trainor and Deborah A. Rosen, and each of them singly, my true and lawful attorney with full power to them, and each of them singly, to sign for me and in my name in my capacity as a Director of Standex, the Annual Report of Standex on Form 10-K for the fiscal year ended June 30, 2000 and any and all amendments thereto and generally to do such things in my name and behalf to enable Standex to comply with the requirements of the Securities and Exchange Commission relating to the Form 10-K. Witness my signature as of the 25th day of September, 2000. /s/ William R. Fenoglio _____________________________ William R. Fenoglio EXHIBIT 24 POWER OF ATTORNEY The undersigned, being a director of Standex International Corporation ("Standex"), hereby constitutes Edward J. Trainor and Deborah A. Rosen, and each of them singly, my true and lawful attorney with full power to them, and each of them singly, to sign for me and in my name in my capacity as a Director of Standex, the Annual Report of Standex on Form 10-K for the fiscal year ended June 30, 2000 and any and all amendments thereto and generally to do such things in my name and behalf to enable Standex to comply with the requirements of the Securities and Exchange Commission relating to the Form 10-K. Witness my signature as of the 25th day of September, 2000. /s/ Walter F. Greeley _____________________________ Walter F. Greeley EXHIBIT 24 POWER OF ATTORNEY The undersigned, being a director of Standex International Corporation ("Standex"), hereby constitutes Edward J. Trainor and Deborah A. Rosen, and each of them singly, my true and lawful attorney with full power to them, and each of them singly, to sign for me and in my name in my capacity as a Director of Standex, the Annual Report of Standex on Form 10-K for the fiscal year ended June 30, 2000 and any and all amendments thereto and generally to do such things in my name and behalf to enable Standex to comply with the requirements of the Securities and Exchange Commission relating to the Form 10-K. Witness my signature as of the 25th day of September, 2000. /s/ Daniel B. Hogan _____________________________ Daniel B. Hogan EXHIBIT 24 POWER OF ATTORNEY The undersigned, being a director of Standex International Corporation ("Standex"), hereby constitutes Edward J. Trainor and Deborah A. Rosen, and each of them singly, my true and lawful attorney with full power to them, and each of them singly, to sign for me and in my name in my capacity as a Director of Standex, the Annual Report of Standex on Form 10-K for the fiscal year ended June 30, 2000 and any and all amendments thereto and generally to do such things in my name and behalf to enable Standex to comply with the requirements of the Securities and Exchange Commission relating to the Form 10-K. Witness my signature as of the 25th day of September, 2000. /s/ Thomas L. King _____________________________ Thomas L. King EXHIBIT 24 POWER OF ATTORNEY The undersigned, being a director of Standex International Corporation ("Standex"), hereby constitutes Edward J. Trainor and Deborah A. Rosen, and each of them singly, my true and lawful attorney with full power to them, and each of them singly, to sign for me and in my name in my capacity as a Director of Standex, the Annual Report of Standex on Form 10-K for the fiscal year ended June 30, 2000 and any and all amendments thereto and generally to do such things in my name and behalf to enable Standex to comply with the requirements of the Securities and Exchange Commission relating to the Form 10-K. Witness my signature as of the 13th day of September, 2000. /s/ C. Kevin Landry _____________________________ C. Kevin Landry EXHIBIT 24 POWER OF ATTORNEY The undersigned, being a director of Standex International Corporation ("Standex"), hereby constitutes Edward J. Trainor and Deborah A. Rosen, and each of them singly, my true and lawful attorney with full power to them, and each of them singly, to sign for me and in my name in my capacity as a Director of Standex, the Annual Report of Standex on Form 10-K for the fiscal year ended June 30, 2000 and any and all amendments thereto and generally to do such things in my name and behalf to enable Standex to comply with the requirements of the Securities and Exchange Commission relating to the Form 10-K. Witness my signature as of the 25th day of September, 2000. /s/ H. Nicholas Muller, III _____________________________ H. Nicholas Muller, III EXHIBIT 24 POWER OF ATTORNEY The undersigned, being a director of Standex International Corporation ("Standex"), hereby constitutes Edward J. Trainor and Deborah A. Rosen, and each of them singly, my true and lawful attorney with full power to them, and each of them singly, to sign for me and in my name in my capacity as a Director of Standex, the Annual Report of Standex on Form 10-K for the fiscal year ended June 30, 2000 and any and all amendments thereto and generally to do such things in my name and behalf to enable Standex to comply with the requirements of the Securities and Exchange Commission relating to the Form 10-K. Witness my signature as of the 25th day of September, 2000. /s/ Sol Sackel _____________________________ Sol Sackel EXHIBIT 24 POWER OF ATTORNEY The undersigned, being a director of Standex International Corporation ("Standex"), hereby constitutes Edward J. Trainor and Deborah A. Rosen, and each of them singly, my true and lawful attorney with full power to them, and each of them singly, to sign for me and in my name in my capacity as a Director of Standex, the Annual Report of Standex on Form 10-K for the fiscal year ended June 30, 2000 and any and all amendments thereto and generally to do such things in my name and behalf to enable Standex to comply with the requirements of the Securities and Exchange Commission relating to the Form 10-K. Witness my signature as of the 18th day of September, 2000. /s/ Edward J. Trainor _____________________________ Edward J. Trainor EXHIBIT 24 POWER OF ATTORNEY The undersigned, being a director of Standex International Corporation ("Standex"), hereby constitutes Edward J. Trainor and Deborah A. Rosen, and each of them singly, my true and lawful attorney with full power to them, and each of them singly, to sign for me and in my name in my capacity as a Director of Standex, the Annual Report of Standex on Form 10-K for the fiscal year ended June 30, 2000 and any and all amendments thereto and generally to do such things in my name and behalf to enable Standex to comply with the requirements of the Securities and Exchange Commission relating to the Form 10-K. Witness my signature as of the 18th day of September, 2000. /s/ Edward F. Paquette _____________________________ Edward F. Paquette EX-27 7 0007.txt
5 1,000 12-MOS JUN-30-2000 JUN-30-2000 10,438 0 107,831 3,400 112,201 231,386 259,643 147,505 424,200 86,376 153,436 0 0 41,976 122,838 424,200 637,049 640,509 427,711 582,320 0 1,413 11,336 46,853 19,150 27,703 0 0 0 27,703 2.19 2.17
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