x |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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|||||||||
For the quarterly period ended
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September 30, 2012
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|||||||||
OR
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||||||||||
o |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from
|
to
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Commission file number
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1-367
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THE L. S. STARRETT COMPANY
|
||||||||||
(Exact name of registrant as specified in its charter)
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MASSACHUSETTS
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04-1866480
|
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(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
121 CRESCENT STREET, ATHOL, MASSACHUSETTS
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01331-1915
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(Address of principal executive offices)
|
(Zip Code)
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Registrant's telephone number, including area code
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978-249-3551
|
|||||||||
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.
|
||||||||||
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).
YES x NO o
|
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 definition of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One): | ||||||||||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
|
||||||||||
Common Shares outstanding as of
|
October 31, 2012
|
||
Class A Common Shares
|
6,036,114 | ||
Class B Common Shares
|
756,852 |
Page No.
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|||
Part I. |
Financial Information:
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||
Item 1.
|
Financial Statements | ||
Condensed Consolidated Balance Sheets - September 30, 2012 (unaudited) and June 30, 2012
|
3
|
||
Condensed Consolidated Statements of Operations - three months ended September 30, 2012 and September 30, 2011 (unaudited)
|
4
|
||
Condensed Consolidated Statements of Comprehensive Income (Loss) – three months ended September 30, 2012 and September 30, 2011 (unaudited) |
5
|
||
Condensed Consolidated Statements of Stockholders' Equity - three months ended September 30, 2012 and September 30, 2011(unaudited) |
6
|
||
Condensed Consolidated Statements of Cash Flows - three months ended September 30, 2012 and September 30, 2011(unaudited) |
7
|
||
Notes to Unaudited Condensed Consolidated Financial Statements |
8-12
|
||
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations |
12-13
|
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk |
13
|
|
Item 4.
|
Controls and Procedures |
14
|
|
Part II. |
Other Information:
|
||
Item 1A.
|
Risk Factors |
14
|
|
Item 6.
|
Exhibits |
14
|
|
SIGNATURES |
15
|
September 30,
2012
(unaudited)
|
June 30,
2012
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash
|
$ | 17,261 | $ | 17,502 | ||||
Short-term investments
|
6,465 | 6,282 | ||||||
Accounts receivable (less allowance for doubtful accounts of $749 and $965, respectively)
|
34,153 | 42,167 | ||||||
Inventories
|
74,413 | 69,895 | ||||||
Current deferred income tax asset
|
7,319 | 7,620 | ||||||
Prepaid expenses and other current assets
|
7,374 | 7,764 | ||||||
Total current assets
|
146,985 | 151,230 | ||||||
Property, plant and equipment, net
|
53,493 | 53,597 | ||||||
Taxes receivable
|
3,711 | 3,814 | ||||||
Deferred tax asset, net
|
29,914 | 29,842 | ||||||
Intangible assets, net
|
8,647 | 8,755 | ||||||
Goodwill
|
3,034 | 3,034 | ||||||
Other assets
|
2,047 | 1,894 | ||||||
Total assets
|
$ | 247,831 | $ | 252,166 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
Current liabilities:
|
||||||||
Notes payable and current maturities
|
$ | 1,642 | $ | 1,800 | ||||
Accounts payable and accrued expenses
|
18,393 | 20,912 | ||||||
Accrued compensation
|
5,756 | 7,299 | ||||||
Total current liabilities
|
25,791 | 30,011 | ||||||
Deferred tax liabilities
|
2,805 | 2,530 | ||||||
Other tax obligations
|
10,200 | 10,590 | ||||||
Long-term debt
|
28,995 | 29,387 | ||||||
Postretirement benefit and pension liabilities
|
52,366 | 51,810 | ||||||
Total liabilities
|
120,157 | 124,328 | ||||||
Stockholders' equity:
|
||||||||
Class A Common stock $1 par (20,000,000 shares authorized); 6,028,568 outstanding at 9/30/2012 and 6,017,227 outstanding at 6/30/2012
|
6,029 | 6,017 | ||||||
Class B Common stock $1 par (10,000,000 shares authorized); 763,857 outstanding at 9/30/2012 and 753,307 outstanding at 6/30/2012
|
764 | 753 | ||||||
Additional paid-in capital
|
52,160 | 51,941 | ||||||
Retained earnings
|
93,631 | 94,661 | ||||||
Accumulated other comprehensive loss
|
(24,910 | ) | (25,534 | ) | ||||
Total stockholders' equity
|
127,674 | 127,838 | ||||||
Total liabilities and stockholders’ equity
|
$ | 247,831 | $ | 252,166 |
3 Months Ended
|
||||||||
9/30/2012
|
9/30/2011
|
|||||||
Net sales
|
$ | 56,937 | $ | 63,384 | ||||
Cost of goods sold
|
39,248 | 41,794 | ||||||
Gross margin
|
17,689 | 21,590 | ||||||
% of Net sales
|
31.1 | % | 34.1 | % | ||||
Selling, general and administrative expenses
|
18,571 | 19,663 | ||||||
Operating (loss)/income
|
(882 | ) | 1,927 | |||||
Other income
|
144 | 1,824 | ||||||
Earnings (loss) before income taxes
|
(738 | ) | 3,751 | |||||
Income tax expense (benefit)
|
(387 | ) | 1,502 | |||||
Net (loss)/earnings
|
$ | (351 | ) | $ | 2,249 | |||
Basic and diluted (loss)/earnings per share
|
$ | (0.05 | ) | $ | 0.33 | |||
Average outstanding shares used in per share calculations:
|
||||||||
Basic
|
6,783 | 6,740 | ||||||
Diluted
|
6,783 | 6,755 | ||||||
Dividends per share
|
$ | 0.10 | $ | 0.10 |
3 Months Ended
|
||||||||
9/30/2012
|
9/30/2011
|
|||||||
Net earnings (loss)
|
$ | (351 | ) | $ | 2,249 | |||
Other comprehensive income (loss), net of tax:
|
||||||||
Translation gain (loss)
|
635 | (10,915 | ) | |||||
Pension and postretirement plans
|
(11 | ) | (16 | ) | ||||
Other comprehensive income (loss)
|
624 | (10,931 | ) | |||||
Total comprehensive income (loss)
|
$ | 273 | $ | (8,682 | ) |
Common Stock
Outstanding
|
||||||||||||||||||||||||
Class A
|
Class B
|
Addi-
tional
Paid-in
Capital
|
Retained
Earnings
|
Accumulated
Other Com-prehensive
Loss
|
Total
|
|||||||||||||||||||
Balance June 30, 2011
|
$ | 5,933 | $ | 801 | $ | 51,411 | $ | 96,477 | $ | (1,961 | ) | $ | 152,661 | |||||||||||
Net earnings
|
2,249 | 2,249 | ||||||||||||||||||||||
Other comprehensive loss
|
(10,931 | ) | (10,931 | ) | ||||||||||||||||||||
Dividends ($0.10 per share)
|
(674 | ) | (674 | ) | ||||||||||||||||||||
Issuance of stock under ESOP
|
10 | 96 | 106 | |||||||||||||||||||||
Stock-based compensation
|
38 | 38 | ||||||||||||||||||||||
Conversion
|
13 | (13 | ) | - | ||||||||||||||||||||
Balance September 30, 2011
|
$ | 5,956 | $ | 788 | $ | 51,545 | $ | 98,052 | $ | (12,892 | ) | $ | 143,449 | |||||||||||
Balance June 30, 2012
|
$ | 6,017 | $ | 753 | $ | 51,941 | $ | 94,661 | $ | (25,534 | ) | $ | 127,838 | |||||||||||
Net loss
|
(351 | ) | (351 | ) | ||||||||||||||||||||
Other comprehensive income
|
624 | 624 | ||||||||||||||||||||||
Dividends ($0.10 per share)
|
(679 | ) | (679 | ) | ||||||||||||||||||||
Issuance of stock under ESOP
|
8 | 84 | 92 | |||||||||||||||||||||
Issuance of stock under ESPP
|
15 | 94 | 109 | |||||||||||||||||||||
Stock-based compensation
|
41 | 41 | ||||||||||||||||||||||
Conversion
|
4 | (4 | ) | - | ||||||||||||||||||||
Balance September 30, 2012 | $ | 6,029 | $ | 764 | $ | 52,160 | $ | 93,631 | $ | (24,910 | ) | $ | 127,674 | |||||||||||
Cumulative Balance:
|
||||||||||||||||||||||||
Translation loss
|
$ | (15,269 | ) | |||||||||||||||||||||
Pension and postretirement plans net of taxes
|
(9,641 | ) | ||||||||||||||||||||||
$ | (24,910 | ) |
3 Months Ended
|
||||||||
9/30/2012
|
9/30/2011
|
|||||||
Cash flows from operating activities:
|
||||||||
Net (loss)/earnings
|
$ | (351 | ) | $ | 2,249 | |||
Non-cash operating activities:
|
||||||||
Depreciation
|
2,166 | 2,305 | ||||||
Amortization
|
368 | 47 | ||||||
Other tax obligations
|
(280 | ) | 122 | |||||
Deferred taxes
|
559 | (107 | ) | |||||
Unrealized transaction (gain) loss
|
1 | (20 | ) | |||||
Equity (gain) loss on investment
|
(157 | ) | 54 | |||||
Working capital changes:
|
||||||||
Receivables
|
8,312 | 801 | ||||||
Inventories
|
(3,590 | ) | (5,881 | ) | ||||
Other current assets
|
86 | (566 | ) | |||||
Other current liabilities
|
(4,572 | ) | (2,520 | ) | ||||
Postretirement benefit and pension obligations
|
244 | 160 | ||||||
Other
|
181 | 544 | ||||||
Net cash provided by (used in) operating activities
|
2,967 | (2,812 | ) | |||||
Cash flows from investing activities:
|
||||||||
Additions to property, plant and equipment
|
(2,304 | ) | (1,649 | ) | ||||
Net cash used in investing activities
|
(2,304 | ) | (1,649 | ) | ||||
Cash flows from financing activities:
|
||||||||
Proceeds from short-term borrowings
|
- | 1,549 | ||||||
Short-term debt repayments
|
(152 | ) | (9 | ) | ||||
Proceeds from long-term borrowings
|
- | 137 | ||||||
Long-term debt repayments
|
(395 | ) | (116 | ) | ||||
Proceeds from common stock issued
|
201 | 106 | ||||||
Dividends paid
|
(679 | ) | (674 | ) | ||||
Net cash provided by (used in) financing activities
|
(1,025 | ) | 993 | |||||
Effect of exchange rate changes on cash
|
121 | (1,656 | ) | |||||
Net decrease in cash
|
(241 | ) | (5,124 | ) | ||||
Cash, beginning of period
|
17,502 | 21,572 | ||||||
Cash, end of period
|
$ | 17,261 | $ | 16,448 | ||||
Supplemental cash flow information:
|
||||||||
Interest paid
|
$ | 247 | $ | 68 | ||||
Income taxes paid, net
|
1,025 | 1,667 |
Cash
|
$
|
298
|
||
Accounts receivable
|
1,897
|
|||
Inventories
|
1,674
|
|||
Other current assets
|
74
|
|||
Intangibles
|
9,300
|
|||
Goodwill
|
3,034
|
|||
Other long-term assets
|
69
|
|||
Accounts payable
|
(379
|
)
|
||
Accrued compensation costs
|
(270
|
)
|
||
Accrued expenses
|
(329
|
)
|
||
Cash paid to sellers | $ | 15,368 |
3 Months Ended
|
||||
9/30/2011
|
||||
Unaudited consolidated pro forma revenue
|
$ | 65,572 | ||
Unaudited consolidated pro forma net earnings (loss)
|
$ | 2,175 | ||
Unaudited consolidated pro forma diluted earnings (loss) per share
|
$ | 0.32 |
9/30/2012
|
6/30/2012
|
|||||||
Raw material and supplies
|
$ | 35,240 | $ | 35,803 | ||||
Goods in process and finished parts
|
25,070 | 24,044 | ||||||
Finished goods
|
41,585 | 37,553 | ||||||
101,895 | 97,400 | |||||||
LIFO Reserve
|
(27,482 | ) | (27,505 | ) | ||||
Inventories
|
$ | 74,413 | $ | 69,895 |
9/30/2012
|
6/30/2012
|
|||
Non-Compete agreement
|
600
|
600
|
||
Trademarks and trade names
|
1,480
|
1,480
|
||
Completed technology
|
2,616
|
2,292
|
||
Customer relationships
|
4,950
|
4,950
|
||
Backlog
|
260
|
260
|
||
Other intangible assets
|
976
|
6,276
|
||
Total
|
10,882
|
15,858
|
||
Accumulated amortization
|
(2,235)
|
(7,103)
|
||
Total net balance
|
8,647
|
8,755
|
2013 (Remainder of year)
|
$ | 802 | ||
2014
|
$ | 1,076 | ||
2015
|
$ | 1,076 | ||
2016
|
$ | 1,061 | ||
2017
|
$ | 1,054 | ||
Thereafter
|
$ | 3,578 |
Three Months Ended
|
||||||||
9/30/2012
|
9/30/2011
|
|||||||
Service cost
|
$ | 738 | $ | 575 | ||||
Interest cost
|
1,494 | 1,664 | ||||||
Expected return on plan assets
|
(1,602 | ) | (1,652 | ) | ||||
Amortization of prior service cost
|
59 | 59 | ||||||
Amortization of net gain
|
- | (1 | ) | |||||
$ | 689 | $ | 645 |
Three Months Ended
|
||||||||
9/30/2012
|
9/30/2011
|
|||||||
Service cost
|
$ | 128 | $ | 96 | ||||
Interest cost
|
136 | 156 | ||||||
Amortization of prior service credit
|
(279 | ) | (226 | ) | ||||
Amortization of accumulated loss
|
40 | 5 | ||||||
$ | 25 | $ | 31 |
|
9/30/2012
|
6/30/2012
|
||||||
Notes payable and current maturities
|
||||||||
Loan and Security Agreement
|
$ | 1,304 | $ | 1,289 | ||||
Short-term foreign credit facility
|
70 | 231 | ||||||
Capitalized leases
|
268 | 280 | ||||||
$ | 1,642 | $ | 1,800 | |||||
Long-term debt
|
||||||||
Loan and Security Agreement
|
28,655 | $ | 28,985 | |||||
Capitalized leases
|
340 | 402 | ||||||
28,995 | 29,387 | |||||||
$ | 30,637 | $ | 31,187 |
Three Months
|
||||||||
9/30/2012
|
9/30/2011
|
|||||||
Cash flows (in thousands) | ||||||||
Cash provided by (used in) operating activities
|
$ | 2,967 | $ | (2,812 | ) | |||
Cash used in investing activities
|
(2,304 | ) | (1,649 | ) | ||||
Cash (used in) provided by financing activities
|
(1,025 | ) | 993 | |||||
Effect of exchange rate changes on cash
|
121 | (1,656 | ) | |||||
Net decrease in cash
|
$ | (241 | ) | $ | (5,124 | ) |
31a
|
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
|
31b
|
Certification of Principal Financial Officer pursuant to Section 202 of the Sarbanes-Oxley Act of 2002, filed herewith.
|
32
|
Certifications of the Principal Executive Officer and the Principal Financial Officer pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101
|
The following materials from L. S. Starrett’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 are furnished herewith, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive Income (Loss), (iv) the Condensed Consolidated Statements of Stockholders' Equity, (v)the Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.
|
THE L. S. STARRETT COMPANY
(Registrant)
|
|||
Date
|
November 6, 2012 |
S/R. Douglas A. Starrett
|
|
Douglas A. Starrett - President and CEO
|
|||
Date
|
November 6, 2012 |
S/R. Francis J. O’Brien
|
|
Francis J. O’Brien - Treasurer and CFO
|
Date: November 6, 2012
|
/S/
|
Douglas A. Starrett
|
Douglas A. Starrett
Chief Executive Officer
|
Date: November 6, 2012
|
/S/
|
Francis J. O’Brien
|
Francis J. O’Brien
Chief Financial Officer
|
Date
|
November 6, 2012
|
/S/ Douglas A. Starrett
|
|
Douglas A. Starrett
Chief Executive Officer
|
|||
Date
|
November 6, 2012
|
/S/ Francis J. O’Brien
|
|
Francis J. O’Brien
Chief Financial Officer
|
Note 6 - Pension and Post Retirement Benefits (Detail) - Net periodic benefit costs for defined benefit pension plans (Pension Plans, Defined Benefit [Member], USD $)
In Thousands, unless otherwise specified |
3 Months Ended | |
---|---|---|
Sep. 30, 2012
|
Sep. 30, 2011
|
|
Pension Plans, Defined Benefit [Member]
|
||
Service cost | $ 738 | $ 575 |
Interest cost | 1,494 | 1,664 |
Expected return on plan assets | (1,602) | (1,652) |
Amortization of prior service cost | 59 | 59 |
Amortization of net gain | (1) | |
$ 689 | $ 645 |
Note 3 - Acquisition (Detail) (USD $)
|
1 Months Ended |
---|---|
Nov. 22, 2011
|
|
Business Acquisition, Purchase Price Allocation, Assets Acquired (Liabilities Assumed), Net | $ 15,368,000 |
Percent of Profits Acquiree is Entitled Under Agreement | 40.00% |
Customer Relationships [Member]
|
|
Acquired Finite-lived Intangible Asset, Amount | 4,950,000 |
Trademarks and Trade Names [Member]
|
|
Acquired Finite-lived Intangible Asset, Amount | 1,480,000 |
Completed Technology [Member]
|
|
Acquired Finite-lived Intangible Asset, Amount | 2,000,000 |
Noncompete Agreements [Member]
|
|
Acquired Finite-lived Intangible Asset, Amount | 600,000 |
Backlog [Member]
|
|
Acquired Finite-lived Intangible Asset, Amount | $ 260,000 |
Note 8 - Income Tax (Detail) (USD $)
|
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Sep. 30, 2012
|
Sep. 30, 2011
|
Jun. 30, 2013
|
|
Effective Income Tax Rate, Continuing Operations | 52.40% | 40.00% | |
Unrecognized Tax Benefits, Period Increase (Decrease) (in Dollars) | $ (91,000) |
Note 1 - Basis of Presentation and Summary of Significant Account Policies
|
3 Months Ended |
---|---|
Sep. 30, 2012
|
|
Basis of Presentation and Significant Accounting Policies [Text Block] |
Note
1: Basis of Presentation and Summary of Significant Account
Policies
The
condensed balance sheet as of June 30, 2012, which has been
derived from audited financial statements, and the unaudited
interim condensed financial statements have been prepared by
The L.S. Starrett Company (the “Company”) in
accordance with accounting principles generally accepted in
the United States of America for interim financial
reporting. Accordingly, they do not include all of
the information and notes required by generally accepted
accounting principles for complete financial
statements. These unaudited condensed financial
statements, which, in the opinion of management, reflect all
adjustments (including normal recurring adjustments)
necessary for a fair presentation, should be read in
conjunction with the financial statements and notes thereto
included in the Company’s Annual Report on Form 10-K
for the year ended June 30, 2012. Operating
results are not necessarily indicative of the results that
may be expected for any future interim period or for the
entire fiscal year.
As
discussed further in Note 3, on November 22, 2011, the
Company acquired all the assets of Bytewise Development
Corporation. The results of operations for this
acquired business are included in the Company’s results
of operations as presented herein since such date.
The
preparation of financial statements and related disclosures
in conformity with accounting principles generally accepted
in the United States of America requires management to make
judgments, assumptions and estimates that affect amounts
reported in the consolidated financial statements and
accompanying notes. Note 2 to the Company’s
Consolidated Financial Statements included in the Annual
Report on Form 10-K for the year ended June 30, 2012
describes the significant accounting policies and methods
used in the preparation of the consolidated financial
statements. There were no changes in any of the
Company’s significant accounting policies during the
quarter ended September 30, 2012.
|
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