ITEM 1. BUSINESS
Standex(1) is a diversified manufacturing and marketing company with operations in three product segments: Food Service, Industrial and Consumer. Standex was incorporated in 1975 and is the successor of a corporation organized in 1955.
The business of the Company is carried on within the three segments by a number of operating units, each with its own organization. The management of each operating unit has responsibility for product development, manufacturing, marketing and for achieving a return on investment in accordance with the standards established by Standex. Overall supervision, coordination and financial control are maintained by the executive staff from its corporate headquarters located at 6 Manor Parkway, Salem, New Hampshire. As of June 30, 2002, the Company had approximately 4,900 employees.
The principal products and the major markets for the Company's products and services are set forth below. Sales are made both directly to customers and by or through manufacturers' representatives, dealers and distributors.
Food Service Products
Master-Bilt(r) refrigerated cabinets, cases, display units, modular structures, coolers and freezers; Barbecue King(r) and BKI(r) commercial cook and hold units, rotisseries, pressure fryers, ovens and baking equipment; and Federal Industries bakery and deli heated and refrigerated display cases for hospitals, schools, fast food industry, restaurants, hotels, clubs, supermarkets, bakeries, convenience stores and delicatessens.
USECO food service equipment and patient feeding systems for hospitals, schools, nursing homes, correctional facilities and restaurants; H. F. Coors hotel restaurant china and cookware; and Mason candlelamps and candles for restaurants, hotels and commercial industries.
Procon(r) rotary vane pumps for the carbonated beverage industry, espresso coffee machine markets, water purification industry and coolant recirculation systems.
Industrial Products
Snappy(r), ACME and ALCO metal ducting and fittings for heating, ventilating and air conditioning distributors throughout the continental United States.
Spincraft(r) power metal spinning, custom formed components for aircraft engines, space launch vehicles, gas turbines, nuclear reactors, military ordnance, commercial satellites and similar products for OEMs, U.S. Government, energy, aircraft, aerospace and commercial satellite industry and other commercial industries.
JarvisTM, Can-Am Casters and WheelsTM and PEMCO(r) casters and wheels and industrial hardware for general industry, hospitals, supermarkets, hotels and restaurants. National Metal fabricated metal products, including specialty hardware and metal furniture for the food service industry, retail stores, office furniture markets, stationery supply houses and other industries.
(1) References in this Annual Report on Form 10-K to "Standex" or the "Company" shall mean Standex International Corporation and its subsidiaries.
Roehlen(r) embossing rolls, texturizing and laser engraving systems, machines and plates; Mold-Tech(r) mold engraving; Mullen(r) Burst Testers; Perkins converting and finishing machinery and systems for general industry (e.g., automotive, plastics, textiles, paper, building products, synthetic materials, OEMs, converting, textile and paper industry, computer, housewares and construction industries).
Custom Hoists single and double acting telescopic and piston rod hydraulic cylinders for dump trucks and trailers used in the construction and waste hauling industries.
Standex Electronics reed switches, electrical connectors, sensors, toroids and relays, fixed and variable inductors and electronic assemblies, fluid sensors and tunable inductors and ATC-Frost transformers and magnetic components for telecommunications, consumer electronics, automotive, security systems, communications equipment, computers, air conditioning and refrigeration industries.
James Burn Wire-O(r) double-looped wire and machinery and complete binding system for printers, publishers and binders of checkbooks, calendars, diaries, appointment books, cookbooks, catalogs and manuals.
Consumer Products
Standard(r) Publishing religious periodicals, curricula, Sunday school literature, children's books and supplies published and marketed to Sunday schools, churches, vacation Bible schools and Christian bookstores and printing for general commerce and industry.
Berean(r) Christian Stores, a chain of 19 Berean(r) Christian bookstores, serving as distribution centers and retail outlets for religious books and merchandise.
Frank Lewis(r) Grapefruit Club gift packages, Red Cooper(r) fresh grapefruit, Harry's Crestview Groves(r) grapefruit packages, grapefruit juice, grapefruit sections, onions, melons and roses; Salsa Express(r) salsas and other related food products; Red Cooper's Onion Store onions for mail order consumer direct sales.
Financial information about these segments is included under the caption Industry Segment Information in the Notes to Consolidated Financial Statements.
Raw Materials
Raw materials and components necessary for the fabrication of products and the rendering of services for the Company are generally available from numerous sources. The Company does not foresee any unavailability of materials or components which would have any material adverse effect on its overall business, or any of its business segments, in the near term.
Patents and Trademarks
The Company owns or is licensed under a number of patents and trademarks in each of its product groups. However, the loss of any single patent or trademark would not, in the opinion of the Company, materially affect any segment or the overall business.
Competition
Standex manufactures and markets products many of which have achieved a unique or leadership position in their market. However, the Company encounters competition in varying degrees in all product groups and for each product line. Competitors include domestic and foreign producers of the same and similar products. The principal methods of competition are price, delivery schedule, quality of services, product performance and other terms and conditions of sale. During fiscal 2002, the Company invested $10,021,000 in new plant and equipment in order to upgrade facilities to become more competitive in all segments.
International Operations
Substantially all international operations of the Company are related to domestic operations and are included in the Food Service and Industrial business segments. International operations are conducted at 31 plants, principally in Western Europe. See the notes to the Consolidated Financial Statements for international operations financial data.
Research and Development
Due to the nature of the manufacturing operations of Standex and the types of products manufactured, expenditures for research and development are not material to any segment.
Environmental and Other Matters
To the best of its knowledge, the Company believes that it is presently in substantial compliance with all existing applicable environmental laws and does not anticipate that such compliance will have a material effect on its future capital expenditures, earnings or competitive position.
ITEM 2.
ITEM 2. PROPERTIES
At June 30, 2002, Standex operated a total of 91 principal plants, stores and warehouses located through the United States, Western Europe, Canada, Australia, Singapore and Mexico. The Company owned 46 of the facilities and the balance were leased. The Company operated 19 retail stores in various sections of the United States, of which all were leased. The approximate building space utilized by each product group of Standex at June 30, 2002 is as follows (in thousands):
Area in Square Feet Owned Leased
Food Service 702 230 Industrial 2,162 515 Consumer 342 268 General Corporate 29 - Total 3,235 1,013
In general, the buildings are in good condition, are considered to be adequate for the uses to which they are being put and are in regular use.
The Company utilizes machinery and equipment which is necessary to conduct its operations. Substantially all of such machinery and equipment is owned by Standex.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to stockholders during the fourth quarter of the fiscal year.
PART II
ITEM 5.
ITEM 5. MARKET FOR STANDEX COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The principal market in which the Common Stock of Standex is traded is the New York Stock Exchange. The high and low sales prices for the Common Stock on the New York Stock Exchange and the dividends paid per Common Share for each quarter in the last two fiscal years are as follows:
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Statements contained in the following "Management's Discussion and Analysis" that are not based on historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward- looking statements may be identified by the use of forward- looking terminology such as "may," "will," "expect," "believe," "estimate," "anticipate," "continue," or similar terms or variations of those terms or the negative of those terms. There are many factors that affect the Company's business and the results of its operations and may cause the actual results of operations in future periods to differ materially from those currently expected or desired. These factors include uncertainties in competitive pricing pressures, unforeseen volatility in financial markets, general domestic and international business and economic conditions and market demand.
Liquidity and Capital Resources
Cash Flow
Operating activities in 2002 generated $44.4 million in cash flow. The Company redeployed those resources by investing $10.0 million in plant and capital equipment while returning $10.1 million to shareholders through cash dividends and reducing net debt by $22.4 million. This represents the third consecutive year in which Standex has generated cash from operations in excess of $40.0 million, and the highest amount in at least 15 years.
In addition to measuring the cash flow generation or usage based upon operating, investing, and financing classifications included in the Consolidated Statement of Cash Flows, the Company also measures free cash flow. Free cash flow is defined as cash flow from operating activities less capital expenditures. The Company generated free cash flow of $34.3 million in 2002, compared with $28.3 million in 2001, and $21.4 million in 2000.
The Company's net debt decreased by $22.4 million to $124.2 million at June 30, 2002. The Company's net debt to capital percentage is 41.0% down from 46.0% in 2001.
On June 30, 2002, the Company had a $175.0 million revolving credit agreement with eight banks which is scheduled to expire in May 2003. In addition, the Company has the option to borrow up to $175.0 million on an unsecured short-term basis. Available borrowings under the revolving credit agreement are reduced by unsecured short-term borrowings. At June 30, 2002, the Company had the ability to borrow an additional $100.3 million under these bank credit agreements. The Company intends to enter into a new revolving credit agreement prior to December 31, 2002 and believes it has adequate access to the private credit market. The Company believes that these resources, along with the Company's internally generated funds, will be sufficient to meet anticipated cash funding needs for the foreseeable future.
The Company authorized the issue and sale of $25 million aggregate principal amount of its 5.94% Senior Note due in 2012. Two institutional holders committed to the note on August 9, 2002. On June 30, 2002, the Company's credit quality designation was NAIC-2.
The Company has an insurance program for certain key executives. The underlying policies have a cash surrender value of $17.3 million and are reported net of loans of $13.3 million for which the Company has the legal right of offset. These policies have been purchased to fund Supplemental Retirement Income Benefits for certain executives. The aggregate present value of future obligations was $1,532,000 at June 30, 2002.
Fiscal 2002 as Compared to Fiscal 2001
A difficult economic environment affected sales in all segments. Net sales for the year ended June 30, 2002 decreased by $26.2 or 4.4% to $574.0 million as volume declined in each of our business segments. The effect, on net sales, of changes in the average foreign exchange rates was not significant.
The 5.5% decline in Food Service Segment sales was primarily due to lower sales volumes caused by a weak economy. Demand was weak as customers delayed or scaled back their rollout programs.
Net sales in the Consumer Segment decreased by 4.8%. Reduced consumer confidence levels and the events of September 11th negatively affected segment performance. The Industrial Segment was particularly hard hit by the recession. Segment sales decreased 3.7%. ATC-Frost was acquired in late fiscal 2001. Excluding this acquisition's impact on fiscal 2002, segment sales decreased by 6.3%. Lower sales volume and negative price pressure from discounting activities was somewhat offset by the effect of a strong housing market.
The Company's gross profit margin percentage ("GPMP") decreased 0.4 percentage points to 32.6%. Because of the economic environment, in the fourth quarter of 2002 the Company recorded higher than normal inventory reserves of $3.4 million affecting all three segments.
Selling, general and administrative expenses ("SG&A") were 25.9% of net sales, up from 24.1% in the prior year. SG&A performance of the Company's business segments corresponds with the decreased sales levels.
Interest expense decreased by $2.5 million. The decline reflects lower average borrowings driven by the Company's strong cash flow performance in 2002, and lower interest rates on the Company's variable rate debt.
The effective tax rate was 36.3% which included the effect of a change in accounting principle described below. The decline in the 2002 effective tax rate from 2001 was affected by the implementation of additional tax-planning strategies, transactional based benefits from distributions from foreign subsidiaries and decreased levels of various tax contingencies.
Income before the cumulative effect of a change in accounting principle was $20.4 million as compared to $24.9 million last year.
The Company recorded a charge of $3.8 million representing the cumulative effect of a change in accounting principle to write-off previously recorded goodwill. The charge related to the Company's adoption of SFAS No. 142 effective July 2001, is described in detail in the Notes to Consolidated Financial Statements.
Fiscal 2001 as Compared to Fiscal 2000
Net sales for the year ended June 30, 2001 of $600.2 million represents a decrease of $36.9 million or 5.8% from sales of $637.0 million for the year ended June 30, 2000. The effect, on net sales, of changes in the average foreign exchange rates was not significant.
For the year ended June 30, 2001 net sales in the Food Service Segment increased by $2.7 million or 1.9% from the prior year. Net sales in the Consumer Segment increased slightly to $115.6 million versus $115.3 in the prior year. Net sales in the Industrial Segment were $337.7 million for the year ended June 30, 2001 compared to $377.7 million for 2000. The Industrial Group continues to be adversely affected by the slowdown in the automotive, trucking, aerospace and telecommunications markets as several relatively larger customer program commitments and orders have been delayed. Lower housing starts have had a negative impact on our Standex Air Distribution Products division
The overall gross profit margin percentage ("GPMP") remained essentially the same (33.0% vs. 32.9%) for the current and prior year. All segments recorded similar GPMPs in 2001 as compared to 2000.
Consolidated selling, general and administrative ("SG&A") expenses were 24.1% of net sales, up slightly from 23.5% in the prior year. However, SG&A declined $4.9 million. None of the fluctuations in SG&A reported by the Company's three segments were individually significant and corresponded with the changes in net sales discussed above.
A restructuring charge of $5.4 million was recorded in the previous year. Also, during fiscal 2000, other income of $2.7 million was recorded resulting from the receipt of marketable stock of an insurance company, in which Standex owned life policies, that "demutualized" by converting from a mutual company to a stock company.
An increase of $427,000 in interest expense for the year was due primarily to a small increase in average net borrowings.
As a result of the above factors, income before income taxes was $42.5 million compared to $46.9 million in the prior year. The effective tax rate increased to 41.4% as compared to 40.9% in the prior year since a greater portion of the Company's income was generated in higher taxed countries. Net income decreased $2.8 million or 10.1% from the prior year.
Other Matters
Inflation - Certain of the Company's expenses, such as wages and benefits, occupancy costs and equipment repair and replacement, are subject to normal inflationary pressures. However, the Company expects significant price increases in the steel products it uses in its manufacturing processes due to the steel tariffs which were implemented in the US this past Spring. Although management believes it can pass these price increases on to its customers, there is no assurance that the Company will be able to fully recover them from its customers.
Environmental Matters - The Company is party to various claims and legal proceedings, generally incidental to its business and has recorded an appropriate provision for the resolution of such matters. As explained more fully in the Notes to the Consolidated Financial Statements, the Company does not expect the ultimate disposition of these matters to have a material adverse effect on its financial statements.
Segments - During fiscal 2002 the Company realigned its internal organization in a manner that caused the composition of its reportable segments to change. The segment information for prior years has been recast to reflect the realignment.
Critical Accounting Policies
The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires the Company to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, management evaluates its estimates and assumptions, and the effects of revisions are reflected in the consolidated financial statements in the period in which they are determined to be necessary. These policies and estimates are more fully described in the Notes to Consolidated Financial Statements.
Adoption of SFAS No. 141 and No. 142
Effective July 1, 2001, the Company adopted the provisions of SFAS No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangibles." SFAS No. 141 requires all business combinations initiated after June 30, 2001 to be accounted for using the purchase method. Under SFAS No. 142, goodwill and intangible assets with indefinite lives are no longer amortized but are reviewed annually for impairment or more frequently if impairment indicators arise. Separable intangible assets that are not deemed to have indefinite lives will continue to be amortized over their useful lives. In connection with the adoption of SFAS No. 142 there were no identified intangible assets.
The result of the Company's initial assessment of goodwill for impairment in accordance with SFAS No. 142 resulted in a non- cash charge of $3.8 million, which is reported as a cumulative effect of a change in accounting principle in the accompanying Statements of Consolidated Income. There was no tax benefit for this change in accounting principle as it was not deductible for tax purposes.
New Accounting Pronouncements
In October 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which supercedes SFAS No. 121, and the provisions of Accounting Principles Board Opinion No. 30, "Reporting the Results of Operations-Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions," for the disposal of segments of a business. The statement creates one accounting model, based on the framework established in SFAS No. 121, to be applied to all long-lived assets including discontinued operations. SFAS No. 144 will be effective for July 1, 2002. The impact of the adoption of SFAS No. 144 is not expected to be significant.
In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44 and 64, amendment of FASB Statement No. 13, and Technical Corrections," which, among other things, restricts the classification of gains and losses from extinguishment of debt as extraordinary to only those transactions that are unusual and infrequent in nature as defined by APB Opinion No. 30 as extraordinary. SFAS No. 145 is effective for fiscal 2004. Upon adoption, gains and losses on certain future debt extinguishment, if any, will be recorded in pre-tax income.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Cost Associated with Exit or Disposal Activities." SFAS No. 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. The provisions of SFAS No. 146 are effective for exit or disposal activities that are initiated after December 31, 2002. The Company believes that the adoption of SFAS No. 146 will not have a material impact on its financial statements.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is subject to market risk associated with changes in foreign currency exchange rates and interest rates. The Company mitigates certain of its foreign currency exchange rate risk by entering into forward foreign currency contracts. These contracts are primarily used as a hedge against anticipated foreign cash flows, such as dividend and loan payments, and are not used for trading or speculative purposes. The fair value of the forward foreign currency exchange contracts is sensitive to changes in foreign currency exchange rates, as an adverse change in foreign currency exchange rates from market rates would decrease the fair value of the contracts. However, any such losses or gains would generally be offset by corresponding gains and losses, respectively, on the related hedged asset or liability. Due to the absence of forward foreign currency contracts at June 30, 2002, the Company did not have any fair value exposure.
The Company's interest rate exposure is limited primarily to interest rate changes on its variable rate borrowings. As of June 30, 2002, a hypothetical 10% immediate increase in interest rates would increase the Company's annual interest expense by $158,000. The Company has an interest rate swap agreement to fix the interest rate on $10 million of its variable rate borrowings. At June 30, 2002, the fair value of the Company's interest rate swap agreement would not be materially affected by a 10% change in interest rates.
In addition to the $10 million of variable rate borrowings covered by the interest rate swap agreement, the Company also has $54 million of long-term debt at fixed interest rates as of June 30, 2002. There would be no immediate impact on the Company's interest expense associated with its long-term debt due to fluctuations in market interest rates. However, based on a hypothetical 10% immediate decrease in market interest rates, the fair value of the Company's long-term debt would be increased by approximately $1.7 million as of June 30, 2002. Such fair value changes may affect the Company's determination as to whether to retain, replace or retire its long-term debt.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See notes to consolidated financial statements.
Notes to consolidated financial statements.
Standex International Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Summary of Accounting Policies
Basis of Presentation and Consolidation
Standex International Corporation (the "Company") is a diversified manufacturing and distribution company with operations primarily in the United States and Europe. The accompanying consolidated financial statements include the accounts of Standex International Corporation and its subsidiaries and is prepared in accordance with generally accepted accounting principles in the United States of America. All significant intercompany transactions are eliminated.
Cash and Cash Equivalents
Cash and cash equivalents include highly liquid investments purchased with a maturity of three months or less. Such investments are carried at cost, which approximates fair value, due to the short period of time until maturity.
Inventories and Revenue Recognition
Inventories are stated at the lower of first-in, first- out cost or market. The Company generally recognizes product and related services revenue when the price to the customer is fixed or determinable, the collectibility of the invoice is evaluated and delivery has occurred. Revenues under certain fixed price contracts are generally recorded at the time deliveries are made or, in a limited number of cases, on a percentage of completion basis.
Property, Plant and Equipment
Property, plant and equipment are depreciated over their estimated useful lives using primarily the straight- line method. Lives for fixed assets are as follows:
Buildings 40 to 50 years Leasehold Improvements 10 to 15 years Machinery and Equipment 8 to 15 years Furniture and Fixtures 3 to 10 years Computer hardware and software 3 to 7 years
Minor maintenance costs are expensed as incurred. Major improvements which extend the life, increase the capacity or improve the safety or the efficiency of property owned are capitalized. Major improvements to leased buildings are capitalized as leasehold improvements and depreciated.
Long-Lived Assets
In accordance with SFAS No. 121, the Company reviews long-lived assets, excluding goodwill, for impairment whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable. Recoverability of these assets is determined by comparing the forecasted undiscounted net cash flows of the operation to which the assets relate, to the carrying amount. The operations are generally distinguished by the business segment, division or geographic region in which they operate. If the operation is determined to be unable to recover the carrying amount of its assets, then intangible assets are written down first, followed by the other long- lived assets of the operation, to fair value. Fair value is determined based on discounted cash flows or appraised values, depending upon the nature of the assets.
In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which supersedes SFAS No. 121, and provisions of APB Opinion No. 30, "Reporting the Results of Operations - Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions," for the disposal of segments of a business. The statement creates one accounting model, based on the framework established in SFAS No. 121, to be applied to all long-lived assets including discontinued operations. SFAS No. 144 will be effective on July 1, 2002. The impact of the adoption of SFAS No. 144 is not expected to be significant.
Goodwill and Identifiable Intangible Assets
Prior to July 1, 2001, the excess of purchase price of acquired businesses over the fair value of net identifiable assets at date of acquisition has been recorded as goodwill and has been amortized on a straight-line basis over a forty- year period. Accumulated amortization aggregated $12,184,000 at June 30, 2001. The Company's amortization of goodwill was $1,113,000 and $1,149,000 for fiscal 2001 and 2000, respectively. Prior to July 1, 2002, the Company evaluated the net balance of goodwill based on the projected operating income of the respective businesses on an undiscounted cash flow basis.
Effective July 1, 2001, the Company adopted the provisions of Statement of Financial Accounting Standards ("SFAS") No. 141, "Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 requires all business combinations initiated after June 30, 2001 to be accounted for using the purchase method. Under SFAS No. 142, goodwill and intangible assets with indefinite lives are no longer amortized but are reviewed annually for impairment or more frequently if impairment indicators arise. Separable intangible assets that are not deemed to have indefinite lives will continue to be amortized over their useful lives. In connection with the adoption of SFAS No. 142 there were no newly identified intangible assets.
The result of the Company's initial assessment of goodwill for impairment in accordance with SFAS No. 142 resulted in a non-cash charge of $3,779,000, which is reported as cumulative effect of a change in accounting principle in the accompanying Statements of Consolidated Income. There was no tax benefit for this change in accounting principle as goodwill was not deductible for tax purposes. Future adjustments for impairment of goodwill, if any, will be recognized as an operating expense. Net goodwill was $36,250,000 and $41,069,000 at June 30, 2002 and 2001, respectively.
Income Taxes
Deferred assets and liabilities are recorded for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax assets and liabilities are determined based on the differences between the financial statements and the tax bases of assets and liabilities using enacted tax rates. Valuation allowances are provided when the Company does not believe it more likely than not the benefit of identified tax assets will be realized.
Research and Development
Research and development expenditures are expensed as incurred.
Stock-Based Compensation
The Company has elected to continue to account for stock options at their intrinsic value with disclosure of the effects of fair value accounting on net income and earnings per share on a proforma basis.
Foreign Currency Translation
Assets and liabilities of non-U.S. operations are translated into U.S. dollars at year-end exchange rates. Revenues and expenses are translated using average exchange rates. The resulting translation adjustment is reported as a component of comprehensive income in the Statements of Consolidated Stockholders' Equity. Gains and losses from currency transactions are included in results of operations.
Derivative Instruments and Hedging Activities
Effective July 1, 2000, the Company adopted SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." Standex manages its debt portfolio by periodically using interest rate swaps to achieve an overall desired position of fixed and floating rate debt to reduce certain exposures to interest rate fluctuations. Standex designates its interest rate swaps as cash flow hedge instruments, whose recorded value in the consolidated balance sheet approximates fair market value. The Company assesses the effectiveness of its hedge instruments on a quarterly basis. For the year ended June 30, 2002, the Company completed an assessment of the cash flow hedge instruments and determined these hedges to be highly effective. For all qualifying and highly effective cash flow hedges, the changes in the fair value of the derivatives are recorded in other comprehensive income. Forward foreign currency exchange contracts are used by the Company to protect certain anticipated foreign cash flows, such as dividends and loan payments from subsidiaries, against movements in the related exchange rates. The Company enters into such contracts for hedging purposes only. The Company does not hold or issue derivative instruments for trading purposes. The cumulative effect of a change in accounting principles due to adoption of SFAS No. 133 as of July 1, 2000 did not have a significant impact on earnings for the year ended June 30, 2001.
Concentration of Credit Risk
The Company is subject to credit risk through trade receivables and short-term cash investments. Credit risk with respect to trade receivables is minimized because of the diversification of the Company's operations, as well as its large customer base and its geographical dispersion. No individual customer generally accounts for more than 3% of revenues or accounts receivable.
Short-term cash investments are placed with high credit- quality financial institutions or in short-duration, high quality debt securities. The Company limits the amount of credit exposure in any one institution or type of investment instrument. The Company is also subject to credit risk exposure relating to its interest rate swap agreements as described in the debt footnote below.
Accounting Estimates
The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires the Company to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of the financial statements and for the period then ended. On an on-going basis, the Company evaluates the estimates used, including those related to the allowance for doubtful accounts, potentially obsolete inventory, impairments of tangible and intangible assets, income taxes, self-insurance liabilities, incentive compensation liabilities, and contingencies. The Company bases its estimates on historical experience, actuarial estimates, current conditions and various other assumptions that are believed to be reasonable under the circumstances. These estimates form the basis for making judgments about the carrying values of assets and liabilities when they are not readily apparent from other sources. The Company uses these estimates to assist in the identification and assessment of the accounting treatment necessary with respect to commitments and contingencies. Actual results may differ from these estimates under different assumptions or conditions.
Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value because of their short-term nature. The carrying amount of the Company's debt instruments approximates fair value.
Reclassifications
Certain prior years' amounts have been reclassified to conform to the 2002 financial statement presentation.
New Accounting Pronouncements
In October 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which supercedes SFAS No. 121, and the provisions of Accounting Principles Board ("APB") Opinion No. 30, "Reporting the Results of Operations-Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions," for the disposal of segments of a business. The statement creates one accounting model, based on the framework established in SFAS No. 121, to be applied to all long-lived assets including discontinued operations. SFAS No. 144 will be effective for July 1, 2002. The impact of the adoption of SFAS No. 144 is not expected to be significant.
In April 2002, the Financial Accounting Standards Board issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44 and 64, amendment of FASB Statement No. 13, and Technical Corrections," which among other things, restricts the classification of gains and losses from extinguishment of debt as extraordinary to only those transactions that are unusual and infrequent in nature as defined by Accounting Principles Board Opinion No. 30 as extraordinary, SFAS No. 145 for fiscal 2004. Upon adoption, gains and losses on certain future debt extinguishment, if any, will be recorded in pre-tax income.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Cost Associated with Exit or Disposal Activities." SFAS No. 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. The provisions of SFAS No. 146 are effective for exit or disposal activities that are initiated after December 31, 2002. The Company believes that the adoption of SFAS No. 146 will not have a material impact on its financial statements.
Bank Credit Agreements
The Company has a revolving credit agreement with eight banks. The agreement provides for a maximum credit line of $175,000,000 until May 2003, at which time outstanding loans will be due and payable. As of June 30, 2002, the effective rate of interest under the agreement was 2.43%. The Company is required to pay a commitment fee of 0.2% on the average daily-unused amount. As of June 30, 2002 and 2001, the Company had borrowings of $50 million and $65 million, respectively, under the agreement. The Company is currently in negotiation to renew this facility and has classified this debt as current in its balance sheet based on the May 2003 maturity.
In addition, the Company has the option to borrow up to $175,000,000 on an unsecured short-term basis at rates which are based on LIBOR and varied from 2.26% to 5.02% during 2002. Available borrowings under the revolving credit agreement described above are reduced by unsecured short- term borrowings. At June 30, 2002, the Company had the ability to borrow an additional $100,268,000 under the aforementioned bank credit agreements.
Institutional Investor Agreements
At June 30, 2002 and 2001, the Company had a $25,000,000 note purchase agreement with two institutional investors. The notes bear interest at 6.8% annually and are due and payable in October 2008. Additionally, the Company has a note purchase agreement with two institutional investors with a balance of $28,571,000 which bears interest at 7.13% annually and is payable in annual installments of $7,143,000 which is due in September.
Interest Rate Swap Agreements
The Company manages its debt portfolio by using interest rate swaps to achieve an overall desired position of fixed and floating rate debt to reduce certain exposures to interest rate fluctuations.
At June 30, 2002, the Company had one interest rate swap contract with a notional amount of $10.0 million. The agreement converts variable rate to a fixed rate of 7.5% and matures in 2003.
Neither the Company nor the counterparty to the agreement, which is a prominent financial institution, is required to collateralize their respective obligations under the swap. The Company is exposed to loss if the counterparty defaults. At June 30, 2002, Standex had no exposure to credit loss on the interest rate swap. The Company does not believe that any likely change in interest rates would have a material adverse effect on its financial position, results of operations or cash flows.
Open interest rate contracts are reviewed regularly by the Company to ensure that they remain effective as hedges of interest rate exposure. This review revealed that the interest rates swaps were highly effective for fiscal 2002. Gains or losses associated with interest rates swaps determined to be ineffective will result in the reclassification into earnings of the gains/losses previously reported in Other Comprehensive Income. Management believes that the fair value of the rate swap agreement approximates the recorded amount.
Loan Covenants and Repayment Schedule
The Company's loan agreements contain a limited number of provisions relating to the maintenance of certain financial ratios and restrictions on additional borrowings and investments. The most restrictive of these provisions requires that the Company maintain a minimum ratio of earnings to fixed charges, as defined, on a trailing four quarters basis.
Debt is due as follows: 2003, $82,221,000; 2004, $7,502,000; 2005, $7,143,000; 2006, $7,142,000; and thereafter, $28,300,000.
Commitments
The Company leases certain property and equipment under agreements with initial terms ranging from one to twenty years. Rental expense for the years ended June 30, 2002, 2001 and 2000 was approximately $8,200,000; $7,500,000; and $8,000,000, respectively. At June 30, 2002, the minimum annual rental commitments under non-cancelable operating leases, principally real estate, were approximately: 2003, $4,800,000; 2004, $4,100,000; 2005, $3,200,000; 2006, $2,200,000; 2007, $1,900,000; and thereafter, $5,300,000.
Contingencies
The Company is a party to various claims and legal proceedings related to environmental and other matters generally incidental to its business. Management has evaluated each matter based, in part, upon the advice of its independent environmental consultants and in-house counsel and has recorded an appropriate provision for the resolution of such matters in accordance with SFAS No. 5, "Accounting for Contingencies." Management believes that such provision is sufficient to cover any future payments, including legal costs, under such proceedings.
The Company changed its tax contingency reserve by $1.3 million to income taxes in 2002. This was a result of a change of tax rates at local domestic taxing jurisdictions, thus reducing previously recorded deferred income taxes and management's evaluation of the need for certain liabilities that had been established for various tax contingencies. The Company considered the level of currently recorded amounts, the status of tax filings currently under examination by the Internal Revenue Service and the ability to benefit from distributions from foreign subsidiaries.
At June 30, 2002, accumulated retained earnings of non- U.S. subsidiaries totaled $34,213,000. No provision for U.S. income and foreign withholding taxes has been made because it is expected that such earnings will be reinvested indefinitely or the distribution of any remaining amount would be principally offset by foreign tax credits. The determination of the withholding taxes that would be payable upon remittance of these earnings and the amount of unrecognized deferred tax liability on these un- remitted earnings is not practicable.
Industry Segment Information
The Company is composed of three product groups. These groups are described on pages 2 and 3.
The Company has determined that it has three distinct reportable segments: Food Service, Consumer and Industrial. These three segments are managed separately, and the operating results of each segment are regularly reviewed and evaluated separately by the Company's senior management. During fiscal 2002, the Company realigned how certain operations are managed and reported to the chief decision maker. The segment information for prior years has been recast to reflect the realignment of management practices of the Company.
Net sales include only transactions with unaffiliated customers and include no significant intersegment or export sales. Operating income by segment and geographic area excludes general corporate and interest expenses. Assets of the Corporate segment consist primarily of cash, administrative buildings, equipment, prepaid pension cost, goodwill and other non-current assets.
Employee Benefit Plans
Retirement Plans
The Company has defined benefit pension plans covering the majority of its employees, including certain employees in foreign countries. Plan assets are invested primarily in common stocks and fixed income securities. The Company makes contributions generally equal to the minimum amounts required by federal laws and regulations. Foreign plans are funded in accordance with the requirements of regulatory bodies governing each plan.
Included in the above are the following assumptions relating to the defined benefit pension plans in the United States: discount rate 7.3%, expected return on assets 9.6% and rate of compensation increase 4.0%. The US defined benefit pension plans represent the majority of the Company's pension obligations.
The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for pension plans with accumulated benefit obligations in excess of plan assets were $6,204,000, $5,323,000 and $0, respectively, as of June 30, 2002 and $6,606,000, $5,867,000 and $0, respectively as of June 30, 2001.
Certain U.S. employees are covered by union-sponsored, collectively bargained, multi-employer pension plans. Contributions and costs are determined in accordance with the provisions of negotiated labor contracts or terms of the plans. Pension expense for these plans was $1,973,000; $1,953,000; and $1,863,000 in 2002, 2001 and 2000, respectively.
Deferred Contribution Plans
The Company had an Employee Stock Ownership Plan (ESOP) covering certain salaried employees. The ESOP was merged into the 401(k) savings plan discussed below in fiscal 2000.
Employee Savings Plan
The Company has established 401(k) savings plans covering substantially all of the Company's full-time domestic employees. Under the provisions of the plans, employees may contribute a portion of their compensation within certain limitations. The Company, at the discretion of the Board of Directors, may make contributions on behalf of its employees under these plans. Such contributions, if any, become fully vested immediately. The Company contributions, including contributions previously made to the ESOP, were approximately $1,775,000, $1,975,000 and $2,119,000 for the years ended June 30, 2002, 2001 and 2000, respectively. These benefits are funded by insurance policies owned by the Company. At June 30, 2002, the 401(k) holds approximately 1.1 million shares of Company stock, representing approximately 57% of the holdings of the plan.
Profit Improvement Participation Share Plan
The Company has maintained a profit improvement incentive plan in which certain officers and employees participate. The plan has been phased-out and, consequently, no new units have been awarded since 1995. Units under this plan were issued at the discretion of the Compensation Committee of the Board of Directors and were assigned a value equal to a multiple of earnings per share payable in five years based upon the net increase in earnings per share over the five-year period. Each fiscal year, amounts were charged or credited to operations to reflect this liability. The amounts credited to operations for the year ended June 30, 2000 was $40,000.
Other Plans
The Company also sponsors a Supplemental Retirement Income Plan for certain executives. The aggregate present value of current outstanding benefits was $1,532,000 at June 30, 2002.
Postretirement Benefits Other Than Pensions
The Company sponsors unfunded postretirement medical and life plans covering certain full-time employees who retire and have attained the requisite age and years of service. Retired employees are required to contribute toward the cost of coverage according to various rules established by the Company.
The Company records postretirement benefits (such as health care and life insurance benefits) during the years an employee provides services.
The assumed weighted average discount rate as of June 30, 2002 and 2001 was 7.30% and 7.75% respectively. The annual assumed rate of increase in the per capita cost of covered health care benefits is 9.0% for retirees under age 65 in 2002 and 10.0% in 2001, trending down to 5.0% in 2006 and is assumed to remain at that level thereafter. A 1% increase in the assumed health care cost trend rate would have increased the accumulated benefit obligation by $563,000 and the net postretirement cost by $101,000 in 2002.
STOCK BASED COMPENSATION AND PURCHASE PLANS
Stock Based Compensation Plans
Under incentive compensation plans, the Company is authorized to, and has made grants of, stock options, restricted stock and performance share units to provide equity incentive compensation to key employees. At June 30, 2002, 1,747,129 shares of common stock were reserved for issuance under these plans. Of this amount, and as noted in the table below, 789,318 shares are for options granted but unexercised and 178,075 shares are for restricted stock grants outstanding.
Stock Option Plans
Statement of Financial Accounting Standards No. 123, "Accounting for Stock Based Compensation," encourages, but does not require companies to record compensation cost for stock based employee compensation plans at fair value. The Company has chosen to continue to account for stock based compensation using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations. Accordingly, the compensation cost of stock options is measured as the excess, if any, of the quoted market price of the Company's stock at the date of the grant over the option exercise price and is charged to operations over the vesting period.
At June 30, 2002, the Company has made grants of options under various Stock Option Plans. Generally, these options may be granted at or below fair market value as of the date of grant and must be exercised within the period prescribed by the Compensation Committee of the Board of Directors at the time of grant but no later than ten years from the date of grant. Certain options granted at fair value can be exercised anytime after six months from the date of grant, and other options can only be exercised in accordance with the vesting schedules prescribed by the Committee.
Restricted Stock Awards
The Company may award shares of restricted stock to eligible employees at no cost, giving them in most instances all of the rights of stockholders, except that they may not sell, assign, pledge or otherwise encumber such shares and rights. Such shares and rights are subject to forfeiture if certain employment conditions are not met. During the restriction period, recipients of the shares are entitled to dividends on such shares, providing that such shares are not forfeited. Dividends are accumulated and paid out at the end of the restriction period. During 2002 and 2001, the Company granted 45,000, and 19,051 shares, respectively, of restricted stock to eligible employees. At June 30, 2002, restrictions on the stock lapse between 2002 through 2010. Through June 30, 2002, restrictions on 3,285 shares have lapsed. Upon issuance of the shares, an unamortized compensation expense on the dates of the grant was charged to stockholders' equity and will be amortized over the restriction period. For the years ended June 30, 2002 and 2001, $601,791 and $771,695, respectively, was recognized as compensation expense.
Executive Compensation Program
The Company operates a compensation program for key employees. The plan contains both an annual component as well as long-term component. Under the annual component, participants are required to receive 20% (and may elect to receive up to 50%) of their annual incentive compensation in restricted stock which is purchased at a discount to the market based on the lower closing price on the date of the grant or the date the award is paid out. During the restriction period, recipients of the shares are entitled to dividends on such shares, providing that such shares are not forfeited. Dividends are accumulated and paid out at the end of the restriction period. The restrictions on the stock expire after three years. At June 30, 2002 and 2001, respectively, 53,115 and 44,452 shares of restricted stock are outstanding and subject to restrictions that lapse between 2003 and 2004. The compensation expense associated with this short-term incentive program is charged to income ratably over the restriction period. The Company recorded compensation expense related to this program of $166,000 and $70,000 for the years ended June 30, 2002 and 2001, respectively.
Under the long-term component, grants of incentive performance share units ("PSU's") are made annually to key employees and are earned based on the achievement of certain overall corporate financial performance targets over a three- year period. In addition, stock options are awarded under this program at the fair market value as of the date of grant. These options vest ratably over five years and must be exercised within seven years. In certain circumstances, such as retirement or a change in control, vesting of the options granted are accelerated and PSU's are paid off on a pro-rata basis. At June 30, 2002, under this program 50,300 shares were subject to the restrictions related to the PSU's. Compensation expense, if any, associated with the PSU's is recorded to expense as the achievement of future performance objectives appears likely. Recipients of the PSU's do not receive dividend rights until such time as the shares have been issued.
It should be noted that the option pricing model used was designed to value readily tradable stock options with relatively short lives. The options granted to employees are not tradable and have contractual lives of up to ten years. However, management believes that the assumptions used and the model to value the awards yields a reasonable estimate of the fair value of the grants made under the circumstances.
Employee Stock Purchase Plan
The Company has an Employee Stock Purchase Plan that allows employees to purchase shares of common stock of the Company at a 15% discount from market value. Shares of stock reserved for the plan were 230,285 at June 30, 2002. Shares purchased under this plan aggregated 67,540, 76,081; and 92,568; in 2002, 2001 and 2000, respectively.
Rights Plan
The Company has a Sharholder Rights Plan for which purchase rights have been distributed as a dividend at the rate of one right for each share of common stock held. The rights may be exercised only if an entity has acquired beneficial ownership of 15% or more of the Company's common stock, or announces an offer to acquire 15% or more of the Company.
Acquisitions and Dispositions
ATC-Frost Magnetics, Inc. was purchased for a total of $15,700,000 in cash and stock in April 2001. ATC-Frost is a leading manufacturer of custom magnetic components in Canada. This transaction was accounted for as a purchase and, accordingly, the consolidated financial statements include the results of the acquired company from its acquisition date. The purchase price of the acquisition was allocated to the assets acquired based on their fair market values and resulted in the recognition of goodwill of approximately $10,000,000. If the acquisition had occurred as of July 1, 1999, consolidated results would not have been materially affected.
Restructuring
In June 2000, the Company recorded a restructuring charge of $5,408,000 before taxes. The restructuring plan involved the: (1) disposal, closing or elimination of certain under-performing and unprofitable operating plants, product lines, manufacturing processes and businesses; (2) realignment and consolidation of certain marketing and distribution activities; and (3) other cost containment actions, including selective personnel reductions. The charge was recorded in the line item "Restructuring charge" on the Statements of Consolidated Income. As part of this restructuring the Company sold for cash and a note the assets and operations of its Keller-Dorian and Goyot subsidiaries in September.
The first quarter of fiscal 2002 excludes a cumulative effect of a change in accounting principle of $3,779,000 or 31 cents per share. During the fourth quarter of fiscal 2002, the Company recorded certain tax adjustments discussed in the Income Tax Note to the Consolidated Financial Statements. In addition, during the fourth quarter of fiscal 2002, the Company provided $3.4 million of additional reserves for potentially obsolete and slow moving inventory.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF STANDEX
The Company will file with the Securities and Exchange Commission ("SEC") a definitive Proxy Statement no later than 120 days after the close of the fiscal year ended June 30, 2002 (the "Proxy Statement"). The information required by this item and not provided in Item 4 "Executive Officers of Standex" is incorporated by reference from the Proxy Statement under the captions "Election of Directors," "Stock Ownership in the Company," "Other Information Concerning the Company" and "Section 16(a) Beneficial Ownership Reporting Compliance."
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
Information regarding executive compensation is incorporated by reference from the Proxy Statement under the captions "Report of the Compensation Committee," "Executive Compensation," and "Directors' Fees."
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The stock ownership of each person known to Standex to be the beneficial owner of more than 5% of its Common Stock and the stock ownership of all directors and executive officers of Standex as a group are incorporated by reference in the Proxy Statement under the caption "Stock Ownership in the Company." The beneficial ownership of Standex Common Stock of all directors and executive officers of the Company is incorporated by reference in the Proxy Statement under the caption "Stock Ownership in the Company."
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding certain relationships and related transactions is incorporated by reference in the Proxy Statement under the caption "Indebtedness of Management."
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Financial Statements and Schedule
(i) The financial statements required in response to this item are listed in response to Part II, Item 8 of this Annual Report on Form 10-K.
(ii) The financial statement schedule listed in the accompanying index to the Consolidated Financial Statements and Schedules is filed as part of this Annual Report on Form 10-K.
(b) Reports on Form 8-K
Standex filed no reports on Form 8-K with the Securities and Exchange Commission during the last quarter of the fiscal year ended June 30, 2002.
(c) Exhibits
3. (i) Restated Certificate of Incorporation of Standex, dated October 27, 1998, is incorporated by reference to the exhibits to the Quarterly Report of Standex on Form 10- Q for the fiscal quarter ended December 31, 1998.
(ii) By-Laws of Standex, as amended, and restated on July 27, 1994 are incorporated by reference to the exhibits to the Annual Report of Standex on Form 10-K for the fiscal year ended June 30, 1994 (the "1994 10- K").
4. (a) Agreement of the Company, dated September 15, 1981, to furnish a copy of any instrument with respect to certain other long-term debt to the Securities and Exchange Commission upon its request is incorporated by reference to the exhibits to the Annual Report of Standex on Form 10-K for the fiscal year ended June 30, 1981.
(b) Rights Agreement of the Company is incorporated by reference to Form 8A filed with the Securities and Exchange Commission on December 18, 1998 and to the Form 8-K filed with the Securities and Exchange Commission on December 18, 1998.
10. (a) Employment Agreement dated May 1, 2000, between the Company and David R. Crichton is incorporated by this reference to the exhibits to the Annual Report on Form 10-K for the fiscal year ended June 30, 2000 (the "2000 10-K") and an Amendment to the Employment Agreement dated January 30, 2002 is incorporated by this reference to the exhibits to the Quarterly Report of Standex on Form 10-Q for the fiscal quarter ended March 31, 2002 (the "March 2002 10-Q").*
(b) Employment Agreement dated May 1, 2000, between the Company and Edward J. Trainor is incorporated by this reference to the exhibits to the 2000 10-K and an Amendment to the Employment Agreement dated January 30, 2002 is incorporated by this reference to the exhibits to the March 2002 10- Q.*
(c) Employment Agreement dated May 1, 2000, between the Company and Edward F. Paquette is incorporated by this reference to the exhibits to the 2000 10-K.*
(d) Employment Agreement dated May 1, 2000, between the Company and Deborah A. Rosen is incorporated by this reference to the exhibits to the 2000 10-K and an Amendment to the Employment Agreement dated January 30, 2002 is incorporated by this reference to the exhibits to the March 2002 10- Q.*
(e) Employment Agreement dated April 1, 2001 between the Company and Daniel C. Potter is incorporated by this reference to the exhibits to the Annual Report on Form 10-K for the fiscal year ended June 30, 2001 (the "2001 10-K").*
(f) Employment Agreement dated September 1, 2001 between the Company and Christian Storch is incorporated by this reference to the exhibits to the Quarterly Report of Standex on Form 10-Q for the fiscal quarter ended September 30, 2001.*
(g) Employment Agreement dated December 3, 2001 between the Company and Roger L. Fix is incorporated by this reference to the exhibits to the Quarterly Report of Standex on Form 10-Q for the fiscal quarter ended December 31, 2001.*
(h) Standex International Corporation 1998 Long-Term Incentive Plan, effective October 27, 1998 is incorporated by reference to the exhibits to the Quarterly Report of Standex on Form 10-Q of the fiscal quarter ended December 31, 1998.*
(i) Standex International Corporation Profit Improvement Participation Shares Plan as amended and restated on April 26, 1995 is incorporated by reference to the exhibits to the Annual Report of Standex on Form 10-K for the fiscal year ended June 30, 1995 (the "1995 10- K").*
(j) Standex International Corporation Stock Option Loan Plan, effective January 1, 1985, as amended and restated on January 26, 1994, is incorporated by reference to the exhibits to the 1994 10-K.*
(k) Standex International Corporation Executive Security Program, as amended and restated on January 31, 2001 is incorporated by reference to the exhibits to the Quarterly Report of Standex on Form 10-Q for the fiscal quarter ended March 31, 2001 (the "March 2001 10-Q").*
(l) Standex International Corporation 1985 Stock Option Plan effective July 31, 1985, as amended on October 30, 1990, is incorporated by reference to the exhibits to the Annual Report of Standex on Form 10-K for the fiscal year ended June 30, 1991.*
(m) Standex International Corporation Executive Life Insurance Plan effective April 27, 1994 and as amended and restated on April 25, 2001 is incorporated by reference to the exhibits to the 2001 10-K.*
(n) Standex International Corporation 1994 Stock Option Plan effective July 27, 1994 is incorporated by reference to the exhibits to the 1994 10-K.*
(o) Standex International Corporation Supplemental Retirement Plan adopted April 26, 1995 and amended on July 26, 1995 is incorporated by reference to the exhibits to the 1995 10-K.*
(p) Standex International Corporation Key Employee Share Option Plan dated June 27, 2002 is incorporated by reference to this Annual Report on Form 10-K for the fiscal year ended June 30, 2002.*
21. Subsidiaries of Standex.
23. Independent Auditors' Consent.
24. Powers of Attorney of David R. Crichton, William R. Fenoglio, Roger L. Fix, Walter F. Greeley, Daniel B. Hogan, Thomas L. King, C. Kevin Landry, H. Nicholas Muller, III, Ph.D. and Deborah A. Rosen.
99. Sarbanes-Oxley Act, Section 906 Certification.
(d) Schedule
The schedule listed in the accompanying Index to the Consolidated Financial Statements and Schedules is filed as part of this Annual Report on Form 10-K.
* Management contract or compensatory plan or arrangement.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Standex International Corporation has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, on August 19, 2002.
STANDEX INTERNATIONAL CORPORATION (Registrant)
By: /s/EDWARD J. TRAINOR Edward J. Trainor Chairman/Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Standex International Corporation and in the capacities indicated on August 19, 2002:
Signature Title
/s/ EDWARD J. TRAINOR Chairman/Chief Executive Officer Edward J. Trainor
/s/ CHRISTIAN STORCH Vice President/Chief Financial Officer Christian Storch
/s/ ROBERT R. KETTINGER Corporate Controller Robert R. Kettinger (Chief Accounting Officer)
Edward J. Trainor, pursuant to powers of attorney which are being filed with this Annual Report on Form 10-K, has signed below on August 19, 2002 as attorney-in-fact for the following directors of the Registrant:
David R. Crichton Thomas L. King William R. Fenoglio C. Kevin Landry Roger L. Fix H. Nicholas Muller, III, Ph.D. Walter F. Greeley Deborah A. Rosen Daniel B. Hogan
/s/ EDWARD J. TRAINOR Edward J. Trainor
Supplemental Information to be furnished with reports filed pursuant to Section 15(d) of the Act by Registrants which have not registered securities pursuant to Section 12 of the Act.
The Company will furnish its 2002 Annual Report, its Proxy Statement and proxy materials to security holders subsequent to the filing of the annual report of this Form. Copies of such material shall be furnished to the Commission when it is sent to security holders.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
Schedule
Schedule VIII Valuation and Qualifying Accounts
Independent Auditors' Report relating to Schedule VIII
Schedules (consolidated) not listed above are omitted because of the absence of conditions under which they are required or because the required information is included in the financial statements submitted.
INDEX TO ITEMS INCORPORATED BY REFERENCE
Page No. Proxy Statement ("P") PART III
Item 10 Directors and Executive Officers of Standex
Item 11 Executive Compensation
Item 12 Security Ownership of Certain Beneficial Owners and Management
Item 13 Certain Relationships and Related Transactions
INDEX TO EXHIBITS
PAGE
10. (p) Standex International Corporation Key Employee Share Option Plan dated July 27, 2002 is incorporated by reference to this Annual Report on From 10-K for the fiscal year ended June 30, 2002.
21. Subsidiaries of Standex.
23. Independent Auditors' Consent.
24. Powers of Attorney of David R. Crichton, William R. Fenoglio, Roger L. Fix, Walter F. Greeley, Daniel B. Hogan, Thomas L. King, C Kevin Landry, H. Nicholas Muller, III, Ph.D., Deborah A. Rosen.
99. Sarbanes-Oxley Act, Section 906 Certification.