ITEM 1. BUSINESS
Standex1 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, 1997, the Company had approximately 4,800 employees.
The principal products produced and services rendered by each of the segments of Standex are incorporated herein by reference to pages 5 through 15 of the Annual Report to Stockholders for the fiscal year ended June 30, 1997 (the "1997 Annual Report"). Sales are made both directly to customers and by or through manufacturers representatives, dealers and distributors.
The major markets for the above products and services are as follows:
MAJOR PRODUCTS MAJOR MARKETS
Food Service Products
. USECO food service equipment Hospitals, schools, nursing and patient feeding systems homes, correctional facilities and restaurants
. Master-Bilt(R) refrigerated Hospitals, schools, fast food cabinets, cases, display industry, restaurants, units, modular structures, hotels, clubs, supermarkets, coolers and freezers; bakeries, dairy convenience Barbecue King(R) and BKI(R) stores and delicatessens commercial cook and hold units, rotisseries, pressure fryers, ovens and baking equipment; Federal Industries bakery and deli heated and refrigerated display cases
. Procon(R) rotary vane pumps Carbonated Beverage industry (including espresso coffee machine markets), water purification industry and coolant recirculation systems
MAJOR PRODUCTS MAJOR MARKETS
Industrial Products
. Printing and distribution General commerce and of election forms and industry, Michigan county tabulation equipment governments, education and and related materials, finance institutions office supplies and furniture
. Wire-O(R) machinery and Printers, publishers of complete binding system checkbooks, calendars, appointment books, cookbooks, catalogs and manuals
. Jarvis, Can-Am Casters and General industry, hospitals, WheelsTM and PEMCO(R) supermarkets, hotels and casters and wheels; restaurants industrial hardware
. Roehlen(R) embossing rolls, General Industry (e.g. texturizing systems, automotive, plastics, machines and plates; Mold- textiles, paper, building Tech(R) mold engraving; products, synthetic Keller-Dorian print rolls materials, OEMs, converting, and calendering equipment; textile and paper industry, Mullen(R) Burst Testers computer, housewares and Perkins converting and construction industries) finishing machinery and systems
. Spincraft(R) power metal OEMs, U.S. Government, spinning, custom formed energy, aircraft, aerospace components for aircraft and commercial satellite engines, space launch industry and commercial vehicles, gas turbines, industries nuclear reactors, military ordnance, commercial satellites and similar products
. Custom Hoists single and Automotive and construction double acting telescopic and industries piston rod hydraulic cylinders;
. Electronics:
Standex Electronics reed Telecommunications, consumer switches, electrical electronics, automotive, connectors, sensors, security systems, toroids and relays, fixed communications equipment, and variable inductors and computers, air conditioning electronic assemblies, and and refrigeration industries tunable inductors
MAJOR PRODUCTS MAJOR MARKETS
Consumer Products
. Publishing and marketing of commercial and religious materials:
Standard Publishing(R) Sunday schools, churches, religious periodicals, vacation Bible schools, Sunday School literature Christian Bookstores and supplies
Berean(R) Retail Chain of 21 Berean(R) Bookstores Christian bookstores
Commercial Printing General commerce and industry
. Mail Order:
Frank Lewis(R) Grapefruit Direct to consumers Club gift packages, Harry's Crestview Groves(R) grapefruit packages, grapefruit juice, grapefruit sections, onions, melons and roses; Salsa Express(R) salsas and other related food products; The Vidalia(R)2 Onion Store Vidalia(R) onions
. National Metal fabricated Food service industry, retail metal products including stores, office furniture Christmas tree stands, markets, stationary supply specialty hardware and metal houses and other industries furniture
. Williams chiropractic and Chiropractors and physical traction tables and therapists electrotherapy and ultrasound equipment (Zenith(R), CombiTM and Intertron(R) brands)
. Snappy(R) metal ducting and Heating, ventilating and air fittings conditioning distributors principally in Midwestern, Southwestern and Western United States
Financial information on each of the product groups of Standex as well as financial information of non-U.S. operations is incorporated by reference to the note to the consolidated financial statements entitled Industry Segment Information on page 24 of the 1997 Annual Report.
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.
2 A registered trademark of the Georgia Department of Agriculture
Substantially all of the 1997 backlog is expected to be realized as sales in fiscal 1998.
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 1997, the Company invested $12,226,000 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 33 plants, principally in Western Europe. The industry segment information regarding non- U.S. operations on page 24 of the 1997 Annual Report is incorporated herein by reference.
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, 1997, Standex operated a total of 83 principal plants and warehouses located through the United States, Western Europe, Canada, Australia, Singapore and Mexico. The Company owned 45 of the facilities and the balance were leased. In addition, the Company operated 21 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, 1997 is as follows (in thousands): Area in Square Feet Owned Leased
Food Service ................. 662 376 Industrial ................... 1,196 366 Consumer ..................... 926 283 General Corporate............. 29 -
Total.................... 2,813 1,025
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.
EXECUTIVE OFFICERS OF STANDEX
Name Age Principal Occupation During the Past Five Years
Thomas L. King 67 Chairman of the Board of the Company since January 1992; President of the Company from August 1984 to July 1994; and Chief Executive Officer of the Company from July 1985 to June 1995.
Edward J. Trainor 57 Chief Executive Officer of the Company since July 1995; President of the Company since July 1994; Chief Operating Officer of the Company from July 1994 to June 1995; Vice President of the Company from July 1992 to July 1994; and President of the Standex Institutional Products Group of the Company from February 1987 to July 1994.
David R. Crichton 59 Executive Vice President/Operations of the Company since June 1989.
Thomas H. DeWitt 55 Executive Vice President/Administration of the Company since January 1987; and General Counsel of the Company since October 1985.
Lindsay M. Sedwick 62 Senior Vice President of Finance/CFO of the Company since January 1996; Vice President of the Company from January 1990 to January 1996; and Treasurer of the Company since January 1986.
Robert R. Kettinger 55 Corporate Controller of the Company since July 1991.
Richard H. Booth 50 Corporate Counsel of the Company since June 1992 and Secretary of the Company since July 1992.
The executive officers are elected each year by the Board of Directors to serve for one-year terms of office. There are no family relationships between any of the directors or executive officers of the Company.
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 incorporated by reference to page 18 of the 1997 Annual Report. The approximate number of stockholders of record on September 10, 1997 was 4,200.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
Selected financial data for the five years ended June 30, 1997 is incorporated by reference to the table entitled "Five-Year Financial Review" on page 18 of the 1997 Annual Report. This summary should be read in conjunction with the consolidated financial statements and related notes included in the 1997 Annual Report on pages 19 through 27, and Exhibit 11 contained herein.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's discussion and analysis of financial condition and results of operations of the Company is incorporated by reference to pages 16 and 17 of the 1997 Annual Report.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is incorporated by reference to pages 18 through 28 of the 1997 Annual Report.
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
Certain information concerning the directors of the Company is incorporated by reference to pages 2 through 6 and pages 16, 18 and 19 of the Proxy Statement of the Company, dated September 19, 1997 (the "1997 Proxy Statement"). Certain information concerning the executive officers of the Company is set forth in Part I under the caption "Executive Officers of Standex."
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
Information regarding executive compensation is incorporated by reference to pages 10 through 16 of the 1997 Proxy Statement.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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 to pages 4 through 6 of the 1997 Proxy Statement. The beneficial ownership of Standex Common Stock of all directors and executive officers of the Company is incorporated by reference to pages 4 through 6 of the 1997 Proxy Statement.
ITEM 13.
Item 13 Certain Relationships and Related Transactions P 15 - 16
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of STANDEX INTERNATIONAL CORPORATION Salem, New Hampshire
We have audited the consolidated financial statements of Standex International Corporation and subsidiaries as of June 30, 1997 and 1996, and for each of the three years in the period ended June 30, 1997, and have issued our report thereon dated August 20, 1997; such financial statements and report are included in your 1997 Annual Report to Stockholders and are incorporated herein by reference. Our audits also included the financial statement schedule of Standex International Corporation and subsidiaries, listed in Item 14.