-----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, FRDkHlPI6+KLOHk3AwMkxLtnu1wqXymfjy9R0QOUSZQgmB/Kxx+v1ZqzDQNkCHyu TRwi4vT1FD9wCx/qV2SfGQ== 0000093676-97-000007.txt : 19970912 0000093676-97-000007.hdr.sgml : 19970912 ACCESSION NUMBER: 0000093676-97-000007 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970628 FILED AS OF DATE: 19970905 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: STARRETT L S CO CENTRAL INDEX KEY: 0000093676 STANDARD INDUSTRIAL CLASSIFICATION: CUTLERY, HANDTOOLS & GENERAL HARDWARE [3420] IRS NUMBER: 042756926 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-00367 FILM NUMBER: 97676021 BUSINESS ADDRESS: STREET 1: 121 CRESCENT ST CITY: ATHOL STATE: MA ZIP: 01331 BUSINESS PHONE: 5082493551 10-K 1 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 28, 1997 Commission File No. 1- 367 THE L.S. STARRETT COMPANY (Exact name of registrant as specified in its charter) MASSACHUSETTS 04-1866480 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 121 CRESCENT STREET, ATHOL, MASSACHUSETTS 01331 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 508-249-3551 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange on Title of each class which registered Class A Common - $1.00 Per Share Par Value New York Stock Exchange Class B Common - $1.00 Per Share Par Value Not applicable 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. Yes X No The Registrant had 5,037,316 and 1,899,962 shares, respectively, of its $1.00 par value Class A and B common stock outstanding on July 25, 1997. On that date, the aggregate market value of the common stock held by nonaffiliates was approximately $210,000,000. The exhibit index is located on page 23. Documents incorporated by reference Proxy Statement dated August 15, 1997 - Part III - -1- PART I Item I - Business The Company was founded in 1880 and incorporated in 1929 and is engaged in the business of manufacturing industrial, professional, and consumer products. The total number of different items made and sold by the Company exceeds 5,000. Among the items produced are precision tools, tape measures, levels, electronic gages, dial indicators, gage blocks, digital readout measuring tools, granite surface plates, optical measuring projectors, coordinate measuring machines, vises, M1 lubricant, hacksaw blades, hole saws, band saw blades, jig saw blades, reciprocating saw blades, and precision ground flat stock. Much of the Company's production is concentrated in hand measuring tools (such as micrometers, steel rules, combination squares and many other items for the individual craftsman) and precision instruments (such as vernier calipers, height gages, depth gages and measuring instruments that manufacturing companies buy for the use of their employees). These tools and instruments are sold throughout the United States and Canada and over 100 foreign countries, primarily through distributors. By far the largest consumer of these products is the metalworking industry, but other important consumers are automotive, aviation, marine and farm equipment shops, do-it-yourselfers and tradesmen such as builders, carpenters, plumbers and electricians. Most of the Company's products are made from steel purchased from steel mills. Forgings, castings, and a few small finished parts are purchased from other manufacturers. Raw materials have always been readily available to the Company and, in most cases, the Company does not rely on sole sources. In the event of unavailability of purchased materials, the Company would be adversely affected, as would its competitors. Similarly, the ability of the Company to pass along raw material price increases is dependent on the competitive situation and cannot be assured. At June 28, 1997, the Company had 2,740 employees, approximately 75% of whom are domestic. None of the Company's operations are subject to collective bargaining agreements. In general, the Company considers its relations with its employees to be excellent. Because of various stock ownership plans, Company domestic personnel hold a large share of Company stock and this dual role of owner-employee has been good for morale. The Company is one of the largest producers of mechanics' hand measuring tools and precision instruments. In the United States, there are three other major companies and numerous small competitors in the field, including direct foreign competitors. As a result, the industry is highly competitive. During the fiscal year ended June 28, 1997, there were no material changes in the Company's competitive position. During recent years, changes in the volume of sales of the Company have, in general, corresponded with changes throughout the industry. In saws and precision ground flat stock, the Company in the United States competes with many manufacturers. The Company competes principally through the high quality of its products and the service it provides its customers. Sales order backlog of the Company at any point in time is negligible. The operations of the Company's foreign subsidiaries are consolidated in its financial statements. The subsidiaries located in Brazil and Scotland are - -2- actively engaged in the manufacture of hacksaw and band saw blades and a limited line of precision tools and measuring tapes. The Company expects its foreign subsidiaries to continue to play a significant role in its overall operations. A summary of the Company's foreign operations is contained in the footnotes to the Company's 1997 financial statements found in item 8 of this Form 10K and is hereby incorporated by reference. The Company generally fills orders from finished goods inventories on hand; total inventories amounted to approximately $75,846,000 at June 28, 1997, and $70,296,000 at June 29, 1996. The Company uses the last-in, first-out (LIFO) method of valuing most inventories, which results in more realistic operating costs and profits. Inventory amounts are approximately $24,790,000 and $25,852,000 lower, respectively, than if determined on a first-in, first-out (FIFO) basis. The Company does apply for patent protection on new inventions and presently owns a number of patents. Its patents are considered important in the operation of the business, but no single patent is of material importance when viewed from the standpoint of its overall business. The Company relies on its continuing product research and development efforts, with less dependence on its present patent position. It has for many years maintained engineers and supporting personnel engaged in research, product development, and related activities. The expenditures for these activities during fiscal years 1997, 1996 and 1995 were approximately $3,073,000, $3,472,000 and $3,769,000, respectively, all of which was expensed in the Company's financial statements. The Company uses trademarks with respect to its products. All of its important trademarks are registered. Compliance with federal, state and local provisions that have been enacted or adopted regulating the discharge of materials into the environment or otherwise relating to protection of the environment is not expected to have a material effect on the capital expenditures, earnings and competitive position of the Company. Specifically, the Company has taken steps to reduce and control water discharges and air emissions. The Company's business is to some extent seasonal, with sales and earnings generally at the lowest level during the first quarter of the fiscal year. Item 2 - Properties The Company's principal plant is located in Athol, Massachusetts, on about 15 acres of Company-owned land. The plant consists of 25 buildings, mostly of brick construction of varying dates, with approximately 535,000 square feet of production and storage area. The Webber Gage Division, Cleveland, Ohio, owns and occupies two buildings containing approximately 50,000 square feet. The Company-owned facility in Mt. Airy, North Carolina has approximately 234,000 square feet. It is occupied by the Company's Saw Division, Granite Surface Plate Division, Coordinate Measuring Machine Division, Optical Comparator Division and Ground Flat Stock Division. This plant is subject to a mortgage collateralizing a $2,100,000 Industrial Revenue Bond. The Company's Advanced Technology Division, located in Gardner, Massachusetts, occupies about 9,000 square feet of leased facilities. - -3- The Company's Evans Rule Division, located in North Charleston, South Carolina, owns and occupies a 136,000 square foot building. In addition, this division leases 45,000 square feet of manufacturing space located in Mayaguez, Puerto Rico. The Company's Exact Level Division is located in Alum Bank, Pennsylvania and owns and occupies a 50,000 square foot building. The Company's Brazil subsidiary occupies several buildings totaling 209,000 square feet. The Company's Scotland subsidiary occupies a 187,000 square foot building and also a 33,000 square foot building in Skipton, England, where its wholly owned subsidiary manufactures optical measuring projectors. A subsidiary in Mississauga, Canada occupies a 25,000 square foot building. These facilities are all owned. In addition, the Company owns and operates warehouses/sales offices in Atlanta, Georgia; Glendale, Arizona; and Elmhurst, Illinois. The Company's Buena Park, California warehouse operations were moved to Glendale, Arizona in fiscal 1995 and the Company's Farmington Hills, Michigan sales office was closed at the end of fiscal 1996. In its opinion, all of the Company's property, plant and equipment is in good operating condition, well maintained and adequate for its needs. Item 3 - Legal Proceedings The Company is not involved in any material pending legal proceedings. Item 4 - Submission of Matters to a Vote of Security Holders No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year ended June 28, 1997. Executive Officers of the Registrant The information under the caption Executive Officers of the Registrant in item 10 of this Form 10K is hereby incorporated by reference. PART II Item 5 - Market for the Registrant's Common Equity and Related Stockholder Matters The Company's Class A common stock is traded on the New York Stock Exchange. Quarterly dividend and high/low closing market price information is presented in the table below. The Registrant's Class B common stock is generally nontransferable, except to lineal descendants and thus has no established trading market, but it can be converted into Class A common stock at any time. The Class B common stock was issued on October 5, 1988, and the Registrant has paid the same dividends thereon as have been paid on the Class A common stock - -4- since that date. At July 25, 1997, there were 2,404 registered holders of Class A common stock and 1,863 registered holders of Class B common stock. Quarter ended Dividends High Low September 1995 0.18 $ 23.50 $ 22.00 December 1995 0.18 25.88 22.50 March 1996 0.18 25.38 23.50 June 1996 0.18 26.38 24.13 September 1996 0.18 25.75 22.75 December 1996 0.18 29.00 23.75 March 1997 0.18 31.25 27.50 June 1997 0.18 32.00 28.13 Item 6 - Selected Financial Data Years ended in June ($000 except per share data) 1997 1996 1995 1994 1993 Net sales $250,503 $235,467 $214,215 $180,178 $174,801 Net earnings 9,859 17,331 13,487 9,041 8,743 Earnings per share 2.84 2.45 1.91 1.28 1.25 Long-term debt 6,500 7,100 8,700 10,843 14,527 Total assets 238,746 227,312 213,940 198,032 194,436 Dividends per share 0.72 0.72 0.69 0.68 0.68 Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS SALES Sales increased 6% in 1997 following a 10% increase in 1996. Domestic sales accounted for almost all of the increase in the current year because of continued good economic conditions in our industry. Foreign sales were flat. Our foreign operations in Brazil and Scotland operate in very competitive marketing environments and continue to be faced with dealing with the effects of exchange rate changes. The strong pound adversely affected export business from Scotland and the weakening of Brazil's currency caused the local currency sales increase to be reduced by eight percentage points after conversion to U.S. dollars. The 1996 increase in total company sales also came primarily from domestic operations, reflecting better U.S. economic conditions as well as some added distribution channels. Foreign sales increased only modestly last year as Brazil struggled with the effects of high real interest rates. EARNINGS BEFORE TAXES Pretax earnings are up 15% for the year. This follows a 16% increase in 1996. Cost of sales was about 68% in 1997, 68.5% in 1996, and 70% in 1995. The improvement in these rates is consistent with the manufacturing effi- ciencies and increased overhead absorption realized because of increased production levels, particularly in domestic operations where pretax earnings are up 15% this year and were up 59% last year. On the foreign side, - -5- significant reductions in selling and general wages in Brazil enabled our foreign pretax earnings to increase 14% despite level sales. In 1996, just the opposite occurred when mandated wage increases in Brazil, during a period when it was difficult to raise prices, caused a decline in our pretax foreign profit despite a slight increase in sales volume. INCOME TAXES The effective tax rate is 34% in 1997 compared to 34% in 1996 and 40% in 1995. Tax-exempt interest on short-term investments in municipal bonds, Puerto Rico tax incentives and, until 1996, dividends on shares of the Company's stock owned by the ESOP have always contributed to an overall effective tax rate that is slightly lower than the combined U.S. state and federal statutory rate. However, as taxable income has increased in the past several years, the effect of these items has diminished. In addition, the overall effective rate has been favorably impacted by lower rates in Brazil starting in 1996. The relatively high effective tax rate in 1995 came about because of the monetary plan instituted in Brazil at that time that created high local taxable income until pre-plan inventories were used up, which has largely happened now. Although the statutory rate in Brazil is now comparable to that in the U.S., nonrecurring permanent differences between book and taxable income for dividends paid to the U.S. in 1997 and local monetary correction adjustments in 1996 reduced their effective tax rate substantially when reported in U.S. dollars. NET EARNINGS As a result of the above, net earnings were up 15% in fiscal 1997 when compared to fiscal 1996 and 1996 net earnings were up 28% when compared to 1995. FOREIGN CURRENCY MANAGEMENT The Company does not engage in regular hedging activities to minimize the impact of foreign currency fluctuations. Net monetary assets in Scotland and Brazil are approximately $10 million and $4 million, respectively. Although inflation in Brazil has decreased to 10% from over 2,000% in 1994 when their current economic plan was initiated, the Brazilian economy continues to be considered hyperinflationary for financial reporting purposes. The Company anticipates that, if inflation continues at these relatively low levels in 1998, the economy may cease to be considered hyperinflationary. LIQUIDITY AND CAPITAL RESOURCES Years ended in June ($000) 1997 1996 1995 Cash provided by operations $23,516 $15,171 $18,991 Cash used in investing activities (13,310) (10,744) (11,322) Cash used in financing activities (8,563) (5,588) (7,363) Effect of translation rate changes on cash (7) (11) (95) Increase (decrease) in cash $ 1,636 $(1,172) $ 211 Cash flows from operating activities increased $8.3 million in 1997 due mainly to the increase in net earnings of $2.5 million, and changes in the components of working capital of $7.5 million offset by increased levels of prepaid pension costs of $1.8 million. The major increase in working capital - -6- resulted from increased inventories of $4.8 million to support increased levels of sales. Although 1996 had a similar increase in net earnings, they were largely offset by inventory increases resulting in a small decrease in cash provided by operations. The Company's investing activities consist mainly of expenditures for property, plant and equipment and the investment of cash not immediately needed for operations. Plant expenditures of $14.0, $11.6 and $9.8 million in 1997, 1996 and 1995 are typical and the Company anticipates similar levels of capital expenditures in the near term. 1997 additions were a little higher than recent averages because of increases in plant square footage at several locations. Cash flows from financing activities are primarily the payment of dividends, which tend to be quite steady from year to year. The Company requires little debt to finance day to day operations and the proceeds from the sale of stock under the various stock plans tend to be used to purchase treasury shares. Treasury share purchases were $7.1 million in 1997 compared to $4.7 million in 1996 and $3.1 million in 1995. The Company maintains sufficient liquidity and has the resources to fund its operations under current business conditions. The Company maintains two lines of credit as discussed in the notes to the financial statements. The Company has not made significant borrowings under these lines during the past three years. The lines were used primarily to finance acquisitions. The Company continues to maintain a strong financial position with a working capital ratio of 5.3 to 1 as of June 28, 1997 and 4.8 to 1 as of June 29, 1996. Cash not immediately required for working capital is invested in high grade money market instruments with maturities generally less than one year (however, see notes to financial statements regarding investments in Puerto Rico). In certain cases, cash and short-term investment balances of foreign subsidiaries may not be repatriated without adverse tax consequences and may be subject to regulatory restriction. NEW ACCOUNTING PRONOUNCEMENTS The Company will be required to adopt two new accounting standards in 1998 as discussed in the notes to the financial statements. SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1996 This Item, as well as other portions of this document and the 1997 Annual Report, including the Chairman's letter to stockholders, include forward- looking statements about the Company's business, sales, expenditures, foreign operations, debt service, liquidity and capital resources, and other operating and capital requirements. In addition, forward-looking statements may be included in future Company documents and in oral statements by Company representatives to security analysts and investors. The Company is subject to risks that could cause actual events to vary materially from such forward- looking statements, including the following risk factors: Risks Related to Foreign Operations: For the period ended June 28, 1997, approximately 30% of the Company's sales were derived from foreign operations and, as of June 28, 1997, approximately 31% of the Company's net assets were located outside the United States. Foreign operations are subject to special risks that can materially affect the sales, profits, cash flows, and financial - -7- position of the Company, including taxes and other restrictions on distributions and payments, currency exchange rate fluctuations, inflation, minimum capital requirements, and exchange controls. In particular, the Company's Brazilian operations, which constitute over half of the Company's revenues from foreign operations, can be very volatile, changing from year to year due to the political situation and high inflation economy. As a result, the future performance of the Brazilian operations is inherently unpredictable. Risks Related to Cyclical Nature of the Industry: The market for the Company's products is subject to general economic conditions, including the level of capital spending by industrial companies. As such, recessionary forces decrease demand for the Company's products and adversely affect performance. Risks Related to Competition: The Company's business is subject to direct and indirect competition from both domestic and foreign firms. In particular, low-wage foreign sources have created severe competitive pricing pressures. Under certain circumstances, including significant changes in U.S. and foreign currency relationships, such pricing pressures might reduce unit sales and/or adversely affect the Company's margins. Item 8 - Financial Statements and Supplementary Data Contents: Page Report of Independent Auditors 9 Consolidated Statements of Earnings and Cash Flows 10 Consolidated Balance Sheets 11 Consolidated Statements of Stockholders' Equity 12 Notes to Consolidated Financial Statements 13-20 - -8- REPORT OF INDEPENDENT AUDITORS To the Stockholders and Directors of The L.S. Starrett Company We have audited the accompanying consolidated balance sheets of The L.S. Starrett Company and subsidiaries as of June 28, 1997 and June 29, 1996, and the related consolidated statements of earnings, cash flows and changes in stockholders' equity for each of the three years in the period ended June 28, 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. 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 the Company and subsidiaries as of June 28, 1997 and June 29, 1996, and the results of their operations and their cash flows for each of the three fiscal years in the period ended June 28, 1997, in conformity with generally accepted accounting principles. S/DELOITTE & TOUCHE LLP Boston, Massachusetts August 1, 1997 - -9- THE L.S. STARRETT COMPANY Consolidated Statements of Earnings and Cash Flows For the years ended in June (in thousands of dollars except per share data) 1997 1996 1995 EARNINGS Net sales $250,503 $235,467 $214,215 Cost of goods sold (170,035) (161,238) (149,871) Selling, general and administrative expense (51,941) (49,567) (43,480) Other income and expense 1,532 1,490 1,648 Earnings before income taxes 30,059 26,152 22,512 Income taxes 10,200 8,821 9,025 Net earnings $ 19,859 $ 17,331 $ 13,487 Earnings per share $ 2.84 $ 2.45 $ 1.91 CASH FLOWS Cash flows from operating activities: Net earnings $ 19,859 $ 17,331 $ 13,487 Noncash expenses: Depreciation and amortization 9,799 9,268 9,098 Deferred taxes (439) 10 1,130 Unrealized translation losses 134 99 596 Working capital changes: Receivables 1,619 564 (10,367) Inventories (4,821) (14,289) (2,554) Other current assets and liabilities (1,962) 1,040 7,619 Prepaid pension and other (673) 1,148 (18) Net cash from operating activities 23,516 15,171 18,991 Cash flows from investing activities: Additions to plant and equipment (13,999) (11,609) (9,795) Decrease(Increase)in short-term investment 689 865 (1,527) Net cash used in investing activities (13,310) (10,744) (11,322) Cash flows from financing activities: Short-term borrowing, net 411 2,599 (983) Debt repayments (600) (1,600) (1,600) Common stock issued 3,691 3,130 3,175 Treasury shares purchased (7,054) (4,656) (3,061) Dividends (5,011) (5,061) (4,894) Net cash used in financing activities (8,563) (5,588) (7,363) Effect of translation rate changes on cash (7) (11) (95) Net increase (decrease) in cash 1,636 (1,172) 211 Cash beginning of year 1,417 2,589 2,378 Cash end of year $ 3,053 $ 1,417 $ 2,589 Supplemental cash flow information: Interest paid $ 839 $ 870 $ 815 Taxes paid $ 11,572 $ 9,289 $ 5,200 See Notes to Consolidated Financial Statements - -10- THE L.S. STARRETT COMPANY Consolidated Balance Sheets (in thousands of dollars) June 28 June 29 ASSETS 1997 1996 Current assets: Cash $ 3,053 $ 1,417 Short-term investments 27,389 27,794 Accounts receivable (less allowance for doubtful accounts of $1,877,000 and $1,284,000) 36,625 37,745 Inventories 75,846 70,296 Prepaid expenses and other current assets 4,682 4,746 Total current assets 147,595 141,998 Property, plant and equipment, at cost: Land 1,945 1,946 Buildings (less accumulated depreciation of $16,447,000 and $15,467,000) 23,499 21,206 Machinery and equipment (less accumulated depreciation of $44,328,000 and $40,368,000) 38,657 36,450 Total property, plant and equipment 64,101 59,602 Cost in excess of net assets acquired (less accumu- lated amortization of $3,514,000 and $3,117,000) 7,772 8,115 Prepaid pension cost 18,928 17,246 Other assets 350 351 $238,746 $227,312 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable and current maturities $ 3,610 $ 3,199 Accounts payable and accrued expenses 13,205 14,432 Accrued salaries and wages 6,628 6,149 Taxes payable 3,927 5,545 Employee deposits for stock purchase plan 434 528 Total current liabilities 27,804 29,853 Deferred income taxes 8,247 8,001 Long-term debt 6,500 7,100 Accumulated postretirement benefit obligation 15,730 15,073 Stockholders' equity: Class A common stock $1 par (10,000,000 shrs. auth.; 5,038,013 outstanding in 1997, excluding 995,943 held in treasury; 5,051,215 outstanding in 1996, excluding 895,516 held in treasury 5,038 5,051 Class B Common Stock $1 par (10,000,000 shrs. auth.; 1,905,606 outstanding in 1997, excluding 260,283 held in treasury; 2,004,174 outstanding in 1996, excluding 220,572 held in treasury 1,906 2,004 Additional paid-in capital 38,730 36,650 Retained earnings reinvested and employed in the business 137,788 128,272 Foreign currency translation adjustment (3,155) (4,716) Other equity adjustments 158 24 Total stockholders' equity 180,465 167,285 $238,746 $227,312 See Notes to Consolidated Financial Statements - -11- THE L.S. STARRETT COMPANY Consolidated Statements of Stockholders' Equity For the years ended in June, 1995 through 1997 (in thousands) Common Addi- Equity Adjustments Stock Out- tional Currency standing Paid-in Retained Trans- ($1 Par) Capital Earnings lation Other Total Balance, 6/25/94 $ 7,107 $32,272 $113,147 $(5,335) $ (543) $146,648 Net earnings 13,487 13,487 Dividends ($0.69) (4,894) (4,894) Treasury shares: Purchased (139) (688) (2,234) (3,061) Issued 121 2,541 2,662 Options exercised 28 485 513 ESOP loan repayments 543 543 Unrealized net losses on short-term investments (257) (257) Translation gain,net 1,188 1,188 Balance, 6/24/95 7,117 34,610 119,506 (4,147) (257) 156,829 Net earnings 17,331 17,331 Dividends ($0.72) (5,061) (5,061) Treasury shares: Purchased (197) (955) (3,504) (4,656) Issued 120 2,730 2,850 Options exercised 15 265 280 Unrealized net gains on short-term investments 281 281 Translation loss,net (569) (569) Balance, 6/29/96 7,055 36,650 128,272 (4,716) 24 167,285 Net earnings 19,859 19,859 Dividends ($0.72) (5,011) (5,011) Treasury shares: Purchased (255) (1,467) (5,332) (7,054) Issued 116 3,057 3,173 Options exercised 28 490 518 Unrealized net gains on short-term investments 134 134 Translation gain,net 1,561 1,561 Balance, 6/28/97 $ 6,944 $38,730 $137,788 $(3,155) $ 158 $180,465 See Notes to Consolidated Financial Statements - -12- THE L. S. STARRETT COMPANY Notes to Consolidated Financial Statements SIGNIFICANT ACCOUNTING POLICIES Principles of consolidation: The consolidated financial statements include the accounts of The L. S. Starrett Company and subsidiaries, a manu- facturer of industrial, professional and consumer products. All subsidiaries are wholly-owned and all significant intercompany items have been eliminated. The Company's fiscal year ends on the last Saturday in June. Results for fiscal 1996 include 53 weeks compared to 52 weeks in 1997 and 1995. The fiscal years of the Company's subsidiaries in Scotland and Brazil end in May. Brazil's fiscal year was changed this year from April to May and consequently the current year includes 13 months of operations. The extra week in fiscal 1996 and the extra month of Brazil's operations in 1997 were not significant. During June 1997 the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income," and SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," which will be applicable for the Company in fiscal 1998. Management has not yet assessed the impact of implementation. Fair market value of financial instruments: The Company's financial instruments consist primarily of current assets, current liabilities, and long-term debt. Current assets, except inventories (see Inventories) and except short-term investments, and current liabilities are stated at cost, which approximates fair market value; long-term debts, which are at current market interest rates, also approximate fair market value. The Company does not purchase derivative financial instruments. Short-term investments: Short-term investments consist primarily of marketable securities, including treasury bills, certificates of deposit and municipal securities. The Company considers all its investments "available for sale." As such, these investments are carried at market, which approximates cost, with unrealized temporary gains and losses recorded as a component of stockholders' equity. Most investments have maturities of less than one year. Included in investments at June 28, 1997 is $7.8 million of liquid AAA rated Puerto Rico debt obligations. These investments were made for the purpose of reducing repatriation taxes and have maturities of up to ten years. Long-lived assets: Buildings and equipment are depreciated using straight-line and accelerated methods over estimated useful lives as follows: buildings 15 to 50 years, building improvements 10 to 40 years, machinery and equipment 5 to 12 years, motor vehicles 3 to 5 years. Costs in excess of net assets acquired are being amortized on a straight-line basis over 10 to 40 years. Inventories: Inventories are stated at the lower of cost or market. For approximately 80% of all inventories, cost is determined on a last-in, first-out (LIFO) basis. For all other inventories, cost is determined on a first-in, first-out (FIFO) basis. LIFO inventories are $58,358,000 and $54,922,000 at the end of 1997 and 1996, respectively, such amounts being - -13- $24,790,000 and $25,852,000 less than if determined on a FIFO basis. Total inventories at year end are as follows (in thousands): Goods in Pro- cess and Raw Materials Finished Goods Finished Parts and Supplies Total 1997 $32,374 $26,698 $16,774 $75,846 1996 27,692 22,858 19,746 70,296 Income taxes: Deferred tax expense results from differences in the timing of certain transactions for financial reporting and tax purposes. Deferred taxes have not been recorded on undistributed earnings of foreign subsidiaries (approximately $50,000,000 at June 1997) or the related unrealized translation adjustments because such amounts are considered permanently invested and, if remitted, the resulting taxes would be offset by foreign tax credits. Research and development: Research and development costs were expensed as follows: $3,073,000 in 1997, $3,472,000 in 1996 and $3,769,000 in 1995. Earnings per share: Earnings per share are computed using the weighted average number of shares and common stock equivalents (stock options) out- standing during the year. Statement of Financial Accounting Standards No. 128, "Earnings Per Share," effective for the Company for fiscal 1998, provides new standards for computing and presenting earnings per share (EPS). It replaces primary EPS with basic EPS, and requires dual pre- sentation of basic and diluted EPS. For the year ended June 28,1997, the pro forma basic EPS and the pro forma diluted EPS would both be $2.84. Translation of foreign currencies: Assets and liabilities in nonhyperinfla- tionary economies are translated at exchange rates in effect on reporting dates, and income and expenses are translated at rates in effect on transaction dates. The resulting differences due to changing exchange rates are charged or credited directly to the "foreign currency translation adjustment" account included as part of stockholders' equity. For the Company's subsidiary in Brazil (a hyperinflationary economy), the translation method is the same except that inventories and plant and the related charges to cost of sales and depreciation expense are translated at rates in effect at the time the assets were purchased, and the resulting translation gains and losses are included in the determination of net earnings. Use of accounting estimates: The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of sales and expenses during the reporting period. Amounts ultimately realized could differ from those estimates. - -14- OTHER INCOME AND EXPENSE Other income and expense consists of the following (in thousands): 1997 1996 1995 Interest income $ 2,118 $ 1,889 $ 2,037 Interest expense and commitment fees (784) (917) (813) Realized and unrealized translation gains and losses (225) (140) 192 Other 423 658 232 $ 1,532 $ 1,490 $ 1,648 INCOME TAXES The provision for income taxes consists of the following (in thousands): 1997 1996 1995 Current: Federal $ 6,146 $ 5,058 $ 2,380 Foreign 2,926 2,385 4,603 State 1,567 1,368 912 Deferred (439) 10 1,130 $10,200 $ 8,821 $ 9,025 Pretax domestic income was $22,096,000, $19,169,000 and $12,022,000 in 1997, 1996 and 1995, respectively. A reconciliation of expected tax expense at the U.S. statutory rate to actual tax expense is as follows (in thousands): 1997 1996 1995 Expected tax expense $10,520 $ 9,153 $ 7,654 Increase (decrease) from: State and Puerto Rico taxes, net of federal benefit 178 219 (425) Foreign taxes, net of federal credits (476) (437) 1,815 Nontaxable investment income (115) (151) (191) Other 93 37 172 Actual tax expense $10,200 $ 8,821 $ 9,025 Deferred income taxes at year end are attributable to the following (in thousands): 1997 1996 Deferred assets: Retiree medical benefits $(6,425) $(6,109) Inventories (1,799) (1,111) Foreign loss carryforwards (145) Other (1,431) (1,169) (9,655) (8,534) Deferred liabilities: Prepaid pension 7,771 7,056 Other employee benefits 511 561 Depreciation 6,164 6,075 Other 761 1,004 15,207 14,696 Current portion 2,695 1,839 $ 8,247 $ 8,001 EMPLOYEE BENEFIT PLANS The Company has several pension plans, both defined benefit and defined contribution, covering all of its domestic and approximately half of its nondomestic employees. In addition, certain domestic employees participate in - -15- an Employee Stock Ownership Plan (ESOP). Ninety percent of the actuarially determined annuity value of their ESOP shares is used to offset retirement benefits otherwise due under the domestic noncontributory defined benefit pension plan. The total cost (benefit) of all such plans for 1997, 1996 and 1995, considering the combined projected benefits and funds of the ESOP as well as the other plans, was $(823,000), $(87,000) and $(152,000), respectively. Under both domestic and foreign defined benefit plans, benefits are based on years of service and final average earnings. Plan assets, including those of the ESOP, consist primarily of investment grade debt obligations, marketable equity securities and approximately 1,050,000 shares of the Company's common stock. The cost of these defined benefit plans, including the ESOP, consists of the following components (in thousands): 1997 1996 1995 Cost of benefits earned during current year $ 2,376 $ 2,238 $ 2,028 Interest on projected benefit obligation 5,425 3,330 3,194 Actual return on assets (17,834) (12,349) (8,943) Net amortization and deferral 8,291 5,830 2,853 $(1,742) $ (951) $ (868) The plans' funded status at year end is as follows (in thousands): 1997 1996 Vested accumulated benefit obligation $72,500 $63,175 Nonvested accumulated benefit obligation 164 65 Effect of future compensation increases 8,265 8,026 Projected benefit obligation 80,929 71,266 Plan assets at fair market value 129,292 112,779 Funded status 48,363 41,513 Unrecognized portion of net assets 29,435 24,267 Prepaid pension cost $18,928 $17,246 The assumed discount rate and rate of increase in compensation used in determining the projected benefit obligation are 7.5% and 5%, respectively, for the domestic plan and 8.5% and 6.5% for the foreign plan. The assumed long-term rate of return on plan assets is 7.5% for the domestic plan and 8.5% for the foreign plan. Less than 15% of the assets and obligations reflected in the table above relate to the foreign plan. The Company provides certain medical and life insurance benefits for most retired employees in the United States. The status of these plans at year end is as follows (in thousands): 1997 1996 Accumulated postretirement benefit obligation: Retirees $ 6,506 $ 6,556 Active plan participants 9,614 9,752 Unrecognized loss (390) (1,235) Accumulated postretirement benefit obligation accrued $15,730 $15,073 - -16- Postretirement benefit expense consists of the following (in thousands): 1997 1996 1995 Service cost $ 494 $ 490 $ 425 Interest cost 1,126 1,096 1,054 Amortization cost 27 38 $ 1,620 $ 1,613 $ 1,517 The Company's portion of the annual rate of increase in the per capita cost of covered benefits is assumed to be 2%. A one percentage point increase in the assumed cost escalation rate would increase the accumulated benefit obligation by $1.2 million and the annual expense by $150,000. A discount rate of 7.5% was used in determining the accumulated benefit obligation. DEBT At year end, long-term debt consists of the following (in thousands): 1997 1996 Industrial revenue bond $ 2,100 $ 2,700 Revolving credit agreement 5,000 5,000 7,100 7,700 Less current maturities 600 600 $ 6,500 $ 7,100 The industrial revenue bond is collateralized by the Company's plant in Mt. Airy, North Carolina. Principal is payable in semiannual installments of $300,000. Interest is at 92% of the 90 day CD rate (5.2% at June 28, 1997). The revolving credit agreement consists of a $10,000,000 line due March 30, 1998 under which there were no borrowings at June 28, 1997 and a $10,000,000 line due March 30, 2000. The credit agreement is with two banks and requires commitment and other fees of .3%. Interest rates vary, but approximate LIBOR plus .33% (5.9% as of June 28, 1997). All debt agreements contain financial covenants, the most restrictive of which is that at June 28, 1997 the Company must have tangible net worth of $141,000,000. Annual principal payments on debt are required as follows: 1998 - 1999 $600,000; 2000 $5,600,000; 2001 $300,000. Current notes payable carry interest at a rate of LIBOR plus 4%. COMMON STOCK Class B Common Stock is identical to Class A except that it has 10 votes per share, is generally nontransferable except to lineal descendants, cannot receive more dividends than Class A, and can be converted to Class A at any time. Class A Common Stock is entitled to elect 25% of the directors to be elected at each meeting with the remaining 75% being elected by Class A and Class B voting together. In addition, the Company has a stockholder rights plan, adopted in 1990, to protect stockholders from attempts to acquire the Company on unfavorable terms not approved by the Board of Directors. Under certain circumstances, the plan entitles each Class A or Class B share to additional shares of the Company or an acquiring company, as defined, at a 50% discount to market. Generally, the rights will be exercisable if a person or group acquires 15% or more of the Company's outstanding shares. The rights trade together with the underlying common stock. They can be redeemed by the Company for $.01 per right and expire in the year 2000. The Company accounts for stock based compensation under the provisions of Accounting Principles Board Opinion No. 25. Under the Company's stock purchase plans, the purchase price of the optioned stock is 85% of the lower of the market price on the date the option is granted or the date it is - -17- exercised. Options become exercisable exactly two years from the date of grant and expire if not exercised. Therefore, no options are exercisable at the end of 1997, 1996, or 1995. A summary of option activity is as follows: Weighted Average Shares Exercise Shares On Option Price Unoptioned Balance, June 25, 1994 61,556 $20.33 738,444 Options granted 47,719 18.39 (47,719) Options exercised ($17.75 and $19.24) (28,232) 18.19 Options canceled (21,132) 21,132 Balance, June 24, 1995 59,911 18.90 711,857 Options granted 32,793 20.56 (32,793) Options exercised ($19.34 and $19.02) (14,548) 19.18 Options canceled (15,804) 15,804 Balance, June 29, 1996 62,352 19.45 694,868 Options granted 38,709 24.21 (38,709) Options exercised ($17.75 and $19.55) (28,368) 18.29 Options canceled (19,359) 19,359 Balance, June 28, 1997 53,334 22.92 675,518 At June 28,1997, a total of 728,852 shares of common stock are reserved for issuance under the plans. The following information relates to outstanding options as of June 28,1997 Weighted Average Exercise Price $22.92 Weighted Average Remaining Life 1.2 years Weighted Average fair value on grant date of options granted in: 1995 $5.50 1996 6.00 1997 7.50 The fair value of each option grant was estimated on the date of grant using the Black-Scholes options pricing model with the following weighted average assumptions: volatility - 14% to 17%, interest - 6%, and expected lives - 2 years. The pro forma effect of any compensation costs related to implementation of and ongoing use of SFAS No. 123, "Accounting for Stock Based Compensation," is not material. In addition 720,612 shares of common stock are reserved for the Company's 401(k) plan at June 28, 1997. Since inception in 1986, 777,697 Class A and 44,155 Class B shares have been issued under this plan. In fiscal 1995, 363,473 shares of Class A treasury stock were canceled and returned to the status of authorized but unissued. - -18- OPERATING DATA The Company is engaged in the single business segment of producing and marketing industrial, professional and consumer products. Revenues, operating income and identifiable assets of the Company's domestic and foreign operations are summarized as follows (in thousands): Elimina- Consoli- Domestic Foreign tions dated 1997: Sales $174,801 $ 75,702 $250,503 Intercompany transfers 2,439 8,862 $(11,301) Revenues 177,240 84,564 (11,301) 250,503 Operating income 20,268 8,259 28,527 Identifiable assets 176,754 71,058 (9,066) 238,746 Net assets 128,739 57,804 (6,078) 180,465 1996: Sales $161,175 $ 74,292 $235,467 Intercompany transfers 2,076 8,320 $(10,396) Revenues 163,251 82,612 (10,396) 235,467 Operating income 17,034 7,628 24,662 Identifiable assets 167,015 70,699 (10,402) 227,312 Net assets 120,227 53,745 (6,687) 167,285 1995: Sales $143,817 $ 70,398 $214,215 Intercompany transfers 1,515 8,578 $(10,093) Revenues 145,332 78,976 (10,093) 214,215 Operating income 10,284 10,580 20,864 Identifiable assets 159,389 63,306 (8,755) 213,940 Net assets 113,442 49,275 (5,888) 156,829 Operating income is computed exclusive of other income and expense and income taxes. Transfers are recorded at normal selling price for finished goods and at cost plus a percentage to cover expenses for finished parts, work in process and raw materials. Eliminations relate to investments in subsidiaries and intercompany transactions and balances. The Company believes it has no significant concentrations of credit risk as of June 28, 1997. Trade receivables are disbursed among a large number of retailers, distributors and industrial accounts in many countries. The significant foreign operations of the Company are located in Scotland and Brazil. These two locations accounted for approximately the following percentages of the indicated foreign information listed above: 1997 1996 1995 Scotland Brazil Scotland Brazil Scotland Brazil Revenues 40% 60% 41% 59% 40% 60% Operating income 62% 38% 69% 31% 45% 55% Identifiable assets 51% 49% 46% 54% 48% 52% - -19- QUARTERLY FINANCIAL DATA (UNAUDITED)(in thousands except per share data) Earnings Before Earnings Net Gross Income Net Per Quarter Ended Sales Profit Taxes Earnings Share September 1995 $52,000 $15,225 $ 3,947 $ 2,563 $ 0.36 December 1995 61,883 18,705 6,934 4,627 0.66 March 1996 53,042 16,179 4,626 3,330 0.47 June 1996 68,542 24,120 10,645 6,811 0.96 $235,467 $74,229 $26,152 $17,331 $ 2.45 September 1996 $58,636 $18,066 $ 6,185 $ 4,042 $ 0.57 December 1996 64,587 20,689 8,486 5,678 0.81 March 1997 60,489 18,439 6,328 4,251 0.61 June 1997 66,791 23,274 9,060 5,888 0.85 $250,503 $80,468 $30,059 $19,859 $ 2.84 The Company's Class A Common Stock is traded on the New York Stock Exchange. Item 9 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The Company had no such changes in or disagreements with its independent auditors. PART III Item 10 - Directors and Executive Officers of the Registrant Directors The information concerning the Directors of the Registrant is contained on pages 1 through 4 in the Company's definitive Proxy Statement for the Annual Meeting of Stockholders to be held on September 17, 1997, and is hereby incorporated by reference. Executive Officers of the Registrant Held Present Name Age Office Since Position Douglas R. Starrett 77 1962 Chairman and CEO and Director Douglas A. Starrett 45 1985 President and Director George B. Webber 76 1962 Vice President Webber Gage Division and Director James S. Carey 46 1997 Vice President Sales Roger U. Wellington, Jr. 56 1984 Treasurer and Chief Financial Officer and Director Peter MacDougall 59 1990 Clerk - -20- George B. Webber and Roger U. Wellington, Jr. have served in the same capacities as listed above for at least the past five years. Douglas R. Starrett was previously President of the Company. Douglas A. Starrett (son of Douglas R. Starrett) was previously Executive Vice President of the Company. James S. Carey was previously Midwest Sales Manager of the Company. Except in the case of Peter MacDougall, the positions listed above represent their principal occupations and employment during the last five years. Peter MacDougall, elected clerk in July 1990, has been a partner in Ropes & Gray, counsel for the Company, throughout that period. The President, Treasurer and Clerk hold office until the first meeting of the directors following the next annual meeting of stockholders and until their respective successors are chosen and qualified, and each other officer holds office until the first meeting of directors following the next annual meeting of stockholders, unless a shorter period shall have been specified by the terms of his election or appointment or, in each case, until he sooner dies, resigns, is removed or becomes disqualified. There have been no events under any bankruptcy act, no criminal proceedings and no judgments or injunctions material to the evaluation of the ability and integrity of any director or executive officer during the past five years. Item 11 - Executive Compensation The information concerning management remuneration is contained on pages 4 through 9 in the Company's definitive Proxy Statement for the Annual Meeting of Stockholders to be held on September 17, 1997 and, except for the information under the caption "Compensation Committee Report," is hereby incorporated by reference. Item 12 - Security Ownership of Certain Beneficial Owners and Management (a) Security ownership of certain beneficial owners: The information concerning a more than 5% holder of any class of the Company's voting shares is contained on page 4 of the Company's definitive Proxy Statement for the Annual Meeting of Stockholders to be held on September 17, 1997, and is hereby incorporated by reference. (b) Security ownership of management: The information concerning the beneficial ownership of each class of equity securities by all directors, and all directors and officers of the Company as a group, is contained on pages 2 and 3 of the Company's definitive Proxy Statement for the Annual Meeting of Stockholders to be held on September 17, 1997, and is hereby incorporated by reference. (c) The Company knows of no arrangements that may, at a subsequent date, result in a change in control of the Company. - -21- Item 13 - Certain Relationships and Related Transactions (a) Transactions with management and others: None (b) Certain business relationships: Not applicable (c) Indebtedness of management: None (d) Transactions with promoters: Not applicable PART IV Item 14 - Exhibits, Financial Statement Schedules, and Reports on Form 8-K (a) 1. Financial statements filed in item 8 of this annual report: Consolidated Statements of Earnings and Cash Flows for the Three Years in the Period ended June 28, 1997 Consolidated Balance Sheets at June 28, 1997 and June 29,1996 Consolidated Statements of Stockholders' Equity for the Three Years in the Period Ended June 28, 1997 Notes to Consolidated Financial Statements 2. All other financial statements and schedules are omitted because they are inapplicable, not required under the instructions, or the information is reflected in the financial statements or notes thereto. 3. See Exhibit Index below on page 23. (b) There were no reports on Form 8-K filed in the last quarter of the period covered by this report. (c) See Exhibit Index below on page 23. (d) Not applicable. - -22- THE L.S. STARRETT COMPANY AND SUBSIDIARIES EXHIBIT INDEX (3i) Restated Articles of Organization dated December 20, 1989, filed with Form 10-Q for the quarter ended December 23, 1989, are hereby incorporated by reference. (3ii) Bylaws as amended September 21, 1994, filed with Form 10-K for the year ended June 29, 1996, are hereby incorporated by reference. (4a) Loan Agreement and related documents, relative to $7,500,000 Industrial Revenue Bond financing dated as of September 1, 1985, between The Surry County Industrial Facilities and Pollution Control Financing Authority and The L.S. Starrett Company will be furnished to the Commission upon request. (4b) Common Stock Rights Agreement, dated as of June 6, 1990, between the Company and The First National Bank of Boston, as Rights Agent, including Form of Common Stock Purchase Rights Certificate and Summary Common Stock Purchase Rights, filed on June 13, 1990 with the Company's Form 8-A, are hereby incorporated by reference. (10a) $20,000,000 Amended and Restated Credit Agreement dated as of March 31, 1995, among The L.S. Starrett Company, The First National Bank of Boston and Wachovia Bank of Georgia, N.A. will be furnished to the Commission upon request. (11) Statement re: Calculation of Shares for Computation of Consolidated Earnings Per Share. See page 24. (21) Subsidiaries of the Registrant. See page 25. (23) Independent Auditors' Consent. See page 26. (27) Financial Data Schedule submitted herewith in electronic format. - -23- Exhibit 11 THE L.S. STARRETT COMPANY AND SUBSIDIARIES CALCULATION OF SHARES FOR COMPUTATION OF CONSOLIDATED EARNINGS PER SHARE 1997 1996 1995 PRIMARY EARNINGS PER SHARE Average shares outstanding during the year 6,991,810 7,057,675 7,070,032 Incremental shares computed on the assumption that dilutive stock options had been exercised, with the proceeds used to purchase treasury stock 11,328 11,444 8,171 Average common and common equiva- lent shares outstanding 7,003,138 7,069,119 7,078,203 FULLY DILUTED EARNINGS PER SHARE Average shares outstanding during the year 6,991,810 7,057,675 7,070,032 Incremental shares computed on the assumption that dilutive stock options had been exercised, with the proceeds used to purchase treasury stock, using year-end market prices where such prices were in excess of average yearly prices, to determine the amount of treasury stock purchased 15,692 14,908 9,909 Average common and common equivalent shares used to calculate fully diluted earnings per share 7,007,502 7,072,583 7,079,941 The Company's average common and common equivalent shares (both primary and fully diluted) during the above years do not, in the aggregate, dilute earnings per share 3% or more. - -24- Exhibit 21 THE L.S. STARRETT COMPANY AND SUBSIDIARIES SUBSIDIARIES OF THE REGISTRANT JUNE 28, 1997 The parent company, The L.S. Starrett Company, incorporated in Massachusetts, has the following subsidiaries, all of which are wholly owned: Fiscal Year End Starrett Securities Corporation Incorporated in Last Sat Massachusetts in June Evans Rule Company, Inc. Incorporated in Last Sat. New Jersey in June The L.S. Starrett Co. of Canada Incorporated in Last Sat. Limited Canada in June The L.S. Starrett International Incorporated in Last Sat. Company Barbados in June The L.S. Starrett Company Incorporated in May 31 Limited Scotland Starrett Industria e Incorporated in May 31 Comercio Ltda. Brazil Level Industries, Inc. Incorporated in Last Sat. Massachusetts in June - -25- Exhibit 23 INDEPENDENT AUDITORS' CONSENT The L.S. Starrett Company We consent to the incorporation by reference in the Registration Statements No. 33-55623 and No. 333-12997 of The L.S. Starrett Company, both on Form S-8, of our report dated August 1, 1997, appearing in the Annual Report on Form 10-K of The L.S. Starrett Company for the year ended June 28, 1997. S/DELOITTE & TOUCHE LLP Boston, Massachusetts September 5, 1997 - -26- SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. THE L.S. STARRETT COMPANY (Registrant) By S/ROGER U. WELLINGTON, JR. Roger U. Wellington, Jr., Treasurer and Chief Financial Officer Date: September 5, 1997 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated: S/DOUGLAS R. STARRETT S/DOUGLAS A. STARRETT Douglas R. Starrett, Sept. 5, 1997 Douglas A. Starrett, Sept. 5, 1997 Chairman and CEO President S/ANDREW B. SIDES, JR. S/WILLIAM S. HURLEY Andrew B. Sides, Jr., Sept. 5, 1997 William S. Hurley, Sept. 5, 1997 Director Director S/RICHARD B. KENNEDY S/GEORGE B. WEBBER Richard B. Kennedy, Sept. 5, 1997 George B. Webber, Sept. 5, 1997 Director Vice President Webber Gage Division and Director S/STEVEN G. THOMSON S/ROGER U. WELLINGTON, JR. Steven G. Thomson, Sept. 5, 1997 Roger U. Wellington,Jr.,Sept. 5, 1997 Chief Accounting Officer Treasurer and Chief Financial Officer and Director - -27- EX-27 2
5 1000 YEAR JUN-28-1997 JUN-28-1997 3,053 27,389 38,502 1,877 75,846 147,595 124,876 60,775 238,746 27,804 6,500 0 0 6,944 173,521 238,746 250,503 250,503 170,035 170,035 0 0 784 30,059 10,200 19,859 0 0 0 19,859 2.84 2.84
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