sxi20190930_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-7233

STANDEX INTERNATIONAL CORPORATION

(Exact name of registrant as specified in its charter)

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 whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] NO [ ]

Delaware	31-0596149
(State of incorporation)	(IRS Employer Identification No.)

11 KEEWAYDIN DRIVE, Salem, New Hampshire	03079
(Address of principal executive offices)	(Zip Code)

(603) 893-9701

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, Par Value $1.50 Per Share	SXI	New York Stock Exchange

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [ X ]		Accelerated filer [ ]
Non-accelerated filer [ ]		Smaller Reporting Company [ ]

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES [ ] NO [X]

The number of shares of Registrant's Common Stock outstanding on November 3, 2019 was 12,461,560.

STANDEX INTERNATIONAL CORPORATION

INDEX

		Page No.
PART I.	FINANCIAL INFORMATION:

Item 1.

	Condensed Consolidated Balance Sheets as of September 30, 2019 (unaudited) and June 30, 2019	3

	Condensed Consolidated Statements of Operations for the three months ended September 30, 2019 and 2018 (unaudited)	4

	Condensed Consolidated Statements of Comprehensive Income for the three months ended September 30, 2019 and 2018 (unaudited)	5

	Condensed Consolidated Statement of Stockholders’ Equity for the three months ended September 30, 2019 and 2018 (unaudited)	6

	Condensed Consolidated Statements of Cash Flows for the three months ended September 30, 2019 and 2018 (unaudited)	7

	Notes to Unaudited Condensed Consolidated Financial Statements	8

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	25

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	33

Item 4.	Controls and Procedures	34

PART II.	OTHER INFORMATION:

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34

Item 6.	Exhibits	35

PART I. FINANCIAL INFORMATION

ITEM 1

(In thousands, except per share data)	*September 30, 2019 (unaudited)*			*June 30, 2019*
ASSETS
Current Assets:
Cash and cash equivalents	$	90,244		$	93,145
Accounts receivable, net of reserve for doubtful accounts of $1,765 and $1,451 at September 30, 2019 and June 30, 2019		114,038			119,589
Inventories		98,359			88,645
Prepaid expenses and other current assets		20,297			30,872
Income taxes receivable		1,444			1,622
Total current assets		324,382			333,873
Property, plant, and equipment, net		147,408			148,024
Intangible assets, net		114,854			118,660
Goodwill		281,149			281,503
Deferred tax asset		12,853			14,140
Operating lease right-of-use asset		42,079			-
Other non-current assets		26,567			25,689
Total non-current assets		624,910			588,016
Total assets	$	949,292		$	921,889

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$	66,651		$	72,603
Accrued liabilities		63,631			62,648
Income taxes payable		4,306			5,744
Current liabilities-Discontinued Operations		124			620
Total current liabilities		134,712			141,615
Long-term debt		188,895			197,610
Operating lease long-term liabilities		34,192			-
Accrued pension and other non-current liabilities		118,572			118,351
Total non-current liabilities		341,659			315,961
Stockholders' equity:
Common stock, par value $1.50 per share, 60,000,000 shares authorized, 27,984,278 issued, 12,373,209 and 12,334,607 outstanding at September 30, 2019 and June 30, 2019		41,976			41,976
Additional paid-in capital		68,196			65,515
Retained earnings		828,226			818,282
Accumulated other comprehensive loss		(141,549	)		(137,278	)
Treasury shares: 15,611,069 shares at September 30, 2019 and 15,649,671 shares at June 30, 2019		(323,928	)		(324,182	)
Total stockholders' equity		472,921			464,313
Total liabilities and stockholders' equity	$	949,292		$	921,889

	*Three Months Ended*
	*September 30,*
(In thousands, except per share data)	*2019*			*2018*
Net sales	$	196,438		$	193,080
Cost of sales		128,154			123,828
Gross profit		68,284			69,252
Selling, general, and administrative expenses		48,675			45,472
Restructuring costs		1,479			447
Acquisition related expenses		734			688
Other operating (income) expense, net		(1,045	)		-
Total operating expenses		49,843			46,607
Income from operations		18,441			22,645
Interest expense		(2,121	)		(2,244	)
Other non-operating income (expense)		916			(201	)
Income from continuing operations before income taxes		17,236			20,200
Provision for income taxes		4,786			5,842
Income from continuing operations		12,450			14,358
Income (loss) from discontinued operations, net of income taxes		(11	)		1,499
Net income (loss)	$	12,439		$	15,857

Basic earnings (loss) per share:
Continuing operations	$	1.01		$	1.13
Discontinued operations		-			0.12
Total	$	1.01		$	1.25
Diluted earnings (loss) per share:
Continuing operations	$	1.00		$	1.12
Discontinued operations		-			0.12
Total	$	1.00		$	1.24

Cash dividends per share	$	0.20		$	0.18

	*Three Months Ended*
	*September 30,*
(In thousands)	*2019*			*2018*
Net income	$	12,439		$	15,857
Other comprehensive income (loss):
Defined benefit pension plans:
Actuarial gains (losses) and other changes in unrecognized costs	$	348		$	320
Amortization of unrecognized costs		1,435			1,116
Derivative instruments:
Change in unrealized gains (losses)		1,152			363
Amortization of unrealized gains (losses) into interest expense		(1,201	)		(659	)
Foreign currency translation gains (losses)		(5,595	)		(6,021	)
Other comprehensive income (loss) before tax	$	(3,861	)	$	(4,881	)

Income tax provision (benefit):
Defined benefit pension plans:
Actuarial gains (losses) and other changes in unrecognized costs	$	(47	)	$	(10	)
Amortization of unrecognized costs		(345	)		(272	)
Derivative instruments:
Change in unrealized gains and (losses)		(25	)		(98	)
Amortization of unrealized gains and (losses) into interest expense		7			15
Income tax provision (benefit) to other comprehensive income (loss)	$	(410	)	$	(365	)

Other comprehensive income (loss), net of tax		(4,271	)		(5,246	)
Comprehensive income (loss)	$	8,168		$	10,611

									*Accumulated Other*
			*Additional*						*Comprehensive*									*Total*
For the Three month period ended September 30, 2019		*Common*		*Paid-in*			*Retained*			*Income*			*Treasury Stock*						*Stockholders’*
(in thousands, except as specified)	*Stock*		*Capital*			*Earnings*			*(Loss)*			*Shares*			*Amount*			*Equity*
Balance, June 30, 2019	$	41,976	$	65,515		$	818,282		$	(137,278	)		15,650		$	(324,182	)	$	464,313
Stock issued for employee stock option and purchase plans, including related income tax benefit and other		-		(76	)		-			-			(50	)		1,025			949
Stock-based compensation		-		2,757			-			-			-			-			2,757
Treasury stock acquired		-		-			-			-			11			(771	)		(771	)
Comprehensive income:																			-
Net Income		-		-			12,439			-			-			-			12,439
Foreign currency translation adjustment		-		-						(5,595	)		-			-			(5,595	)
Pension and OPEB adjustments, net of tax of $0.4 million		-		-			-			1,390			-			-			1,390
Change in fair value of derivatives, net of tax of $0.4 million		-		-			-			(66	)		-			-			(66	)
Dividends declared ($0.20 per share)		-		-			(2,495	)		-			-			-			(2,495	)
Balance, September 30, 2019	$	41,976	$	68,196		$	828,226		$	(141,549	)		15,611		$	(323,928	)	$	472,921

For the Three month period ended September 30, 2018
(in thousands, except as specified)
Balance, June 30, 2018	$	41,976	$	61,328		$	761,431		$	(121,860	)		15,279		$	(292,080	)	$	450,795
Stock issued for employee stock option and purchase plans, including related income tax benefit and other		-		(205	)		-			-			(45	)		858			653
Stock-based compensation		-		2,157			-			-			-			-			2,157
Treasury stock acquired		-		-			-			-			8			(837	)		(837	)
Adoption of ASU 2018-02		-		-			(1,033	)		-			-			-			(1,033	)
Comprehensive income:																			-
Net Income		-		-			15,857			-			-			-			15,857
Foreign currency translation adjustment		-		-			-			(6,021	)		-			-			(6,021	)
Pension and OPEB adjustments, net of tax of $0.3 million		-		-			-			1,154			-			-			1,154
Change in fair value of derivatives, net of tax of $0.4 million		-		-			-			(378	)		-			-			(378	)
Dividends declared ($0.18 per share)		-		-			(2,317	)		-			-			-			(2,317	)
Balance, September 30, 2018	$	41,976	$	63,280		$	773,938		$	(127,105	)		15,242		$	(292,059	)	$	460,030

	*Three Months Ended*
	*September 30,*
(In thousands)	*2019*			*2018*
Cash flows from operating activities
Net income	$	12,439		$	15,857
Income from discontinued operations		(11	)		1,499
Income from continuing operations		12,450			14,358
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		8,380			6,655
Stock-based compensation		2,757			2,157
Non-cash portion of restructuring charge		(122	)		13
Life Insurance Benefit		(1,302	)		-
Contributions to defined benefit plans		(241	)		(252	)
Net changes in operating assets and liabilities		(13,607	)		(25,502	)
Net cash provided by operating activities - continuing operations		8,315			(2,571	)
Net cash (used in) operating activities - discontinued operations		99			3,560
Net cash provided by operating activities		8,414			989
Cash flows from investing activities
Expenditures for property, plant, and equipment		(7,034	)		(7,465	)
Expenditures for acquisitions, net of cash acquired		-			(96,828	)
Proceeds from insurance recovery		9,000			-
Other investing activity		376			2,332
Net cash provided by (used in) investing activities- continuing operations		2,342			(101,961	)
Net cash provided by (used in) investing activities- discontinued operations		-			(232	)
Net cash provided by (used in) investing activities		2,342			(102,193	)
Cash flows from financing activities
Borrowings on revolving credit facility		25,700			139,500
Payments of revolving credit facility		(34,500	)		(34,000	)
Activity under share-based payment plans		949			652
Purchases of treasury stock		(771	)		(837	)
Cash dividends paid		(2,463	)		(2,287	)
Net cash provided by financing activities		(11,085	)		103,028
Effect of exchange rate changes on cash and cash equivalents		(2,572	)		(2,156	)
Net change in cash and cash equivalents		(2,901	)		(332	)
Cash and cash equivalents at beginning of year		93,145			109,602
Cash and cash equivalents at end of period	$	90,244		$	109,270

Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for:
Interest	$	1,841		$	1,447
Income taxes, net of refunds	$	5,114		$	5,264

Statements contained in this Quarterly Report 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 “should,” “could,” “may,” “will,” “expect,” “believe,” “estimate,” “anticipate,” “intend,” “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 that may cause the actual results of operations in future periods to differ materially from those currently expected or anticipated. These factors include, but are not limited to: materially adverse or unanticipated legal judgments, fines, penalties or settlements; conditions in the financial and banking markets, including fluctuations in exchange rates and the inability to repatriate foreign cash; domestic and international economic conditions, including the impact, length and degree of economic downturns on the customers and markets we serve and more specifically conditions in the food service equipment, automotive, construction, aerospace, energy, oil and gas, transportation, consumer appliance and general industrial markets; lower-cost competition; the relative mix of products which impact margins and operating efficiencies in certain of our businesses; the impact of higher raw material and component costs, particularly steel, petroleum based products, refrigeration components and certain materials used in electronics parts; an inability to realize the expected cost savings from restructuring activities including effective completion of plant consolidations, cost reduction efforts including procurement savings and productivity enhancements, capital management improvements, strategic capital expenditures, and the implementation of lean enterprise manufacturing techniques; the inability to achieve the savings expected from global sourcing of raw materials and diversification efforts in emerging markets; the impact on cost structure and on economic conditions as a result of actual and threatened increases in trade tariffs; the inability to attain expected benefits from acquisitions and the inability to effectively consummate and integrate such acquisitions and achieve synergies envisioned by the Company; market acceptance of our products; our ability to design, introduce and sell new products and related product components; the ability to redesign certain of our products to continue meeting evolving regulatory requirements; the impact of delays initiated by our customers; and our ability to increase manufacturing production to meet demand; and potential changes to future pension funding requirements. In addition, any forward-looking statements represent management's estimates only as of the day made and should not be relied upon as representing management's estimates as of any subsequent date. While the Company may elect to update forward-looking statements at some point in the future, the Company and management specifically disclaim any obligation to do so, even if management's estimates change.

We are a leading manufacturer of a variety of products and services for diverse commercial and industrial markets. We have nine operating segments aggregated into five reportable segments: Engraving, Electronics, Engineering Technologies, Hydraulics, and Food Service Equipment. Overall management, strategic development and financial control are led by the executive staff at our corporate headquarters located in Salem, New Hampshire.

Our long-term strategy is to create, improve, and enhance shareholder value by building larger, more profitable industrial platforms through a value creation system that assists management in meeting specific corporate and business unit financial and strategic performance goals. In so doing, we expect to focus our financial assets and managerial resources on our higher growth and operating margin businesses while considering divestiture of those businesses that we feel are not strategic or do not meet our growth and return expectations. The Standex Value Creation System is a standard methodology which provides consistent tools used throughout the company in order to achieve our organization’s goal of transforming from its historic roots as a holding company to an efficient operating company. The Standex Value Creation System employs four components: Balanced Performance Plan, Standex Growth Disciplines, Standex Operational Excellence, and Standex Talent Management. The Balanced Performance Plan process aligns annual goals throughout the business and provides a standard reporting, management and review process by setting and meeting annual and quarterly targets that support our short and long-term goals. The Standex Growth Disciplines use a set of tools and processes including market maps, growth lane ways, and market tests to identify opportunities to expand the business organically and through acquisitions. Standex Operational Excellence employs a standard playbook and processes, including LEAN, to eliminate waste and improve profitability, cash flow and customer satisfaction. Finally, the Standex Talent Management process is an organizational development process that provides training, development, and succession planning for our employees throughout our worldwide organization. The Standex Value Creation System ties all disciplines in the organization together under a common umbrella by providing standard tools and processes to deliver our business objectives.

It is our objective to invest in our higher growth and operating margin businesses through both organic initiatives and acquisitions. Organically, we seek to identify and implement growth initiatives such as new product development, geographic expansion, and the introduction of products and technologies into new markets and applications, key accounts and strategic sales channel partners. Inorganically, we look to add strategically aligned or “bolt on” acquisitions to strengthen these core businesses, creating both sales and cost synergies and accelerating their growth and margin improvement. We have a particular focus on identifying and investing in opportunities that complement our products and will increase the global presence and capabilities of our core businesses.

We create “Customer Intimacy” by utilizing the Standex Growth Disciplines to partner with our customers in order to develop and deliver custom solutions or engineered components. By partnering with our customers during long-term product development cycles, we become an extension of their development teams. Through this Partner, Solve, Deliver ® methodology, we are able to secure our position as a preferred long-term solution provider for our products and components. This strategy is designed to result in increased sales and operating margins that enhance shareholder returns.

Standex Operational Excellence drives continuous improvement in the efficiency of our businesses, both on the shop floor and in the office environment. We recognize that our businesses are competing in a global economy that requires us to improve our competitive position. We have deployed a number of management competencies to drive improvements in the cost structure of our business units including operational excellence through lean enterprise, the use of low cost manufacturing facilities in countries such as Mexico and China, the consolidation of manufacturing facilities to achieve economies of scale and leveraging of fixed infrastructure costs, alternate sourcing to achieve procurement cost reductions, and capital improvements to increase productivity.

The Company’s strong historical cash flow has been a cornerstone for funding our capital allocation strategy. We use cash flow generated from operations to fund the strategic growth programs described above, including acquisitions and investments for organic growth, investments in capital assets to improve productivity and lower costs and to return cash to our shareholders through payment of dividends and stock buybacks.

Restructuring expenses reflect costs associated with our efforts to continuously improve operational efficiency and expand globally in order to remain competitive in the end-user markets we serve. We incur costs for actions to size our businesses to a level appropriate for current economic conditions, improve our cost structure, enhance our competitive position and increase operating margins. Such expenses include costs for moving facilities to locations that allow for lower fixed and variable costs, starting up plants after relocation, downsizing operations because of changing economic conditions, and other costs resulting from asset redeployment decisions. Shutdown costs include severance, benefits, stay bonuses, lease and contract terminations, asset write-downs, costs of moving fixed assets, and moving and relocation costs. Vacant facility costs include maintenance, utilities, property taxes and other costs.

Because of the diversity of the Company’s businesses, end user markets and geographic locations, we do not use specific external indices to predict the future performance of the Company, other than general information about broad macroeconomic trends. Each of our individual business units serves niche markets and attempts to identify trends other than general business and economic conditions which are specific to its business and which could impact its performance. Those units report pertinent information to senior management, which uses it to the extent relevant to assess the future performance of the Company. A description of any such material trends is described below in the applicable segment analysis.

We monitor a number of key performance indicators (“KPIs”) including net sales, income from operations, backlog, effective income tax rate, gross profit margin, and operating cash flow. A discussion of these KPIs is included below. We may also supplement the discussion of these KPIs by identifying the impact of foreign exchange rates, acquisitions, and other significant items when they have a material impact on a specific KPI.

We believe the discussion of these items provides enhanced information to investors by disclosing their impact on the overall trend which provides a clearer comparative view of the KPI, as applicable. For discussion of the impact of foreign exchange rates on KPIs, the Company calculates the impact as the difference between the current period KPI calculated at the current period exchange rate as compared to the KPI calculated at the historical exchange rate for the prior period. For discussion of the impact of acquisitions, we isolate the effect on the KPI amount that would have existed regardless of our acquisition. Sales resulting from synergies between our acquisitions and existing operations of the Company are considered organic growth for the purposes of our discussion.

Net sales increased in the first quarter of fiscal year 2020 by $3.4 million or 1.7% when compared to the prior year quarter. Acquisitions contributed $8.4 million or 4.4% to overall sales growth. Organic sales declined $3.2 million or 1.7%, and foreign currency had a $1.9 million or 1.0% negative impact on sales. We discuss our results and outlook for each segment below.

Our gross margin for the first quarter of 2020 was 34.8% which declined from the prior year quarter’s gross margin of 35.9%. We experienced gross margin declines in our Engraving and Electronics businesses as a product of the deleveraging generated by organic sales declines, particularly in Asia, as well as increased material costs in Electronics, along with wage inflation.

Selling, General, and Administrative Expenses (“SG&A”) for the first quarter of 2020 were $48.7 million, or 24.8% of sales, compared to $45.5 million, or 23.6% of sales, during the prior year quarter. SG&A expenses during the quarter were impacted by on-going SG&A expenses related to our recent acquisitions of $1.1 million along with increased employee benefit and compensation costs.

We incurred restructuring expenses of $1.5 million during the first quarter of 2020 as compared to $0.4 million in 2019. Restructuring expenses during the quarter primarily related to headcount reductions and facility rationalization within our Engraving segment. We expect to incur restructuring costs of approximately $1.9 million throughout the remainder of fiscal year 2020 primarily as a result of further rationalization efforts and targeted administrative headcount reductions within Engraving.

We incurred acquisition-related expenses of $0.7 million during the first quarter ended September 30, 2019. Acquisition-related expenses primarily related to deferred compensation earned during the quarter by the seller of our Horizon Scientific business acquired in October of fiscal year 2017. The last of these payments was made in October of fiscal year 2020, subsequent to the end of the quarter.

Income from operations for the first quarter of 2020 was $18.4 million, compared to $22.6 million during the prior year quarter. The decline of $4.2 million, or 18.6%, is primarily due to gross profit declines of $1.0 million as a result of increased material costs and wage inflation as well as organic sales declines in our Electronics segment, in addition to higher compensation and benefit costs.

Interest expense for the first quarter of 2020 was $2.1 million, a 5.5% decline from interest of $2.2 million during the prior year quarter. The decreased interest expense is due to lower borrowings offset by an increase in our effective interest rate of 3.41% as of September 30, 2019, as compared to 3.32% as of September 30, 2018.

The Company's effective tax rate from continuing operations for the first quarter of the fiscal year 2020 was 27.8% compared with 28.9% for the prior year quarter. The effective tax rate in 2020 was lower primarily due to a benefit as a result of non-taxable life insurance proceeds earned in the quarter.

The Company is routinely audited by various jurisdictions. The Company is currently under audit by the IRS for the fiscal years ending June 30, 2016 and 2017. We anticipate finalizing the audit during the third quarter of fiscal year 2020.

Backlog includes all active or open orders for goods and services. Backlog also includes any future deliveries based on executed customer contracts, so long as such deliveries are based on agreed upon delivery schedules. With the exception of our Engineering Technologies Group, backlog is not generally a significant factor in the Company’s businesses because of our relatively short delivery periods and rapid inventory turnover. Backlog orders are not necessarily an indicator of future sales levels because of variations in lead times and customer production demand pull systems. Customers may delay delivery of products or cancel orders prior to shipment, subject to possible cancellation penalties. Due to the nature of long term agreements in the Engineering Technologies group, the timing of orders and delivery dates can vary considerably resulting in significant backlog changes from one period to another. In general, the majority of net realizable backlog beyond one year comes from the Engineering Technologies Group.

Total backlog realizable under one year decreased $13.3 million, or 6.4%, to $193.7 million at September 30, 2019 from $207.0 million at September 30, 2018. Organic backlog under one year decreased in all segments except Engineering Technologies as a result of a slow down in select end markets. Backlog across Electronics and Engraving was also negatively impacted by the weakening of the euro and pound as compared to September 30, 2018.

Net sales for the first quarter of 2020 increased by $2.5 million, or 6.8%, when compared to the prior year. Organic sales declined by $2.0 million, or 5.5% offset by revenue growth due to acquisitions of $5.3 million, or 14.8%. Foreign exchange had a negative impact of $0.9 million, or 2.4%, for the quarter. We experienced expected organic revenue declines in the quarter primarily due to the timing of automotive programs.

Income from operations for the first quarter of 2020 decreased by $1.0 million, or 13.4%, when compared to the prior year. Income from operations in the prior year quarter was impacted by $0.5 million of purchase accounting expenses related to our acquisition of Tenibac. The organic revenue declines along with increased amortization expense of $1.0 million as a result of our recent acquisitions both contributed to the operating income reduction. Looking forward, we expect year-over-year improvement as new global automotive model roll-outs increase sequentially along with continued contribution from the GS Engineering acquisition and the restructuring actions announced in Q3 FY 2019 are completed.

Net sales in the first quarter fiscal year 2020 decreased by $4.8 million, or 9.4%, when compared to the prior year quarter. Organic sales declines of $7.2 million, or 14.0% were spread across all major geographic regions but were most pronounced in Asia and were offset by acquisition sales of $3.1 million or 6.0% in North America. The sales decline was mostly focused within the reed switch and sensor markets in Asia and was partially offset by growth in our magnetics business. We have a strong funnel of new business opportunities and our new product launches continue to partially offset current economic headwinds.

Income from operations in the first quarter fiscal year 2020 decreased by $4.7 million, or 36.7%, when compared to the prior year quarter. Operating income declines were a result of sales mix, inflationary cost increases, particularly within platinum-group metals, and were partially offset by various cost saving initiatives. We anticipate that material costs will remain elevated during the upcoming quarters and as a result we have fixed some future purchase commitments in order to reduce the additional price increases and are pursuing additional manufacturing process changes.

Engineering Technologies revenue grew 18.6% over the first quarter of fiscal year 2019 with continued strength in Aviation, and Space and Defense. Operating income increased 89.2% year-over-year as the segment successfully leveraged both the volume growth and ongoing productivity improvements in manufacturing processes and efficiency initiatives.

Standex expects revenue and operating income growth year-over-year to continue in the second quarter of fiscal year 2020 driven by continued favorable end-market strength in this segment's core markets, additional productivity improvements and a healthy pipeline of new business opportunities going forward.

Net sales in the first quarter of fiscal year 2020 increased $1.2 million, or 9.7%, when compared to the prior year quarter. The increase is primarily due to strong demand from OEM’s in the refuse space along with new refuse applications. Specifically, our new pack eject cylinder for front end loading garbage trucks and others continues to receive market acceptance by OEMs.

Income from operations in the first quarter of fiscal year 2020 increased $0.9 million, or 59.6%, when compared to the prior year quarter. The operating income increase was driven by strong top line growth, slightly lower material costs, and improved cost management. The group received tariff relief on both rod and telescopic cylinders during fiscal year 2019, but this relief is scheduled to end in the third quarter of fiscal year 2020. We cannot be certain if the tariff relief will be extended by the U.S. government. While we expect improved financial performance year-over-year in fiscal 2020, in the second quarter, we expect Hydraulics revenue and operating income to be relatively flat year-over-year.

Net sales for the first quarter of 2020 increased $0.7 million or 0.9% when compared to the prior year quarter. Organic sales growth increased 1.1% while foreign exchange had a negative 0.2% effect on sales. The organic sales increase was driven by double digit revenue growth in our Scientific business as we recorded strong gains with pharmacy and retail customers. Sales in our Refrigeration business were flat compared to prior year. We continue to recover from the fire that destroyed much of our Refrigeration finished goods cabinet inventory just before the end of fiscal year 2019 and we are working to retain customers whose orders were cancelled due to the absence of inventory to satisfy immediate demand.

Income from operations increased $1.7 million or 25.6% in the first quarter of fiscal 2020. The increase in operating income is primarily due to strong sales growth in the Scientific business and favorable sales mix within our display merchandising business. The Company expects that commercial refrigeration sales will be lower year-over-year in the second quarter as finished goods inventory levels are further rebuilt to meet customer demand following the warehouse facility fire. In the second quarter of fiscal year 2020, we also expect continued strength in Scientific end markets.

Corporate expenses in the first quarter of fiscal year 2020 increased by $2.7 million, or 41.1%, when compared to the prior year quarter. The corporate expense increase primarily reflects accrued stock-based compensation and benefits expense in fiscal 2020, along with management transition cost.

During the first quarter of 2020, we received $9.0 million of insurance proceeds related to losses of finished goods and personal property as a result of a fire which occurred at a leased Food Service location. As the lost property carried a book value that was below the insurance coverage for this property, we recorded a $1.0 million gain upon receipt of the proceeds and recorded this as a component of Other Operating Income.

The restructuring and acquisition-related costs have been discussed above in the Company Overview.

At September 30, 2019, our total cash balance was $90.2 million, of which $76.9 million was held by foreign subsidiaries. During the quarter, we repatriated $9.2 million to the United States from our foreign subsidiaries and we expect to repatriate $35.0 million during the entire fiscal year. The repatriation of cash balances from certain of our subsidiaries could have adverse tax consequences or be subject to capital controls; however, those balances are generally available without legal restrictions to fund ordinary business operations.

Net cash provided by continuing operating activities for the three months ended September 30, 2019, was $8.4 million compared to net cash used by continuing operating activities of $2.5 million in the prior year. We generated $22.2 million from income statement activities and used $13.5 million of cash to fund working capital and other balance sheet increases. Cash flow provided by continuing investing activities for quarter ended September 30, 2019 totaled $2.3 million and consisted of insurance proceeds related to the destruction of inventory in our leased Refrigeration facility offset by $7.0 million of capital expenditures. Cash used by financing activities for the three months ended September 30, 2019 were $11.1 million and included debt repayments of $8.8 million, cash paid for dividends of $2.5 million, and stock repurchases of $0.8 million.

During the second quarter of fiscal year 2019, we entered into a five-year Amended and Restated Credit Agreement (“credit agreement”, or “facility”) with a borrowing limit of $500 million. The facility can be increased by an amount of up to $250 million, in accordance with specified conditions contained in the agreement. The facility also includes a $10 million sublimit for swing line loans and a $35 million sublimit for letters of credit.

Under the terms of the Credit Facility, we pay a variable rate of interest and a commitment fee on borrowed amounts as well as a commitment fee on unused amounts under the facility. The amount of the commitment fee depends upon both the undrawn amount remaining available under the facility and the Company’s funded debt to EBITDA (as defined in the agreement) ratio at the last day of each quarter. As our funded debt to EBITDA ratio increases, the commitment fee increases.

Funds borrowed under the facility may be used for the repayment of debt, working capital, capital expenditures, acquisitions (so long as certain conditions, including a specified funded debt to EBITDA leverage ratio is maintained), and other general corporate purposes. As of September 30, 2019, the Company has used $7.6 million against the letter of credit sub-facility and had the ability to borrow $257.5 million under the facility based on our current trailing twelve-month EBITDA. The facility contains customary representations, warranties and restrictive covenants, as well as specific financial covenants. The Company’s current financial covenants under the facility are as follows:

Interest Coverage Ratio - The Company is required to maintain a ratio of Earnings Before Interest and Taxes, as Adjusted (“Adjusted EBIT per the Credit Facility”), to interest expense for the trailing twelve months of at least 2.75:1. Adjusted EBIT per the Credit Facility specifically excludes extraordinary and certain other defined items such as cash restructuring and acquisition-related charges up to the lower of $20.0 million or 10% of EBITDA. The facility also allows for unlimited non-cash charges including purchase accounting and goodwill adjustments. At September 30, 2019, the Company’s Interest Coverage Ratio was 7.53:1.

Leverage Ratio - The Company’s ratio of funded debt to trailing twelve month Adjusted EBITDA per the Credit Facility, calculated as Adjusted EBIT per the Credit Facility plus depreciation and amortization, may not exceed 3.5:1. Under certain circumstances in connection with a Material Acquisition (as defined in the Facility), the Facility allows for the leverage ratio to go as high as 4.0:1 for a four-fiscal quarter period. At September 30, 2019, the Company’s Leverage Ratio was 1.22:1.

As of September 30, 2019, we had borrowings under our facility of $190.0 million and the effective rate of interest for outstanding borrowings under the facility was 3.41%.

Our primary cash requirements in addition to day-to-day operating needs include interest payments, capital expenditures, acquisitions, share repurchases, and dividends. Our primary sources of cash for these requirements are cash flows from continuing operations and borrowings under the facility. We expect fiscal year 2020 capital spending to be between $31.0 and $34.0 million which includes amounts not spent in fiscal year 2019. We also expect that depreciation and amortization expense will be between $25.5 and $26.5 million and $8.5 and $9.5 million, respectively.

In order to manage our interest rate exposure, we are party to $85.0 million of active floating to fixed rate swaps. These swaps convert our interest payments from LIBOR to a weighted average rate of 2.11%.

The following table sets forth our capitalization at September 30, 2019 and June 30, 2019:

We sponsor a number of defined benefit and defined contribution retirement plans. The U.S. pension plan is frozen for substantially all participants. We have evaluated the current and long-term cash requirements of these plans, and our existing sources of liquidity are expected to be sufficient to cover required contributions under ERISA and other governing regulations.

The fair value of the Company's U.S. defined benefit pension plan assets was $188.2 million at September 30, 2019, as compared to $186.2 million at the most recent measurement date, which occurred as of June 30, 2019. The next measurement date to determine plan funding and benefit obligations will be on June 30, 2020.

The Company expects to pay $5.2 million in contributions to its defined benefit plans during fiscal 2020. Contributions of $0.2 were made during the three months ended September 30, 2019. Required contributions of $4.3 million and $0.4 million will be paid to the Company’s U.S. and U.K. defined benefit plan respectively during 2020. The Company also expects to make contributions during the current fiscal year of $0.2 million and $0.3 million to its unfunded defined benefit plans in the U.S. and Germany, respectively. Any subsequent plan contributions will depend on the results of future actuarial valuations.

We have an insurance program in place to fund supplemental retirement income benefits for four retired executives. Current executives and new hires are not eligible for this program. At September 30, 2019, the underlying policies had a cash surrender value of $17.9 million and are reported net of loans of $8.7 million for which we have the legal right of offset. In September of fiscal year 2019, one of the covered former executives passed away and we recorded a $1.3 million gain on insurance as a component of non-operating income to reflect the settlement due under the policy.

Inflation – Certain of our expenses, such as wages and benefits, occupancy costs and equipment repair and replacement, are subject to normal inflationary pressures. Inflation for medical costs can impact both our employee benefit costs as well as our reserves for workers' compensation claims. We monitor the inflationary rate and make adjustments to reserves whenever it is deemed necessary. Our ability to control worker compensation insurance medical cost inflation is dependent upon our ability to manage claims and purchase insurance coverage to limit the maximum exposure for us. Each of our segments is subject to the effects of changing raw material costs caused by the underlying commodity price movements. In general, we do not enter into purchase contracts that extend beyond one operating cycle. While Standex considers our relationship with our suppliers to be good, there can be no assurances that we will not experience any supply shortage.

Foreign Currency Translation – Our primary functional currencies used by our non-U.S. subsidiaries are the Euro, British Pound Sterling (Pound), Japanese (Yen), and Chinese (Yuan).

Environmental Matters – To the best of our knowledge, we believe that we are presently in substantial compliance with all existing applicable environmental laws and regulations and do not anticipate any instances of non-compliance that will have a material effect on our future capital expenditures, earnings or competitive position.

Seasonality – We are a diversified business with generally low levels of seasonality, however our fiscal third quarter typically has a comparatively lower level of sales and profitability.

Employee Relations – The Company has labor agreements with four union locals in the United States and several European employees belong to European trade unions. One union contract in the U.S. will expire during the second quarter of fiscal year 2020 and was being negotiated as of September 30, 2019.

The condensed consolidated financial statements include the accounts of Standex International Corporation and all of its subsidiaries. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying condensed consolidated financial statements. Although we believe that materially different amounts would not be reported due to the accounting policies adopted, the application of certain accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. Our Annual Report on Form 10-K for the year ended June 30, 2019 lists a number of accounting policies which we believe to be the most critical.

We are exposed to market risks from changes in interest rates, commodity prices and changes in foreign currency rates. To reduce these risks, we selectively use financial instruments and other proactive management techniques. We have internal policies and procedures that place financial instruments under the direction of the Treasurer and restrict all derivative transactions to those intended for hedging purposes only. The use of financial instruments for trading purposes (except for certain investments in connection with the non-qualified defined contribution plan) or speculation is strictly prohibited. The Company has no majority-owned subsidiaries that are excluded from the consolidated financial statements. Further, we have no interests in or relationships with any special purpose entities.

We are exposed to both transactional risk and translation risk associated with exchange rates. Our overall transactional risk is mitigated, in large part, by natural hedges developed with locally denominated debt service on intercompany accounts. In the three months ended September 30, 2019, net sales to external customers in our consolidated sales not transacted in functional currency were 3.0%. We also mitigate certain of our foreign currency exchange rate risks by entering into forward foreign currency contracts from time to time. The contracts are used as a hedge against anticipated foreign cash flows, such as dividend payments, loan payments, and materials purchases, and are not used for trading or speculative purposes. The fair values of the forward foreign currency exchange contracts are 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. At September 30, 2019, the fair value, in the aggregate, of the Company’s open foreign exchange contracts was a liability of $1.5 million.

Our primary translation risk is with the Euro, British Pound Sterling, Japanese Yen and Chinese Yuan. A hypothetical 10% appreciation or depreciation of the value of any these foreign currencies to the U.S. Dollar at September 30, 2019, would not result in a material change in our operations, financial position, or cash flows. We hedge our most significant foreign currency translation risks primarily through cross currency swaps and other instruments, as appropriate.

Our interest rate exposure is limited primarily to interest rate changes on our variable rate borrowings. From time to time, we will use interest rate swap agreements to modify our exposure to interest rate movements. The Company’s currently effective swap agreements convert our base borrowing rate on $85.0 million of debt due under our Credit Agreement from a variable rate equal to LIBOR to a weighted average rate of 2.11% at September 30, 2019.

The Company’s effective rate on variable-rate borrowings, including the impact of interest rate swaps, under the revolving credit agreement decreased from 3.88% at June 30, 2019 to 3.41% at September 30, 2019.

We have a diversified customer base. As such, the risk associated with concentration of credit risk is inherently minimized. As of September 30, 2019, no one customer accounted for more than 5% of our consolidated outstanding receivables or of our sales.

The Company is exposed to fluctuating market prices for all commodities used in its manufacturing processes. Each of our segments is subject to the effects of changing raw material costs caused by the underlying commodity price movements and the impact that any tariffs may have on such commodities. In general, we do not enter into purchase contracts that extend beyond one operating cycle. While Standex considers our relationship with our suppliers to be good, there can be no assurances that we will not experience any supply shortage.

The Engineering Technologies, Food Service Equipment, Electronics, and Hydraulics Groups are all sensitive to price increases for steel products, other metal commodities and petroleum based products. In the past year, we have experienced price fluctuations for a number of materials including steel, copper wire, other metal commodities, refrigeration components and foam insulation. These materials are some of the key elements in the products manufactured in these segments. Wherever possible, we will implement price increases to offset the impact of changing prices. The ultimate acceptance of these price increases, if implemented, will be impacted by our affected divisions’ respective competitors and the timing of their price increases.

At the end of the period covered by this Report, the management of the Company, including the Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”)). Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2019 in ensuring that the information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's ("SEC") rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

SEC guidance permits the exclusion of an evaluation of the effectiveness of a registrant's disclosure controls and procedures as they relate to the internal control over financial reporting for an acquired business during the first year following such acquisition. As discussed in Note 2 to the consolidated financial statements contained in this Report, the Company acquired all of the outstanding stock of GS Engineering and Regional Mfg. Specialists, Inc. (now named Agile Magnetics, Inc.) during the last year. These acquisitions represent approximately 1.1% and 1.6% of the Company's consolidated continuing operations revenue for the three months ended September 30, 2019, respectively, and approximately 3.7% of the Company's consolidated assets at September 30, 2019. Management's evaluation and conclusion as to the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of September 30, 2019 excludes any evaluation of the internal control over financial reporting of GS Engineering and Agile Magnetics.

There was no change in the Company's internal control over financial reporting during the quarterly period ended September 30, 2019 that has materially affected or is reasonably likely to materially affect the Company's internal control over financial reporting.

⁽¹⁾ The Company has a Stock Buyback Program (the “Program”) which was originally announced on January 30, 1985 and most recently amended on April 26, 2016. Under the Program, the Company was authorized to repurchase up to an aggregate of $100 million of its shares. Under the program, purchases may be made from time to time on the open market, including through 10b5-1 trading plans, or through privately negotiated transactions, block transactions, or other techniques in accordance with prevailing market conditions and the requirements of the Securities and Exchange Commission. The Board’s authorization is open-ended and does not establish a timeframe for the purchases. The Company is not obligated to acquire a particular number of shares, and the program may be discontinued at any time at the Company’s discretion.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	*Preliminary Allocation June 30, 2019*			*Adjustments*		*Adjusted Preliminary Allocation September 30, 2019*
Fair value of business combination:
Cash payments	$	30,502		$	-	$	30,502
Less, cash acquired		(622	)		-		(622	)
Total	$	29,880		$	-	$	29,880

	*Preliminary Allocation June 30, 2019*			*Adjustments*			*Adjusted Preliminary Allocation September 30, 2019*
Identifiable assets acquired and liabilities assumed:
Other acquired assets	$	2,197		$	(72	)	$	2,125
Inventories		228			(75	)		153
Customer Backlog		180			-			180
Property, plant, & equipment		1,391			-			1,391
Identifiable intangible assets		8,910			-			8,910
Goodwill		17,976			147			18,123
Liabilities assumed		(1,002	)		-			(1,002	)
Total	$	29,880		$	-		$	29,880

	*Preliminary Allocation September 30, 2018*			*Adjustments*		*Final Allocation September 30, 2019*
Fair value of business combination:
Cash payments	$	39,194		$	-	$	39,194
Less, cash acquired		(1	)		-		(1	)
Total	$	39,193		$	-	$	39,193

	*Preliminary Allocation September 30, 2018*			*Adjustments*			*Final Allocation September 30, 2019*
Identifiable assets acquired and liabilities assumed:
Other acquired assets	$	1,928		$	(35	)	$	1,893
Inventories		2,506			268			2,774
Customer Backlog		-			200			200
Property, plant, & equipment		1,318			(348	)		970
Identifiable intangible assets		13,718			3,632			17,350
Goodwill		20,142			(3,708	)		16,434
Liabilities assumed		(419	)		(9	)		(428	)
Total	$	39,193		$	-		$	39,193

	*Preliminary Allocation September 30, 2018*			*Adjustments*		*Final Allocation*

Fair value of business combination:
Cash payments	$	57,284		$	-	$	57,284
Less cash acquired		(558	)		-		(558	)
Total	$	56,726		$	-	$	56,726

STANDEX INTERNATIONAL CORPORATION
Unaudited Condensed Consolidated Statements of Cash Flows

	*Three Months Ended*
Revenue by Product Line	*September 30, 2019*		*September 30, 2018*
Engraving Services		36,066		33,855
Engraving Products		2,365		2,124
Total Engraving		38,431		35,979

Electronics		46,617		51,450

Engineering Technologies Components		24,644		20,784

Hydraulics Cylinders and Systems		13,749		12,536

Refrigeration	$	55,133	$	54,545
Merchandising & Display		9,823		9,058
Pumps		8,041		8,728
Total Food Service Equipment		72,997		72,331

Total Revenue by Product Line	$	196,438	$	193,080

	*Three Months Ended*
Net sales	*September 30, 2019*		*September 30,2018*
United States	$	134,293	$	124,729
Asia Pacific		24,346		27,878
EMEA (1)		34,300		35,526
Other Americas		3,499		4,947
Total	$	196,438	$	193,080

	*Three Months Ended*
Timing of Revenue Recognition	*September 30, 2019*		*September 30, 2018*
Products and services transferred at a point in time	$	189,954	$	187,898
Products transferred over time		6,484		5,182
Net Sales	$	196,438	$	193,080

	*Balance at Beginning of Period*		*Additions*		*Deductions*		*Balance at End of Period*
Three months ended September 30, 2019
Contract assets:
Prepaid and other current assets		8,418		6,325		8,679		6,064
Contract liabilities:
Customer deposits		1,358		1,943		3,277		24

	*Three months ended*
Revenue recognized in the period from:	*September 30, 2019*
Amounts included in the contract liability balance at the beginning of the period	$	1,358

	*September 30, 2019*
	*Total*		*Level 1*		*Level 2*		*Level 3*
Assets
Marketable securities - deferred compensation plan	$	2,429	$	2,429	$	-	$	-
Interest rate swaps		14		-		14		-

Liabilities
Foreign exchange contracts	$	1,521	$	-	$	1,521	$	-
Interest rate swaps		1,678		-		1,678		-
Contingent acquisition payments (a)		7,006		-		-		7,006

	*September 30, 2019*		*June 30, 2019*
Raw materials	$	46,315	$	43,117
Work in process		28,672		28,120
Finished goods		23,372		17,408
Total	$	98,359	$	88,645

	*June 30, 2019*		*Acquisitions*		*Translation Adjustment*			*September 30, 2019*
Engraving	$	79,776	$	147	$	(312	)	$	79,611
Electronics		131,317		820		(729	)		131,408
Engineering Technologies		43,890		-		(280	)		43,610
Hydraulics		3,059		-		-			3,059
Food Service Equipment		23,461		-		-			23,461
Total	$	281,503	$	967	$	(1,321	)	$	281,149

	*Customer Relationships*			*Tradenames (Indefinite-lived)*		*Developed Technology*			*Other*			*Total*
September 30, 2019
Cost	$	73,748		$	19,849	$	55,057		$	5,475		$	154,129
Accumulated amortization		(25,803	)		-		(9,804	)		(3,668	)	$	(39,275	)
Balance, September 30, 2019	$	47,945		$	19,849	$	45,253		$	1,807		$	114,854

June 30, 2019
Cost	$	75,018		$	19,977	$	55,164		$	5,492		$	155,651
Accumulated amortization		(24,476	)		-		(8,765	)		(3,750	)		(36,991	)
Balance, June 30, 2019	$	50,542		$	19,977	$	46,399		$	1,742		$	118,660

	*September 30, 2019*			*June 30, 2019*
Balance at beginning of year	$	5,278		$	4,966
Acquisitions and other		(7	)		(85	)
Warranty expense		1,703			5,016
Warranty claims		(1,517	)		(4,619	)
Balance at end of period	$	5,457		$	5,278

	*September 30, 2019*			*June 30, 2019*
Bank credit agreements	$	190,000		$	198,800
Total funded debt		190,000			198,800
Issuance Cost		(1,105	)		(1,190	)
Total long-term debt	$	188,895		$	197,610

Fiscal Year	*September 30, 2019*
2020	$	-
2021		-
2022		-
2023		-
2024		190,000
Thereafter		-
Total Debt		190,000
Issuance cost		(1,105	)
Debt net of issuance cost	$	188,895

Effective Date	*Notional Amount*	*Fixed Interest Rate*	*Maturity*	*September 30, 2019*			*June 30, 2019*
December 19, 2015	10,000	2.01%	December 19, 2019		$ (1)			$ 3
May 24, 2017	25,000	1.88%	April 24, 2022		(287	)		(190	)
May 24, 2017	25,000	1.67%	May 24, 2020		14			49
August 6, 2018	25,000	2.83%	August 6, 2023		(1,390	)		(1,242	)
					$ (1,664)			$ (1,380)

Currency	*September 30, 2019*		*June 30, 2019*
USD		46,278		55,015
EUR		5,750		5,750
CAD		20,600		20,600

	*Asset Derivatives*
	*September 30, 2019*			*June 30, 2019*
Derivative designated	*Balance*			*Balance*
as hedging instruments	*Sheet*			*Sheet*
	*Line Item*	*Fair Value*		*Line Item*	*Fair Value*
Interest rate swaps	Other Assets	$	14	Other Assets	$	52
Foreign exchange contracts	Other Assets		-	Other Assets		-
		$	14		$	52

	*Liability Derivatives*
	*September 30, 2019*			*June 30, 2019*
Derivative designated	*Balance*			*Balance*
as hedging instruments	*Sheet*			*Sheet*
	*Line Item*	*Fair Value*		*Line Item*	*Fair Value*
Interest rate swaps	Accrued Liabilities	$	1,679	Accrued Liabilities	$	1,432
Foreign exchange contracts	Accrued Liabilities		1,521	Accrued Liabilities		3,052
		$	3,200		$	4,484

Details about Accumulated							*Affected line item*
Other Comprehensive	*Three Months Ended*						*in the Unaudited*
Income (Loss) Components	*September 30,*						*Condensed Statements*
	*2019*			*2018*			*of Operations*
Interest rate swaps	$	(30	)	$	(61	)	Interest expense
Foreign exchange contracts		(1,171	)		(598	)	Interest expense
	$	(1,201	)	$	(659	)

	*U.S. Plans*						*Non-U.S. Plans*
	*Three Months Ended*						*Three Months Ended*
	*September 30,*						*September 30,*
	*2019*			*2018*			*2019*			*2018*
Service cost	$	1		$	1		$	10		$	9
Interest cost		2,271			2,586			205			254
Expected return on plan assets		(3,288	)		(3,385	)		(211	)		(228	)
Recognized net actuarial loss		1,275			1,030			158			86
Net periodic benefit cost	$	259		$	232		$	162		$	121


		*Three Months Ended*				*Remaining*
		*September 30,*				*Contributions*
Contributions to defined benefit plans	*2019*		*2018*		*Fiscal 2020*
United States, funded plan	$	-	$	-	$	4,348
United States, unfunded plan		56		56		160
United Kingdom		184		195		185
Germany, unfunded plan		-		-		254
Ireland		-		-		62
	$	240	$	251	$	5,009

	*Three Months Ended September 30,*
	*Net Sales*				*Income from Operations*
	*2019*		*2018*		*2019*			*2018*
Segment:
Engraving	$	38,431	$	35,979	$	6,537		$	7,547
Electronics		46,617		51,450		8,099			12,787
Engineering Technologies		24,644		20,784		3,359			1,775
Hydraulics		13,749		12,536		2,527			1,583
Food Service Equipment		72,997		72,331		8,372			6,668
Corporate		-		-		(9,285	)		(6,580	)
Restructuring costs		-		-		(1,479	)		(447	)
Acquisition-related costs		-		-		(734	)		(688	)
Other operating (income) expense, net		-		-		1,045			-
Sub-total	$	196,438	$	193,080	$	18,441		$	22,645
Interest expense						(2,121	)		(2,244	)
Other non-operating income						916			(201	)
Income from continuing operations before income taxes					$	17,236		$	20,200

	*Three Months Ended*
	*September 30, 2019*
Fiscal 2020	*Involuntary Employee Severance and Benefit Costs*		*Other*		*Total*
Current year initiatives	$	1,000	$	479	$	1,479
Prior year initiatives		-		-	$	-
	$	1,000	$	479	$	1,479

	*Three Months Ended*
	*September 30, 2018*
Fiscal 2019	*Involuntary Employee Severance and Benefit Costs*		*Other*		*Total*
Current year initiatives	$	-	$	350	$	350
Prior year initiatives		85		12		97
	$	85	$	362	$	447

Current Year Initiatives	*Involuntary Employee Severance and Benefit Costs*			*Other*			Total
Restructuring liabilities at June 30, 2019	$	-		$	-		$	-
Additions and adjustments		1,000			479			1,479
Payments		(1,000	)		(479	)		(1,479	)
Restructuring liabilities at September 30, 2019	$	-		$	-		$	-

Prior Year Initiatives	*Involuntary Employee Severance and Benefit Costs*			*Other*		*Total*
Restructuring liabilities at June 30, 2019	$	147		$	5	$	152
Additions and adjustments		-			-		-
Payments		(122	)		-		(122	)
Restructuring liabilities at September 30, 2019	$	25		$	5	$	30

	*September 30, 2019*
Assets
ROU Assets (other assets)	$	42,079

Liabilities
Current (accrued expense)	$	7,712
Other non-current liability		34,192
Total lease liability	$	41,904

	*Three Months Ended*
	*September 30, 2019*
Operating lease cost1	$	2,913

	*Operating Leases*
Remainder of 2020	$	6,758
2021		7,187
2022		5,779
2023		4,027
2024		3,593
After 2024		20,083
Less: Interest		(5,523	)
Present value of lease Liabilities	$	41,904

Lease Term and Discount Rate	*September 30, 2019*
Weighted average remaining lease term (years)
Operating leases		10.54
Weighted average discount rate (percentage)
Operating leases		2.7	%

	*Three Months Ended*
	*September 30, 2019*
Operating cash flows from operating leases	$	2,551
Total cash paid for amounts included in the measurement of lease liabilities		2,551