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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended Commission File Number 1-7233
March 31, 2003
STANDEX INTERNATIONAL CORPORATION
(Exact name of Registrant as specified in its Charter)
DELAWARE 31-0596149
(State of incorporation) (I.R.S. Employer Identification No.)
6 MANOR PARKWAY, SALEM, NEW HAMPSHIRE 03079
(Address of principal executive office) (Zip Code)
(603) 893-9701
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. YES X NO
Indicate by check mark whether the Registrant is an accelerated filer
(as defined in Rule 12.b-2).
YES X NO
The number of shares of Registrant's Common Stock outstanding on
March 31, 2003 was 12,004,457.
STANDEX INTERNATIONAL CORPORATION
I N D E X
Page No.
PART I. FINANCIAL INFORMATION:
Item 1.
Condensed Statements of Consolidated Income
for the Three and Nine Months Ended
March 31, 2003 and 2002 2
Condensed Consolidated Balance Sheets,
March 31, 2003 and June 30, 2002 3
Condensed Statements of Consolidated Cash Flows
for the Nine Months Ended March 31, 2003 and 2002 4
Notes to Condensed Consolidated Financial Statements 5-11
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations 12-20
Item 3.
Quantitative and Qualitative Disclosures About Market Risk 21
Item 4.
Controls and Procedures 21
PART II. OTHER INFORMATION
Not applicable 22
PART I. FINANCIAL INFORMATION
STANDEX INTERNATIONAL CORPORATION
Condensed Statements of Consolidated Income
(In thousands, except per share data)
Three Months Ended Nine
Months Ended
March 31
March 31
2003 2002 2003 2002
Net sales $137,683 $136,865 $434,072 $430,502
Cost of sales 94,959 93,468 294,538 288,681
Gross profit 42,724 43,397 139,534 141,821
Operating Expenses:
Selling, general and
administrative expenses 37,403 35,821 115,248 110,233
Other expense, net - - 1,306 -
Restructuring/Asset Impairment 2,171 - 3,200 -
Total operating expenses 39,574 35,821 119,754 110,233
Income from operations 3,150 7,576 19,780 31,588
Interest expense (1,824) (2,070) (5,295) (6,618)
Other, net 49 (11) 40 151
Income before income taxes 1,375 5,495 14,525 25,121
(Credit)/Provision for income taxes (166) 1,906 4,831 9,656
Income before cumulative effect of
a change in accounting principle 1,541 3,589 9,694 15,465
Cumulative effect of a change in
accounting principle - - - (3,779)
Net income $1,541 $3,589 $9,694 $11,686
Earnings per share: (before cumulative
effect of a change in accounting
principle):
Basic $.13 $.29 $.80 $1.27
Diluted $.13 $.29 $.80 $1.26
Earnings per share: (after cumulative
effect of a change in accounting
principle):
Basic $.13 $.29 $.80 $.96
Diluted $.13 $.29 $.80 $.95
Cash dividends per share $.21 $.21 $.63 $.63
See notes to condensed consolidated financial statements.
STANDEX INTERNATIONAL CORPORATION
Condensed Consolidated Balance Sheets
(In thousands)
March 31 June 30
2003 2002
ASSETS
Current assets
Cash and cash equivalents $13,055 $8,092
Receivables, net 82,036 93,219
Inventories 90,325 92,931
Prepaid expenses 7,458 4,570
Total current assets 192,874 198,812
Property, plant and equipment 278,768 273,630
Less accumulated depreciation 169,582 160,738
Property, plant and equipment, net 109,186 112,892
Other assets
Prepaid pension cost 48,649 47,405
Goodwill, net 37,130 36,250
Other 19,342 10,680
Total other assets 105,121 94,335
Total $407,181 $406,039
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term borrowings and current portion
of long-term debt $1,536 $82,221
Accounts payable 34,762 35,209
Income taxes 1,508 1,221
Accrued expenses 37,792 36,128
Total current liabilities 75,598 154,779
Long-term debt (less current
portion included above) 114,829 50,087
Deferred income taxes and other liabilities 31,396 22,741
Stockholders' equity
Common stock 41,976 41,976
Additional paid-in capital 12,447 12,075
Retained earnings 386,656 384,589
Unamortized value of restricted stock (104) (655)
Accumulated other comprehensive loss (2,549) (8,473)
Treasury shares (253,068) (251,080)
Total stockholders' equity 185,358 178,432
Total $407,181 $406,039
See notes to condensed consolidated financial statements.
STANDEX INTERNATIONAL CORPORATION
Condensed Statements of Consolidated Cash Flows
(In thousands)
Nine Months Ended
March 31
2003 2002
Cash flows from operating activities:
Net income $9,694 $11,686
Cumulative effect of a change in
accounting principle - 3,779
Depreciation and amortization 10,157 9,847
Net changes in operating assets and liabilities 10,368 8,290
Net cash provided by operating activities 30,219 33,602
Cash flows from investing activities:
Expenditures for property and equipment (5,982) (9,133)
Expenditures for acquisitions (1,599) -
Proceeds from sale of real estate 5,293 -
Other 521 167
Net cash used for investing activities (1,767) (8,966)
Cash flows from financing activities:
Repayment of debt (40,943) (7,576)
Proceeds from additional borrowings 25,000 962
Cash dividends paid (7,627) (7,593)
Reacquisition of shares-open market - (22)
Reacquisition of shares-stock incentive
programs and employees (3,399) (5,088)
Other, net 2,336 2,756
Net cash used for financing activities (24,633) (16,561)
Effect of exchange rate changes on cash 1,144 (66)
Net change in cash and cash equivalents 4,963 8,009
Cash and cash equivalents at beginning of year 8,092 8,955
Cash and cash equivalents at March 31 $13,055 $16,964
Supplemental disclosure of cash flow information:
Cash paid during the nine months for:
Interest $4,852 $7,019
Income taxes $4,544 $8,158
See notes to condensed consolidated financial statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Management Statement
The financial statements as reported in this Form 10-Q reflect
all adjustments (including those of a normal recurring nature)
which are, in the opinion of management, necessary to a fair
statement of results for the three and nine months ended March
31, 2003 and 2002.
These financial statements should be read in conjunction with the
Annual Report on Form 10-K, and in particular, the audited
financial statements for the fiscal year ended June 30, 2002.
Accordingly, footnote disclosures that would substantially
duplicate the disclosures contained in the latest audited
financial statements have been omitted from this filing.
2. Non-U.S. Adjustment
In July 2002, the Company conformed the year end of its non-U.S.
operations which had previously reported on a one month lag. An
additional month of sales of $4.4 million were included in the
nine months ended March 31, 2003 as a result of this conformation
of year end.
3. Inventories
Inventories at March 31, 2003 and June 30, 2002 are comprised of
(in thousands):
March 31 June 30
Raw materials $34,788 $33,257
Work in process 19,244 21,779
Finished goods 36,293 37,895
Total $90,325 $92,931
4. Debt
Debt is comprised of (in thousands):
March 31 June 30
2003 2002
Bank credit agreements $41,175 $74,732
Institutional investors
5.94% to 7.13% (due 2003-2012) 71,428 53,571
Other 3.0% to 4.85%
(due 2003-2018) 3,762 4,005
Total 116,365 132,308
Less current portion 1,536 82,221
Total long-term debt $114,829 $50,087
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.
In October 2002, the Company completed a private placement of $25
million aggregate principal amount of 5.94% Senior Notes due
October 17, 2012. The Notes are unsecured and carry an average
life of approximately seven years. Proceeds were used to repay
debt and for general working capital purposes.
On February 7, 2003, the Company entered into a 3-year, $130
million revolving credit facility (RCF) replacing the existing
facility which was to expire in May 2003. Proceeds under the
agreement may be used for general corporate purposes or to
provide financing for acquisitions. At March 31, 2003, the
Company had available $90 million under this facility. The
agreement contains certain covenants including limitations on
indebtedness and liens. Borrowings under the agreement bear
interest at a rate equal to the sum of a base rate or a
Eurodollar rate, plus an applicable percentage based on the
Company's consolidated leverage ratio, as defined by the
agreement. The effective interest rate would have been 2.4% if
there had been borrowings under the agreement on the date the
agreement was signed. Borrowings under the agreement are not
collateralized. The facility will expire in February 2006.
Debt is due as follows by fiscal year: 2003, $1,278,000; 2004,
$7,502,000; 2005, $7,143,000; 2006, $47,142,000; 2007,
$3,571,000; and thereafter, $49,729,000.
5. U.S. Pension Plan Credits
In the fiscal year ended June 30, 2002, the Company recorded a
net pension credit of $2.9 million for its defined benefit U.S.
pension plans. The Company expects to report a pension credit of
approximately $770,000 in the current fiscal year.
6. Earnings Per Share Calculation
The following table sets forth the computation of basic and
diluted earnings per share (in thousands):
Three Months Ended Nine Months Ended
March 31 March 31
2003 2002 2003 2002
Income before cumulative
effect of a change in
accounting principle $1,541 $3,589 $9,694 $15,465
Cumulative effect of a
change in accounting
principle - - - (3,779)
Net income $1,541 $3,589 $9,694 $11,686
Basic - Average Shares
Outstanding 11,998 12,107 12,055 12,130
Effect of Dilutive
Securities-Stock Options 77 209 133 179
Diluted - Average Shares
Outstanding 12,075 12,316 12,188 12,309
Earnings per share (before
cumulative effect of a change
in accounting principle):
Basic $0.13 $0.29 $0.80 $1.27
Diluted $0.13 $0.29 $0.80 $1.26
Earnings per share (after
cumulative effect of a change
in accounting principle):
Basic $0.13 $0.29 $0.80 $0.96
Diluted $0.13 $0.29 $0.80 $0.95
Cash dividends per share have been computed based on the shares
outstanding at the time the dividends were paid. The shares (in
thousands) used in this calculation for the three and nine months
ended March 31, 2003 and 2002 were as follows:
2003 2002
Quarter 11,980 12,021
Year-to-date 12,106 12,053
7.Adoption of SFAS Nos. 144, 145, 146 and 148
Effective July 1, 2002, the Company adopted Statement of
Financial Accounting Standards (SFAS) Nos. 144, 145 and 146.
SFAS No. 144, "Accounting for the Impairment or Disposal of Long-
Lived Assets," creates one accounting model, based on the
framework established in SFAS No. 121, to be applied to all long-
lived assets including discontinued operations. The impact of the
adoption of SFAS No. 144 was not significant.
SFAS No. 145, "Rescission of FASB Statements No. 4, 44 and 64,
amendment to FASB Statement No. 13, and Technical Corrections,"
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. There was no impact from
the adoption of this SFAS.
SFAS No. 146, "Accounting for Costs Associated with Exit or
Disposal Activities," 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)." The SFAS requires that a
liability for costs associated with an exit or disposal activity
be recognized when the liability is incurred. The Company
announced in October 2002 that restructuring charges in the range
of $11 to $12 million (pre-tax) would be recorded over the next
18 months (see below). If this SFAS had not been adopted, a
significant portion of these charges would have been recorded in
the current nine month period instead of the $3.2 million (pre
tax) which has been recorded.
In December 2002, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 148, "Accounting
for Stock-Based Compensation -Transition and Disclosure," which
amends the transition and disclosure provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock -
Based Compensation." Statement 148 provides methods of
transition for a voluntary change to the fair value based method
of accounting for stock-based employee compensation and amends
the disclosure requirements of Statement 123 to require more
prominent and more frequent disclosures in financial statements
about the effects of stock-based compensation. The transition
provisions are effective for fiscal years ending after December
15, 2002. The disclosure provisions are effective for interim
periods beginning after December 15, 2002. The Company adopted
the interim period disclosure provisions of Statement 148 this
quarter. The adoption of Statement 148 had no effect on the
Company's financial condition or results of operations.
8. Other Expenses, Net
During the current nine month period, the Chief Executive Officer
and the Executive Vice President/Operations elected early
retirement. As participants in certain executive life insurance
plans, they were entitled to certain plan-specified benefits.
The charges related to these benefits include costs that
previously were being amortized to an anticipated retirement age
of 65, the net present value of a conversion feature and a
retirement bonus. The majority of these benefits will be paid
over the next ten years, and, accordingly, the total benefits
have been discounted to their present value of $5.6 million,
which is included in the caption "Other expenses, net" in the
Condensed Statements of Consolidated Income.
Also included in this caption is a gain ($4.3 million) on the
sale of a manufacturing facility of a UK subsidiary which was
completed in October 2002. The sale is part of the Company's
realignment strategy.
9. Restructuring/Asset Impairment
In October 2002, the Company announced it was incurring
restructuring charges over the next eighteen months in the amount
of $11 to $12 million before taxes. The restructuring plan
involves the (1) disposal, closing or elimination of certain
under-performing and unprofitable operating plants, product
lines, manufacturing processes and businesses; (2) realignment
and consolidation of certain marketing and distribution
activities; and (3) other cost containment actions, including
selective personnel reductions. The charges will be recorded in
the Condensed Statements of Consolidated Income under the caption
"Restructuring costs." The components of the total estimated
charges include involuntary employee severance and benefits costs
totaling $4,772,000, asset impairments of $1,773,000 and shutdown
costs of $4,812,000.
The Company has early adopted SFAS No. 146 (described above),
and, accordingly, these charges will be recorded generally when a
liability is incurred or a severance plan is initiated. A
summary of the charges is as follows (in thousands):
Three Months Ended March 31, 2003
Involuntary
Employee
Severance
and
Benefits Asset Shutdown
Costs Impairment Costs Total
Cash expended $750 $- $121 $871
Accrued/Non-Cash 618 682 - 1,300
Total expense $1,368 $682 $121 $2,171
Nine Months Ended March 31, 2003
Involuntary
Employee
Severance
and
Benefits Asset Shutdown
Costs Impairment Costs Total
Cash expended $849 $ - $345 $1,194
Accrued/Non-Cash 1,324 682 - 2,006
Total expense $2,173 $682 $345 $3,200
10. 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.
11. Accumulated Other Comprehensive Loss
The change in accumulated other comprehensive loss is as follows
(in thousands):
Three Months Ended Nine Months
Ended
March 31 March 31
2003 2002 2003 2002
Accumulated other
comprehensive loss -
beginning $(4,698) $(10,216) $(8,473) $10,134)
Foreign currency
translation adjustment 2,002 (303) 5,539 (605)
Change in fair market
value of interest rate
swap agreements 147 479 385 699
Accumulated other
comprehensive loss at
March 31 $(2,549) $(10,040) $(2,549) $(10,040)
12. Income Taxes
A reconciliation of the U.S. Federal income tax rate to the
effective income tax rate is as follows:
Three Months Ended Nine Months Ended
March 31 March 31
2003 2002 2003 2002
Statutory tax rate 35.0% 35.0% 35.0% 35.0%
Non-U.S. 3.8% (3.4)% 0.9% 0.3%
State taxes (4.8)% 2.8% 2.9% 2.9%
Other including change
in contingency (46.1)% 0.3% (5.5)% 0.2%
Effective income tax rate (12.1)% 34.7% 33.3% 38.4%
As part of the Company's tax planning strategies, a multi-year
R&D (research and development) tax credit project was completed
in the third quarter. As a result, the Company amended its filed
Federal and state tax returns for 1997 to 2001 and claimed an R&D
tax credit in its fiscal year 2002 filing. Based on these tax
returns, benefits, net of associated project costs, of up to $2
million could be realized for these fiscal years. In the current
quarter, $560,000 was recorded to reflect the appropriate year-to-
date benefit for this fiscal year.
The tax benefits of the amended returns will be recorded when the
actual benefits become more certain. In addition, as a result of
this project, future effective tax rates could improve to the
benefit of the Company.
13. Industry Segment Information
The Company is composed of three business segments. Net sales
include only transactions with unaffiliated customers and include
no intersegment sales. Operating income by segment excludes
general corporate expenses, and interest expense and income.
Net Sales
Three Months Ended Nine Months
Ended
March 31 March 31
Segment 2003 2002 2003 2002
Food Service $33,362 $32,462 $103,921 $101,416
Industrial 79,964 76,869 253,614 244,352
Consumer 24,357 27,534 76,537 84,734
Total $137,683 $136,865 $434,072 $430,502
Income From Operations
Three Months Ended Nine Months Ended
March 31 March 31
Segment 2003 2002 2003 2002
Food Service $1,727 $1,915 $6,469 $7,154
Industrial 6,506 6,466 27,400 26,909
Consumer 119 1,688 632 5,558
Restructuring/
Asset Impairment (2,171) - (3,200) -
Other expense, net - - (1,306) -
Corporate (3,031) (2,493) (10,215) (8,033)
Total $3,150 $7,576 $19,780 $31,588
14. Derivative Instruments and Hedging Activities
Standex 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.
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 quarter ended March 31, 2003, the Company completed an
assessment of the cash flow hedge instruments and determined
these hedges to be highly effective. The Company also determined
the fair market value of its interest rate swap. The change in
value, adjusted for any inefficiency, was recorded to other
comprehensive income and the related derivative liability. For
the quarter ended March 31, 2003 the increase in value totaled
$147,000 and the ineffective portion of the hedge was immaterial.
15. Acquisitions
The Company purchased, as of September 30, 2002, substantially
all the assets of Cincinnati, Ohio-based CIN-TRAN, Inc. a
manufacturer of custom UL/CSA approved low-frequency
transformers. In December 2002, Millennium Molds, a repairer of
injection molds, was acquired. The combined purchase price of
these acquisitions was $1.6 million, and their combined revenues
totaled approximately $4.3 million. The first acquisition will
be fully integrated with Standex Electronics, and the latter
acquisition will become part of Standex Engraving. Both
acquisitions are part of the Company's Focused Diversity strategy
to seek bolt-on acquisitions for growth platform companies.
16. Stock Compensation Plans
In December 2002, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 148, "Accounting
for Stock-Based Compensation - Transition and Disclosure" ("SFAS
148") which amends the transition and disclosure provisions of
SFAS No. 123, "Accounting for Stock-Based Compensation" ("SFAS
123"). SFAS 148 provides alternative methods of transition for a
voluntary change to the fair value based method of accounting for
stock-based employee compensation and amends the disclosure
requirements of SFAS 123 to require more prominent and more
frequent disclosures in financial statements about the effects of
stock-based compensation. The disclosure provisions are
effective for interim periods beginning after December 15, 2002.
The adoption of these provisions had no effect on the Company's
financial position or results of operations. The Company applies
Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees" ("APB No. 25") and related interpretations
in accounting for its plans, as permitted under SFAS 123.
The following table illustrates the effect on net earnings and
earnings per share if the Company had applied the fair value
recognition provisions of SFAS No. 123 to its stock option plans
and employee stock purchase plan:
Three Months Ended Nine Months
Ended
March 31 March 31
2003 2002 2003 2002
Net income, as reported $1,541 $3,589 $9,694 $11,686
Deduct: Total stock-based
employee compensation
expense determined under
fair value based method for
all awards, net of related
tax effects (210) (304) (654) (844)
Proforma net income $1,331 $3,285 $9,040 $10,842
Earnings per share:
Basic - as reported $0.13 $0.29 $0.80 $0.96
Basic - proforma $0.11 $0.27 $0.75 $0.89
Diluted - as reported $0.13 $0.29 $0.80 $0.95
Diluted - proforma $0.11 $0.27 $0.74 $0.88
17. Subsequent Event
Subsequent to March 31, 2003, the Company sold the real estate
facility of one of its business units for $4.2 million as part
of its realignment strategy. Concurrently, the operations at
that business unit were closed. Annual net sales at the
business unit have averaged less than $3.5 million, and it has
been marginally unprofitable.
STANDEX INTERNATIONAL CORPORATION
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,"
"could", "will," "expect," "believe," "estimate," "anticipate,"
"assume," "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 or marketing
of new products, failure to achieve the Company's acquisition,
disposition and restructuring goals in the anticipated timeframe,
unforeseen volatility in financial markets, general domestic and
international business and economic conditions, significant changes
in domestic and international fiscal policies or tax legislation and
market demand.
MATERIAL CHANGES IN FINANCIAL CONDITION
Cash Flow
During the first nine months of fiscal 2003 operating activities
generated $30.2 million in cash flow, as compared to the $33.6
million for the comparable period in fiscal 2002. Despite a decline
in operating income of $11.8 million, the Company has been able to
more closely maintain similar cash flows due to its working capital
initiatives. The Company redeployed those resources by investing
$6.0 million in plant and capital equipment while returning $7.6
million to shareholders through cash dividends and reducing net debt
by $20.9 million. Capital expenditures declined by $3.2 million as
compared to the first nine months of last year as the Company
reacted to the downturn in the economy and focused on replacement
activities. Capital expenditures are expected to be $9 to $10
million for the current fiscal year.
In addition to measuring the cash flow generation or usage based
upon operating, investing, and financing classifications included in
the Condensed 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 and
acquisitions. The Company generated free cash flow of $22.6 million
in the first nine months of fiscal 2003 compared with $24.5 million
in the same period of fiscal 2002.
Capital Structure
The following table sets forth the Company's capitalization at March
31, 2003 and June 30, 2002:
March 31 June 30
Short-term debt $1,536 $82,221
Long-term debt 114,829 50,087
Total Debt 116,365 132,308
Less cash 13,055 8,092
Total net debt 103,310 124,216
Stockholders' equity 185,358 178,432
Total capitalization $288,668 $302,648
The Company's net debt decreased by $20.9 million to $103.3 million
at March 31, 2003. The Company's net debt to capital percentage is
35.8% at March 31, 2003 down from 41.0% at June 30, 2002.
In October 2002, the Company completed a private placement of $25
million aggregate principal amount of 5.94% Senior Notes due October
17, 2012. The Notes are unsecured and carry an average life of
approximately seven years. Proceeds were used to repay debt and for
general working capital purposes.
In February 2003, the Company entered into a 3-year, $130 million
revolving credit facility (RCF) replacing the existing facility
which was to expire in May 2003. Proceeds under the agreement may
be used for general corporate purposes or to provide financing for
acquisitions. At March 31, 2003, the Company had available $90
million under this facility. The agreement contains certain
covenants including limitations on indebtedness and liens.
Borrowings under the agreement bear interest at a rate equal to the
sum of a base rate or a Eurodollar rate, plus an applicable
percentage based on the Company's consolidated leverage ratio, as
defined by the agreement. Borrowings under the agreement are not
collateralized. The facility will expire on February 7, 2006.
OPERATIONS
Quarter Ended March 31, 2003
As Compared to Quarter Ended March 31, 2002
Summary
Net sales for the quarter ended March 31, 2003 were $137.7 million,
slightly ahead of the comparable quarter last year of $136.9
million. Net sales were favorably impacted by $2.1 million due to
the effect of changes in the average foreign exchange rates.
A decline in net earnings from the same quarter last year of 57% was
incurred. Earnings per share decreased to 13 cents per share (diluted)
versus 29 cents in the prior year. Pretax restructuring charges of $2.2
million (9 cents per share after tax) were recorded in the current
quarter. Excluding the restructuring charge earnings per share were
22 cents versus 29 cents in the prior year. The current third quarter results
also includes a $560,000 (5 cents per share) tax benefit related to the
R&D tax credit, discussed below, for fiscal 2003.
Both the Industrial and Food Service Segments showed improvement
over the previous year. However, the Consumer businesses continued
to reflect depressed sales, recording a reduction of 12% from the
prior year.
Standex's businesses in general continue to face flat, or negative,
growth in their markets and are focused on increasing sales through
market share gains. Headcount reductions continued through the
restructuring program and other cost cutting measures. A hiring
freeze has also been imposed throughout the Company with exceptions
limited to key replacements. In addition, a general wage freeze has
been announced for all U.S. based management.
Industrial Segment
The Industrial Segment reported net sales of $80 million for the
latest quarter as compared to $76.9 million last year, a 4%
increase. However, a significant change in the mix in divisional
sales from the previous quarter was incurred. Standex Electronics
and Standex Engraving were the primary business units responsible
for the improved sales. Although sales at the Standex Air
Distribution Products division were flat from the prior year, unit
sales were down due to local construction slowdowns caused by heavy
snowstorms in the Northeast United States and lower housing starts
in the Rocky Mountain region. Sales price increases off-set the
unit's sales declines.
Both gross profit margins (30%) and operating income ($6.5 million)
for the group were about the same as the comparable quarter last
year. Income of the Standex ADP Group was negatively impacted by
higher metal prices due to the tariffs imposed by the Bush
administration on imported steel products. The division has raised
sales prices of its products in response to higher material costs,
but has not been able to recapture all the costs through price
increases.
Operating income at Standex Electronics, Standex Engraving and
Spincraft improved due to higher sales, as noted above, and improved
margins at Spincraft. These divisions' increased income more than
off-set the income deterioration at Standex ADP.
Food Service Segment
An improvement of three percent in net sales was registered by this
segment in the current quarter ($33.4 million) as compared to last
year ($32.5 million). Both the Master-Bilt and Federal Industries
divisions recorded improved sales. Partially off-setting these
improvements, the USECO division was negatively impacted by weak
near term customer demand and some production interruptions caused
by the consolidation of its manufacturing into the Master-Bilt
operation.
The gross profit margin declined to 25% from 28% primarily due to
the short-term inefficiencies of the USECO/Master-Bilt integration.
Operating income was also down by $188,000 as compared to the
previous year.
Backlogs have increased substantially (33%) for the segment. Of
particular note in this regard are Master-Bilt, USECO and BKI.
Consumer Segment
A twelve percent decrease was recorded for the 3rd quarter net sales
of this segment. All three divisions in this segment experienced
reduced sales due to lagging customer confidence and the impact of
the war in Iraq. Also, Easter occurred in the third quarter in
fiscal 2002, but falls in the fourth quarter in fiscal 2003;
therefore, Easter sales at the Berean bookstores did not impact the
current quarter.
The gross profit margin for the current quarter was 45%, a one
percent decline from the previous year's 46%. Operating income fell
to $119,000 from last year's $1.7 million.
Cost reduction activity continues in these businesses with
reductions in payroll and discretionary spending.
Restructuring/Asset Impairment
During the current quarter $2.2 million of restructuring/asset
impairment charges were incurred and were primarily for National
Metal products and Standex Electronics. The National Metal unit was
closed as of the end of February. The sales of this operation have
been significantly impacted by foreign competition, and it was
experiencing operating losses that were diluting the overall
operating margins of the Company. The restructuring charges
incurred by Standex Electronics are the result of moving some of its
Canadian and Cincinnati manufacturing operations to Mexico. Lower
Mexican labor rates should improve gross profit margins.
Corporate
This segment's expenses increased by $538,000 due to higher
professional fees, a lower pension credit and divisional expenses
not allocated to the divisions.
R&D Tax Credit
As part of the Company's tax planning strategies, a multi-year R&D
(research and development) tax credit project was completed in the
third quarter. As a result, the Company amended its filed Federal
and state tax returns for 1997 to 2001 and claimed an R&D tax credit
in its 2002 fiscal year filing. Based on these tax returns,
benefits, net of associated project costs, of up to $2 million could
be realized. In the current quarter, $560,000 was recorded to
reflect the appropriate year-to-date benefit for this fiscal year.
The tax benefits of the amended returns will be recorded when the
actual benefits become more certain. In addition, as a result of
this project, future effective tax rates could improve to the
benefit of the Company.
Nine Months Ended March 31, 2003
As Compared to the Nine Months Ended March 31, 2002
Summary
The current nine-month period reflects net sales of $434.1 million
or $3.6 million higher than the same period in fiscal 2002. The
extra month of European sales ($4.4 million), discussed above, and
the favorable impact ($4.5 million) of the effect of changes in
average foreign exchange rates were partially off-set by declines in
operational sales which are discussed below.
In fiscal 2002, the comparable nine-month operating income was $31.6
million (before a cumulative effect of a change in accounting
principle) versus $19.8 million this year. This decrease is
primarily a reflection of several non-recurring items discussed
below, as well as the decline in operating income of the Consumer
Segment which is also discussed below. The effective tax rate for
the latest nine months was 33.3% as compared to the nine months
ended March 31, 2002 of 38.4%. The previously discussed R&D tax
credit was the major contributor to this decrease which was also
affected by more income in lower taxed countries than in the
previous year and the Company's various tax strategies.
In the first quarter of fiscal 2002, the Company recorded a charge
of $3.8 million which represented the cumulative effect of a change
in accounting principle. The change related to the Company's
adoption of Statement of Financial Accounting Standard (SFAS) No.
142 effective July 1, 2001.
Industrial Segment
This segment's sales for the current nine-month period were $253.6
million as compared to $244.4 million for the same period last
fiscal year. The extra month's European sales ($3.3 million) and
improvements in the engraving and aerospace divisions accounted for
the increase. Gross profit margins were the same as last year.
Operating income was $27.4 million this year versus $26.9 million, a
result of the higher sales.
Food Service Segment
Net sales for this segment were $2.5 million more than the nine
months ended March 31, 2002. Of this amount, the extra month of
European sales accounted for $1.1 million. The remainder is due to
Master-Bilt and Federal Industries, as noted in the quarter
discussion above, partially off-set by the integration costs of
USECO also noted above. A decline from 30% in gross profit margins
to 27% in the current year is primarily due to USECO. Operating
income decreased from $7.2 million to $6.5 million.
Consumer Segment
A ten percent decrease in net sales was recorded by this segment in
the current nine month period versus the same period last year while
operating income dropped by $4.9 million. The results of the mail
order business were negatively impacted by weak consumer demand and
a shorter Christmas holiday season. Higher marketing expenses were
incurred to reach new customers, but did not yield the expected
results. The bookstore and publishing divisions also experienced
weak consumer and church customer demand due to lagging customer
confidence and the impact of the war in Iraq. Additionally,
marketing expenses increased in the publishing unit due to the
launch of a new product.
Restructuring/Asset Impairment and Other Expenses, net
A total of $3.2 million of restructuring costs were recorded in the
current nine-month period. The primary components of these charges
to date are due to the integration of USECO manufacturing activities
into the Master-Bilt operations, the closure of National Metal
Products (described above) and the transfer to Mexico of some of the
Canadian and Cincinnati manufacturing operations of Standex
Electronics, also noted above.
In the second quarter of the current fiscal year, the Chief
Executive Officer and the Executive Vice President/Operations
elected early retirement. As participants in certain executive life
insurance plans, they were entitled to certain plan-specified
benefits. The charges related to these benefits include costs that
previously were being amortized to an anticipated retirement age of
65, the net present value of a conversion feature and a retirement
bonus. The majority of these benefits will be paid over the next
ten years, and, accordingly, the total benefits have been discounted
to their present value of $5.6 million, which is included in the
caption "Other expenses, net" in the Condensed Statements of
Consolidated Income.
Also included in this caption is a gain ($4.3 million) on the sale
of a manufacturing facility of a UK subsidiary which was completed
in October, 2002. This sale is part of the Company's realignment
strategy.
Corporate
The expenses of this segment increased to $10.2 million from the
comparable period last year of $8.0 million. This increase reflects
several items some of which were higher professional fees, duplicate
salaries, a reduction in the Corporate pension credit, and
divisional fees not allocated to the divisions.
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.
Foreign Currency Translation - The Company's primary
functional currencies used by its non-US subsidiaries are
the Euro and the British Pound Sterling (Pound). During the
last nine months, both these currencies have experienced
significant increase in value relative to the US dollar, the
Company's reporting currency. Since June 30, 2002 the Euro
has appreciated in value by 13.6% relative to the US dollar,
and the Pound has appreciated in value by 7.2% relative to
the US dollar. These higher exchange values were used in
translating the appropriate non-US subsidiaries' balance
sheets in to US dollars at the end of the current quarter.
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, at this time, the
ultimate disposition of these matters to have a material adverse
effect on its financial statements.
Seasonality - Increased consumer spending during the holiday season
results in a higher level of activity in the Consumer Segment in the
second quarter of the fiscal year and lower activity in the
remaining quarters. The Industrial Segment experiences higher
activity levels in the fiscal quarters ending September 30, December
31 and June 30 of each year and decreased activity in the quarter
ending March 31, generally due to the effects of weather conditions
on the construction industry.
ACQUISITIONS
The Company purchased, as of September 30, 2002, substantially all
the assets of Cincinnati, Ohio-based CIN-TRAN, Inc. a manufacturer
of custom UL/CSA approved low-frequency transformers. In December
2002, Millennium Molds, a repairer of injection molds, was
acquired. The combined purchase price of these acquisitions was
$1.6 million, and their combined revenues totaled approximately
$4.3 million. The first acquisition will be fully integrated with
Standex Electronics, and the latter acquisition will become part
of Standex Engraving. Both acquisitions are part of the Company's
Focused Diversity strategy to seek bolt-on acquisitions for growth
platform companies.
CRITICAL ACCOUNTING POLICIES
Presented below is a discussion about the Company's application of
critical accounting policies that requires assumptions about matters
that are uncertain at the time the accounting estimate is made, and
where different estimates that reasonably could have been used in
the current period, or changes in the accounting estimate that are
reasonably likely to occur from period to period, have a material
impact on the presentation of the Company's financial condition,
changes in financial condition or results of operations. Management
has identified the following accounting estimates as critical for
the Company, and will discuss them separately below; allowance for
bad and doubtful accounts; inventory obsolescence provision; income
tax accruals; workers' compensation accruals; environmental
liabilities; goodwill impairment; and pension and other
postretirement benefits.
Allowance for Bad and Doubtful Accounts
The Company's recognition of revenue from sales to its customer base
is impacted by the financial viability of its customers. At the
time the Company recognizes revenue, upon product shipment,
measurement of those sales are reduced by an estimate of customer
non-payment, and the measurement of accounts receivable is also
reduced by the same amount. Currently, the net accounts receivables
balance of $82.0 million is about 20% of total assets, and the
reserve of $5.7 million is about 6.5% of gross accounts receivable.
For each of the Company's divisions, a historical correlation exists
between the amount of sales made and the amount of bad debt. The
greater sales level, the more bad debt is expected. For each of the
Company's divisions, the Company monitors the levels of sales and
receivables turnover and aging as part of its effort to reach an
appropriate accounting estimate for bad debts. In estimating a bad
debt reserve, the Company analyzes historical write-offs, current
credit sales aging, current economic trends, changes in customer
base, and recovery of bad debts.
In recent years, as a result of a combination of the factors
described above, the bad debt reserve has been increased to reflect
the estimated valuation of gross receivables. It is possible that a
large customer could default; however, no customer represents more
than 3% of receivables. Estimating an allowance for doubtful
accounts requires significant management judgment. In addition,
different reserve estimates that reasonably could have been used
would have had a material impact on reported receivable balances and
thus have had a material impact on the presentation of the results
of operations. For those reasons, since receivables balances are a
material part of its balance sheet, and the majority of its sales
are on a credit basis, the Company believes that the accounting
estimate related to bad debts is a critical accounting estimate.
Inventory Obsolescence
A significant portion of the Company's assets (about 22%) are in the
form of inventories in the various industries in which it operates.
The Company's profitability and viability is highly dependent on the
demand for products in the food service, consumer and industrial
segments. An imbalance between purchasing, production levels and
sales, could cause obsolescence and loss of competitive price
advantage and market share. The Company's diversity and the various
markets in which it participates somewhat mitigates this risk. The
Company reduces its inventory valuation by its estimate of the
portion which might remain unsold, and recognizes an expense of this
same amount which is classified within cost of sales in the
statement of operations.
For its products, a historical correlation exists between the rate
of inventory turnover and the levels of inventory. For each of its
products, the Company monitors the levels of product sales and
inventory at the division level as part of its effort to reach an
appropriate accounting estimate of obsolescence reserves. In
estimating impairment, the Company analyzes historical returns,
current inventory levels, current economic and industry trends,
changes in consumer demand, introduction of new competing products
and acceptance of its products. As a result of a combination of the
factors described above, the reserves for inventory obsolescence
were materially increased in the last fiscal year. In addition,
different reserve estimates that the Company reasonably could have
used would have had a material impact on reported net inventory and
cost of sales, and thus have had a material impact on the
presentation of the results of operations. For those reasons, the
Company believes that the accounting estimate related to inventory
obsolescence is a critical accounting estimate.
Income Taxes
The Company's estimate of current year tax expense and accrual, and
recognition of a deferred tax liability ($19 million at March 31,
2003) follows the provisions of SFAS No. 109.
The Company provides for potential tax contingencies arising from
routine audits by revenue taxing agencies. Its estimate is based on
historical evidence as well as expert advice from its tax advisors.
It is reasonably possible to assume that actual amounts payable as a
result of such audits could differ from that accrued in the
financial statements.
Workers' Compensation Accrual
The Company is self-insured for workers' compensation at the
majority of its divisions, and evaluates its accrual on a monthly
basis. The accrual is adjusted monthly based on actual claims
experience. Management believes, and past experience has confirmed,
that total service fee savings for the Company outweigh certain
financial risks incurred by self-insurance of workers' compensation.
Accounting standards require that a related loss contingency be
recognized as part of the Company's financial position. The accrual
as of March 31, 2003, was $4.7 million, of which approximately $3.1
million relates to the future liability for incidents which have
already occurred but not yet reported.
The Company believes that the accounting estimate related to the
assessment of future liability for current work-related injuries is
a critical accounting estimate because it is highly susceptible to
change from period to period due to the requirement that Company
management make assumptions about future costs of claims based on
historical costs.
Environmental Liabilities
At several of its divisions, the Company's operations utilize
materials defined under federal and state regulations as
"hazardous." On occasion, the Company has incurred costs both in
connection with environmental remediation of its facilities (whether
ongoing operations or facilities being sold) and disposal of waste
at licensed, third party disposal facilities. A recorded liability
for potential future environmental remediation reflects the
Company's estimate of the potential future costs of possible
remediation based primarily on experience with properties of that
type, consultation with independent environmental consultants and
previous environmental involvement. The Company believes the
accounting estimate related to remediation expenses is a critical
accounting estimate because legal requirements related to any
remediation could affect net income. However, a number of
contingencies could affect the Company's future exposure in
connection with this item including, but not limited to, changes in
legislation and unforeseen incidents which could occur at the
Company's divisions. The forecasting of environmental remediation
costs is highly uncertain and requires a large degree of judgment.
However, based upon the Company's experience with environmental
issues, the Company believes the recorded liability is appropriate.
Further, the charges related to environmental remediation in the
past three years have been insignificant.
Goodwill Impairment
The Company adopted SFAS No. 142, "Goodwill and Other Intangibles"
effective July 1, 2001. In accordance with this SFAS, the Company
evaluated its carrying value of goodwill on a division by division
basis at both December 31, 2001 and June 30, 2002. As a result of
the initial evaluation an impairment charge of $3.8 million was
recorded in fiscal 2002. The Company's carrying value of goodwill
at March 31, 2003, was $37.1 million and relates to several
divisions and industries. All of these divisions and industries are
subject to changes in markets, processes and products which could
impact the carrying value of the division and its goodwill. The
valuation of these divisions is a critical accounting policy since
the reduction in value in any one division could have a significant
impact on the financial statements of the Company.
Pension and Other Postretirement Benefits
The Company records pension and other postretirement benefit costs
in accordance with SFAS No. 87, "Employers' Accounting for
Pensions," and SFAS No. 106, "Employers' Accounting for
Postretirement Benefits Other than Pensions." Under these
accounting standards, assumptions are made regarding the valuation
of benefit obligations and performance of plan assets. The primary
assumptions relate to discount rate, expected return on plan assets,
rate of compensation increase, health care cost trend, and
amortization of gains and (losses). While the Company believes that
the assumptions used are appropriate, significant differences in the
actual experience or significant changes in the assumptions may have
a material impact on its results of operations and financial
position.
Adoption of SFAS Nos. 144, 145, 146 and 148
Effective July 1, 2002, the Company adopted SFAS Nos. 144, 145 and
146. SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets" creates one accounting model, based on the
framework established in SFAS No. 121, to be applied to all long-
lived assets including discontinued operations. The impact of the
adoption of SFAS No. 144 was not significant.
SFAS No. 145, "Rescission of FASB Statements No. 4, 44 and 64,
amendment to FASB Statement No. 13, and Technical Corrections,"
primarily 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. There was no impact from the adoption of
this SFAS.
SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal
Activities," 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)." The SFAS
requires that a liability for cost associated with an exit or
disposal activity be recognized when the liability is incurred. The
Company announced in October 2002, that restructuring charges in the
range of $11 to $12 million (pre tax) would be recorded over the
next 18 months (see below). If this SFAS had not been adopted,
these charges would have been recorded in full in the current nine
month period instead of the $3.2 million (pre tax) which was
recorded.
In December 2002, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 148, "Accounting for
Stock-Based Compensation -Transition and Disclosure," which amends
the transition and disclosure provisions of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based
Compensation." Statement 148 provides methods of transition for a
voluntary change to the fair value based method of accounting for
stock-based employee compensation and amends the disclosure
requirements of Statement 123 to require more prominent and more
frequent disclosures in financial statements about the effects of
stock-based compensation. The transition provisions are effective
for fiscal years ending after December 15, 2002. The disclosure
provisions are effective for interim periods beginning after
December 15, 2002. The Company adopted the interim period
disclosure provisions of Statement 148 this quarter. The adoption
of Statement 148 had no effect on the Company's financial condition
or results of operations.
New Accounting Pronouncements
In October 2002, the Financial Accounting Standards Board issued
SFAS No. 147, "Acquisitions of Certain Financial Institutions."
This SFAS will not apply to the Company.
Restructuring
In October 2002, the Company announced it was incurring
restructuring charges over the next eighteen months in the amount of
$11 to $12 million before taxes. The restructuring plan involves
the (1) disposal, closing or elimination of certain under-performing
and unprofitable operating plants, product lines, manufacturing
processes and businesses; (2) realignment and consolidation of
certain marketing and distribution activities; and (3) other cost
containment actions, including selective personnel reductions. The
charges will be recorded in the Condensed Statements of Consolidated
Income under the caption "Restructuring costs." The components of
the estimated charges include involuntary employee severance and
benefits costs totaling $4,772,000, asset impairments of $1,773,000
and shutdown costs of $4,812,000.
The restructuring will consist of a series of initiatives that are
expected to yield significant savings and individual pay backs in
the range of 12 to 24 months. In addition, the Company anticipates
generating cash by selling underutilized facilities to fund a
significant portion of the restructuring.
The Company has early adopted SFAS No. 146 (described above), and,
accordingly, these charges will be recorded generally when a
liability is incurred or a severance plan is initiated. At March
31, 2003, $3.2 million (pre tax) of the charges had been incurred.
See the notes to condensed consolidated financial statements for
details of these charges.
ITEM 3. 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 May 6, 2003, the Company did
not have any fair value exposure.
There have been no significant changes in the exposure to changes in
both foreign currency and interest rates from June 30, 2002 to May
6, 2003.
ITEM 4. CONTROLS AND PROCEDURES
The management of the Company including Mr. Roger L. Fix as Chief
Executive Officer and Mr. Christian Storch as Chief Financial
Officer have evaluated the Company's disclosure controls and
procedures. Under the rules promulgated by the Securities Exchange
Commission, disclosure controls and procedures are defined as those
"controls or other procedures of an issuer that are designed to
ensure that information required to be disclosed by an issuer in
the reports issued or submitted by it under the Exchange Act are
recorded, processed, summarized and reported within the time
periods specified in the Commission's rules and forms." Based on
the evaluation of the Company's disclosure controls and procedures,
it was determined that such controls and procedures were effective
as of May 6, 2003 the date of the conclusion of the evaluation.
Further, there were no significant changes in the internal controls
or in other factors that could significantly affect these controls
after May 6, 2003 the date of the conclusion of the evaluation of
disclosure controls and procedures.
PART II. OTHER INFORMATION
ALL ITEMS ARE INAPPLICABLE
STANDEX INTERNATIONAL CORPORATION
S I G N A T U R E S
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
STANDEX INTERNATIONAL
CORPORATION
Date: May 14, 2003 /s/Robert R. Kettinger
Robert R. Kettinger
Corporate Controller
Date: May 14, 2003 /s/Christian Storch
Christian Storch
Vice President/CFO
CERTIFICATION
I, Roger L. Fix, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Standex
International Corporation;
2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and we have:
a. designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date.
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors
and the audit committee of registrant's board of directors (or
persons performing the equivalent function):
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data and
have identified for the registrant's auditors any material
weaknesses in internal controls; and
b. any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated
in this quarterly report whether or not there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of our
most recent evaluation, including any corrective actions with regard
to significant deficiencies and material weaknesses.
Date: May 14, 2003 /s/Roger L. Fix
Roger L. Fix
President/CEO
CERTIFICATION
I, Christian Storch, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Standex
International Corporation;
2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and we have:
a. designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date.
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors
and the audit committee of registrant's board of directors (or
persons performing the equivalent function):
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data and
have identified for the registrant's auditors any material
weaknesses in internal controls; and
b. any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated
in this quarterly report whether or not there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of our
most recent evaluation, including any corrective actions with regard
to significant deficiencies and material weaknesses.
Date: May 14, 2003 /s/Christian Storch
Christian Storch
Vice President/CFO