UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 2012
Commission File Number 1-7233
STANDEX INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its Charter)
DELAWARE
(State of incorporation)
31-0596149
(I.R.S. Employer Identification No.)
11 KEEWAYDIN DRIVE, SALEM, NEW HAMPSHIRE
(Address of principal executive offices)
03079
(Zip Code)
(603) 893-9701
(Registrant’s telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE
SECURITIES EXCHANGE ACT OF 1934:
Title of Each Class
Common Stock, Par Value $1.50 Per Share
Name of Each Exchange on Which Registered
New York Stock Exchange
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES [ ] NO [X]
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES [ ] NO [X]
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 has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required to submit and post such files).
YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be
contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check one):
Large accelerated filer __ Accelerated filer X Non-accelerated filer __ Smaller Reporting Company __
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES [ ] NO [X]
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant at the close of business on
December 31, 2011 was approximately $423,000,000. Registrant’s closing price as reported on the New York Stock Exchange for
December 31, 2011 was $34.17 per share.
The number of shares of Registrant's Common Stock outstanding on August 24, 2012 was 12,614,552
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the Registrant’s 2012 Annual Meeting of Stockholders (the “Proxy Statement”) are incorporated by
reference into Part III of this report.
1
Forward Looking Statement
Statements contained in this Annual Report on Form 10-K 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 “should,” “could,” "may," “will,” “expect," "believe,"
"estimate," "anticipate," ”intends,” "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, but are
not limited to material adverse or unforeseen legal judgments, fines, penalties or settlements, conditions in the financial and
banking markets, including fluctuations in the exchange rates and the inability to repatriate foreign cash, general and
international recessionary economic conditions, including the impact, length and degree of the current recessionary
conditions on the customers and markets we serve and more specifically conditions in the food service equipment,
automotive, construction, aerospace, energy, transportation and general industrial markets, lower-cost competition, the
relative mix of products which impact margins and operating efficiencies, both domestic and foreign, in certain of our
businesses, the impact of higher raw material and component costs, particularly steel, petroleum based products and
refrigeration components, an inability to realize the expected cost savings from restructuring activities, effective completion
of plant consolidations, cost reduction efforts ,restructuring including procurement savings and productivity enhancements,
capital management improvements, strategic capital expenditures, and the implementation of lean enterprise manufacturing
techniques, the inability to achieve the savings expected from the sourcing of raw materials from and diversification efforts in
emerging markets, the inability to attain expected benefits from strategic alliances or acquisitions and the inability to
achieve synergies contemplated by the Company. Other factors that could impact the Company include changes to future
pension funding requirements and the failure by the purchaser of our former Berean bookstore chain to satisfy its obligations
under those leases where the Company remains an obligor. In addition, any forward-looking statements represent
management's estimates only as of the day made and should not be relied upon as representing management's estimates as of
any subsequent date. While the Company may elect to update forward-looking statements at some point in the future, the
Company and management specifically disclaim any obligation to do so, even if management's estimates change.
PART I
Item 1. Business
Standex International Corporation (“Standex”, the “Company" or "we" (1)) was incorporated in 1975 and is the successor of a
corporation organized in 1955. We have paid dividends each quarter since Standex became a public corporation in November
1964.
We are a leading manufacturer of a variety of products and services for diverse industrial market segments. We have 12
operating segments, aggregated and organized for reporting purposes into five segments: Food Service Equipment Group,
Engraving Group, Engineering Technologies Group, Electronics Products Group and Hydraulics Products Group. Overall
management, strategic development and financial control are maintained by the executive staff from our corporate
headquarters located in Salem, New Hampshire.
Our corporate strategy has several primary components:
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It is our objective to grow larger and more profitable business units through both organic initiatives and acquisitions.
On an ongoing basis we identify and implement organic growth initiatives such as new product development,
geographic expansion, introduction of products and technologies into new markets and applications and leveraging
of sales synergies between business units, key accounts and strategic sales channel partners. Also, we utilize
strategically aligned or “bolt on” acquisitions to create both sales and cost synergies with our core business platforms
to accelerate their growth and margin improvement. There is a particular focus on identifying and investing in
opportunities to increase the global presence and capabilities of our businesses. From time to time we have divested
businesses that we felt were not strategic or did not meet our growth and return expectations.
• Our focus is on the growth and development of businesses that provide customer solutions or engineered products
that provide higher levels of added value to our customers. These types of businesses generally demonstrate the
ability to sustain sales and profit growth over time and provide superior operating margins to enhance shareholder
returns.
(1) References in this Annual Report on Form 10-K to "Standex" or the "Company" or “we,” “our” or “us” shall mean
Standex International Corporation and its subsidiaries.
(2) Unless otherwise noted, references to years are to fiscal years.
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• We have a focus on operational excellence through the continuous improvement in the cost structure of our
businesses and in management of working capital. We recognize that our businesses are competing in a global
economy that requires that we constantly strive to improve our competitive position. We have deployed a number of
management competencies including lean enterprise, the use of low cost manufacturing facilities in countries such as
Mexico, India, and China, the consolidation of manufacturing facilities to achieve economies of scale and leveraging
of fixed infrastructure costs, alternate sourcing to achieve procurement cost reductions, and capital improvements to
increase shop floor productivity, which drives improvements in the cost structure of our business units. Further, we
have made a priority of improving the utilization and efficiency in the investment of working capital in our business
units.
• Finally, we have a constant focus on cash flow generation. We recognize that cash flow is fundamental in our ability
to invest in organic and acquisitive growth for our business units, to allow us to return cash to our shareholders in the
form of dividends and that it is a measure of the quality of the earnings that we generate over time.
Please visit our web site at www.standex.com to learn more about us or to review our most recent SEC filings. The
information on our web site is for informational purposes only and is not incorporated into this Annual Report on Form 10-K.
Description of Segments
Food Service Equipment Group
Our Food Service Equipment businesses are leading, broad-line manufacturers of commercial food service equipment which
includes products on the “cold” or in the refrigerated segment of food service applications and on the “hot” or in the cooking,
warming or holding segment of the market. Our products are used throughout the entire food service process; from storage,
to preparation, to cooking and to display. The equipment that we design and manufacture is utilized in restaurants,
convenience stores, quick-service restaurants, supermarkets, drug stores and institutions such as hotels, casinos and corporate
and school cafeterias to meet the challenges of providing food and beverages that are fresh and appealing while at the same
time providing for food safety, energy efficiency and reliability of the equipment performance. The Food Service Equipment
Group also applies technology and product expertise in the health science and medical markets. Customers in this segment
include laboratories, health care institutions, and blood banks. Our products are sold direct, through dealer buying groups and
through industry representatives. Through innovation and acquisition, we continue to expand this segment. Our brands and
products include:
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Master-Bilt® and Kool Star® refrigerated reach-in and under counter refrigerated cabinets, cases, display units, and
walk-in coolers and freezers
Nor-Lake, Incorporated walk-in coolers and freezers and reach-in and under counter refrigerated cabinets to meet food
service and scientific needs
APW Wyott®, American Permanent Ware, Bakers Pride®, Tri-Star and BevLes® commercial ranges, ovens, griddles,
char broilers, holding cabinets and toasters used in cooking, toasting, warming and merchandising food
American Foodservice custom-fabricated food service counter systems, buffet tables and cabinets
Barbecue King® and BKI® commercial cook and hold units, rotisseries, pressure fryers, ovens and baking equipment
Federal Industries merchandizing display cases
Procon® rotary vane pumps used in beverage and industrial fluid handling applications
Engraving Group
Our Engraving Group is a world leader in texturizing molds used in the production of plastic components, giving the final
product the cosmetic appearance and appeal that our consumers require. We provide texturizing services for molds used to
produce plastic components used in automotive applications and consumer products including household items made of
plastic, toys, computers, and electronic devices. Our worldwide locations enable us to better serve our customers within key
geographic areas, including the United States, Canada, Europe, China, India, Southeast Asia, Australia, South Africa, and
South America. In addition to mold texturizing, the Engraving Group also produces embossed and engraved rolls and plates
and process tooling and machinery serving a wide variety of industries. Through the development of new digital based
process technology, new “green field” facilities particularly focused on expansion in emerging markets, and acquisitions, the
Engraving Group continues to build its market leadership position and to expand the breadth of products and services it
provides to its customers on a global basis. The companies and products within the Engraving Group include Roehlen® and I
R International which engrave and emboss rolls and plates used in manufacturing continuous length materials; Innovent
which makes specialized tooling used to manufacture absorbent cores of many consumer and medical products; Mold-Tech®
which texturizes molds used in manufacturing plastic injected components; Mullen® Burst Testers; and Perkins converting
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and finishing machinery. Our products are primarily sold direct through our global sales network. The Engraving Group
serves a number of industries including the automotive, plastics, building products, synthetic materials, converting, textile and
paper industry, computer, housewares, and construction industries.
Engineering Technologies Group
Our Engineering Technologies Group, consisting of the Spincraft® operating segment and Metal Spinners Group, provides
customized solutions in the fabrication and machining of engineered components. Sales are made directly to our customers
in the aerospace, energy, defense, marine, aviation, healthcare, medical, oil & gas, and general industrial markets.
Electronics Products Group
Our Electronics Products Group consists of Standex Electronics, which manufactures reed switches, electrical connectors,
sensors, toroids and relays, fixed and variable inductors and electronic assemblies, fluid sensors, tunable inductors,
transformers and magnetic components and Meder electronics which designs, manufactures and distributes a broad offering
of magnetic reed switch, reed relay and reed sensor products. Sales are made both directly to customers and through
manufacturers’ representatives, dealers and distributors. End user market segments include automotive, white goods,
lighting, HVAC, aerospace, military, medical, security, and general industrial applications.
In July 2012, subsequent to year-end, we acquired Meder Electronic Group (“Meder”), which designs, manufactures and
distributes a broad offering of magnetic reed switch, reed relay and reed sensor products. Our investment in Meder will
substantially broaden our global footprint, product line offerings, and end-user markets in the Electronics Products Group.
Hydraulics Products Group
Our Hydraulics Products Group provides single and double acting telescopic and piston rod hydraulic cylinders through
Custom Hoists to manufacturers of dump truck and dump trailers and other material handling applications. Sales are made
directly to OEMs manufacturing dump trucks, trash collection vehicles, lift trucks and other mobile units requiring hydraulic
power.
Raw Materials
Raw materials and components necessary for the manufacture of our products are generally available from numerous sources.
Generally, we are not dependent on a single source of raw materials and supplies. We do not foresee unavailability of
materials or supplies which would have a significant adverse effect on any of our businesses, nor any of our segments, in the
near term. The prices of many commodities that we use generally remain at higher levels than in past years. Discussion of
the impacts of these materials is included in Management’s Discussion and Analysis.
Seasonality
We are a diversified business with generally low levels of seasonality, however our fiscal third quarter is typically the period
with the lowest level of sales volume.
Patents and Trademarks
We hold approximately 59 United States patents and patents pending covering processes, methods and devices and
approximately 40 United States trademarks. Many counterparts of these patents have also been registered in various foreign
countries. In addition, we have various foreign registered and common law trademarks.
While we believe that many of our patents are important, we credit our competitive position in our niche markets to
engineering capabilities, manufacturing techniques and skills, marketing and sales promotions, service and the delivery of
quality products.
Due to the diversity of our businesses and the markets served, the loss of any single patent or trademark would not, in our
opinion, materially affect any individual segment.
Customers
Our business is not dependent upon a single customer or a few large customers, the loss of any one of which would have a
material adverse effect on our operations. No customer accounted for more than 5% of our consolidated revenue in fiscal
2012 or any of the years presented.
4
Working Capital
Our primary source of working capital is the cash generated from continuing operations. No segments require any special
working capital needs outside of the normal course of business.
Backlog
Backlog orders believed to be firm at June 30, 2012 and 2011 are as follows (in thousands):
Food Service Equipment
Engraving
Engineering Technologies
Electronics
Hydraulics
Total
Net realizable beyond one year
Net realizable within one year
Competition
2012
$48,782
11,443
51,756
16,732
2,892
131,605
11,914
$119,691
2011
$41,940
9,992
48,848
14,188
2,900
117,868
14,176
$103,692
Standex manufactures and markets products many of which have achieved a unique or leadership position in their market.
However, we encounter 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, other terms and conditions of sale and product performance.
International Operations
All of our international operations are included in the Food Service Equipment, Engraving Group, Engineering Technologies,
Electronics Products and Hydraulics Products business segments. International operations are conducted at 33 locations, in
Europe, Canada, China, India, Singapore, Australia, Mexico, Brazil, and South Africa. See the Notes to Consolidated
Financial Statements for international operations financial data. Our international operations contributed approximately 23%
of operating revenues in 2012 and 19% in 2011. International operations are subject to certain inherent risks in connection
with the conduct of business in foreign countries including, exchange controls, price controls, limitations on participation in
local enterprises, nationalizations, expropriation and other governmental action and changes in currency exchange rates.
Research and Development
Developing new and improved products, broadening the application of established products, and continuing efforts to
improve and develop new methods, processes and equipment, have driven our success. However, due to the nature of our
manufacturing operations and the types of products manufactured, expenditures for research and development are not
significant to any individual segment or in the aggregate. Research and development costs are quantified in the Notes to
Consolidated Financial Statements. We develop and design new products to meet customer needs or in order to offer
enhanced products or to provide customized solutions for customers.
Environmental Matters
During 2008, the Company entered into an Administrative Order of Consent with the U.S. Environmental Protection Agency
related to the removal of various PCB-contaminated materials and soils at a site where the Company leased a building and
conducted operations from 1967-1979. See the notes to our consolidated financial statements for further information
regarding this event.
To the best of our knowledge, we believe that we are presently in substantial compliance with all existing applicable
environmental laws and regulations and do not anticipate any instances of non-compliance that will have a material effect on
our future capital expenditures, earnings or competitive position.
5
Financial Information about Geographic Areas
Information regarding revenues from external customers attributed to the United States, all foreign countries and any
individual foreign country, if material, is contained in the Notes to Consolidated Financial Statements for “Industry Segment
Information.”
Number of Employees
As of June 30, 2012, we employed approximately 3,900 employees of which approximately 2,000 were in the United States.
About 300 of our U.S. employees were represented by unions. Approximately 46% of our production workforce is situated
in low-cost manufacturing regions such as Mexico and Asia.
Executive Officers of Standex
The executive officers of the Company as of June 30, 2012 were as follows:
Name
Age Principal Occupation During the Past Five Years
Roger L. Fix
59 Chief Executive Officer of the Company since January 2003; President of
the Company since December 2001
Thomas D. DeByle
52 Vice President, Chief Financial Officer, and Treasurer of the Company
since March 2008; Vice President of Finance and Chief Financial Officer
of Bobcat Company Doosan Infracore November 2007 – March 2008 due
to the divestiture of the Compact Equipment businesses from Ingersoll
Rand, prior thereto various senior financial positions in Ingersoll Rand
from September 2001 through November 2007 including Sector CFO of
the Compact Vehicle Technologies Sector (Club Car and Bobcat).
57 Chief Legal Officer of the Company since October 2001; Vice President
of the Company since July 1999; Secretary of the Company since 1997.
53 Group Vice President of the Food Service Group since December 2006;
and prior thereto President of Filtration Group of Pentair from 2004 to
2006.
Deborah A. Rosen
John Abbott
The executive officers are elected each year at the first meeting of the Board of Directors subsequent to the annual meeting of
stockholders, to serve for one-year terms of office. There are no family relationships among any of the directors or executive
officers of the Company.
Long-Lived Assets
Long-lived assets are described and discussed in the Notes to Consolidated Financial Statements under the caption “Long-
Lived Assets.”
Available Information
Standex’s corporate headquarters are at 11 Keewaydin Drive, Salem, New Hampshire 03079, and our telephone number at
that location is (603) 893-9701.
The U. S. Securities and Exchange Commission (the “SEC”) maintains an internet website at http://www.sec.gov that
contains our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and proxy
statements, and all amendments thereto. All reports that we file with the SEC may be read and copied at the SEC’s Public
Reference Room at 100 F Street, N.E., Washington, DC 20549. Information about the operation of the Public Reference
Room can be obtained by calling the SEC at 1-800-SEC-0330. Standex’s internet website address is www.standex.com. Our
annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and proxy statements, and all
amendments thereto, are available free of charge on our website as soon as reasonably practicable after such reports are
electronically filed with, or furnished to, the SEC. In addition, our code of business conduct, our code of ethics for senior
financial management, our corporate governance guidelines, and the charters of each of the committees of our Board of
Directors (which are not deemed filed by this reference), are available on our website and are available in print to any
Standex shareholder, without charge, upon request in writing to “Chief Legal Officer, Standex International Corporation, 11
Keewaydin Drive, Salem, New Hampshire, 03079.”
6
The certifications of Standex’s Chief Executive Officer and Chief Financial Officer, as required by the rules adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002, are filed as exhibits to this Form 10-K.
Item 1A. Risk Factors
An investment in the Company’s common shares involves various risks, including those mentioned below and those that are
discussed from time to time in our other periodic filings with the SEC. Investors should carefully consider these risks, along
with the other information filed in this report, before making an investment decision regarding our common shares. There
may be additional risks which the Company is currently unaware of or which we currently consider immaterial. All of these
risks could have a material adverse effect on our financial condition, results of operations and/or value of our common shares.
A continuation of the deterioration in the economic environment could adversely affect our operating results and
financial condition.
Recessionary economic conditions coupled with a tightening of credit could continue to adversely impact major markets
served by our businesses, including cyclical markets such as automotive, heavy construction vehicle, general industrial and
food service. A continuation of the economic recession could adversely affect our business by:
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reducing demand for our products and services, particularly in markets where demand for our products and services is
cyclical;
causing delays or cancellations of orders for our products or services;
reducing capital spending by our customers;
increasing price competition in our markets;
increasing difficulty in collecting accounts receivable;
increasing the risk of excess or obsolete inventories;
increasing the risk of impairment to long-lived assets due to reduced use of manufacturing facilities;
increasing the risk of supply interruptions that would be disruptive to our manufacturing processes; and
reducing the availability of credit for our customers.
We rely on our credit facility to provide us with sufficient capital to operate our businesses.
We rely on our revolving credit facility to provide us with sufficient capital to operate our businesses. The availability of
borrowings under our revolving credit facility is dependent upon our compliance with the covenants set forth in the facility,
including the maintenance of certain financial ratios. Our ability to comply with these covenants is dependent upon our
future performance, which is subject to economic conditions in our markets along with factors that are beyond our control.
Violation of those covenants could result in our lenders restricting or terminating our borrowing ability under our credit
facility, cause us to be liable for covenant waiver fees or other obligations, or trigger an event of default under the terms of
our credit facility which could result in acceleration of the debt under the facility and require prepayment of the debt before
its due date. Even if new financing is available in the event of a default under our current credit facility, the interest rate
charged on any new borrowing could be substantially higher than under the current credit facility, thus adversely affecting
our overall financial condition. If our lenders reduce or terminate our access to amounts under our credit facility, we may not
have sufficient capital to fund our working capital needs or we may need to secure additional capital or financing to fund our
working capital requirements or to repay outstanding debt under our credit facility.
Our credit facility contains covenants that restrict our activities.
Our revolving credit facility contains covenants that restrict our activities, including our ability to:
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incur additional indebtedness;
make investments;
create liens;
pay cash dividends unless we are in compliance with certain financial covenants; and
sell material assets.
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Our global operations subject us to international business risks.
We operate in 33 locations outside of the United States in Europe, Canada, China, India, Singapore, Australia, Mexico,
Brazil, and South Africa. If we are unable to successfully manage the risks inherent to the operation and expansion of our
global businesses, those risks could have a material adverse effect on our business, results of operations or financial
condition. Those international business risks include:
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fluctuations in currency exchange rates;
restrictions on repatriation of earnings;
import and export controls;
political, social and economic instability or disruptions;
potential adverse tax consequences;
difficulties in staffing and managing multi-national operations;
difficulties in our ability to enforce legal rights and remedies; and
changes in regulatory requirements.
Failure to achieve expected savings and synergies could adversely impact our operating profits and cash flows.
We focus on improving profitability through lean enterprise, low cost sourcing and manufacturing initiatives, improving
working capital management, developing new and enhanced products, consolidating factories where appropriate, automating
manufacturing processes, diversification efforts and completing acquisitions which deliver synergies to supplement sales and
growth. If we were unable to successfully execute these programs, this failure could adversely affect our operating profits
and cash flows. In addition, actions we may take to consolidate manufacturing operations to achieve cost savings or adjust to
market developments may result in restructuring charges that adversely affect our profits.
Violation of anti-bribery or similar laws by our employees, business partners or agents could result in fines, penalties,
damage to our reputation or other adverse consequences.
We cannot assure that our internal controls, code of conduct and training of our employees will provide complete protection
from reckless or criminal acts of our employees, business partners or agents that might violate US or international laws
relating to anti-bribery or similar topics. An action resulting in a violation of these laws could subject us to civil or criminal
investigations that could result in substantial civil or criminal fines and penalties and which could damage our reputation.
We face significant competition in our markets and, if we are not able to respond to competition in our markets, our net
sales, profits and cash flows could decline.
Our businesses operate in highly competitive markets. In order to effectively compete, we must retain longstanding
relationships with significant customers, offer attractive pricing, develop enhancements to products that offer performance
features that are superior to our competitors and which maintain our brand recognition, continue to automate our
manufacturing capabilities, continue to grow our business by establishing relationships with new customers, diversify into
emerging markets and penetrate new markets. If we are unable to compete effectively, our net sales, profitability and cash
flows could decline. Pricing pressures resulting from competition may adversely affect our net sales and profitability.
If we are unable to successfully introduce new products and product enhancements, our future growth could be impaired.
Our ability to develop new products and innovations to satisfy customer needs or demands in the markets we serve can affect
our competitive position and often requires significant investment of resources. Difficulties or delays in research,
development or production of new products and services or failure to gain market acceptance of new products and
technologies may significantly reduce future net sales and adversely affect our competitive position.
Increased prices or significant shortages of the commodities that we use in our businesses could result in lower net sales,
profits and cash flows.
We purchase large quantities of steel, refrigeration components, freight services, foam insulation and other metal
commodities for the manufacture of our products. Historically, prices for commodities have fluctuated, and we are unable to
enter into long term contracts or other arrangements to hedge the risk of price increases in these commodities. Significant
price increases for these commodities could adversely affect our operating profits if we cannot timely mitigate the price
increases by successfully sourcing lower cost commodities or by passing the increased costs on to customers. Shortages or
other disruptions in the supply of these commodities could delay sales or increase costs.
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An inability to identify or complete future acquisitions could adversely affect our future growth.
As part of our growth strategy, we intend to pursue acquisitions that provide opportunities for profitable growth for our
businesses and which enable us to leverage our competitive strengths. While we continue to evaluate potential acquisitions,
we may not be able to identify and successfully negotiate suitable acquisitions, obtain financing for future acquisitions on
satisfactory terms, obtain regulatory approval for certain acquisitions or otherwise complete acquisitions in the future. An
inability to identify or complete future acquisitions could limit our future growth.
We may experience difficulties in integrating acquisitions.
Integration of acquired companies involves a number of risks, including:
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inability to operate acquired businesses profitably;
failure to accomplish strategic objectives for those acquisitions;
unanticipated costs relating to acquisitions or to the integration of the acquired businesses;
difficulties in achieving planned cost savings and synergies; and
possible future impairment charges for goodwill and non-amortizable intangible assets that are recorded as a result of
acquisitions.
Additionally, our level of indebtedness may increase in the future if we finance acquisitions with debt, which would cause us
to incur additional interest expense and could increase our vulnerability to general adverse economic and industry conditions
and limit our ability to service our debt or obtain additional financing. We cannot assure that future acquisitions will not
have a material adverse effect on our financial condition, results of operations and cash flows.
Impairment charges could reduce our profitability.
We test goodwill and our other intangible assets with indefinite useful lives for impairment on an annual basis or on an
interim basis if an event occurs that might reduce the fair value of the reporting unit below its carrying value. In connection
with the divestiture of the Air Distribution Products (“ADP”) business, we determined that, based on the net realizable value
of the business in the transaction, the goodwill of the ADP reporting unit was impaired. As such, we recognized $14.9
million in impairment charges in discontinued operations during the second quarter of 2012. During fiscal 2009, we incurred
an impairment charge of $21.3 million relating to goodwill and intangible assets in our Food Service Equipment Group.
Various uncertainties, including continued adverse conditions in the capital markets or changes in general economic
conditions, could impact the future operating performance at one or more of our businesses which could significantly affect
our valuations and could result in additional future impairments. The recognition of an impairment of a significant portion of
goodwill would negatively affect our results of operations, the effect of which could be material to us.
Material adverse or unforeseen legal judgments, fines, penalties or settlements could have an adverse impact on our
profits and cash flows.
We are and may, from time to time, become a party to legal proceedings incidental to our businesses, including, but not
limited to, alleged claims relating to product liability, environmental compliance, patent infringement, commercial disputes
and employment matters. In accordance with United States generally accepted accounting principles, we have established
reserves based on our assessment of contingencies. Subsequent developments in legal proceedings may affect our assessment
and estimates of loss contingencies recorded as reserves which could require us to record additional reserves or make
material payments which could adversely affect our profits and cash flows. Even the successful defense of legal proceedings
may cause us to incur substantial legal costs and may divert management's time and resources away from our businesses.
The costs of complying with existing or future environmental regulations, and of correcting any violations of these
regulations, could increase our expenses and reduce our profitability.
We are subject to a variety of environmental laws relating to the storage, discharge, handling, emission, generation, use and
disposal of chemicals, hazardous waste and other toxic and hazardous materials used to manufacture, or resulting from the
process of manufacturing, our products. We cannot predict the nature, scope or effect of regulatory requirements to which
our operations might be subject or the manner in which existing or future laws will be administered or interpreted. We are
also exposed to potential legacy environmental risks relating to businesses we no longer own or operate. Future regulations
could be applied to materials, products or activities that have not been subject to regulation previously. The costs of
complying with new or more stringent regulations, or with more vigorous enforcement of these or existing regulations, could
be significant.
9
In addition, properly permitted waste disposal facilities used by us as a legal and legitimate repository for hazardous waste
may in the future become mismanaged or abandoned without our knowledge or involvement. In such event, legacy landfill
liability could attach to or be imposed upon us in proportion to the waste deposited at any disposal facility.
Environmental laws require us to maintain and comply with a number of permits, authorizations and approvals and to
maintain and update training programs and safety data regarding materials used in our processes. Violations of these
requirements could result in financial penalties and other enforcement actions. We could be required to halt one or more
portions of our operations until a violation is cured. Although we attempt to operate in compliance with these environmental
laws, we may not succeed in this effort at all times. The costs of curing violations or resolving enforcement actions that
might be initiated by government authorities could be substantial.
Contingent liabilities from businesses that we have sold could adversely affect our results of operations and financial
condition.
We have retained responsibility for some of the known and unknown contingent liabilities related to a number of businesses
we have sold, such as lawsuits, tax liabilities, product liability claims, multiemployer plan withdrawal liabilities and
environmental matters and have agreed to indemnify purchasers of these businesses for certain of those contingent liabilities.
The purchaser of Berean Christian Bookstores, a former subsidiary of the Company, filed a Chapter 11 bankruptcy petition
on June 9, 2009. On July 27, 2009, the Bankruptcy Court approved a sale under Section 363 of the Bankruptcy Code of
substantially all of the assets of Berean to a newly-formed entity, Berean Christian Stores Endeavor, LLC ("Berean
Endeavor"), which has assumed all of the Berean leases on which we remain an obligor. The failure of Berean Endeavor to
improve the performance of the business could make it unable to satisfy its obligations under the leases, which could trigger
our continuing obligation.
The trading price of our common stock has been volatile, and investors in our common stock may experience substantial
losses.
The trading price of our common stock has been volatile and may become volatile again in the future. The trading price of
our common stock could decline or fluctuate in response to a variety of factors, including:
•
•
•
•
•
•
•
our failure to meet the performance estimates of securities analysts;
changes in financial estimates of our net sales and operating results or buy/sell recommendations by securities
analysts;
fluctuations in our quarterly operating results;
substantial sales of our common stock;
changes in the amount or frequency of our payment of dividends or repurchases of our common stock;
general stock market conditions; or
other economic or external factors.
Decreases in discount rates and actual rates of return could require future pension contributions to our pension plans
which could limit our flexibility in managing our company.
Key assumptions inherent in our actuarially calculated pension plan obligations and pension plan expense are the discount
rate and the expected rate of return on plan assets. If discount rates and actual rates of return on invested plan assets were to
decrease significantly, our pension plan obligations could increase materially. The size of future required pension
contributions could require us to dedicate a greater portion of our cash flow from operations to making contributions, which
could negatively impact our financial flexibility.
Various restrictions in our charter documents, Delaware law and our credit agreement could prevent or delay a change in
control of us that is not supported by our board of directors.
We are subject to a number of provisions in our charter documents, Delaware law and our credit facility that may discourage,
delay or prevent a merger, acquisition or change of control that a stockholder may consider favorable. These anti-takeover
provisions include:
•
maintaining a classified board and imposing advance notice procedures for nominations of candidates for election as
directors and for stockholder proposals to be considered at stockholders' meetings;
10
•
•
•
•
a provision in our certificate of incorporation that requires the approval of the holders of 80% of the outstanding shares
of our common stock to adopt any agreement of merger, the sale of substantially all of the assets of Standex to a third
party or the issuance or transfer by Standex of voting securities having a fair market value of $1 million or more to a
third party, if in any such case such third party is the beneficial owner of 10% or more of the outstanding shares of our
common stock, unless the transaction has been approved prior to its consummation by all of our directors;
requiring the affirmative vote of the holders of at least 80% of the outstanding shares of our common stock for
stockholders to amend our amended and restated by-laws;
covenants in our credit facility restricting mergers, asset sales and similar transactions; and
the Delaware anti-takeover statute contained in Section 203 of the Delaware General Corporation Law.
Section 203 of the Delaware General Corporation Law prohibits a merger, consolidation, asset sale or other similar business
combination between Standex and any stockholder of 15% or more of our voting stock for a period of three years after the
stockholder acquires 15% or more of our voting stock, unless (1) the transaction is approved by our board of directors before
the stockholder acquires 15% or more of our voting stock, (2) upon completing the transaction the stockholder owns at least
85% of our voting stock outstanding at the commencement of the transaction, or (3) the transaction is approved by our board
of directors and the holders of 66 2/3% of our voting stock, excluding shares of our voting stock owned by the stockholder.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
We operate a total of 65 manufacturing plants and warehouses located throughout the United States, Europe, Canada,
Australia, Singapore, China, India, Brazil, South Africa, and Mexico. The Company owns 24 of the facilities and the balance
are leased. The approximate building space utilized by each product group is as follows (in thousands):
Area in Square Feet
Owned
Leased
Food Service Equipment
Engraving
Engineering Technologies
Electronics
Hydraulics
Corporate and other
Total
1,195
268
171
51
101
43
1,829
260
337
140
107
29
12
885
In general, the buildings are in sound operating condition and are considered to be adequate for their intended purposes and
current uses.
We own substantially all of the machinery and equipment utilized in our businesses.
Item 3. Legal Proceedings
In August 2008, a redhibition action was filed in Lafayette, Louisiana by Ultra Pure Water Technologies, Inc. (“Ultra Pure”)
against Master-Bilt Products, an unincorporated division of Standex. Redhibition is a civil action in which a buyer may seek
damages against a seller for goods sold with allegedly hidden defects. The suit alleges defects in Master-Bilt ice
merchandisers which were sold to Master-Bilt’s customer, who then sold them to Ultra Pure. The damages sought by Ultra
Pure arise out of the alleged lost profits purportedly sustained when the Master-Bilt merchandisers were made part of a self-
contained ice making system designed by Ultra Pure, called the “ICEX Ice Island.” Ultra Pure alleges that the ICEX units did
not operate as anticipated at customer locations. Standex has been aggressively defending the action, and, the case was
dismissed in September 2011 based on Master-Bilt’s motion for summary judgment. However, in May 2012, the Louisiana
Third Circuit Court of Appeal reversed the dismissal, finding that various fact questions should be addressed by the trial
court. This reversal was appealed by Master-Bilt in July 2012 to the Louisiana Supreme Court. A determination whether the
Supreme Court will hear the matter is expected in the first or second quarter of 2013. In the event that the litigation is
remanded to the jurisdiction of the trial court, the result is not assured, given the unpredictability and uncertainty inherent in
any jury trial. If an unfavorable outcome were to occur, there is a possibility that the Company’s financial position and
results of operations and cash flows could be negatively affected, although the Company is not yet able to estimate a range of
possible loss.
11
Discussion of other legal matters is incorporated by reference to Part II, Item 8, Note 12, “CONTINGENCIES,” in the Notes
to the Consolidated Financial Statements.
Item 4. Mine Safety Disclosures
Not Applicable
PART II
Item 5. Market for Standex Common Stock
Related Stockholder Matters and Issuer Purchases of Equity Securities
The principal market in which the Common Stock of Standex is traded is the New York Stock Exchange under the ticker
symbol “SXI”. 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:
Common Stock Price Range
2012
2011
Year Ended June 30
First quarter
Second quarter
Third quarter
Fourth quarter
Low
High
$36.68 $25.11
28.95
34.88
38.27
40.43
43.92
46.05
Low
High
$30.49 $22.27
23.39
28.81
28.85
32.54
38.35
39.11
Dividends
Per Share
2012 2011
$0.06 $0.05
0.06
0.06
0.06
0.07
0.07
0.07
The approximate number of stockholders of record on August 24, 2012 was 1,980.
Additional information regarding our equity compensation plans is presented in the Notes to Consolidated Financial
Statements under the caption “Stock-Based Compensation and Purchase Plans” and Item 12 “Security Ownership of Certain
Beneficial Owners and Management and Related Stockholder Matters.”
On May 8, 2009, the Company issued 42,783 shares of common stock from its treasury shares to the former owners of IR
International, which was acquired by Standex in 2003. The shares, along with a cash payment of $3.6 million, were issued
upon the receipt of a Certificate of Satisfactory Completion of Remediation from the Virginia Department of Environmental
Quality for the Company’s Richmond, Virginia, Engraving Group facility, which was a contingent requirement of the
acquisition whereby Standex purchased the facility. An exemption from registration of the shares was claimed under
Regulation D, Rule 506 of the Securities Act. The exemption applied because there were fewer than 35 purchasers, each
purchaser was an accredited investor and the transaction did not involve a public offering.
12
Issuer Purchases of Equity Securities (1)
Quarter Ended June 30, 2012
(a) Total
Number of
Shares (or
units)
Purchased
(b)
Average
Price Paid
per Share
(or unit)
9,539
$41.06
15,846
$43.62
213
25,598
$42.55
$42.66
Period
April 1, 2012 -
April 30, 2012
May 1, 2012 -
May 31, 2012
June 1, 2012 -
June 30, 2012
TOTAL
(c) Total Number
of Shares (or
units) Purchased
as Part of
Publicly
Announced Plans
or Programs
(d) Maximum
Number (or
Appropriate
Dollar Value) of
Shares (or units)
that May Yet Be
Purchased Under
the Plans or
Programs
9,539
15,846
213
25,598
319,758
303,912
303,699
303,699
1The Company has a Stock Buyback Program (the “Program”) which was originally
announced on January 30, 1985. Under the Program, the Company may repurchase its
shares from time to time, either in the open market or through private transactions,
whenever it appears prudent to do so. On December 15, 2003, the Company authorized an
additional 1 million shares for repurchase pursuant to its Program. The Program has no
expiration date, and the Company from time to time may authorize additional increases of 1
million share increments for buyback authority so as to maintain the Program.
13
The following graph compares the cumulative total stockholder return on the Company’s Common Stock as of the end of
each of the last five fiscal years, with the cumulative total stockholder return on the Standard & Poor’s Small Cap 600
(Industrial Segment) Index and on the Russell 2000 Index, assuming an investment of $100 in each at their closing prices on
June 30, 2007 and the reinvestment of all dividends.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Standex International Corporation, the Russell 2000 Index,
and S&P SmallCap 600 Industrial Sector
$180
$160
$140
$120
$100
$80
$60
$40
$20
$0
6/07 9/07 12/07 3/08 6/08 9/08 12/08 3/09 6/09 9/09 12/09 3/10 6/10 9/10 12/10 3/11 6/11 9/11 12/11 3/12 6/12
Standex International Corporation
Russell 2000
S&P SmallCap 600 Industrial Sector
*$100 invested on 6/30/07 in stock or index, including reinvestment of dividends.
Fiscal year ending June 30.
14
Item 6. Selected Consolidated Financial Data
Selected financial data for the five years ended June 30, 2012 is as follows:
See Item 7 for discussions on comparability of the below.
2012
2011
2010
2009
2008
SUMMARY OF OPERATIONS (in thousands)
Net sales
Food Service Equipment
Engraving
Engineering Technologies
Electronics Products Group
Hydraulics Products Group
Corporate and Other
Total
Gross profit
Operating income (loss)
Food Service Equipment (a)
Engraving
Engineering Technologies
Electronics Products Group
Hydraulics Products Group
Restructuring (b)
Gain on sale of real estate
Corporate
Total
Interest expense
Other non-operating (loss) income
Provision for income taxes
Income from continuing operations
Income/(loss) from discontinued operations
Net income
$388,813
93,611
74,088
48,206
29,922
--
$634,640
$208,484
$39,613
17,896
14,305
8,715
4,403
(1,685)
4,776
(23,443)
$64,580
(2,280)
519
(15,912)
46,907
(16,002)
$30,905
$365,523
85,258
61,063
46,600
22,925
--
$581,369
$191,538
$37,915
14,182
12,606
7,551
2,436
(1,843)
3,368
(20,959)
$55,256
(2,107)
(201)
(14,922)
38,026
(2,659)
$35,367
$337,578
77,372
58,732
37,201
16,598
--
$527,481
$174,976
$39,682
9,395
13,843
4,074
963
(3,494)
1,405
(20,137)
$45,731
(3,624)
749
(12,504)
30,352
(1,653)
$28,699
$350,358
77,311
51,693
37,933
23,257
--
$540,552
$161,621
$9,900
7,028
8,667
2,875
747
(2,872)
--
(16,070)
$10,275
(6,532)
205
(2,946)
1,002
(6,407)
($5,405)
(a) Includes $21.3 million of impairment of goodwill and intangible assets during 2009.
(b) See discussion of restructuring activities in Note 16 of the consolidated financial statements.
$381,254
92,167
51,615
49,013
35,054
103
$609,206
$185,970
$31,460
9,611
9,770
3,513
4,712
(590)
--
(19,207)
$39,269
(9,510)
307
(10,706)
19,360
(850)
$18,510
PER SHARE DATA
Basic
Income from continuing operations
Income/(loss) from discontinued operations
Total
Diluted
Income from continuing operations
Income/(loss) from discontinued operations
Total
$3.75
(1.28)
$2.47
$3.67
(1.25)
$2.42
$3.05
(0.22)
$2.83
$2.98
(0.21)
$2.77
$2.44
(0.13)
$2.31
$2.39
(0.13)
$2.26
$0.08
(0.52)
($0.44)
$0.08
(0.52)
($0.44)
$1.58
(0.07)
$1.51
$1.56
(0.07)
$1.49
Dividends paid
$0.27
$0.23
$0.20
$0.68
$0.84
15
BALANCE SHEET (in thousands)
Total assets
Accounts receivable
Inventories
Accounts payable
Goodwill (a)
Short-term debt
Long-term debt
Total debt
Less cash
Net debt
Stockholders' equity
KEY STATISTICS
Gross profit margin
Operating income margin (a)
2012
2011
2010
2009
2008
$479,811
99,432
73,076
62,113
100,633
$ --
50,000
50,000
54,749
(4,749)
242,907
$474,905
95,716
74,805
68,205
102,439
$5,100
46,500
51,600
14,407
37,193
245,613
$446,279
86,475
58,298
50,237
87,870
$ --
93,300
93,300
33,630
59,670
192,063
$433,709
76,083
61,277
48,977
86,789
$ --
94,300
94,300
8,984
85,316
176,286
$523,034
93,415
78,457
62,466
105,717
$28,579
106,086
134,665
28,657
106,008
223,158
2012
32.9%
10.2%
2011
32.9%
9.5%
2010
33.2%
8.7%
2009
29.9%
1.9%
2008
30.5%
6.4%
(a) Includes $21.3 million of impairment of goodwill and intangible assets during 2009.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Overview
We are a leading manufacturer of a variety of products and services for diverse commercial and industrial market segments.
We have five reportable segments: Food Service Equipment Group, Engraving Group, Engineering Technologies Group,
Electronics Products Group, and the Hydraulics Products Group. Our ongoing “Focused Diversity” strategy is to deliver
superior returns and greater shareholder value through the identification of and investment in businesses that provide value-
added and technology-driven customer solutions.
As part of this ongoing strategy, in December 2011, the Company decided to divest its Air Distribution Products (“ADP”)
business unit, which was previously reported as a stand-alone segment. We determined that as a more commodity-like
product, ADP was not well aligned with our strategic objectives. On March 30, 2012, we completed the sale of ADP to a
private equity buyer for consideration of $13.1 million in cash and a $3.0 million secured note in anticipation of using the
proceeds from the sale to further implement our Focused Diversity strategy. Subsequent to year-end, we executed on this
plan by acquiring Meder Electronic Group (“Meder”), an investment which will substantially broaden our global footprint,
product line offerings, and end-user markets in the Electronics Products segment.
Since the beginning of the 2008 macroeconomic recession, we have reduced our cost structure through company-wide and
targeted headcount reductions, low cost manufacturing initiatives, plant consolidations, procurement savings, and improved
productivity in all aspects of our operations. Also, in light of commodity inflation that a number of our business units have
experienced, we have initiated a number of price increases in the marketplace in order to at least partially offset these cost
increases and improve profitability. These efforts have allowed the Company to significantly improve margins since 2008
and improve profitability despite sales only recently returning to above their pre-recession peak. In addition to the focus on
improving our cost structure, we continue to focus on the Company’s liquidity through improved working capital
management, the sale of excess land and buildings, and the disposal of ADP. We ended 2012 in a net cash position, as our
net debt to capital ratio at June 30, 2012 was (2.0%). This additional liquidity to pursue acquisitive growth initiatives is
evidenced by the four strategic acquisitions during 2011 and the acquisition of Meder in 2013.
We also continue to concentrate our attention on driving market share gains in what we expect will be a highly competitive,
low-growth environment in our end-user markets. Each of our business units has developed a series of top-line initiatives that
we believe will provide opportunities for market share gains, which should supplement future economic growth in our
markets. These growth initiatives include new product introductions, expansion of product offerings through private labeling
and sourcing agreements, geographic expansion of sales coverage and the use of new sales channels, leveraging strategic
customer relationships, development of energy efficient products, new applications for existing products and technology, and
next generation products and services for our end-user markets.
As we advance our strategy in 2013, we expect to face a few headwinds including a soft European economy, negative year
over year foreign exchange comparisons, and increased expense associated with our legacy defined benefit pension plan in
16
the U.S. At the same time, our ongoing efforts to implement Focused Diversity position us well to offset the effect that these
factors may have on our results.
Because of the diversity of the Company’s businesses, end user markets and geographic locations, management does not use
specific external indices to predict the future performance of the Company, other than general information about broad
macroeconomic trends. Each of our individual business units serves niche markets and attempts to identify trends other than
general business and economic conditions which are specific to their businesses and which could impact their performance.
Those units report pertinent information to senior management, which uses it to the extent relevant to assess the future
performance of the Company. A description of any such material trends is described below in the applicable segment
analysis.
We monitor a number of key performance indicators (“KPIs”) including net sales, income from operations, backlog, effective
income tax rate, and gross profit margin. A discussion of these KPIs is included within the discussion below. We may also
supplement the discussion of these KPIs by identifying the impact of foreign exchange rates, acquisitions, and other
significant items when they have a material impact on the discussed KPI. We believe that the discussion of these items
provides enhanced information to investors by disclosing their consequence on the overall trend in order to provide a clearer
comparative view of the KPI where applicable. For discussion of the impact of foreign exchange rates on KPIs, the Company
calculates the impact as the difference between the current period KPI calculated at the current period exchange rate as
compared to the KPI calculated at the historical exchange rate for the prior period. For discussion of the impact of
acquisitions, we isolate the effect to the KPI amount that would have existed regardless of our acquisition. Sales resulting
from synergies between the acquisition and existing operations of the Company are considered organic growth for the
purposes of our discussion.
Unless otherwise noted, references to years are to fiscal years.
Consolidated Results from Continuing Operations (in thousands):
Net sales
Gross profit margin
Restructuring costs
Gain on sale of real estate
Income from operations
2012
$634,640
32.9%
$1,685
$4,776
$64,580
2011
$581,369
32.9%
$1,843
$3,368
$55,256
2010
$527,481
33.2%
$3,494
$1,405
$45,731
Backlog (realizable within 1 year)
$119,691
$103,692
$98,571
Net Sales
Net sales, as reported
Components of change in sales:
Effect of acquisitions
Effect of exchange rates
Organic sales growth (decline)
2012
$634,640
2011
$581,369
2010
$527,481
$14,117
($888)
$40,042
$9,852
$1,602
$42,434
--
$1,950
($15,021)
Net sales in 2012 increased $53.3 million, or 9.2%, from 2011 levels. Of the increase, $40.0 million, or 6.9% was attributable
to organic growth, as organic sales increased across all of our segments as a result of both improvements in end-user markets
and the success of our top-line growth efforts. Also factoring in our growth was an increase of $14.1 million, or 2.4%,
resulting from our four acquisitions completed during 2011. Unfavorable foreign exchange accounted for $0.9 million
against our year-over-year gains.
Net sales in 2011 increased $53.9 million, or 10.2%, from 2010 levels. Of the increase, $42.4 million, or 8.0% was
attributable to organic growth, as organic sales increased across all of our segments except Engineering Technologies, which
demonstrated historically lumpy revenues and had a difficult prior year comparison due to several large project deliveries in
2010. The increases in our other segments are a result of both improvements in end-user markets and the success of our top-
line growth efforts. Also factoring in our growth was an increase of $9.9 million, or 1.9%, resulting from our four
acquisitions completed during the year. Favorable foreign exchange accounted for the remaining $1.6 million, or 0.3% of
revenue increase.
17
Gross Profit Margin
During 2012, our gross margin was flat at 32.9% as compared to 2011, as lower gross margin in the Food Service Equipment
Group offset increases across our other segments.
During 2011, our gross margin was slightly down at 32.9% as compared to 33.2% in 2010. In 2011, our cost of sales
included $0.7 million of purchase accounting-related expenses during the year.
Income from Operations
Income from operations during 2012 increased $9.3 million, or 16.9% compared to 2011. This increase was driven by strong
performances by the Engraving, Electronics Products, and Hydraulics Products Groups. The Engraving Group benefitted
from a second consecutive record year of automotive platform work, while the Electronics Products and Hydraulics Products
Groups continue to demonstrate the impact of prior cost reductions combined with end-user market recovery and entry into
new markets and applications. Additionally, the Engineering Technologies Group was bolstered by the acquisition of Metal
Spinners impacting the full year.
Income from operations during 2011 increased $9.5 million, or 20.8% compared to 2010. The increase was due to
improvements in both the Engraving and Electronics and Hydraulics Groups. In the Engraving Group, increased volume and
previous cost reduction efforts were augmented by a favorable mix of automotive platform work. Driving the increase as well
were the Electronics Products and Hydraulics Products Groups, which also benefitted from increased volume combined with
the impact of previous cost reduction efforts.
Discussion of the performance of all of our Groups is more fully explained in the segment analysis that follows.
Income Taxes
The Company's income tax provision from continuing operations for the fiscal year ended June 30, 2012 was $15.9 million,
or an effective rate of 25.3%, compared to $14.9 million, or an effective rate of 28.2% for the year ended June 30, 2011, and
$12.5 million, or an effective rate of 29.2% for the year ended June 30, 2010. Changes in the effective tax rates from period to
period may be significant as they depend on many factors including, but not limited to, the amount of the Company's income
or loss, the mix of income earned in the US versus outside the US, the effective tax rate in each of the countries in which we
earn income, and any one time tax issues which occur during the period. In 2013, we expect to return to a more normal tax
rate in the range of 29.0% to 30.0% based on an anticipated increase in US-based taxable income within our overall business
mix.
The Company's income tax provision from continuing operations for the fiscal year ended June 30, 2012 was impacted by the
following items: (i) ) a benefit of $1.3 million from the reversal of income tax contingency reserves that were determined to
be no longer needed due to the lapsing of the statute of limitations and re-measurement of existing tax contingency reserves
based on recently completed tax examinations, (ii) a benefit of $0.4 million related to a decrease in the statutory tax rate in the
United Kingdom on prior period deferred tax liabilities recorded during the first quarter, and (iii) a benefit of $4.5 million due
to the mix of income earned in jurisdictions with beneficial tax rates.
The Company's income tax provision from continuing operations for the fiscal year ended June 30, 2011 was impacted by the
following items: (i) a benefit of $0.3 million from the reversal of income tax contingency reserves that were determined to be
no longer needed due to the expiration of applicable limitation statutes, (ii) a benefit of $0.2 million related primarily to the
retroactive extension of the R&D credit recorded during the second quarter, and (iii) a benefit totaling $0.3 million as part of
the deferred tax provision related to a change in the estimated state rate used to calculate the deferred balances.
The Company's income tax provision from continuing operations for the fiscal year ended June 30, 2010 was impacted by a
benefit of $1.1 million from the reversal of a deferred tax asset valuation allowance. This allowance was primarily related to
foreign loss carry forwards whose recovery was assessed as more likely than not based on events occurring during the year
ended June 30, 2010.
Capital Expenditures
In general, our capital expenditures over the longer term are expected to be approximately equivalent to our annual
depreciation costs. In 2012, capital expenditures of $8.6 million began shifting back to our historical trend as we made
strategic investments which supported productivity improvements, geographic expansion, and development of new product
offerings. In 2011, capital expenditures of $7.0 million were below our annual depreciation of $10.9 million, as we chose to
focus our spending on acquisitions in lieu of capital expenditures.
18
Backlog
Backlog at June 30, 2012 increased $16.0 million from $103.7 million to $119.7 million when compared to fiscal 2011, a
15.4% increase. Backlog was approximately flat for the Hydraulics Products Group, with our other segments all showing
double-digit increases year-over-year. The Food Service Equipment and Engraving Groups were the strongest drivers, with
increases of 19% and 23.5%, respectively.
Segment Analysis (in thousands)
Food Service Equipment
Net sales
Income from operations
Operating income margin
2012 compared to 2011
2011 compared to 2010
2012
2011
$ 388,813
39,613
10.2%
$ 365,523
37,915
10.4%
%
Change
2011
2010
6.4% $ 365,523
4.5% 37,915
10.4%
$ 337,578
39,682
11.8%
%
Change
8.3%
-4.5%
Net sales for the year ended June 30, 2012 increased $23.3 million, or 6.4%, from the same period one year earlier. This
includes a minor negative effect of foreign exchange rates of $0.1 million in sales. The Refrigerated Solutions (walk-in
coolers and freezers and refrigerated cabinets) and Cooking Solutions groups grew approximately 6.3% and 4.1% year over
year, respectively, while the other Food Service Equipment businesses grew net sales by 9.1%. The Refrigeration business
continues to see strong sales across the board to our quick-service restaurant chain customers, and we are seeing continued
traction in the dollar store segment where we are growing market share and the customer base. From a product standpoint,
we continue to see double-digit growth in our value line products and rack refrigeration systems. Sales in Cooking Solutions
were driven by US business at BKI, whereas AAI was negatively impacted by lower sales to major quick service chains and
lower sales to UK retail accounts due to the macroeconomic conditions impacting that market. Our equity investment and
distribution agreement with Giorik SpA, an Italian manufacturer of “combi” ovens, was well received at the two spring trade
shows, and we are working with our customer base in both the US and UK to complete required customer testing and
evaluation. We expect to see the benefits of this strategic alliance in the second half of 2013.
Income from operations for fiscal 2012 increased $1.7 million, or 4.5%, when compared to the same period one year earlier.
This includes the minor negative effect of foreign exchange rates of $0.1 million. The Group’s return on sales decreased from
10.4% to 10.2% in the prior year. The positive impact of the year over year volume increase was partially offset by a
combination of reduced volume, adverse product and channel mix changes, coupled with higher commodity prices earlier in
the year and increased warranty costs at Cooking Solutions. Additionally, productivity was negatively impacted by the
integration of Kool Star product lines into our Master-Bilt facility in Mississippi, and the integration of Tri-Star
manufacturing operations into our Nogales, Mexico facility. However, these issues were largely corrected at the end of the
fourth quarter. In response to these margin challenges, the Group has implemented price increases and multiple productivity
improvement actions, including freight and metal cost reduction efforts.
Net sales for the year ended June 30, 2011 increased $27.9 million, or 8.3%, from the same period one year earlier, 7.2% of
which resulted from organic growth. The acquisition of Tri-Star contributed approximately 1.1% of the increase in sales. The
Refrigerated Solutions (walk-in cooler and refrigerated cabinets) and Cooking Solutions groups grew approximately 6.6%
and 7.8% year over year, respectively, while the Custom Solutions group grew net sales 13.3%.
Income from operations for fiscal 2011 decreased $1.8 million, or 4.5%, when compared to 2010. The positive impact of
the year over year volume increase, cost reductions due to facility consolidations, supply chain cost reductions and labor
productivity increases was overcome by a combination of negative product and channel mix resulting in lower margin sales,
pricing pressures, and increased commodities prices..
19
Engraving
Net sales
Income from operations
Operating income margin
2012 compared to 2011
2011 compared to 2010
2012
2011
$ 93,611
17,896
19.1%
$ 85,258
14,182
16.6%
%
Change
2011
2010
9.8% $ 85,258
26.2% 14,182
16.6%
$ 77,372
9,395
12.1%
%
Change
10.2%
51.0%
Net sales in the Engraving Group increased $8.4 million, or 9.8%, from 2011 levels at $93.6 million compared to $85.3
million in the prior year. Foreign exchange had an unfavorable impact on sales of $0.9 million in fiscal year 2012. Our mold
texturizing businesses continued to demonstrate strong top line growth on a global basis due to the release of new automotive
programs, which also created an improved product mix due to their generally higher margins. We expect this trend to slow
slightly in 2013 based on currently anticipated program work and the effect of currency translation in Europe. However, we
will continue to grow this business via expansion into emerging markets including China, India, Korea and Brazil, where we
expect strong growth in the automotive and non-automotive markets for mold texturizing. We believe that our global
infrastructure and proximity to our customers, as well as our technology and responsiveness to automotive OEM customers’
needs, will allow us to remain the number one choice for their texturing services. Our roll plate and machinery equipment
sales continued to experience a soft market due to lower capital spending budgets at our customers, however, quotation
activity increased in the fourth quarter
Income from operations increased by $3.7 million, or 26.2%, when compared to 2011. We have demonstrated our ability to
favorably leverage sales growth as we expand the use of lean enterprise techniques. We also continued to develop and
globalize market leading technology in order to further improve profitability. Going into 2013, we will be moving our Brazil
facility into a leased building better suited to our operational needs and cost structure, which will result in a restructuring
charge during the first quarter of the year.
Net sales in 2011 increased 10.2% from 2010 levels at $85.3 million compared to $77.4 million in 2010. Foreign exchange
had a favorable impact on sales of $1.1 million during the year. Our mold texturizing businesses continued to strengthen
based on the release of new automotive programs, which also created an improved product mix due to their generally higher
margins. Our roll plate and machinery equipment sales continued to experience a soft market due to lower capital spending
budgets at our customers.
Income from operations in 2011 increased by $4.8 million, or 51.0%, when compared to 2010. Restructuring of the business
and significant cost reduction efforts implemented in 2009, as well as headcount reductions in our European operations in
2010, were significant in the improvement of operating income year over year. With our new lower cost structure and focus
on growth, we demonstrated our ability to improve income from operations on flat sales in 2010. In 2011, we demonstrated
that we had favorably leveraged sales growth and further improved our operating performance.
Engineering Technologies
Net sales
Income from operations
Operating income margin
2012 compared to 2011
2011 compared to 2010
2012
2011
$ 74,088
14,305
19.3%
$ 61,063
12,606
20.6%
%
Change
2011
2010
21.3% $ 61,063
13.5% 12,606
20.6%
$ 58,732
13,843
23.6%
%
Change
4.0%
-8.9%
Net sales in the fiscal year increased $13.0 million or 21.3%, when compared to the prior year. The increase is a result of the
acquisition of Metal Spinners Group. Negative organic growth of 11.3% occurred in our legacy businesses as increases in the
Aerospace segment at Spincraft were more than offset by declines in the Energy, Aviation and the Defense markets. As
expected, the Energy business was down significantly year-over-year as one of our major customers implemented an
inventory correction program. The Aerospace segment increased from prior year levels due to strong demand for unmanned
vehicles. The Defense sector was down primarily due to order phasing and a difficult prior year comparison, but we expect
this sector to improve in 2013. At Metal Spinners, Oil & Gas business will be soft in the first half of 2013, but we expect it
to return to 2012 levels for all of calendar year 2013 based on forecasted demand.
20
For the fiscal year ending June 30, 2012, income from operations increased $1.7 million, or 13.5%, when compared to the
prior year. This increase was driven by the acquisition of Metal Spinners. The improvement from Metal Spinners was offset
by the impact of reduced sales volume at Spincraft.
Net sales in 2011 increased $2.3 million or 4.0%, when compared to 2010. The increase is a result of the acquisition of Metal
Spinners Group, which increased sales 9.0%. Negative organic growth of 5.1% occurred as increases in the Aviation and
Defense segments at Spincraft were more than offset by declines in the Energy and Aerospace markets.
For the fiscal year ending June 30, 2011, income from operations decreased $1.2 million, or 8.9%, when compared to 2010.
This decrease was driven by the energy and aerospace sales volume reductions at Spincraft and the effect of $0.8 million of
purchase accounting and other acquisition-related costs from the Metal Spinners acquisition.
Electronics Products
Net sales
Income from operations
Operating income margin
2012 compared to 2011
2011 compared to 2010
2012
2011
$ 48,206
8,715
18.1%
$ 46,600
7,551
16.2%
%
Change
2011
2010
3.4% $ 46,600
15.4% 7,551
16.2%
$ 37,201
4,074
11.0%
%
Change
25.3%
85.3%
Electronics Products sales increased $1.6 million, or 3.4% in 2012 when compared to the prior year. Sales growth was
negatively impacted during the first three quarters of 2012 as we experienced soft demand for reed switches, particularly in
the Asia Pacific region, and soft demand from a number of larger OEM accounts for sensors and magnetic products.
However, sales strengthened significantly in the fourth quarter as we benefited from a number of new products and customer
project launches within the automotive, appliance, medical, and HVAC sensor and magnetic markets and strengthening
demand for reed switches. This pipeline of new programs remains robust and is expected to contribute to solid top line
growth in 2013. Additionally, 2013 will see the impact of the Meder acquisition, which will add complementary geographic
regions, products, markets, and sales.
Income from operations in 2012 increased $1.2 million, or 15.4%, compared to 2011. The year over year improvement was
the result of the sales increase as well as the impact of various material and labor cost savings particularly within the North
American businesses. The higher sales level and the various cost reduction initiatives drove operating income margin from
16.2 % in 2011 to 18.1% for 2012. While the purchase accounting from Meder will negatively impact the first quarter, we
expect the acquisition to be accretive to the year in the range of $0.08 to $0.12 per diluted share.
Sales for the Group increased $9.4 million, or 25.3%, in 2011 when compared to 2010. This increase is due to improved
market conditions in our end user markets and market share gains resulting from our top line organic growth initiatives. We
moved into new regions, products, and markets by adding new internal and third-party sales representatives in the United
States, Europe and Asia. We remain in a unique position relative to our competition, as we are able to provide engineering
expertise on a global basis combined with the low cost manufacturing from our facilities located in Mexico and China. Our
North American-based competition typically cannot offer the same low cost manufacturing position and competitors located
in China cannot provide the same level of new product and application engineering capability.
Income from operations during 2011 increased $3.5 million, or 85.3% compared to 2010 as improved pricing and
productivity improvements allowed us to continue to leverage volume at our low-cost facilities in Mexico and China.
Hydraulics Products
Net sales
Income from operations
Operating income margin
2012 compared to 2011
2011 compared to 2010
2012
2011
$ 29,922
4,403
14.7%
$ 22,925
2,436
10.6%
%
Change
2011
2010
30.5% $ 22,925
80.7% 2,436
10.6%
$ 16,598
963
5.8%
%
Change
38.1%
153.0%
Net sales in 2012 for the Hydraulics Products Group increased $7.0 million, or 30.5% when compared to 2011. Conditions in
the North American dump trailer market continue to improve. Diversification into other markets has been a major contributor
to the growth, as demonstrated by market share gains at several North American refuse market OEMs. The manufacturing
facility in Tianjin, China has also been a factor in our top line growth, as this facility is now producing both rod and
21
telescopic cylinders for global customers. The ability to offer our engineering expertise on a global basis combined with
manufacturing locations in the United States and a low cost operation in China has allowed us to penetrate markets where we
previously could not be competitive. Expansion of business geographically into areas such as Southeast Asia, Australia,
Central America and South America is contributing to the increase outside of our historical focus on the North American
market. We are currently adding capacity to our China facility in anticipation of continued growth from these markets.
Income from operations for 2012 increased $2.0 million or 80.7% when compared to 2011. This increase in annual income
from operations can be attributed to leveraging the top line growth, cost containment and process and productivity
improvements.
Sales for the Group in 2011 were $22.9 million, an increase of $6.3 million, or 38.1%, compared to 2010 sales of $16.6
million. Business in the domestic dump truck and dump trailer markets began to improve due to increases in coal mining,
requirements for aggregate, and the replacement of aging equipment by municipalities. Our diversification efforts in the
Chinese domestic market, the move into alternative markets such as oil & gas and refuse vehicles, as well as sales into
Southeast Asia, Australia, Central America and South America, also contributed to the increase.
Income from operations in 2011 was $2.4 million, an increase of $1.5 million, or 153.0%, from 2010 income from operations
of $1.0 million. The increase in sales during the period had a dramatic positive impact on income due to the impact of cost
reduction initiatives taken in 2009.
Corporate, Restructuring and Other
2012 compared to 2011
2011 compared to 2010
2012
2011
%
Change
2011
2010
%
Change
Income (loss) from operations:
Corporate
Gain on sale of real estate
Restructuring
$ (23,443)
4,776
$ (1,685)
$ (20,959)
3,368
$ (1,843)
11.9% $ (20,959)
41.8% 3,368
-8.6% $ (1,843)
$ (20,137)
1,405
$ (3,494)
4.1%
139.7%
-47.3%
Corporate expenses in 2012 increased $2.5 million, or 11.9% as compared to 2011, driven primarily by increased
management bonus and stock compensation expense related to exceeding performance targets for the year.
Corporate expenses in 2011 increased $0.8 million, or 4.1% as compared to 2010. During 2011, we incurred $1.0 million of
expenses related to the four acquisitions during the year, including legal and administrative costs and investment banking
fees.
The Company recorded a gain of $4.8 million during 2012 related to the sale of an Engraving Group facility in Sao Paolo,
Brazil. We will be relocating the plant to a leased facility in an industrial park that is more suited to our operational needs
and cost structure. In 2011, the Company recorded a gain of $3.4 million from the sale of an excess facility in Lyon, France,
that was the site of a former Engraving Group operation.
Restructuring expenses reflect costs associated with the Company’s efforts to continuously improve operational efficiency
and expand globally in order to remain competitive in the end-user markets we serve. Each year the Company incurs costs
for actions to size its businesses to a level appropriate for current economic conditions and to improve its cost structure to
improve our competitive posture and to improve operating margins. Restructuring expenses result from numerous individual
actions implemented across the Company’s various operating divisions on an ongoing basis and include costs for moving
facilities to low-cost locations, starting up plants after relocation, curtailing/downsizing operations because of changing
economic conditions, and other costs resulting from asset redeployment decisions. Shutdown costs include severance,
benefits, stay bonuses, lease and contract terminations and asset write-downs. In addition to the costs of moving fixed assets,
start-up and moving costs include employee training and relocation. Vacant facility costs include maintenance, utilities,
property taxes, and other costs.
During 2012 the Company incurred restructuring expense of $1.7 million. These expenses primarily related to the
relocation of Tri-Star manufacturing operations to Nogales, Mexico, the consolidation of Kool Star into our Master-Bilt
operations in Mississippi, and ongoing headcount reductions in our European Engraving operations.
During 2011 the Company incurred restructuring expense of $1.8 million. The majority of these expenses related to the
continuation of two initiatives begun in 2010 – the relocation of our Dallas Food Service Equipment Group manufacturing
operations to Nogales, Mexico, and headcount reductions in our European Engraving operations. We also incurred additional
22
expenses in the Food Service Equipment Group as we began integrating Tri-Star into our Nogales facility and consolidated
customer service functions for the Cooking Solutions businesses.
The Company currently expects to incur between $1.5 and $2.5 million of restructuring expense in 2013, including the costs
to complete actions initiated before the end of 2012 and actions anticipated to be approved and initiated during 2013.
Discontinued Operations
In December 2011, we decided to divest the ADP business unit. In connection with this decision, the Company adjusted the
carrying value of ADP’s assets to their net realizable value based on a range of expected sale prices. As a result, the
Company recorded goodwill impairment charges of $14.9 million and impairment charges of $5.0 million to fixed assets.
Charges taken in the second quarter included the aforementioned impairment and other transaction costs required to reflect
the carrying value of ADP at its estimated net realizable value.
On March 30, 2012, we completed the sale of ADP to a private equity buyer for consideration of $16.1 million consisting of
$13.1 million in cash and a $3.0 million note secured by first mortgages on three ADP facilities. During the quarter ended
March 31, 2012, additional pre-tax charges of $2.6 million were taken in connection with the sale. These charges related
primarily to the impairment of a non-cancellable lease liability that the buyer elected not to assume as part of the purchase.
During the fourth quarter of 2012, we sold the two ADP facilities retained by us in the transaction for a gain of $0.8 million.
In 2007, the Company sold substantially all the assets of the Berean Christian Stores (“Berean”) business. As the former
owner of Berean, the Company is party under a number of operating leases which were assigned to the purchaser of the
business for the remaining initial terms of the leases at the stated lease costs. The Company remained an obligor of these
leases until the expiration of the initial terms. In June 2009, Berean filed for bankruptcy under Chapter 11 of the U.S.
Bankruptcy Code and, in July 2009, its assets were sold to a third party under Section 363 of the Code. The new owner of
the Berean assets has infused capital into the business, and we believe the Berean bookstores can now be operated
successfully as a going concern. As part of this transaction, the Company agreed to provide lease supplement payments to the
new owner of the Berean assets. The Company remained an obligor of the leases assumed by the new owner, however, our
obligation was reduced for locations where the new owner was able to obtain rent concessions. In addition, the Company
remains responsible for two sites formerly operated by Berean. Liabilities associated with these two leases, net of expected
subleases at current market rates, total $0.2 million at June 30, 2012. The aggregate amount of our obligations in the event of
default is $1.5 million at June 30, 2012.
During 2008, the Company entered into an Administrative Order of Consent with the U.S. Environmental Protection Agency
(“EPA”) related to the removal of various PCB-contaminated materials and soils at a site where the Company leased a
building and conducted operations from 1967-1979. Remediation efforts were substantially completed during the third
quarter of 2009, and the Company received a closure letter from the EPA in the first half of 2010. The Company actively
sought the recovery of costs incurred in carrying out the terms of the AOC through negotiations with its legacy insurers. In
2010, the Company reached a recovery settlement and recorded income of $2.5 million ($1.6 million net of tax), net of costs
incurred to negotiate the settlement.
The following table summarizes the Company’s discontinued operations activity, by operation, for the years ended June 30,
2012, 2011 and 2010 (in thousands):
Sales:
Air Distribution Products Group
Income (loss) before taxes:
Air Distribution Products Group
Berean Christian Bookstores
Club Products and Monarch Aluminum
Other loss from discontinued operations
Income (loss) before taxes from discontinued operations
(Provision) benefit for tax
Net income (loss) from discontinued operations
Year
Disposed
2012
2011
2010
2012
$
43,537
$
52,384
$
50,974
2012
2007
1982
(24,871)
(184)
(19)
(250)
(25,324)
9,322
(16,002)
$
$
$
$
(2,841)
(635)
--
(490)
(3,966)
1,307
(2,659)
$
$
(3,458)
(659)
2,291
(454)
(2,280)
627
(1,653)
23
Liquidity and Capital Resources
Cash Flow
Cash flow from continuing operations for the year ended June 30, 2012 was $47.4 million, compared to $60.8 million for the
same period in 2011. Items which positively impacted cash flow as compared to the prior year were an increase in net
income from continuing operations of $8.9 million. The improvement was offset by an increase in working capital during the
year of $3.9 million and contributions to defined benefit plans of $7.3 million, including a voluntary contribution of $6.0
million.
Investing activities from continuing operations consumed $7.4 million of cash during 2012, consisting primarily of $9.9
million for capital expenditures and $2.4 million in other investing activities. An additional $5.2 million of cash was
generated from the aforementioned sale of real estate. $16.0 million of cash inflows were also realized from discontinued
operations due to the sale of the ADP business and related real estate.
During the year ended June 30, 2012, we used $9.5 million of cash for financing activities. We reduced our funded debt by
$1.6 million, paid dividends of $3.4 million, and repurchased $5.5 million of treasury stock during the year.
Capital Structure
On January 5, 2012, the Company entered into a five-year $225 million unsecured Revolving Credit Facility (“Credit
Agreement”, or “new facility”), which can be increased by the Company by an amount of up to $100 million, in accordance
with specified conditions contained in the agreement. The new facility also includes a $10 million sublimit for swing line
loans and a $30 million sublimit for letters of credit. The new credit facility replaced the 2007 credit agreement, which was
scheduled to mature in September 2012.
Under the terms of the Credit Agreement, we will pay a variable rate of interest and a commitment fee on available, but
unused, amounts under the new facility. The amount of the commitment fee will depend upon both the undrawn amount
remaining available under the new facility and the Company’s funded debt to EBITDA (as defined in the agreement) ratio
at particular points in time. As our funded debt to EBITDA ratio increases, the commitment fee will increase. Amounts
borrowed under the new facility may be in the form of either Base Rate or Eurodollar Rate loans. The rate of interest on
Base Rate loans shall be the higher of (i) the Federal Funds rate plus ½ of 1%, (ii) the “prime rate” announced by RBS
Citizens, N. A. or (iii) the London interbank offered rate (“LIBOR”) plus ½ of 1% (the rate in effect shall be referred to as
the “Base Rate”), plus an additional amount based upon the Company’s debt to EBITDA ratio. The rate of interest on
Eurodollar Rate loans shall be the LIBOR rate which corresponds to the interest period (either one, two, three or six
months) selected by the Company, plus an additional amount based upon the Company’s funded debt to EBITDA ratio.
Swing Line loans shall bear interest at the Base Rate, plus an additional amount based upon the Company’s funded debt to
EBITDA ratio. As the Company’s funded debt to EBITDA ratio increases, the additional amount will also increase.
The new facility expires in January 2017, and contains customary representations, warranties and restrictive covenants, as
well as specific financial covenants. The Company’s current financial covenants under the facility are as follows:
Interest Coverage Ratio - The Company is required to maintain a ratio of Earnings Before Interest and Taxes, as Adjusted
(“Adjusted EBIT per the Credit Agreement”), to interest expense for the trailing twelve months of at least 3:1. Adjusted
EBIT per the Credit Agreement specifically excludes extraordinary and certain other defined items such as non-cash
restructuring and acquisition-related charges up to $2.0 million, and goodwill impairment. At June 30, 2012, the
Company’s Interest Coverage Ratio was 27.3:1.
Leverage Ratio - The Company’s ratio of funded debt to trailing twelve month Adjusted EBITDA per the credit agreement,
calculated as Adjusted EBIT per the Credit Agreement plus Depreciation and Amortization, may not exceed 3.5:1. At June
30, 2012, the Company’s Leverage Ratio was 0.79:1.
As of June 30, 2012, we had borrowings under the new facility of $50.0 million. As of June 30, 2012, the effective rate of
interest for outstanding borrowings under the new facility was 3.67%. We also utilize an uncommitted money market credit
facility to help manage daily working capital needs. The amount outstanding under this facility was $0 and $1.8 million at
June 30, 2012 and 2011, respectively.
Funds borrowed under the new facility may be used for the repayment of debt, working capital, capital expenditures,
acquisitions (so long as certain conditions, including a specified funded debt to EBITDA leverage ratio is maintained), and
other general corporate purposes.
24
Our primary cash requirements in addition to day-to-day operating needs include interest payments, capital expenditures,
and dividends. Our primary sources of cash for these requirements are cash flows from continuing operations and
borrowings under the new facility. We expect to spend between $13.0 and $16.0 million on capital expenditures during
2013, and expect that depreciation and amortization expense will be between $12.0 and $13.0 million and $4.0 and $4.5
million, respectively.
In order to manage our interest rate exposure, we are party to $50.0 million of floating to fixed rate swaps. These swaps
convert our interest payments from LIBOR to a weighted average rate of 2.29%.
The following table sets forth our capitalization at June 30:
Year Ended June 30 (in thousands) :
Short-term debt
Current portion of long-term debt
Long-term debt
Total debt
Less cash
Net (cash) debt
Stockholders’ equity
Total capitalization
2012
$ --
--
50,000
50,000
54,749
(4,749)
242,907
$238,158
2011
$1,800
3,300
46,500
51,600
14,407
37,193
245,613
$282,806
Stockholders’ equity decreased year over year primarily as a result of changes in unrealized pension losses of $21.6 million.
Also affecting equity were net income of $30.9 million, dividends of $3.5 million, unfavorable foreign currency movements
of $7.8 million, and changes in the fair value of derivative instruments of $0.7 million. The remaining changes are
attributable to treasury stock activity, offset by the additional paid in capital increases associated with stock-based
compensation in the current year. The Company's net (cash) debt to capital percentage improved from 13.2% to -2.0% in
2012 due to continued debt reduction, the contribution of current year net income to retained earnings, and the
aforementioned changes to accumulated other comprehensive income.
We sponsor a number of defined benefit and defined contribution retirement plans. The Company’s pension plan for U.S.
salaried employees was frozen as of December 31, 2007. Participants in the U.S. salaried pension and supplemental defined
benefit plans no longer accrue future benefits. The fair value of the Company's U.S. pension plan assets was $198.7 million
at June 30, 2012 and the projected benefit obligation in the U.S. was $245.2 million at that time. During 2012, we made a
voluntary contribution of $6.0 million to the plan. In June 2012, the Moving Ahead for Progress in the 21st Century (“MAP
21”) bill was signed into law. Based on changes in pension funding provisions under MAP 21, we made an additional $3.25
million contribution subsequent to June 30 due to its favorable treatment under the bill and retroactive treatment under the
Pension Protection Act (“PPA”). As a result of this additional contribution in conjunction with the voluntary contribution
made in 2012, the plan is 100% funded under PPA rules, and we do not expect to make mandatory contributions to the plan
until 2016. We do not expect contributions to our other defined benefit plans to be material in 2013.
We have evaluated the current and long-term cash requirements of our defined benefit and defined contribution plans as of
June 30, 2012. Our operating cash flows from continuing operations and available liquidity are expected to be sufficient to
cover required contributions under ERISA and other governing regulations.
We have an insurance program for certain retired key executives. The underlying policies have a cash surrender value of
$19.1 million and are reported net of loans of $11.1 million for which we have the legal right of offset. These policies have
been purchased to fund supplemental retirement income benefits. The aggregate present value of future obligations was $0.2
million and $0.6 million at June 30, 2012 and 2011, respectively. During 2012, the Company withdrew $0.2 million of
excess funding from these policies with no related tax consequences.
25
Contractual obligations of the Company as of June 30, 2012 are as follows (in thousands):
Contractual Obligations
Long-term debt obligations
Operating lease obligations
Estimated interest payments 1
Post-retirement benefit payments 2
Total
Payments Due by Period
Less
than 1
year
$0
5,473
1,644
136
$7,253
Total
$50,000
22,335
5,909
2,002
$80,246
1-3
years
3-5
years
$0
7,562
3,092
267
$10,921
$50,000
4,723
1,173
255
$56,151
More
than 5
years
$0
4,577
--
1,344
$5,921
1 Estimated interest payments are based upon effective interest rates as of June 30, 2012, and include the impact of
interest rate swaps. See Item 7A for further discussions surrounding interest rate exposure on our variable rate
borrowings.
2 Post-retirement benefit payments are based upon current benefit payment levels.
At June 30, 2012, we had $0.8 million of non-current liabilities for uncertain tax positions. We are not able to
provide a reasonable estimate of the timing of future payments related to these obligations.
Off Balance Sheet Items
In March 2012, the Company sold substantially all of the assets of the ADP business. In connection with the divestiture, the
Company remained the lessee of ADP’s Philadelphia, PA facility and administrative offices, with the purchaser subleasing a
fractional portion of the building at current market rates. In connection with the transaction, the Company recognized a lease
impairment charge of $2.3 million for the remaining rental expense. The Company’s aggregate obligation with respect to the
lease is $2.9 million, of which $2.2 million was recorded as a liability at June 30, 2012. Additionally, the Company remained
an obligor on an additional facility lease that was assumed in full by the buyer, for which our aggregate obligation in the
event of default by the buyer is $1.2 million. With the exception of the impaired portion of the Philadelphia lease, the
Company does not expect to make any payments with respect to these obligations. The buyer’s obligations under the
respective sublease and assumed lease are secured by a cross-default provision in the purchaser’s promissory note for a
portion of the purchase price which is secured by mortgages on the ADP real estate sold in the transaction.
In connection with the sale of the Berean Christian Bookstores completed in August 2006, we assigned all but one lease to the
buyers. During June 2009, the Berean business filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy
Code. The Berean assets were subsequently resold under section 363 of the Code. The new owners of the Berean business
have negotiated lower lease rates and extended lease terms at certain of the leased locations. We remain an obligor on these
leases, but at the renegotiated rates and to the original term of the leases. The aggregate amount of our obligations in the
event of default is $1.5 million at June 30, 2012, of which $1.3 million is not recorded on our balance sheet as a liability
based on management’s assessment of the likelihood of loss.
We had no other material off balance sheet items at June 30, 2012, other than the operating leases summarized above.
Other Matters
Inflation – Certain of our expenses, such as wages and benefits, occupancy costs and equipment repair and replacement, are
subject to normal inflationary pressures. Inflation for medical costs can impact both our reserves for self-insured medical
plans as well as our reserves for workers' compensation claims. We monitor the inflationary rate and make adjustments to
reserves whenever it is deemed necessary. Our ability to manage medical costs inflation is dependent upon our ability to
manage claims and purchase insurance coverage to limit the maximum exposure for us.
Foreign Currency Translation – Our primary functional currencies used by our non-U.S. subsidiaries are the Euro, British
Pound Sterling (Pound), Mexican Peso, and Chinese Yuan. During the current year, the Pound Sterling, Peso, and Euro have
experienced decreases in value relative to the U.S. Dollar, our reporting currency. Since June 30, 2011 the Euro has
depreciated by 12.7%, the Pound has depreciated by 2.2%, and the Peso has depreciated by 13.4% (all relative to the U.S.
Dollar). These lower exchange values were used in translating the appropriate non-U.S. subsidiaries’ balance sheets into U.S.
Dollars at the end of the current year.
26
Defined Benefit Pension Plans – We record expenses related to these plans based upon various actuarial assumptions such as
discount rates and assumed rates of returns. Based on current assumptions, we are projecting an increase of $2.6 million, or
$0.13 per share, of additional expense related to our legacy U.S. plan in 2013 and compared to 2012.
Environmental Matters – During 2008, the Company entered into an Administrative Order of Consent with the U.S.
Environmental Protection Agency related to the removal of various PCB-contaminated materials and soils at a site where the
Company leased a building and conducted operations from 1967-1979. See the notes to our consolidated financial statements
for further information regarding this event.
Seasonality – We are a diversified business with generally low levels of seasonality, however our fiscal third quarter is
typically the period with the lowest level of activity.
Employee Relations – The Company has labor agreements with a number of union locals in the United States and a number of
European employees belong to European trade unions. We renegotiated three union contracts during 2012, and in each case
reached an agreement. There are no union contracts expiring during 2013. The company maintains good working relations
with all of its unions, however, there can be no guarantee that agreements can be reached in future negotiations.
Critical Accounting Policies
The Consolidated Financial Statements include accounts of the Company and all of our subsidiaries. The preparation of
financial statements in conformity with accounting principles generally accepted in the United States of America requires us
to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying Consolidated
Financial Statements. Although we believe that materially different amounts would not be reported due to the accounting
policies described below, the application of these accounting policies involves the exercise of judgment and use of
assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. We have listed a
number of accounting policies which we believe to be the most critical.
Collectability of Accounts Receivable – Accounts Receivable are reduced by an allowance for amounts that may become
uncollectible in the future. Our estimate for the allowance for doubtful accounts related to trade receivables includes
evaluation of specific accounts where we have information that the customer may have an inability to meet its financial
obligation together with a general provision for unknown but existing doubtful accounts.
Realizability of Inventories – Inventories are valued at the lower of cost or market. The Company regularly reviews
inventory values on hand using specific aging categories, and records a provision for obsolete and excess inventory based on
historical usage and estimated future usage. As actual future demand or market conditions may vary from those projected by
management, adjustments to inventory valuations may be required.
Realization of Goodwill - Goodwill and certain indefinite-lived intangible assets are not amortized, but instead are tested for
impairment at least annually and more frequently whenever events or changes in circumstances indicate that the fair value of
the asset may be less than its carrying amount of the asset. The Company’s annual test for impairment is performed using a
May 31st measurement date.
We have identified our reporting units for impairment testing as our twelve operating segments, which are aggregated into our
five reporting segments as disclosed in Note 18 – Industry Segment Information.
The test for impairment is a two step process. The first step compares the carrying amount of the reporting unit to its
estimated fair value (Step 1). To the extent that the carrying value of the reporting unit exceeds its estimated fair value, a
second step is performed, wherein the reporting unit’s carrying value is compared to the implied fair value (Step 2). To the
extent that the carrying value exceeds the implied fair value, impairment exists and must be recognized.
As quoted market prices are not available for the Company’s reporting units, the fair value of the reporting units is
determined using a discounted cash flow model (income approach). This method uses various assumptions that are specific
to each individual reporting unit in order to determine the fair value. In addition, the Company compares the estimated
aggregate fair value of its reporting units to its overall market capitalization.
Our annual impairment testing at each reporting unit relied on assumptions surrounding general market conditions, short-term
growth rates, and a terminal growth rate of 2.5%, and detailed management forecasts of future cash flows prepared by the
relevant reporting unit. Fair values were determined primarily by discounting estimated future cash flows at a weighted
average cost of capital of 9.97%. An increase in the weighted average cost of capital of approximately 350 basis points in
the analysis would not result in the identification of any impairments.
27
While we believe that our estimates of future cash flows are reasonable, changes in assumptions could significantly affect our
valuations and result in impairments in the future. The most significant assumption involved in the Company’s determination
of fair value is the cash flow projections of each reporting unit. Certain of our reporting units have been significantly
impacted by the current global economic downturn, and if the effects of the current global economic environment are
protracted or the recovery is slower than we have projected estimates of future cash flows for each reporting unit may be
insufficient to support the carrying value of the reporting units, requiring the Company to re-assess its conclusions related to
fair value and the recoverability of goodwill.
As a result of our annual assessment, the Company determined that the fair value of the reporting units and indefinite-lived
intangible assets exceeded their respective carrying values. Therefore, no impairment charges were recorded in connection
with our assessments during 2012 and 2011.
In connection with the divestiture of ADP, the Company determined that, based on the net realizable value of the business in
the transaction, the goodwill of the ADP reporting unit was impaired. As such, the Company recognized $14.9 million in
impairment charges in discontinued operations during the second quarter of 2012.
Cost of Employee Benefit Plans – We provide a range of benefits to our employees, including pensions and some
postretirement benefits. We record expenses relating to these plans based upon various actuarial assumptions such as
discount rates, assumed rates of return, compensation increases, turnover rates, and health care cost trends. The expected
return on plan assets assumption of 8.1% in the U.S. is based on our expectation of the long-term average rate of return on
assets in the pension funds and is reflective of the current and projected asset mix of the funds and considers the historical
returns earned on the funds. We have analyzed the rates of return on assets used and determined that these rates are
reasonable based on the plans’ historical performance relative to the overall markets as well as our current expectations for
long-term rates of returns for our pension assets. The U.S. discount rate of 4.6% reflects the current rate at which pension
liabilities could be effectively settled at the end of the year. The discount rate is determined by matching our expected benefit
payments from a stream of AA- or higher bonds available in the marketplace, adjusted to eliminate the effects of call
provisions. We review our actuarial assumptions, including discount rate and expected long-term rate of return on plan
assets, on at least an annual basis and make modifications to the assumptions based on current rates and trends when
appropriate. Based on information provided by our actuaries and other relevant sources, we believe that our assumptions are
reasonable.
The cost of employee benefit plans includes the selection of assumptions noted above. A twenty-five basis point change in
the expected return on plan assets assumptions, holding our discount rate and other assumptions constant, would increase or
decrease pension expense by approximately $0.5 million per year. A twenty-five basis point basis point change in our
discount rate, holding all other assumptions constant, would increase or decrease pension expense by approximately $0.3
million annually. See the Notes to the Consolidated Financial Statements for further information regarding pension plans.
Business Combinations - The accounting for business combinations requires estimates and judgments as to expectations for
future cash flows of the acquired business, and the allocation of those cash flows to identifiable intangible assets, in
determining the estimated fair values for assets acquired and liabilities assumed. The fair values assigned to tangible and
intangible assets acquired and liabilities assumed, are based on management’s estimates and assumptions, as well as other
information compiled by management, including valuations that utilize customary valuation procedures and techniques. If
the actual results differ from the estimates and judgments used in these fair values, the amounts recorded in the consolidated
financial statements could result in a possible impairment of the intangible assets and goodwill, or require acceleration of the
amortization expense of finite-lived intangible assets.
Allocations of the purchase price for acquisitions are based on estimates of the fair value of the net assets acquired and are
subject to adjustment upon finalization of the purchase price allocation. During this measurement period, the Company will
adjust assets or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date
that, if known, would have resulted in the recognition of those assets and liabilities as of that date. All changes that do not
qualify as measurement period adjustments are included in current period earnings.
Recently Issued Accounting Pronouncements
In September 2011, the Financial Accounting Standards Board ("FASB") issued amended accounting guidance for goodwill
in order to simplify how companies test goodwill for impairment. The amendments permit a company to first assess the
qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its
carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. The
more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. If, after assessing the totality of
events or circumstances, a company determines it is not more likely than not that the fair value of a reporting unit is less than
its carrying amount, then performing the two-step impairment test is unnecessary. The amendments are effective for annual
28
and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is
permitted. We do not expect the adoption of this accounting pronouncement to have a material effect on our financial
statements when implemented.
In June 2011, the FASB issued an amendment to the accounting guidance for presentation of comprehensive income. Under
the amended guidance, a company may present the total of comprehensive income, the components of net income, and the
components of other comprehensive income either in a single continuous statement of comprehensive income or in two
separate but consecutive statements. In either case, a company is required to present each component of net income along
with total net income, each component of other comprehensive income along with a total for other comprehensive income,
and a total amount for comprehensive income. Regardless of choice in presentation, of which we are currently evaluating, a
company is required to present on the face of the financial statements reclassification adjustments for items that are
reclassified from other comprehensive income to net income in the statement(s) where the components of net income and the
components of other comprehensive income are presented. In December 2011, the FASB delayed indefinitely the portion of
the guidance related to the presentation of reclassification adjustments in the income statement. For public companies, these
amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, and
shall be applied retrospectively. Early adoption is permitted. Other than a change in presentation, the implementation of this
accounting pronouncement is not expected to have a material impact on our financial statements when implemented.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Risk Management
We are exposed to market risks from changes in interest rates, commodity prices and changes in foreign currency exchange.
To reduce these risks, we selectively use, from time to time, financial instruments and other proactive management
techniques. We have internal policies and procedures that place financial instruments under the direction of the Treasurer and
restrict all derivative transactions to those intended for hedging purposes only. The use of financial instruments for trading
purposes (except for certain investments in connection with the KEYSOP plan and non-qualified defined contribution plan) or
speculation is strictly prohibited. The Company has no majority-owned subsidiaries that are excluded from the consolidated
financial statements. Further, we have no interests in or relationships with any special purpose entities.
Exchange Risk
We are exposed to both transactional risk and translation risk associated with exchange rates. The transactional risk is
mitigated, in large part, by natural hedges developed with locally denominated debt service on intercompany accounts. We
also mitigate certain of our foreign currency exchange rate risks by entering into forward foreign currency contracts from time
to time. The contracts are used as a hedge against anticipated foreign cash flows, such as dividend payments, loan payments,
and materials purchases, and are not used for trading or speculative purposes. The fair values of the forward foreign currency
exchange contracts are 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. At June 30, 2012
and 2011, the fair value, in the aggregate, of the Company’s open foreign exchange contracts was not material.
Our primary translation risk is with the Euro, British Pound Sterling, and Chinese Yuan. A hypothetical 10% appreciation or
depreciation of the value of any these foreign currencies to the U.S. Dollar at June 30, 2012, would not result in a material
change in our operations, financial position, or cash flows. We do not hedge our translation risk. As a result, fluctuations in
currency exchange rates can affect our stockholders’ equity.
Interest Rate
The Company’s effective rate on variable-rate borrowings under the revolving credit agreement increased from 2.96% at
June 30, 2011 to 3.67% at June 30, 2012. Our interest rate exposure is limited primarily to interest rate changes on our
variable rate borrowings. From time to time, we will use interest rate swap agreements to modify our exposure to interest rate
movements. We are currently entered into $50.0 million of floating to fixed rate swaps with terms ranging from two to five
years. These swaps convert our interest payments from LIBOR to a weighted average rate of 2.29%. Due to the impact of
the swaps, an increase in interest rates would not materially impact our annual interest expense at June 30, 2012.
Concentration of Credit Risk
We have a diversified customer base. As such, the risk associated with concentration of credit risk is inherently minimized.
As of June 30, 2012, no one customer accounted for more than 5% of our consolidated outstanding receivables or of our sales.
29
Commodity Prices
The Company is exposed to fluctuating market prices for all commodities used in its manufacturing processes. Each of our
segments is subject to the effects of changing raw material costs caused by the underlying commodity price movements. In
general, we do not enter into purchase contracts that extend beyond one operating cycle. While Standex considers our
relationship with our suppliers to be good, there can be no assurances that we will not experience any supply shortage.
The Engineering Technologies, Food Service Equipment and Electronics and Hydraulics Groups are all sensitive to price
increases for steel products, other metal commodities and petroleum based products. In the past year, we have experienced
price fluctuations for a number of materials including steel, copper wire, other metal commodities, refrigeration components
and foam insulation. These materials are some of the key elements in the products manufactured in these segments.
Wherever possible, we will implement price increases to offset the impact of changing prices. The ultimate acceptance of
these price increases, if implemented, will be impacted by our affected divisions’ respective competitors and the timing of
their price increases.
30
Item 8. Financial Statements and Supplementary Data
Consolidated Balance Sheets
Standex International Corporation and Subsidiaries
As of June 30 (in thousands, except share data )
2012
2011
ASSETS
Current assets:
Cash and cash equivalents
Accounts receivable, net
Inventories
Prepaid expenses and other current assets
Income taxes receivable
Deferred tax asset
Current assets - discontinued operations
Total current assets
Property, plant, equipment, net
Intangible assets, net
Goodwill
Deferred tax asset
Other non-current assets
Non-current assets - discontinued operations
Total non-current assets
$
54,749
99,432
73,076
6,255
3,568
12,190
-
249,270
82,563
19,818
100,633
6,618
20,909
-
230,541
$
14,407
95,716
74,805
5,345
-
11,337
18,939
220,549
87,088
22,554
102,439
-
18,028
24,247
254,356
Total assets
$
479,811
$
474,905
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt
Current portion of long-term debt
Accounts payable
Accrued liabilities
Income taxes payable
Current liabilities – discontinued operations
Total current liabilities
$
Long-term debt
Deferred income taxes
Pension obligations
Other non-current liabilities
Non-current liabilities - discontinued operations
Total non-current liabilities
Commitments and Contingencies (Notes 11 and 12)
Stockholders' equity:
Common stock, par value $1.50 per share -
60,000,000 shares authorized, 27,984,278
issued, 12,523,866 and 12,448,632 shares
outstanding in 2012 and 2011
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Treasury shares (15,460,412 shares in 2012
and 15,535,646 shares in 2011)
Total stockholders' equity
-
-
62,113
51,124
3,548
-
116,785
50,000
4,644
53,550
11,925
-
120,119
41,976
34,928
505,163
(75,125)
(264,035)
242,907
$
1,800
3,300
68,205
43,825
3,404
7,603
128,137
46,500
7,653
27,815
12,707
6,480
101,155
41,976
33,228
477,726
(44,928)
(262,389)
245,613
Total liabilities and stockholders' equity
$
479,811
474,905
See notes to consolidated financial statements.
31
Consolidated Statements of Operations
Standex International Corporation and Subsidiaries
For the Years Ended June 30 (in thousands, except per share data)
2012
2011
2010
Net sales
Cost of sales
Gross profit
Selling, general and administrative
Gain on sale of real estate
Restructuring costs
Income from operations
Interest expense
Other, net
Total
Income from continuing operations before income taxes
Provision for income taxes
Income from continuing operations
$
$
634,640
426,156
208,484
146,995
(4,776)
1,685
64,580
2,280
(519)
1,761
62,819
15,912
46,907
$
581,369
389,831
191,538
137,807
(3,368)
1,843
55,256
2,107
201
2,308
52,948
14,922
38,026
Income (loss) from discontinued operations, net of tax
(16,002)
(2,659)
527,481
352,505
174,976
127,156
(1,405)
3,494
45,731
3,624
(749)
2,875
42,856
12,504
30,352
(1,653)
Net income
$
30,905
$
35,367
$
28,699
Basic earnings per share:
Income (loss) from continuing operations
Income (loss) from discontinued operations
Total
Diluted earnings per share:
Income (loss) from continuing operations
Income (loss) from discontinued operations
Total
See notes to consolidated financial statements.
$
$
$
$
3.75
(1.28)
2.47
3.67
(1.25)
2.42
$
$
$
$
3.05
(0.22)
2.83
2.98
(0.21)
2.77
$
$
$
$
2.44
(0.13)
2.31
2.39
(0.13)
2.26
32
Standex International Corporation and Subsidiaries
Consolidated Statements of Stockholders' Equity and Comprehensive Income
Year End (in thousands)
Balance, July1, 2009
Stock issued for employee stock option and
purchase plans, including related income tax benefit
Stock-based compensation
Treasury stock acquired
Comprehensive income
Net Income
Foreign currency translation adjustment
Pension and OPEB adjustments, net of tax of $7.2 million
(Note 14)
Change in fair value of derivatives, net of tax of ($0.3)
million (Note 14)
Total comprehensive income
Dividends paid ($.20 per share)
Balance, June 30, 2010
Stock issued for employee stock option and
purchase plans, including related income tax benefit
Stock-based compensation
Treasury stock acquired
Comprehensive income
Net Income
Foreign currency translation adjustment
Pension and OPEB adjustments, net of tax of ($7.4) million
(Note 14)
Change in fair value of derivatives, net of tax of $0.2 million
(Note 14)
Total comprehensive income
Dividends paid ($.23 per share)
Balance, June 30, 2011
Stock issued for employee stock option and
purchase plans, including related income tax benefit
and other
Stock-based compensation
Treasury stock acquired
Comprehensive income
Net Income
Foreign currency translation adjustment
Pension and OPEB adjustments, net of tax of $11.1 million
(Note 14)
Change in fair value of derivatives, net of tax of $0.4 million
(Note 14)
Total comprehensive income
Dividends paid ($.27 per share)
Balance, June 30, 2012
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Treasury Stock
Shares
Amount
Total
Stockholders’
Equity
$
41,976
$
28,690
$
419,157
$ (52,591)
15,597
$ (260,946)
$
176,286
(1,075)
3,845
(107)
1,790
715
3,845
46
(1,074)
(1,074)
28,699
(2,543)
(2,360)
(12,032)
527
28,699
(2,360)
(12,032)
527
14,834
(2,543)
$
41,976
$
31,460
$
445,313
$
(66,456)
15,536
$ (260,230)
$
192,063
(2,037)
3,805
(183)
3,078
183
(5,237)
35,367
(2,954)
9,075
12,803
(350)
1,041
3,805
(5,237)
35,367
9,075
12,803
(350)
56,895
(2,954)
$
41,976
$
33,228
$
477,726
$ (44,928)
15,536
$ (262,389)
$
245,613
(2,156)
3,856
(229)
3,875
154
(5,521)
30,905
(3,468)
(7,847)
(21,625)
(725)
1,719
3,856
(5,521)
30,905
(7,847)
(21,625)
(725)
708
(3,468)
$
41,976
$
34,928
$
505,163
$
(75,125)
15,461
$
(264,035)
$
242,907
See notes to consolidated financial statements.
33
Consolidated Statements of Cash Flows
Standex International Corporation and Subsidiaries
For the Years Ended June 30 (in thousands)
Cash Flows from Operating Activities
Net income (loss)
Income (loss) from discontinued operations
Income (loss) from continuing operations
2012
2011
2010
$ 30,905
(16,002)
46,907
$
35,367 $
(2,659)
38,026
28,699
(1,653)
30,352
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization
Stock-based compensation
Deferred income taxes
Non-cash portion of restructuring charge
(Gain)/loss on sale of real estate
Increase/(decrease) in cash from changes in assets and liabilities,
net of effects from discontinued operations and business acquisitions:
Accounts receivables, net
Inventories
Contributions to defined benefit plans
Prepaid expenses and other
Accounts payable
Accrued payroll, employee benefits and other liabilities
Income taxes payable
Net cash provided by operating activities - continuing operations
Net cash used for operating activities - discontinued operations
Net cash provided by operating activities
Cash Flows from Investing Activities
Expenditures for capital assets
Expenditures for acquisitions, net of cash acquired
Expenditures for executive life insurance policies
Proceeds withdrawn from life insurance policies
Proceeds from sale of real estate and equipment
Other investing activity
Net cash provided by (used for) investing activities from continuing operations
Net cash provided by investing activities from discontinued operations
Net cash provided by (used for) investing activities
Cash Flows from Financing Activities
Proceeds from borrowings
Payments of debt
Short-term borrowings, net
Stock issued under employee stock option and purchase plans
Excess tax benefit associated with stock option exercises
Cash dividends paid
Purchase of treasury stock
Net cash used for financing activities from continuing operations
Net cash used for financing activities from discontinued operations
Net cash used for financing activities
13,490
3,768
2,376
81
(4,776)
(5,883)
876
(7,268)
(2,742)
(651)
4,375
(3,112)
47,441
(3,775)
43,666
(9,936)
-
(476)
152
5,207
(2,367)
(7,420)
16,004
8,584
210,500
(210,300)
(1,800)
316
649
(3,383)
(5,521)
(9,539)
13,274
3,805
(673)
485
(3,368)
(2,535)
(11,845)
(506)
(1,296)
12,665
6,019
6,783
60,834
(4,497)
56,337
(5,919)
(26,603)
(514)
415
5,746
(1,242)
(28,117)
(132)
(28,249)
73,000
(116,500)
1,800
342
247
(2,875)
(5,237)
(49,223)
-
(9,539)
-
(49,223)
13,408
3,845
3,709
403
(1,405)
(11,787)
2,292
(17,414)
(2,817)
467
3,874
(1,729)
23,198
(1,797)
21,401
(3,936)
-
(640)
1,649
8,681
-
5,754
(82)
5,672
78,000
(79,000)
-
376
-
(2,490)
(1,074)
(4,188)
-
(4,188)
Effect of exchange rate changes on cash
(2,369)
1,912
1,761
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for:
Interest
Income taxes, net of refunds
See notes to consolidated financial statements.
34
40,342
14,407
$ 54,749
$ 1,792
$ 13,377
$
$
$
(19,223)
33,630
14,407
24,646
8,984
$ 33,630
1,837
5,673
$ 3,071
$ 9,068
STANDEX INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF ACCOUNTING POLICIES
Basis of Presentation and Consolidation
Standex International Corporation (“Standex” or the “Company”) is a diversified manufacturing company with operations in
the United States, Europe, Asia, Africa, and Latin America. The accompanying consolidated financial statements include the
accounts of Standex International Corporation and its subsidiaries and are prepared in accordance with accounting principles
generally accepted in the United States of America (“GAAP”). All intercompany accounts and transactions have been
eliminated in consolidation.
During the year ended June 30, 2012, the Company completed the divestiture of its ADP business. As a result, all periods
have been restated to reflect the operations of ADP as discontinued operations. For further information, please see Note 15 –
Discontinued Operations.
The Company considers events or transactions that occur after the balance sheet date but before the financial statements are
issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. We
evaluated subsequent events through the date and time our consolidated financial statements were issued.
Accounting Estimates
The preparation of consolidated financial statements in conformity with GAAP requires the use of 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. Estimates are based 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. These estimates 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.
Cash and Cash Equivalents
Cash and cash equivalents include highly liquid investments purchased with a maturity of three months or less. These
investments are carried at cost, which approximates fair value. At June 30, 2012 and 2011, the Company’s cash was
comprised solely of cash on deposit.
Trading Securities
The Company purchases investments in connection with the KEYSOP Plan for certain retired executives and for its non-
qualified defined contribution plan for employees who exceed certain thresholds under our traditional 401(k) plan. These
investments are classified as trading and reported at fair value. The investments generally consist of mutual funds, are
included in other non-current assets and amounted to $3.5 million and $7.4 million at June 30, 2012 and 2011, respectively.
Gains and losses on these investments are recorded as other non-operating income (expense) in the Consolidated Statements
of Operations.
Accounts Receivable Allowances
The Company has provided an allowance for doubtful accounts reserve which represents the best estimate of probable loss
inherent in the Company’s account receivables portfolio. This estimate is derived from the Company’s knowledge of its end
markets, customer base, products, and historical experience.
35
The changes in the allowances for uncollectible accounts during 2012, 2011, and 2010 were as follows (in thousands):
Balance at beginning of year
Provision charged to expense
Write-offs, net of recoveries
Balance at end of year
Inventories
2012
2011
2010
$
$
2,201
366
(581)
1,986
$
$
1,882
697
(378)
2,201
$
$
2,095
377
(590)
1,882
Inventories are stated at the lower of first-in, first-out cost or market.
Long-Lived Assets
Long-lived assets that are used in operations, excluding goodwill and identifiable intangible assets, are tested for
recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable.
Recognition and measurement of a potential impairment loss is performed on assets grouped with other assets and liabilities
at the lowest level where identifiable cash flows are largely independent of the cash flows of other assets and liabilities. An
impairment loss is the amount by which the carrying amount of a long-lived asset (asset group) exceeds its estimated fair
value. Fair value is determined based on discounted cash flows or appraised values, depending upon the nature of the assets.
Property, Plant and Equipment
Property, plant and equipment are reported at cost less accumulated depreciation. Depreciation is recorded on assets over
their estimated useful lives, generally using the straight-line method. Lives for property, plant and equipment are as follows:
Buildings
Leasehold improvements
Machinery and equipment
Furniture and Fixtures
Computer hardware and software
40 to 50 years
Lesser of term or useful life
8 to 15 years
3 to 10 years
3 to 7 years
Routine maintenance costs are expensed as incurred. Major improvements are capitalized. Major improvements to leased
buildings are capitalized as leasehold improvements and depreciated over the lesser of the lease term or the life of the
improvement.
Goodwill and Identifiable Intangible Assets
All business combinations are accounted for using the purchase method, and goodwill and identifiable intangible assets with
indefinite lives are not amortized, but are reviewed annually for impairment or more frequently if impairment indicators arise.
Identifiable intangible assets that are not deemed to have indefinite lives are amortized on an accelerated basis over the
following useful lives:
Customer relationships
Patents
Non-compete agreements
Other
Tradenames
5 to 16 years
12 years
5 to 10 years
10 years
Indefinite life
See discussion of the Company’s assessment of impairment in Note 5 – Goodwill, and Note 6 – Intangible Assets.
Fair Value of Financial Instruments
The financial instruments, shown below, are presented at fair value. Fair value is defined as the price that would be received
to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters.
Where observable prices or inputs are not available, valuation models may be applied.
36
Assets and liabilities recorded at fair value in the consolidated balance sheet are categorized based upon the level of judgment
associated with the inputs used to measure their fair values. Hierarchical levels directly related to the amount of subjectivity
associated with the inputs to fair valuation of these assets and liabilities and the methodologies used in valuation are as
follows:
Level 1 – Quoted prices in active markets for identical assets and liabilities. The Company’s KEYSOP and deferred
compensation plan assets consist of shares in various mutual funds (for the deferred compensation plan, investments
are participant-directed) which invest in a broad portfolio of debt and equity securities. These assets are valued
based on publicly quoted market prices for the funds’ shares as of the balance sheet dates. For pension assets (see
Note 17 – Employee Benefit Plans), securities are valued based on quoted market prices for securities held directly
by the trust.
Level 2 – Inputs, other than quoted prices in an active market, that are observable either directly or indirectly
through correlation with market data. For foreign exchange forward contracts and interest rate swaps, the Company
values the instruments based on the market price of instruments with similar terms, which are based on spot and
forward rates as of the balance sheet dates. For pension assets held in commingled funds (see Note 17 – Employee
Benefit Plans), the Company values investments based on the net asset value of the funds, which are derived from
the quoted market prices of the underlying fund holdings. The Company has considered the creditworthiness of
counterparties in valuing all assets and liabilities.
Level 3– Unobservable inputs based upon the Company’s best estimate of what market participants would use in
pricing the asset or liability.
Cash and cash equivalents, accounts receivable, and accounts payable are carried at cost, which approximates fair value.
The fair values of our financial instruments at June 30, 2012 and 2011 were (in thousands):
Financial Assets
Marketable securities - KEYSOP assets
Marketable securities - deferred compensation plan
Foreign Exchange contracts
Financial Liabilities
Foreign Exchange contracts
Interest rate swaps
Financial Assets
Marketable securities - KEYSOP assets
Marketable securities - deferred compensation plan
Foreign Exchange contracts
Financial Liabilities
Interest rate swaps
Concentration of Credit Risk
Total
Level 1
Level 2
Level 3
2012
$
$
$
$
$
$
1,847
1,697
96
231
2,734
Total
6,009
1,366
366
$
$
1,847
1,697
-
-
-
-
-
96
231
2,734
2011
Level 1
Level 2
$
6,009
1,366
-
-
-
366
$
$
$
$
1,486
$
-
$
1,486
$
-
-
-
-
-
Level 3
-
-
-
-
The Company is subject to credit risk through trade receivables and short-term cash investments. Concentration of risk with
respect to trade receivables is minimized because of the diversification of our operations, as well as our large customer base
and our geographical dispersion. No individual customer accounts for more than 5% of revenues or accounts receivable in
the periods presented.
Short-term cash investments are placed with high credit-quality financial institutions. The Company monitors the amount of
credit exposure in any one institution or type of investment instrument.
37
Revenue Recognition
The Company’s product sales are recorded when persuasive evidence of an arrangement exists, delivery has occurred, the
price to the buyer is fixed or determinable, and collectability is reasonably assured. For products that include installation, and
if the installation meets the criteria to be considered a separate element, product revenue is recognized upon delivery, and
installation revenue is recognized when the installation is complete. Revenues under certain fixed price contracts are
generally recorded when deliveries are made.
Sales and estimated profits under certain long-term contracts are recognized under the percentage-of-completion methods of
accounting, whereby profits are recorded pro rata, based upon current estimates of costs to complete such contracts. Losses
on contracts are provided for in the period in which the losses become determinable. Revisions in profit estimates are
reflected on a cumulative basis in the period in which the basis for such revision becomes known. Any excess of the billings
over cost and estimated earnings on long-term contracts is included in deferred revenue.
Cost of Goods Sold and Selling, General and Administrative Expenses
The Company includes expenses in either cost of goods sold or selling, general and administrative categories based upon the
natural classification of the expenses. Cost of goods sold includes expenses associated with the acquisition, inspection,
manufacturing and receiving of materials for use in the manufacturing process. These costs include inbound freight charges,
purchasing and receiving costs, inspection costs, warehousing costs, internal transfer costs as well as depreciation,
amortization, wages, benefits and other costs that are incurred directly or indirectly to support the manufacturing process.
Selling, general and administrative includes expenses associated with the distribution of our products, sales effort,
administration costs and other costs that are not incurred to support the manufacturing process. The Company records
distribution costs associated with the sale of inventory as a component of selling, general and administrative expenses in the
Consolidated Statements of Operations. These expenses include warehousing costs, outbound freight charges and costs
associated with distribution personnel. Our gross profit margins may not be comparable to those of other entities due to
different classifications of costs and expenses.
Research and Development
Research and development expenditures are expensed as incurred. Total research and development costs, which are classified
under selling, general, and administrative expenses, were $4.4 million, $4.0 million, and $3.6 million for the years ended
June 30, 2012, 2011, and 2010, respectively.
Warranties
The expected cost associated with warranty obligations on our products is recorded when the revenue is recognized. The
estimate of warranty cost is based on contract terms and historical warranty loss experience that is periodically adjusted for
recent actual experience. Because warranty estimates are forecasts that are based on the best available information, claims
costs may differ from amounts provided. Adjustments to initial obligations for warranties are made as changes in the
obligations become reasonably estimable.
The changes in warranty reserve, which are recorded as accrued liabilities, during 2012, 2011, and 2010 were as follows (in
thousands):
Balance at beginning of year
Warranty expense
Warranty claims
Balance at end of year
Stock-Based Compensation Plans
2012
5,131
4,459
(3,507)
6,083
$
$
2011
4,761
2,685
(2,315)
5,131
$
$
2010
4,821
2,827
(2,887)
4,761
$
$
Restricted stock awards generally vest over a three-year period. Compensation expense associated with these awards is
recorded based on their grant-date fair values and is generally recognized on a straight-line basis over the vesting period
except for awards with performance conditions, which are recognized on a graded vesting schedule. Compensation cost for
an award with a performance condition is based on the probable outcome of that performance condition. The stated vesting
period is considered substantive for retirement eligible participants. Accordingly, the Company recognizes any remaining
unrecognized compensation expense upon participant retirement.
38
Foreign Currency Translation
The functional currency of our non-U.S. operations is generally the local currency. Assets and liabilities of non-U.S.
operations are translated into U.S. Dollars on a monthly basis using period-end exchange rates. Revenues and expenses of
these operations are translated using average exchange rates. The resulting translation adjustment is reported as a component
of comprehensive income (loss) in the consolidated statements of stockholders’ equity and comprehensive income. Gains and
losses from foreign currency transactions are included in results of operations and were not material for any period presented.
Derivative Instruments and Hedging Activities
The Company recognizes all derivatives on its balance sheet at fair value.
Forward foreign currency exchange contracts are periodically used to limit the impact of currency fluctuations on certain
anticipated foreign cash flows, such as foreign purchases of materials and loan payments from subsidiaries. The Company
enters into such contracts for hedging purposes only. For hedges of intercompany loan payments, the Company records
derivative gains and losses directly to the statement of operations due to the general short-term nature and predictability of the
transactions.
The Company also uses interest rate swaps to manage exposure to interest rates on the Company’s variable rate indebtedness.
The Company values the swaps based on contract prices in the derivatives market for similar instruments. The Company has
designated the swaps as cash flow hedges, and changes in the fair value of the swaps are recognized in other comprehensive
income (loss) until the hedged items are recognized in earnings. Hedge ineffectiveness, if any, associated with the swaps will
be reported by the Company in interest expense.
The Company does not hold or issue derivative instruments for trading purposes.
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.
The Company provides reserves for potential payments of tax to various tax authorities related to uncertain tax positions and
other issues. The Company accounts for uncertain tax positions based on a determination of whether and how much of a tax
benefit taken by the Company in its tax filings or positions is more likely than not to be realized following resolution of any
potential contingencies present related to the tax benefit, assuming that the matter in question will be raised by the tax
authorities. Interest and penalties associated with such uncertain tax positions are recorded as a component of income tax
expense.
Earnings Per Share
(share amounts in thousands)
Basic – Average Shares Outstanding
Effect of Dilutive Securities – Stock Options
and Restricted Stock Awards
Diluted – Average Shares Outstanding
2012
12,517
2011
12,475
2010
12,440
270
12,787
277
12,752
245
12,685
Both basic and dilutive income are the same for computing earnings per share. There were no outstanding instruments that
had an anti-dilutive effect at June 30, 2012, 2011 and 2010.
Recently Issued Accounting Pronouncements
In September 2011, the Financial Accounting Standards Board ("FASB") issued amended accounting guidance for goodwill
in order to simplify how companies test goodwill for impairment. The amendments permit a company to first assess the
qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its
carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. The
more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. If, after assessing the totality of
events or circumstances, a company determines it is not more likely than not that the fair value of a reporting unit is less than
its carrying amount, then performing the two-step impairment test is unnecessary. The amendments are effective for annual
and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is
39
permitted. We do not expect the adoption of this accounting pronouncement to have a material effect on our financial
statements when implemented.
In June 2011, the FASB issued an amendment to the accounting guidance for presentation of comprehensive income. Under
the amended guidance, a company may present the total of comprehensive income, the components of net income, and the
components of other comprehensive income either in a single continuous statement of comprehensive income or in two
separate but consecutive statements. In either case, a company is required to present each component of net income along
with total net income, each component of other comprehensive income along with a total for other comprehensive income,
and a total amount for comprehensive income. Regardless of choice in presentation, of which we are currently evaluating, a
company is required to present on the face of the financial statements reclassification adjustments for items that are
reclassified from other comprehensive income to net income in the statement(s) where the components of net income and the
components of other comprehensive income are presented. In December 2011, the FASB delayed indefinitely the portion of
the guidance related to the presentation of reclassification adjustments in the income statement. For public companies, these
amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, and
shall be applied retrospectively. Early adoption is permitted. Other than a change in presentation, the implementation of this
accounting pronouncement is not expected to have a material impact on our financial statements when implemented.
2. ACQUISITIONS
Metal Spinners Group
In March 2011, the Company acquired Metal Spinners Group, Ltd. (“Metal Spinners”), a U.K.-based metal fabrication
supplier. Metal Spinners, which uses technology similar to Spincraft, is reported under the Engineering Technologies Group.
The acquisition provides the Company with access to new end-user and geographic markets in the medical, general industrial
and oil and gas markets in the U.S., U.K., Europe, and China.
The Company paid $23.9 million in cash for 100% of the equity of Metal Spinners. Acquired intangible assets of $5.7
million consist entirely of customer relationships, which are expected to be amortized over a weighted average period of 8.66
years.
The components of the fair value of the Metal Spinners acquisition and final allocation reported at June 30, 2011 are as
follows (in thousands):
Fair value of business combination:
Cash payments
Less: cash acquired
Total
Identifiable assets acquired and liabilities assumed
Current assets
Property, plant, and equipment
Identifiable intangible assets
Goodwill
Deferred taxes
Liabilities assumed
Total
Metal Spinners
Group
$
$
$
$
23,887
(1,652)
22,235
5,349
6,534
5,727
11,288
(2,837)
(3,826)
22,235
Subsequent to acquisition, revenues and earnings for Metal Spinners in 2011 were $6.4 million and $0.2 million, respectively.
Included in earnings are $0.7 million of purchase accounting-related expenses.
40
Other 2011 Acquisitions
The Company made three additional acquisitions during 2011 – two in the Engraving Group and one in the Food Service
Equipment Group. Total consideration transferred in the aggregate for these acquisitions was $4.7 million. Acquired
intangible assets of $1.6 million consist of $1.0 million of amortizing intangible assets expected to be amortized over a
weighted average period of 12.38 years.
The components of the fair value of other 2011 acquisitions and the final allocation of their purchase price are as follows (in
thousands):
Fair value of business combination:
Cash payments
Deferred consideration
Total
Identifiable assets acquired and liabilities assumed
Current assets
Property, plant, and equipment
Identifiable intangible assets
Goodwill
Liabilities assumed
Total
Other
4,368
350
4,718
1,705
518
1,619
1,368
(492)
4,718
$
$
$
Subsequent to their acquisition, revenues and earnings for these other businesses in 2011 were $7.1 million and $0.8 million,
respectively.
3. INVENTORIES
Inventories are comprised of (in thousands):
June 30
Raw materials
Work in process
Finished goods
Total
2012
2011
$
$
33,208
21,833
18,035
73,076
$
$
31,292
22,014
21,499
74,805
Distribution costs associated with the sale of inventory are recorded as a component of selling, general and administrative
expenses and were $19.9 million, $17.8 million, and $15.0 million in 2012, 2011, and 2010, respectively.
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following (in thousands):
June 30
Land, buildings and
leasehold improvements
Machinery, equipment and other
Total
Less accumulated depreciation
Property, plant and equipment - net
$
$
2012
2011
69,933
142,495
212,428
129,865
82,563
$
$
71,421
141,126
212,547
125,459
87,088
Depreciation expense for the years ended June 30, 2012, 2011, and 2010 totaled $10.8 million, $10.9 million, and $10.9
million, respectively.
41
5. GOODWILL
Goodwill and certain indefinite-lived intangible assets are not amortized, but instead are tested for impairment at least
annually and more frequently whenever events or changes in circumstances indicate that the fair value of the asset may be
less than its carrying amount of the asset. The Company’s annual test for impairment is performed using a May 31st
measurement date.
The Company has identified our reporting units for impairment testing as its eleven operating segments, which are aggregated
into five reporting segments as disclosed in Note 18 – Industry Segment Information.
As quoted market prices are not available for the Company’s reporting units, the fair value of the reporting units is
determined using a discounted cash flow model (income approach). This method uses various assumptions that are specific
to each individual reporting unit in order to determine the fair value. In addition, the Company compares the estimated
aggregate fair value of its reporting units to its overall market capitalization.
While the Company believes that estimates of future cash flows are reasonable, changes in assumptions could significantly
affect valuations and result in impairments in the future. The most significant assumption involved in the Company’s
determination of fair value is the cash flow projections of each reporting unit. Certain reporting units have been significantly
impacted by the current global economic downturn. If the effects of the current global economic environment are protracted
or the recovery is slower than projected, estimates of future cash flows for each reporting unit may be insufficient to support
the carrying value of the reporting units, requiring the Company to re-assess its conclusions related to fair value and the
recoverability of goodwill.
As a result of our annual assessment, the Company determined that the fair value of the reporting units and indefinite-lived
intangible assets exceeded their respective carrying values. Therefore, no impairment charges were recorded in connection
with our assessments during 2012 and 2011.
In connection with the divestiture of the Air Distribution Products (“ADP”) business, the Company determined that, based on
the net realizable value of the business in the transaction, the goodwill of the ADP reporting unit was impaired. As such, the
Company recognized $14.9 million in impairment charges in discontinued operations during the second quarter of 2012.
Changes to goodwill during the years ended June 30, 2012 and 2011 are as follows (in thousands):
2012
2011
Balance at beginning of year
Accumulated impairment losses
Balance at beginning of year, net
Acquisitions
Measurement period adjustments and other
Foreign currency translation
Balance at end of year
$
$
$
120,378
17,939
102,439
-
(263)
(1,543)
100,633
$
$
$
105,809
17,939
87,870
12,656
-
1,913
102,439
42
6. INTANGIBLE ASSETS
Intangible assets consist of the following (in thousands):
Customer
Relationships
Trademarks
(Indefinite-lived)
Other
Total
June 30, 2012
Cost
Accumulated amortization
Balance, June 30, 2012
June 30, 2011
Cost
Accumulated amortization
Balance, June 30, 2011
$
$
$
$
27,062
(17,003)
10,059
27,549
(14,647)
12,902
$
$
$
$
9,406
-
9,406
9,406
-
9,406
$
$
$
$
3,846
(3,493)
353
4,736
(4,490)
246
$
$
$
$
40,314
(20,496)
19,818
41,691
(19,137)
22,554
Amortization expense (excluding impairment) for the years ended June 30, 2012, 2011, and 2010 totaled $2.7 million, $2.4
million, and $2.5 million, respectively. At June 30, 2012, aggregate amortization expense is estimated to be $2.2 million in
fiscal 2013, $1.9 million in fiscal 2014, $1.6 million in fiscal 2015, $1.2 million in fiscal 2016, $0.9 million in fiscal 2017, and
$2.6 million thereafter.
7. DEBT
Long-term debt is comprised of the following at June 30 (in thousands):
Bank credit agreements
Other
Total
Less current portion
Total long-term debt
2012
$ 50,000 $
-
50,000
-
$ 50,000 $
2011
46,500
3,300
49,800
(3,300)
46,500
Long-term debt is due as follows (in thousands):
2013
2014
2015
2016
2017
Thereafter
-
-
-
-
$ 50,000
-
Bank Credit Agreements
On January 5, 2012, the Company entered into a five-year $225 million unsecured Revolving Credit Facility (“Credit
Agreement”), which includes a letter of credit sub-facility with a limit of $30 million and a $100 million accordion feature.
The new credit facility replaced the company’s existing $150 million five-year credit agreement that was scheduled to expire
in September 2012. Interest is payable on borrowings at either a LIBOR or base rate benchmark rate plus an applicable
margin, which will fluctuate based on financial performance. The Credit Agreement requires a ratio of funded debt to
EBITDA (as defined in the Credit Agreement) of no greater than 3.5:1, an interest coverage ratio of no less than 3:1, as well
as customary affirmative and negative covenants and events of default. The Credit Agreement also includes certain
requirements related to acquisitions and dispositions. Borrowings under the Credit Agreement are guaranteed by the
Company’s domestic subsidiaries and are unsecured. The Company intends to use this Credit Agreement to fund potential
acquisitions, to support organic growth initiatives and working capital needs, and for general corporate purposes.
As of June 30, 2012, the Company had the ability to borrow $166.2 million under this facility. The carrying value of the
current borrowings under the facility approximated fair value.
43
The new facility expires in January 2017, and contains customary representations, warranties and restrictive covenants, as
well as specific financial covenants. The Company’s current financial covenants under the facility are as follows:
Interest Coverage Ratio - The Company is required to maintain a ratio of Earnings Before Interest and Taxes, as Adjusted
(“Adjusted EBIT per the Credit Agreement”), to interest expense for the trailing twelve months of at least 3:1. Adjusted
EBIT per the Credit Agreement specifically excludes extraordinary and certain other defined items such as non-cash
restructuring and acquisition-related charges up to $2.0 million, and goodwill impairment. At June 30, 2012, the
Company’s Interest Coverage Ratio was 27.34:1.
Leverage Ratio - The Company’s ratio of funded debt to trailing twelve month Adjusted EBITDA per the credit agreement,
calculated as Adjusted EBIT per the Credit Agreement plus Depreciation and Amortization, may not exceed 3.5:1. At June
30, 2012, the Company’s Leverage Ratio was 0.79:1.
Other Long-Term Borrowings
The Company was a borrower under industrial revenue bonds totaling $3.3 million at June 30, 2011. Because these bonds
were remarketed on a monthly basis and a failed remarketing would trigger repayment of the bonds via a renewable letter of
credit arrangement, they were classified as a current liability. The Company repaid the bonds without penalty during 2012.
Short-Term Facilities
The Company also utilizes an uncommitted money market credit facility to help manage daily working capital needs. This
unsecured facility, which is renewed annually, provides for a maximum aggregate credit line of $5 million. Amounts
outstanding under these facilities were zero and $1.8 million at June 30, 2012 and 2011, respectively.
At June 30, 2012, and 2011, the Company had standby letters of credit outstanding, primarily for insurance purposes, of $9.5
million and $14.2 million, respectively.
8. ACCRUED LIABILITIES
Accrued expenses consist of the following (in thousands):
Payroll and employee benefits
Workers' compensation
Other
Total
$
$
2012
2011
27,110
3,325
20,689
51,124
$
$
23,341
3,735
16,749
43,825
9. DERIVATIVE FINANCIAL INSTRUMENTS
Interest Rate Swaps
In order to manage our interest rate exposure, we are party to $50.0 million of floating to fixed rate swaps. These swaps
convert our interest payments from LIBOR to a weighted average rate of 2.29% at June 30, 2012.
The fair value of the swaps recognized in accrued liabilities and in other comprehensive income (loss) at June 30, 2012 and
2011 is as follows (in thousands):
Effective Date
Notional Amount Fixed Interest Rate
Maturity
2012
2011
Fair Value at June 30,
$
June 1, 2010
June 1, 2010
June 4, 2010
June 9, 2010
June 18, 2010
September 21, 2011
September 21, 2011
March 15, 2012
5,000,000
5,000,000
10,000,000
5,000,000
5,000,000
5,000,000
5,000,000
10,000,000
2.495%
2.495%
2.395%
2.34%
2.38%
1.28%
1.60%
2.75%
May 26, 2015
May 26, 2015
May 26, 2015
May 26, 2015
May 26, 2015
September 21, 2013
September 22, 2014
March 15, 2016
$
$
44
(300)
(300)
(566)
(275)
(283)
(61)
(136)
(813)
(2,734)
$
$
(203)
(203)
(365)
(172)
(180)
(52)
(55)
(256)
(1,486)
The Company reported no losses for the years ended June 30, 2012, 2011, and 2010, as a result of hedge ineffectiveness.
Future changes in these swap arrangements, including termination of the agreements, may result in a reclassification of any
gain or loss reported in accumulated other comprehensive income (loss) into earnings as an adjustment to interest expense.
Accumulated other comprehensive loss related to these instruments is being amortized into interest expense concurrent with
the hedged exposure.
Foreign Exchange Contracts
Forward foreign currency exchange contracts are used to limit the impact of currency fluctuations on certain anticipated
foreign cash flows, such as foreign purchases of materials and loan payments to and from subsidiaries. The Company enters
into such contracts for hedging purposes only. For hedges of intercompany loan payments, the Company has not elected
hedge accounting due to the general short-term nature and predictability of the transactions, and records derivative gains and
losses directly to the consolidated statement of operations. At June 30, 2012 and 2011 the Company had outstanding forward
contracts related to hedges of intercompany loans with net unrealized (losses) gains of ($0.1) million and $0.4 million,
respectively, which approximate the unrealized gains or losses on the related loans. The contracts have maturity dates
ranging from 2013-2015, which correspond to the related intercompany loans. The notional amounts of these instruments, by
currency, are as follows:
Currency
Mexican Peso
Euro
Canadian Dollar
Pound Sterling
Singapore Dollar
Australian Dollar
10. INCOME TAXES
2012
3,750,000
2,350,000
1,250,000
933,473
1,500,000
-
2011
15,756,000
5,964,800
2,875,350
1,000,750
1,000,000
527,700
The components of income from continuing operations before income taxes are as follows (in thousands):
2012
2011
2010
U.S. Operations
Non-U.S. Operations
Total
$
$
27,590
35,229
62,819
$
$
28,587
24,361
52,948
$
$
30,819
12,037
42,856
The Company utilizes the asset and liability method of accounting for income taxes. Deferred income taxes are determined
based on the estimated future tax effects of differences between the financial and tax bases of assets and liabilities given the
provisions of the enacted tax laws. The components of the provision for income taxes on continuing operations (in
thousands) were as shown below:
Current:
Federal
State
Non-U.S.
Total Current
Deferred:
Federal
State
Non-U.S.
Total Deferred
Total
2012
2011
2010
$
$
$
5,314
449
7,773
13,536
2,139
644
(407)
2,376
15,912
$
$
$
9,750
1,060
4,785
15,595
(1,231)
(851)
1,409
(673)
14,922
$
$
$
5,707
486
2,602
8,795
3,619
848
(758)
3,709
12,504
45
A reconciliation from the U.S. Federal income tax rate on continuing operations to the total tax provision is as follows (in
thousands):
Provision at statutory tax rate
State taxes
Impact of Foreign Operations
Federal tax credits
Other
2012
35.0%
1.2%
-5.6%
-2.9%
-2.4%
2011
35.0%
0.3%
-3.8%
-1.7%
-1.6%
2010
34.0%
2.1%
-5.2%
-0.4%
-1.3%
Effective income tax provision
25.3%
28.2%
29.2%
Changes in the effective tax rates from period to period may be significant as they depend on many factors including, but not
limited to, size of the Company’s income or loss and any one-time activities occurring during the period.
The Company's income tax provision from continuing operations for the fiscal year ended June 30, 2012 was impacted by the
following items: (i) a benefit of $1.3 million from the reversal of income tax contingency reserves that were determined to be
no longer needed due to the lapsing of the statute of limitations and re-measurement of existing tax contingency reserves
based on recently completed tax examinations, (ii) a benefit of $0.4 million related to a decrease in the statutory tax rate in the
United Kingdom on prior period deferred tax liabilities recorded during the first quarter, and (iii) a benefit of $4.5 million due
to the mix of income earned in jurisdictions with beneficial tax rates.
The Company's income tax provision from continuing operations for the fiscal year ended June 30, 2011 was impacted by the
following items: (i) a benefit of $0.3 million from the reversal of income tax contingency reserves that were determined to be
no longer needed due to the expiration of applicable limitation statutes, (ii) a benefit of $0.2 million related primarily to the
retroactive extension of the R&D credit recorded during the second quarter, and (iii) a benefit totaling $0.3 million as part of
the deferred tax provision related to a change in the estimated state rate used to calculate the deferred balances.
The Company's income tax provision from continuing operations for the fiscal year ended June 30, 2010 was impacted by a
benefit of $1.1 million from the reversal of a deferred tax asset valuation allowance. This allowance was primarily related to
foreign loss carry forwards whose recovery was assessed as more likely than not based on events occurring during the year
ended June 30, 2010.
Significant components of the Company’s deferred income taxes are as follows (in thousands):
2012
2011
Deferred tax liabilities:
Depreciation and amortization
Other
Total deferred tax liability
Deferred tax assets:
Accrued compensation
Accrued expenses and reserves
Pension
Inventory
Other
Net operating loss and
credit carry forwards
Total deferred tax asset
Less: Valuation allowance
Net deferred tax asset (liability)
(25,321)
-
(25,321)
5,204
4,206
9,847
1,899
1,108
2,811
25,075
(169)
(415)
$
$
$
$
$
(19,247)
(1,832)
(21,079)
3,966
6,242
19,985
1,554
1,678
2,631
36,056
(813)
14,164
$
$
$
$
$
46
The Company estimates the degree to which deferred tax assets, including net operating loss and credit carry forwards will
result in a benefit based on expected profitability by tax jurisdiction and provides a valuation allowance for tax assets and loss
carry forwards that it believes will more likely than not go unrealized. The valuation allowances at June 30, 2012 apply to the
tax benefit of foreign and state loss carry forwards, which management has concluded that it is more likely than not that these
tax benefits will not be realized. The increase (decrease) in the valuation allowance totaled $0.6 million, ($0.2 million) and
$(0.5 million) in 2012, 2011, and 2010, respectively.
As of June 30, 2012, the Company had state net operating loss ("NOL") and credit carry forwards of approximately $29.9
million and $1.5 million, respectively, which may be available to offset future state income tax liabilities and expire at various
dates from 2013 through 2032. In addition, the Company had foreign NOL carry forwards of approximately $1.9 million,
$1.8 million of which carry forward indefinitely and $0.1 million that carry forward for 5 years.
The Company’s income taxes currently payable for federal and state purposes have been reduced by the benefit of the tax
deduction in excess of recognized compensation cost from employee stock compensation transactions. The provision for
income taxes that is currently payable has not been adjusted by approximately $0.7 million and $0.2 million of such benefits
of the Company that have been allocated to capital in excess / (deficit) of par value in 2012 and 2011, respectively.
A provision has not been made for U.S. or additional non-U.S. taxes on $79.0 million of undistributed earnings of
international subsidiaries that could be subject to taxation if remitted to the U.S. However, a provision of $1.0 million has
been recorded for an anticipated future dividend of approximately $4.4 million in earnings resulting from a building sale in
Brazil. It is not practicable to estimate the amount of tax that might be payable on the remaining undistributed earnings. Our
intention is to reinvest these earnings permanently or to repatriate the earnings only when it is tax effective to do so.
Accordingly, we believe that U.S. tax on any earnings that might be repatriated would be substantially offset by U.S. foreign
tax credits.
The total provision for income taxes included in the consolidated statements of operations was as follows (in thousands):
Continuing operations
Discontinued operations
2012
2011
$
$
15,912
(9,322)
6,590
$
$
14,922
(1,307)
13,615
2010
12,504
(627)
11,877
$
$
The changes in the amount of gross unrecognized tax benefits during 2012 were as follows (in thousands):
2010
2011
2012
Beginning Balance
Additions based on tax positions related to the current year
Additions for tax positions of prior years
Reductions for tax positions of prior years
Settlements
Ending Balance
$
$
2,146
64
394
(1,306)
-
1,298
$
$
1,782
611
-
(247)
-
2,146
$
$
2,346
110
-
(674)
-
1,782
If these tax benefits were recognized in a future period, the entire amount of unrecognized tax benefit would impact the
Company’s effective tax rate.
Within the next twelve months, the statute of limitations will close in various U.S., state and non-U.S. jurisdictions. As a
result, it is reasonably expected that net unrecognized tax benefits from these various jurisdictions would be recognized
within the next twelve months. The recognition of these tax benefits is not expected to have a material impact to the
Company's financial statements. The Company does not reasonably expect any other significant changes in the next twelve
months. Further, an audit of the company’s U.S. tax returns for the years ending June 30, 2009 and June 30, 2010 concluded
during the fourth quarter with no unfavorable adjustments. The following tax years, in the major tax jurisdictions noted, are
open for assessment or refund:
Country
United States
Canada
Ireland
Portugal
United Kingdom
Years Ending June 30,
2009 to 2012
2008 to 2012
2009 to 2012
2009 to 2012
2011 to 2012
47
The Company’s policy is to include interest expense and penalties related to unrecognized tax benefits within the provision
for income taxes on the consolidated statements of operations. At June 30, 2012 and June 30, 2011, the Company had
approximately $0.0 million and $0.2 million, respectively, accrued for interest expense on unrecognized tax benefits.
11. COMMITMENTS
The Company leases certain property and equipment under agreements with initial terms ranging from one to twenty years.
Rental expense related to continuing operations for the years ended June 30, 2012, 2011, and 2010 was approximately $4.8
million, $4.5 million and $4.0 million, respectively. At June 30, 2012, the gross minimum annual rental commitments under
non-cancelable operating leases, principally real estate, were approximately $5.5 million in 2013, $4.1 million in 2014, $3.5
million in 2015, $2.6 million in 2016, $2.1 million in 2017, and $4.6 million thereafter. These amounts are offset by sublease
income of $0.9 million in 2013, $0.8 million in 2014, $0.7 million in 2015, $0.4 million in 2016, $0.3 million in 2017, and
$0.2 million thereafter.
In March 2012, the Company sold substantially all of the assets of its ADP business. In connection with the divestiture, the
Company remained the lessee of ADP’s Philadelphia, PA facility and administrative offices, with the purchaser subleasing a
fractional portion of the building at current market rates. In connection with the transaction, the Company recognized a lease
impairment charge of $2.3 million for the remaining rental expense. The Company’s aggregate obligation with respect to the
lease is $2.9 million, of which $2.2 million was recorded as a liability at June 30, 2012. Additionally, the Company remained
an obligor on an additional facility lease that was assumed in full by the buyer, for which our aggregate obligation in the
event of default by the buyer is $1.2 million. With the exception of the impaired portion of the Philadelphia lease, the
Company does not expect to make any payments with respect to these obligations. The buyer’s obligations under the
respective sublease and assumed lease are secured by a cross-default provision in the purchaser’s promissory note for a
portion of the purchase price which is secured by mortgages on the ADP real estate sold in the transaction.
In connection with the ADP divestiture, the Company agreed to indemnify the buyer in the event a withdrawal liability is
triggered for the plans by a future action of the buyer. The fair value of this indemnification, which was recorded in
conjunction with the divestiture, is $1.9 million, determined based on actuarial estimates of the withdrawal liability and
probability-weighted cash flows. The aggregate amount of our obligations in the event of withdrawal is $3.2 million at
June 30, 2012.
In 2007, the Company sold substantially all the assets of the Berean Christian Stores (“Berean”) business. As the former
owner of Berean, the Company is party under a number of operating leases which were assigned to the purchaser of the
business for the remaining initial terms of the leases at the stated lease costs. The Company remained an obligor of these
leases until the expiration of the initial terms. In June 2009, Berean filed for bankruptcy under Chapter 11 of the U.S.
Bankruptcy Code and, in July 2009, its assets were sold to a third party under Section 363 of the Code. The new owner of
the Berean assets has infused capital into the business, and we believe the Berean bookstores can now be operated
successfully as a going concern. As part of this transaction, the Company agreed to provide lease supplement payments to the
new owner of the Berean assets through November 2011. The Company remained an obligor of the leases assumed by the
new owner, however, our obligation was reduced for locations where the new owner was able to obtain rent concessions. In
addition, the Company remains responsible for two sites formerly operated by Berean. Liabilities associated with these two
leases, net of expected subleases at current market rates, total $0.2 million at June 30, 2012. The aggregate amount of our
obligations in the event of default is $1.5 million at June 30, 2012.
12. CONTINGENCIES
In August 2008, a redhibition action was filed in Lafayette, Louisiana by Ultra Pure Water Technologies, Inc. (“Ultra Pure”)
against Master-Bilt Products, an unincorporated division of Standex. Redhibition is a civil action in which a buyer may seek
damages against a seller for goods sold with allegedly hidden defects. The suit alleges defects in Master-Bilt ice
merchandisers which were sold to Master-Bilt’s customer, who then sold them to Ultra Pure. The damages sought by Ultra
Pure arise out of the alleged lost profits purportedly sustained when the Master-Bilt merchandisers were made part of a self-
contained ice making system designed by Ultra Pure, called the “ICEX Ice Island.” Ultra Pure alleges that the ICEX units did
not operate as anticipated at customer locations. Standex has been aggressively defending the action, and, the case was
dismissed in September 2011 based on Master-Bilt’s motion for summary judgment. However, in May 2012, the Louisiana
Third Circuit Court of Appeal reversed the dismissal, finding that various fact questions should be addressed by the trial
court. This reversal was appealed by Master-Bilt in July 2012 to the Louisiana Supreme Court. A determination whether the
Supreme Court will hear the matter is expected in the first or second quarter of 2013. In the event that the litigation is
remanded to the jurisdiction of the trial court, the result is not assured, given the unpredictability and uncertainty inherent in
any jury trial. If an unfavorable outcome were to occur, there is a possibility that the Company’s financial position and
results of operations and cash flows could be negatively affected, although the Company is not yet able to estimate a range of
possible loss.
48
From time to time, the Company is subject to various claims and legal proceedings, either asserted or unasserted, that arise in
the ordinary course of business. While the outcome of these proceedings and claims cannot be predicted with certainty, the
Company’s management does not believe that the outcome of any of the currently existing legal matters, other than the matter
above, will have a material impact on the Company’s consolidated financial position, results of operations or cash flow. The
Company accrues for losses related to a claim or litigation when the Company’s management considers a potential loss
probable and can reasonably estimate such potential loss. With respect to the matter set forth above, the Company’s
management has determined a potential loss is not probable nor reasonably estimable at this time.
During 2008, the Company entered into an Administrative Order of Consent (“AOC”) with the U.S. Environmental
Protection Agency (“EPA”) related to the removal of various PCB-contaminated materials and soils at a site where the
Company leased a building and conducted operations from 1967-1979. Remediation efforts were substantially completed
during the third quarter of 2009, and the Company received a closure letter from the EPA in the first half of 2010. The
Company actively sought the recovery of costs incurred in carrying out the terms of the AOC through negotiations with its
legacy insurers. In 2010, the Company reached a recovery settlement and recorded income of $2.5 million ($1.6 million net
of tax), net of costs incurred to negotiate the settlement.
13. STOCK-BASED COMPENSATION AND PURCHASE PLANS
Stock-Based Compensation Plans
Under incentive compensation plans, the Company is authorized to make grants of stock options, restricted stock and
performance share units to provide equity incentive compensation to key employees and directors. In fiscal 2004, the
Company began granting stock awards instead of stock options. The stock award program offers employees and directors the
opportunity to earn shares of our stock over time, rather than options that give the employees and directors the right to
purchase stock at a set price. The Company has stock plans for directors, officers and certain key employees.
Total compensation cost recognized in income for equity based compensation awards was $3.8 million, $3.8 million, and $3.8
million for the years ended June 30, 2012, 2011 and 2010, respectively, primarily within Selling, General, and Administrative
Expenses. The total income tax benefit recognized in the consolidated statement of operations for equity-based compensation
plans was $1.3 million, $1.3 million, and $1.3 million for the years ended June 30, 2012, 2011 and 2010, respectively.
1,268,654 shares of common stock were reserved for issuance under various compensation plans at June 30, 2012.
Restricted Stock Awards
The Company may award shares of restricted stock to eligible employees and non-employee directors of the Company 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 during the restriction period. 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 dividend equivalents
on such shares, providing that such shares are not forfeited. Dividends are accumulated and paid out at the end of the
restriction period. During 2012, 2011 and 2010, the Company granted 52,884, 62,817, and 110,278 shares, respectively, of
restricted stock to eligible participants. Restrictions on the stock awards generally lapse between fiscal 2013 and fiscal 2015.
For the years ended June 30, 2012, 2011 and 2010, $1.4 million, $1.4 million, and $1.7 million, respectively, was recognized
as compensation expense related to restricted stock awards. Substantially all awards are expected to vest.
49
A summary of restricted stock awards activity during the year ended June 30, 2012 is as follows:
Restricted Stock Awards
Aggregate
Number
Intrinsic
of
Value
Shares
Outstanding, July 1, 2011
Granted
Exercised / vested
Canceled
Outstanding, June 30, 2012
235,825
52,884
(74,641)
(6,079)
207,989
$
7,232,753
2,361,505
$
8,854,092
Restricted stock awards granted during 2012, 2011 and 2010 had a weighted average grant date fair value of $29.05, $24.22,
and $18.33, respectively. The grant date fair value of restricted stock awards is determined based on the closing price of the
Company’s common stock on the date of grant. The total intrinsic value of awards exercised during the years ended June 30,
2012, 2011, and 2010 was $2.4 million, $1.6 million, and $0.8 million, respectively.
As of June 30, 2012, there was $2.3 million of unrecognized compensation costs related to awards expected to be recognized
over a weighted-average period of 0.94 years.
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 defer 20% (and may elect to defer up to
50%) of their annual incentive compensation in restricted stock which is purchased at a discount to the market. Additionally,
non-employee directors of the Company may defer a portion of their director’s fees in restricted stock units which is
purchased at a discount to the market. During the restriction period, recipients of the shares are entitled to dividend
equivalents on such units, providing that such shares are not forfeited. Dividend equivalents are accumulated and paid out at
the end of the restriction period. The restrictions on the units expire after three years. At June 30, 2012 and 2011,
respectively, 94,916 and 107,875 shares of restricted stock units are outstanding and subject to restrictions that lapse between
fiscal 2013 and fiscal 2015. The compensation expense associated with this incentive program is charged to income over the
restriction period. The Company recorded compensation expense related to this program of $0.4 million, $0.4 million, and
$0.3 million for the years ended June 30, 2012, 2011 and 2010, respectively.
The fair value of the awards under the annual component of this incentive program is measured using the Black-Scholes
option-pricing model. Key assumptions used to apply this pricing model are as follows:
Range of risk-free interest rates
Range of expected life of option grants (in years)
Expected volatility of underlying stock
Expected quarterly dividends (per share)
$
0.25%
3
63.2%
0.06
$
0.68%
3
65.4%
0.05
$
1.37%
3
44.5%
0.05
2012
2011
2010
Under the long-term component, grants of performance share units (“PSUs”) are made annually to key employees and the
share units are earned based on the achievement of certain overall corporate financial performance targets over the
performance period. At the end of the performance period, the number of shares of common stock issued will be determined
by adjusting upward or downward from the target in a range between 50% and 200%. No shares will be issued if the
minimum performance threshold is not achieved. The final performance percentage, on which the payout will be based,
considering the performance metrics established for the performance period, will be certified by the Compensation
Committee of the Board of Directors.
50
The awards granted by the Committee on August 25, 2011, August 30, 2010, and September 2, 2009 provided that the PSUs
will be converted to shares of common stock if the Company’s EBITDA (earnings before interest, taxes, depreciation and
amortization) and return on assets meet specified levels approved by the Committee. A participant’s right to any shares that
are earned will vest in three equal installments. An executive whose employment terminates prior to the vesting of any
installment for a reason other than death, disability, retirement, or following a change in control, will forfeit the shares
represented by that installment. In certain circumstances, such as death, disability, or retirement, PSUs are paid on a pro-rata
basis. In the event of a change in control, vesting of the awards granted is accelerated.
A summary of the awards activity under the executive compensation program during the year ended June 30, 2012 is as
follows:
Annual Component
Performance Stock Units
Number
of
Shares
Weighted
Average
Exercise
Price
Aggregate
Intrinsic
Value
Number
of
Shares
Aggregate
Intrinsic
Value
Non-vested, July 1, 2011
Granted
Vested
Expired
Non-vested, June 30, 2012
107,875
36,360
(47,960)
(1,359)
94,916
$
$
15.21
23.00
15.70
19.18
17.89
$
1,667,717
843,438
$
2,342,302
101,615
95,104
(106,026)
(4,473)
86,220
$
3,116,532
4,513,527
$
3,670,385
Restricted stock awards granted under the annual component of this program in fiscal 2012, 2011, and 2010 had a grant date
fair value of $40.78, $29.36, and $13.12, respectively. The PSUs granted in fiscal 2012, 2011 and 2010 had a grant date fair
value of $26.60, $23.49, and $17.45, respectively. The total intrinsic value of awards vested under the executive
compensation program during the years ended June 30, 2012, 2011 and 2010 was $5.4 million, $2.5 million, and $2.0 million,
respectively.
The Company recognized compensation expense related to the PSUs of $2.1 million, $2.0 million, and $1.8 million for the
years ended June 30, 2012, 2011 and 2010, respectively. The total unrecognized compensation costs related to non-vested
performance share units was $1.2 million at June 30, 2012, which is expected to be recognized over a weighted average
period of 1.87 years.
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 discount from the market each quarter. Shares of our stock may be purchased by employees quarterly at 95%
of the fair market value on the last day of each quarter. Shares of stock reserved for the plan were 108,176 at June 30, 2012.
Shares purchased under this plan aggregated 9,185, 12,044, and 17,790 in 2012, 2011 and 2010, respectively, at an average
price of $34.48, $28.32, and $21.15, respectively.
14. OTHER COMPREHENSIVE INCOME AND ACCUMULATED OTHER COMPREHENSIVE LOSS
The components of the Company’s accumulated other comprehensive loss at June 30 are as follows (in thousands):
Foreign currency translation adjustment
Unrealized pension losses, net of tax
Unrealized losses on derivative instruments, net of tax
Total
2012
2011
$
$
7,770
(81,197)
(1,698)
(75,125)
$
$
15,617
(59,572)
(973)
(44,928)
51
Amounts shown in the Statements of Other Comprehensive Income are presented in detail, including reclassification
adjustments, as follows (in thousands):
Net income (loss):
Other comprehensive income (loss):
Defined benefit pension plans:
Actuarial gains (losses) and other changes in unrecognized costs
Amortization of unrecognized costs
Derivative instruments:
Change in unrealized gains and losses
Amortization of unrealized gains and losses into interest expense
Other comprehensive income (loss) before tax:
Income tax provision (benefit):
Defined benefit pension plans:
Actuarial gains (losses) and other changes in unrecognized costs
Amortization of unrecognized costs
Derivative instruments:
Change in unrealized gains and losses
Amortization of unrealized gains and losses into interest expense
Income tax provision benefit to other comprehensive income (loss)
Foreign currency translation adjustment
Other comprehensive income (loss), net of tax:
Comprehensive income (loss)
2012
2011
$ 30,905 $ 35,367
(38,283)
5,603
14,971
5,193
(1,987)
820
(1,295)
780
$ (33,847) $ 19,649
$ 13,848 $ (5,428)
(1,933)
(2,793)
752
(310)
11,497
(7,847)
(30,197)
434
(269)
(7,196)
9,075
21,528
$ 708 $ 56,895
15. DISCONTINUED OPERATIONS
In December 2011, the Company decided to divest the ADP business unit. In connection with this decision, the Company
adjusted the carrying value of ADP’s assets to their net realizable value based on a range of expected sale prices. As a result,
the Company recorded goodwill impairment charges of $14.9 million and impairment charges of $5.0 million to fixed assets.
Charges taken in the second quarter included the aforementioned impairment and other transaction costs required to reflect
the carrying value of ADP at its estimated net realizable value.
On March 30, 2012, ADP was sold to a private equity buyer for consideration of $16.1 million consisting of $13.1 million in
cash and a $3.0 million note secured by first mortgages on three ADP facilities. During the quarter ended March 31, 2012,
additional pre-tax charges of $2.6 million were taken in connection with the closing of the sale. These charges related
primarily to the impairment of a non-cancellable lease liability that the buyer elected not to assume as part of the purchase.
During the fourth quarter of 2012, the Company sold two ADP facilities retained in the transaction for a gain of $0.8 million,
which is reflected in discontinued operations.
As discussed in Note 11 – Commitments, the Company is an obligor for certain assigned leases to Berean Christian
Bookstores, an operation disposed of by the Company in 2006. Expenses related to these obligations consist of lease
impairment charges and subsequent adjustments to sublease and other assumptions.
During 2008, the Company entered into an Administrative Order of Consent with the U.S. Environmental Protection Agency
(“EPA”) related to the removal of various PCB-contaminated materials and soils at a site where the Company leased a
building and conducted operations from 1967-1979. Remediation efforts were substantially completed during the third
quarter of 2009, and the Company received a closure letter from the EPA in the first half of 2010. The Company actively
sought the recovery of costs incurred in carrying out the terms of the AOC through negotiations with its legacy insurers. In
2010, the Company reached a recovery settlement and recorded income of $2.5 million ($1.6 million net of tax), net of costs
incurred to negotiate the settlement.
52
Earnings (losses) from discontinued operations include the following results for the years ended June 30 (in thousands):
Sales:
Air Distribution Products Group
Income (loss) before taxes:
Air Distribution Products Group
Berean Christian Bookstores
Club Products and Monarch Aluminum
Other loss from discontinued operations
Income (loss) before taxes from discontinued operations
(Provision) benefit for tax
Net income (loss) from discontinued operations
Year
Disposed
2012
2011
2010
2012
$
43,537
$
52,384
$
50,974
2012
2007
1982
(24,871)
(184)
(19)
(250)
(25,324)
9,322
(16,002)
$
$
$
$
(2,841)
(635)
--
(490)
(3,966)
1,307
(2,659)
$
$
(3,458)
(659)
2,291
(454)
(2,280)
627
(1,653)
Assets and liabilities related to discontinued operations to be retained by the Company are recorded in the Consolidated Balance
Sheets at June 30, 2012 under the following captions (in thousands):
Current assets
Other non-current assets
Accrued expenses
Other non-current liabilities
16. RESTRUCTURING
$
2012
849
3,000
3,712
3,667
The Company has undertaken a number of initiatives that have resulted in severance, restructuring, and related charges. A
summary of charges by initiative is as follows (in thousands):
2012 Restructuring Initiatives
Prior Year Initiatives
Total expense
2011 Restructuring Initiatives
Prior Year Initiatives
Total expense
Workforce Reduction
Consolidation of Global Manufacturing Footprint
Total expense
Year Ended June 30,
2012
Involuntary
Employee
Severance
and Benefit
Costs
Other
Total
901
87
988
-
315
315
986
716
1,702
$
$
$
$
$
$
2011
2010
206
491
697
286
1,242
1,528
64
1,728
1,792
$
$
$
$
$
$
1,107
578
1,685
286
1,557
1,843
1,050
2,444
3,494
$
$
$
$
$
$
53
2012 Restructuring Initiatives
During the first quarter of 2012, the Company transferred production of the Kool Star product line from Nogales, Mexico, to
New Albany, Mississippi, where it is being integrated into the Master-Bilt manufacturing operations. Restructuring costs of
$0.3 million were incurred in carrying out this initiative, which was substantially completed during the year. Additionally,
the Company continued to reduce headcount across several divisions as part of our ongoing commitment to achieving
operational efficiency. Restructuring costs of $0.8 million were incurred as part of this initiative during the year ended
June 30, 2012. The Company expects remaining expense related to 2012 headcount reductions of $0.3 million to be incurred
in 2013. Activity in the reserves related to 2012 restructuring initiatives is as follows (in thousands):
Involuntary
Employee
Severance
and Benefit
Costs
$
$
-
901
(860)
41
$
$
Other
Total
-
136
(136)
-
$
$
-
1,037
(996)
41
Restructuring Liabilities at June 30, 2011
Additions
Payments
Restructuring Liabilities at June 30, 2012
Prior Year Initiatives
During the fourth quarter of 2011, the Company began the integration of the newly-acquired Tri-Star manufacturing
operations into existing production capabilities in Nogales, Mexico. Production was transferred during the first quarter of
2012, and restructuring charges of $0.6 million were incurred during the year ended June 30, 2012.
Activity in the reserves related to prior year restructuring initiatives is as follows (in thousands):
Involuntary
Employee
Severance
and Benefit
Costs
Other
Total
Restructuring Liabilities at June 30, 2010
Additions
Payments
Restructuring Liabilities at June 30, 2011
Additions
Payments
Restructuring Liabilities at June 30, 2012
$
$
$
325
315
(630)
10
87
(97)
-
$
$
$
-
1,463
(1,463)
-
491
(491)
-
$
$
$
325
1,778
(2,093)
10
578
(588)
-
54
The Company’s total restructuring expenses by segment are as follows (in thousands):
Year Ended June 30,
2012
Other
$
Total
$
$
$
$
$
$
2011
$
$
$
$
$
$
2010
$
Involuntary
Employee
Severance
and Benefit
Costs
$
279
683
26
988
70
157
88
315
520
1,045
49
-
88
1,702
647
50
-
697
1,528
--
--
1,528
2,055
(270)
-
7
--
1,792
$
$
$
926
733
26
1,685
1,598
157
88
1,843
2,575
775
49
7
88
3,494
Food Service Equipment Group
Engraving Group
Corporate
Total expense
Food Service Equipment Group
Engraving Group
Corporate
Total expense
Food Service Equipment Group
Engraving Group
Electronics Products Group
Hydraulics Products Group
Corporate
Total expense
17. EMPLOYEE BENEFIT PLANS
Retirement Plans
The Company has defined benefit pension plans covering certain employees both inside and outside of the U.S. All pension
benefits accruing under the U.S. salaried defined benefit plan and the supplemental defined benefit plan have been frozen as
of December 31, 2007.
Plan assets are generally invested in equity securities (exclusive of common stock of the Company), debt, and global balanced
securities. Contributions for U.S. plans are 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.
Net periodic benefit cost for U.S. and non-U.S. plans included the following components (in thousands):
U.S. Plans
Year Ended June 30,
Foreign Plans
Year Ended June 30,
2012
2011
2010
2012
2011
2010
Service Cost
Interest Cost
Expected return on plan assets
Recognized net actuarial loss
Amortization of prior service cost (benefit)
Amortization of transition obligation (asset)
Curtailment
Net periodic benefit cost (benefit)
$
$
$
$
447
11,975
(15,333)
4,814
111
2
$
444
12,151
(15,777)
4,342
139
2
314
12,887
(15,601)
1,777
172
2
-
2,016
$
-
1,301
$
-
(449)
$
34
1,758
(1,527)
527
(59)
-
-
733
$
$
41
1,683
(1,495)
604
(60)
-
-
773
$
$
127
1,735
(1,506)
253
(61)
-
(180)
368
55
The following table sets forth the funded status and amounts recognized as of June 30, 2012 and 2011 for our U.S. and
foreign defined benefit pension plans (in thousands):
U.S. Plans
Year Ended June 30,
2011
2012
Foreign Plans
Year Ended June 30,
2011
2012
Change in benefit obligation
Benefit obligation at beginning of year
Service cost
Interest cost
Plan participants' contributions
Actuarial loss (gain)
Benefits paid
Foreign currency exchange rate
Projected benefit obligation at end of year
Change in plan assets
Fair value of plan assets at beginning of year
Actual return on plan assets
Employer contribution
Benefits paid
Foreign currency exchange rate
Fair value of plan assets at end of year
Funded Status
$
$
$
$
$
213,637
447
11,975
-
33,766
(14,613)
-
245,212
191,179
15,966
6,186
(14,613)
-
198,718
(46,494)
Amounts recognized in the consolidated balance sheets consist of:
Prepaid Benefit Cost
Current liabilities
Non-current liabilities
Net amount recognized
Unrecognized net actuarial loss
Unrecognized prior service cost
Accumulated other comprehensive income, pre-tax
$
$
$
-
(179)
(46,315)
(46,494)
116,920
522
117,442
$
$
212,930
444
12,151
-
2,401
(14,289)
-
213,637
$ 174,349
30,938
181
(14,289)
-
191,179
(22,458)
-
(179)
(22,279)
(22,458)
88,601
634
89,235
$
$
$
$
$
$
$
33,141
34
1,758
-
5,596
(1,306)
(1,696)
37,527
$
$
31,142
41
1,683
-
(1,627)
(1,190)
3,092
33,141
$ 28,241 $ 24,297
1,937
1,147
(1,306)
(881)
29,138
(8,389)
$
$
2,773
325
(1,190)
2,036
28,241
(4,900)
-
(1,154)
(7,235)
(8,389)
$ 1,003
(368)
(5,535)
(4,900)
$
11,511
(315)
11,196
$
7,125
(425)
6,700
$
$
$
$
$
The accumulated benefit obligation for all defined benefit pension plans was $279.8 million and $244.6 million at June 30,
2012 and 2011, respectively.
The estimated net loss and prior service cost for the defined benefit pension plans that will be amortized from accumulated
other comprehensive income into net periodic benefit cost over the next fiscal year are $8.5 million and less than $0.1 million,
respectively.
56
Plan Assets and Assumptions
The fair values of the Company’s pension plan assets at June 30, 2012 and 2011 by asset category, as classified in the three
levels of inputs described in Note 1 under the caption Fair Value of Financial Instruments, are as follows (in thousands):
Cash and cash equivalents
Common and preferred stocks
U.S. Government securities
Corporate bonds and other fixed income securities
Other
Cash and cash equivalents
Common and preferred stocks
U.S. Government securities
Corporate bonds and other fixed income securities
Other
Total
Level 1
Level 2
Level 3
June 30, 2012
$
$
$
$
9,547
89,495
18,159
90,052
20,603
227,856
Total
5,876
96,250
30,395
69,437
17,461
219,420
$
$
$
$
222
16,585
-
641
-
17,448
$
$
9,325
72,910
18,159
89,411
20,603
210,408
June 30, 2011
Level 1
Level 2
265
18,080
-
-
-
18,345
$
$
5,611
78,170
30,395
69,437
17,461
201,075
$
$
$
$
-
-
-
-
-
-
Level 3
-
-
-
-
-
-
Asset allocation at June 30, 2012 and 2011 and target asset allocations for 2012 are as follows:
Asset Category
Equity securities
Debt securities
Global balanced securities
Other
Total
U.S. Plans
Year Ended June 30,
Foreign Plans
Year Ended June 30,
2012
2011
2012
2011
32%
31%
24%
13%
100%
37%
27%
25%
11%
100%
34%
65%
--
1%
100%
36%
63%
--
1%
100%
Asset Category – Target
Equity securities
Debt and market neutral securities
Global balanced securities
Other
Total
2012
U.K.
Ireland
U.S.
70%
33%
30%
20%
67%
30%
0%
0%
25%
15%
10%
0%
100% 100% 100%
Our investment policy for the U.S. pension plans targets a range of exposure to the various asset classes. Standex rebalances
the portfolio periodically when the allocation is not within the desired range of exposure. The plan seeks to provide returns in
excess of the various benchmarks. The benchmarks include the following indices: S&P 500; Citigroup PMI EPAC;
Citigroup World Government Bond and Barclays Aggregate Bond. A third party investment consultant tracks the plan’s
portfolio relative to the benchmarks and provides quarterly investment reviews which consist of a performance and risk
assessment on all investment managers and on the portfolio.
Certain managers within the plan use, or have authorization to use, derivative financial instruments for hedging purposes, the
creation of market exposures and management of country and asset allocation exposure. Currency speculation derivatives are
strictly prohibited.
57
Year Ended June 30
Plan assumptions - obligation
Discount rate
Rate of compensation increase
Plan assumptions - cost
Discount rate
Expected return on assets
Rate of compensation increase
2012
2011
2010
4.00 - 4.60%
3.40 - 3.50%
5.60 - 6.00%
3.50 - 4.00%
4.40 - 5.90%
3.50 - 3.80%
5.50 - 6.00%
5.40 - 8.10%
3.50 - 4.00%
4.40 - 5.90%
5.70 - 8.10%
3.50 - 3.80%
5.90 - 7.20%
6.30 - 8.35%
3.50 - 3.70%
Included in the above are the following assumptions relating to the obligations for defined benefit pension plans in the United
States at June 30, 2012: a discount rate of 4.6% and a rate of compensation increase of 3.5%. At June 30, 2011, the
assumptions were a discount rate of 5.8% and rate of compensation increase of 3.5%. The U.S. defined benefit pension plans
represent the majority of our pension obligations. The expected return on plan assets assumption is based on our expectation
of the long-term average rate of return on assets in the pension funds and is reflective of the current and projected asset mix of
the funds. The discount rate reflects the current rate at which pension liabilities could be effectively settled at the end of the
year. The discount rate is determined by matching our expected benefit payments from a stream of AA- or higher bonds
available in the marketplace, adjusted to eliminate the effects of call provisions.
Expected benefit payments for the next five years are as follows: 2013, $16.0 million; 2014, $15.9 million; 2015, $15.8
million; 2016, $15.8 million; 2017, $16.2 million and thereafter, $83.2 million. The Company expects to make $4.7 million
of contributions to its pension plans in 2013, which includes $3.25 million of voluntary contributions made in July 2012 in
order to take advantage of new legislation that allowed our U.S. plan to be 100% funded under Pension Protection Act rules.
The Company operates a defined benefit plan in Germany which is unfunded.
Multi-Employer Pension Plans
We contribute to a number of multiemployer defined benefit plans under the terms of collective bargaining agreements that
cover our union-represented employees. These plans generally provide for retirement, death and/or termination benefits for
eligible employees within the applicable collective bargaining units, based on specific eligibility/participation requirements,
vesting periods and benefit formulas. The risks of participating in these multiemployer plans are different from single-
employer plans in the following aspects:
• Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other
•
•
participating employers.
If a participating employer stops contributing to the multiemployer plan, the unfunded obligations of the plan may be
borne by the remaining participating employers.
If we choose to stop participating in some of our multiemployer plans, we may be required to pay those plans an
amount based on the underfunded status of the plan, referred to as a withdrawal liability. However, cessation of
participation in a multiemployer plan and subsequent payment of any withdrawal liability is subject to the collective
bargaining process.
The following table outlines the Company’s participation in multiemployer pension plans for the periods ended June 30,
2012, 2011, and 2010, and sets forth the yearly contributions into each plan. The “EIN/Pension Plan Number” column
provides the Employer Identification Number (“EIN”) and the three-digit plan number. The most recent Pension Protection
Act zone status available in 2012 and 2011 relates to the plans’ two most recent fiscal year-ends. The zone status is based on
information that we received from the plans’ administrators and is certified by each plan’s actuary. Among other factors,
plans certified in the red zone are generally less than 65% funded, plans certified in the orange zone are both less than 80%
funded and have an accumulated funding deficiency or are expected to have a deficiency in any of the next six plan years,
plans certified in the yellow zone are less than 80% funded, and plans certified in the green zone are at least 80% funded. The
“FIP/RP Status Pending/Implemented” column indicates whether a financial improvement plan (“FIP”) for yellow/orange
zone plans, or a rehabilitation plan (“RP”) for red zone plans, is either pending or has been implemented. For all plans, the
Company’s contributions do not exceed 5% of the total contributions to the plan in the most recent year.
58
Pension
Protection Act
Zone Status
Contributions
Pension Fund
EIN/Plan Number
2012
2011
FIP/RP
Status
2012
2011
2010
Expiration
Date of
Collective
Bargaining
Agreement
Surcharge
Imposed?
New England Teamsters
and Trucking Industry
Pension Fund
Laborers' Local 57
Industrial Pension Fund
of Philadelphia, PA
Sheet Metal Workers'
National Pension Fund
IAM National Pension
Fund, National Pension
Plan
04-6372430-001
Red
Red
Yes/
Implemented
$
367
$
391
$
438
No
4/15/2015
23-1627410-003
Green
Green
No
52-6112463-001
Red
Red
Yes/
Implemented
39
36
89
38
105
No
11/1/2014
42
No
9/1/2012
51-6031295-002
Green
Green
No
584
1,026
$
599
1,117
$
625
1,210
$
No
10/14/2013 -
5/31/2015
Retirement Savings Plans
The Company has two primary employee savings plans, one for salaried employees and one for hourly employees.
Substantially all of our full-time domestic employees are covered by these savings plans. 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 our employees under the plans. During the third quarter of 2009, the
Company announced that it would suspend employer matching contributions to its savings plans, with the exception of
obligations under collective bargaining agreements. The suspension of contributions began in April 2009, and contributions
were reinstated at the beginning of calendar year 2010. Company contributions were $4.1 million, $4.0 million, and $1.7
million for the years ended June 30, 2012, 2011, and 2010, respectively. At June 30, 2012, the salaried plan holds
approximately 170,000 shares of Company common stock, representing approximately 8% of the holdings of the plan.
Other Plans
Certain retired executives are covered by an Executive Life Insurance Program. During 2003, two executives retired and the
Board of Directors approved benefits under this plan of approximately $5.6 million. The aggregate present value of current
vested and outstanding benefits to all participants was approximately $0.2 million, and $0.6 million at June 30, 2012 and
2011, respectively, and will be paid over the next three years.
Key Employee Share Option Plan (KEYSOP)
In fiscal 2002, we created a Key Employee Share Option Plan (the “KEYSOP”). The purpose of the KEYSOP is to provide
alternate forms of compensation to certain key employees of the Company commensurate with their contributions to the
success of our activities. Under the KEYSOP, certain employees are granted options by the Compensation Committee and
designated property is purchased by the Company and placed in a Rabbi trust. The option price set at the date of the grant is
25% of the fair value of the underlying assets. During fiscal 2003, the Company granted options to two key employees prior
to their retirement. Assets associated with the plan were $1.8 million and $6.0 million at June 30, 2012 and 2011,
respectively. As of June 30, 2012 and 2011, the Company has recorded a liability in other long term liabilities of
approximately $1.5 million and $4.7 million respectively associated with the grants made.
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 established rules.
The Company records postretirement benefits (such as health care and life insurance) during the years an employee provides
services.
59
The following table sets forth the funded status of the postretirement benefit plans and accrued postretirement benefit cost
reflected in the consolidated balance sheet at year end (in thousands):
Year Ended June 30,
2012
2011
Change in benefit obligation
Benefit obligation at beginning of year
Service cost
Interest cost
Plan participants' contributions
Actuarial loss (gain)
Benefits paid
Accumulated benefit obligation at end of year
Change in plan assets
Fair value of plan assets at beginning of year
Employer contribution
Plan participants' contribution
Benefits paid
Foreign currency exchange rate
Fair value of plan assets at end of year
Funded Status
$
$
$
$
$
1,808
19
101
36
188
(150)
2,002
-
114
36
(150)
-
-
(2,002)
Amounts recognized in the consolidated balance sheets consist of:
Current liabilities
Non-current liabilities
Net amount recognized
Accumulated other comprehensive income, pre-tax
Unrecognized net actuarial loss
Unrecognized transition obligation
Net amount recognized
$
$
$
(135)
(1,867)
(2,002)
(710)
240
(470)
Components of Net Periodic Benefit Cost (in thousands)
$
$
$
$
$
$
$
$
1,865
12
105
35
(21)
(188)
1,808
-
153
35
(188)
-
-
(1,808)
(147)
(1,661)
(1,808)
(954)
464
(490)
Year Ended June 30,
2011
2012
2010
Service Cost
Interest Cost
Recognized net actuarial gain
Amortization of transition obligation
Net periodic benefit cost
$
$
19
101
(55)
223
288
$
$
12
106
(57)
223
284
$
$
8
124
(83)
224
273
The estimated net actual loss (gain) and transition obligation for the postretirement benefits that will be amortized from
accumulated other comprehensive income into net periodic benefit cost over the next fiscal year are $(0.0) million and $0.2
million, respectively.
The assumed weighted average discount rate was 4.60% and 5.80% as of June 30, 2012 and 2011, respectively. A 1%
increase in the assumed health care cost trend rate does not impact either the accumulated benefit obligation or the net
postretirement cost, as the employer contribution for each participant is a fixed amount.
60
18. INDUSTRY SEGMENT INFORMATION
The Company has determined that it has five reportable segments organized around the types of product sold:
•
•
•
•
•
Food Service Equipment Group– an aggregation of seven operating segments that manufacture and sell commercial
food service equipment.
Engraving Group – provides mold texturizing, roll engraving and process machinery for a number of industries.
Engineering Technologies Group – provides customized solutions in the fabrication and machining of engineered
components for the aerospace, energy, aviation, medical, oil and gas, and general industrial markets.
Electronics Products Group – manufacturing and selling of electronic components for applications throughout the
end-user market spectrum.
Hydraulics Products Group – manufacturing and selling of single- and double-acting telescopic and piston rod
hydraulic cylinders.
During the third quarter of 2012, the Company evaluated its reportable segments and determined that, due to the disposal of
the Air Distribution Products business, the Electronics Products Group met the quantitative thresholds to be separately
disclosed as a reportable segment. As this group was previously combined with our Hydraulics business to form the
Electronics and Hydraulics segment, the Hydraulics business is now also reported separately as the Hydraulics Products
Group. Amounts applicable to 2011 have been reclassified to conform to the new segment presentation.
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, and other non-current assets.
61
Industry Segments (in thousands)
Food Service Equipment
Engraving
Engineering Technologies
Electronics Products Group
Hydraulics Products Group
Corporate and Other
Total
Food Service Equipment
Engraving
Engineering Technologies
Electronics Products Group
Hydraulics Products Group
Restructuring charge
Gain on sale of real estate
Corporate
Total
Interest expense
Other, net
Income from continuing operations
before income taxes
$
$
$
$
2012
388,813
93,611
74,088
48,206
29,922
-
634,640
Net Sales
2011
365,523
85,258
61,063
46,600
22,925
-
581,369
$
$
2010
337,578
77,372
58,732
37,201
16,598
-
527,481
$
$
$
$
Income (Loss) From Operations
2011
37,915
14,182
12,606
7,551
2,436
(1,843)
3,368
(20,959)
55,256
(2,107)
(201)
2012
39,613
17,896
14,305
8,715
4,403
(1,685)
4,776
(23,443)
64,580
(2,280)
519
2010
39,682
9,395
13,843
4,074
963
(3,494)
1,405
(20,137)
45,731
(3,624)
749
$
$
$
62,819
$
52,948
$
42,856
$
$
Depreciation and Amortization
2011
5,832
3,525
1,951
1,105
530
331
13,274
2012
5,342
3,293
3,188
878
518
271
13,490
2010
6,257
3,569
1,406
1,276
604
296
13,408
$
$
$
Capital Expenditures
2011
2,806
1,014
2,177
551
423
-
-
48
7,019
2012
2,513
2,223
2,577
963
304
-
-
13
8,593
$
2010
2,233
1,115
359
381
160
-
-
289
4,537
$
$
$
$
$
$
Food Service Equipment
Engraving
Engineering Technologies
Electronics Products Group
Hydraulics Products Group
Corporate & Other
Total
Net sales
Income from operations
Long-lived assets
$
$
$
Goodwill
2012
45,793
20,618
11,206
19,957
3,059
-
100,633
2011
46,149
20,994
11,370
20,867
3,059
-
102,439
$
$
2012
144,338
34,504
19,579
Non-U.S. Operations
2011
112,681
24,058
20,636
$
$
$
$
$
Identifiable Assets
2012
192,799
94,738
71,463
43,285
14,432
63,094
479,811
2011
189,935
85,364
65,358
42,419
13,007
78,822
474,905
$
2010
86,215
11,378
14,245
Given the nature of our corporate expenses, management has concluded that it would not be appropriate to allocate the
expenses associated with corporate activities to our operating segments. These corporate expenses include the costs for the
corporate headquarters, salaries and wages for the personnel in corporate, professional fees related to corporate matters and
compliance efforts, stock-based compensation and post-retirement benefits related to our corporate executives, officers and
directors, and other compliance related costs. The Company has a process to allocate and recharge certain direct costs to the
operating segments when such direct costs are administered and paid at corporate. Such direct expenses that are recharged on
an intercompany basis each month include such costs as insurance, workers’ compensation programs, audit fees and pension
expense. The accounting policies applied by the reportable segments are the same as those described in the Summary of
Accounting Policies footnote to the consolidated financial statements. There are no differences in accounting policies which
would be necessary for an understanding of the reported segment information.
62
19. GAIN ON SALE OF REAL ESTATE
During, 2012, the Company completed the sale of an Engraving Group facility in Sao Paolo, Brazil, which will be replaced by
a leased facility more suited to the Company’s operational needs. Proceeds from the sale were $5.1 million and the sale
resulted in a pre-tax gain of $4.8 million, net of related costs.
During 2011, the Company completed the sale of a parcel of real estate in Lyon, France, on which it had previously operated
an Engraving Group facility. Proceeds from the sale were $4.9 million and the sale resulted in a pre-tax gain of $3.4 million,
net of related costs.
During 2010, the Company sold its corporate headquarters facility in Salem, New Hampshire, and entered into a lease
agreement for a facility in Salem which is more than 50% smaller and more suited to current operational needs. Proceeds
from the sale were $2.9 million and the sale resulted in a pre-tax gain of $1.4 million, net of related costs.
20. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The unaudited quarterly results of operations for the years ended June 30, 2012 and 2011 are as follows (in thousands, except
for per share data):
Net sales
Gross profit
Net income (loss)
EARNINGS PER SHARE
Basic
Diluted
Net sales
Gross profit
Net income
EARNINGS PER SHARE
Basic
Diluted
First
159,306
52,746
11,958
0.96
0.94
First
143,276
48,754
10,988
0.88
0.86
$
$
$
$
$
$
$
$
$
$
$
$
2012
Second
Third
Fourth
$
154,868
50,270
(4,116)
150,666
48,167
9,120
(0.33)
(0.32)
$
$
0.73
0.71
2011
Second
Third
142,078
47,821
9,019
0.72
0.71
$
$
$
134,321
42,377
5,090
0.41
0.40
$
$
$
$
$
$
169,800
57,301
13,943
1.10
1.08
Fourth
161,694
52,586
10,270
0.83
0.81
Note: Basic and diluted earnings per share are computed independently for each reporting period. Accordingly, the sum
of the quarterly earnings per share amounts may not agree to the year-to-date amounts.
21. SUBSEQUENT EVENT
On July 10, 2012, the Company acquired Meder Electronic Group (“Meder”), a manufacturer of magnetic reed switches, reed
relays, reed sensors, and other electronics products. Consideration in the transaction was $40.4 million cash, subject to
normalized working capital and other post-closing adjustments. Meder will be reported as part of the Electronic Products
Group, and will substantially broaden the Company’s global footprint, product line offerings, and end-user markets in the
segment.
63
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Standex International Corporation
Salem, New Hampshire
We have audited the accompanying consolidated balance sheets of Standex International Corporation and subsidiaries (the
"Company") as of June 30, 2012 and 2011, and the related consolidated statements of operations, stockholders' equity and
comprehensive income, and cash flows for each of the three years in the period ended June 30, 2012. These consolidated
financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Standex
International Corporation and subsidiaries as of June 30, 2012 and 2011, and the results of their operations and their cash
flows for each of the three years in the period ended June 30, 2012, in conformity with accounting principles generally
accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States),
the Company's internal control over financial reporting as of June 30, 2012, based on the criteria established in Internal
Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our
report dated August 28, 2012 expressed an unqualified opinion on the Company's internal control over financial reporting.
/s/ Deloitte & Touche LLP
Boston, Massachusetts
August 28, 2012
64
Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure
Not Applicable
Item 9A. Controls and Procedures
The management of the Company including its Chief Executive Officer, and Chief Financial Officer, have conducted an
evaluation of the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-
15(e) and 15(d)-15(e) under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) as of the end of the
period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded as
of June 30, 2012, that the disclosure controls and procedures are effective in ensuring that the information required to be
disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized
and reported within the time periods specified in the Commission's rules and forms and (ii) that such information is
accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial
Officer as appropriate to allow timely decisions regarding required disclosure.
There were no changes in the Company’s internal control over financial reporting identified in connection with management’s
evaluation that occurred during the fourth quarter of our fiscal year (ended June 30, 2012) that has materially affected, or is
reasonably likely to materially affect our internal control over financial reporting.
Management's Report on Internal Control over Financial Reporting
The management of Standex is responsible for establishing and maintaining adequate internal control over financial reporting
(as defined in Section 240.13a-15(f) of the Exchange Act). The Company’s internal control over financial reporting is
designed to provide reasonable assurance as to the reliability of the Company’s financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles. Management,
including the Chief Executive Officer and the Chief Financial Officer, assessed the effectiveness of our internal control over
financial reporting as of the end of the fiscal year covered by this report on Form 10-K. In making this assessment,
management used the criteria established by the Committee of Sponsoring Organizations of the Treadway Commission in
“Internal Control-Integrated Framework.” These criteria are in the areas of control environment, risk assessment, control
activities, information and communication and monitoring. Management’s assessment included documenting, evaluating and
testing the design and operating effectiveness of our internal control over financial reporting.
Based on the Company’s processes, as described above, management, including the Chief Executive Officer and the Chief
Financial Officer, has concluded that our internal control over financial reporting was effective as of June 30, 2012 to provide
reasonable assurance of achieving its objectives. These results were reviewed with the Audit Committee of the Board of
Directors. Deloitte & Touche LLP, the independent registered public accounting firm that audited our consolidated financial
statements included in this Annual Report on Form 10-K, has issued an unqualified attestation report on the Company’s
internal control over financial reporting, which is included below.
Inherent Limitation on Effectiveness of Controls
No matter how well designed, internal control over financial reporting has inherent limitations. Internal control over financial
reporting determined to be effective can provide only reasonable, not absolute, assurance with respect to financial statement
preparation and may not prevent or detect all misstatements that might be due to error or fraud. In addition, a design of a
control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative
to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute
assurance that all control issues and instances of fraud, if any, within the Company have been detected.
65
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Standex International Corporation
Salem, New Hampshire
We have audited the internal control over financial reporting of Standex International Corporation and subsidiaries (the
"Company") as of June 30, 2012, based on criteria established in Internal Control — Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for
maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control
over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting.
Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material respects. Our audit included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our
opinion.
A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's
principal executive and principal financial officers, or persons performing similar functions, and effected by the company's
board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and directors of the company; and (3)
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company's assets that could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or
improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on
a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to
future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of
June 30, 2012, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States),
the consolidated financial statements as of and for the year ended June 30, 2012 of the Company and our report dated
August 28, 2012 expressed an unqualified opinion on those financial statements.
/s/ Deloitte & Touche LLP
Boston, Massachusetts
August 28, 2012
66
Item 9B. Other Information
None
PART III
Item 10. Directors, Executive Officers and Corporate Governance
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, 2012 (the “Proxy Statement”). The information required by this
item and not provided in Part 1 of this report under Item 1 “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, Board of Directors and its Committees” and “Section 16(a) Beneficial Ownership Reporting
Compliance.”
There have been no material changes to the procedures by which security holders may recommend nominees to our board of
directors. Information regarding the process for identifying and evaluating candidates for director are set forth and
incorporated in reference to the information in the Proxy Statement under the caption “Corporate Governance/Nominating
Committee Report.”
Information regarding the Audit Committee Financial Expert and the identification of the Audit Committee is incorporated
by reference to the information in the Proxy Statement under the caption “Other Information Concerning the Company Board
of Directors and its Committee, Audit Committee.” The Audit Committee is established in accordance with Section
3(a)(58)(A) of the Securities Exchange Act.
We maintain a corporate governance section on our website, which includes our code of ethics for senior financial
management that applies to our chief executive officer, principal financial officer, principal accounting officer, controller or
persons performing similar functions. Our corporate governance section also includes our code of business conduct and
ethics for all employees. In addition, we will promptly post any amendments to or waivers of the code of ethics for senior
financial management on our website. You can find this and other corporate governance information at www.standex.com.
Item 11. Executive Compensation
Information regarding executive compensation is incorporated by reference from the Proxy Statement under the captions and
sub-captions: “Executive Compensation,” “Compensation Discussion and Analysis,” “Report of the Compensation
Committee,” “2012 Summary Compensation Table,” “Other Information Concerning the Company Board of Directors and
Its Committees,” and “Directors Compensation.”
67
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 is
incorporated by reference in the Proxy Statement under the caption “Stock Ownership of Certain Beneficial Owners.” 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 and sub-caption “Stock Ownership in the Company” and “Stock
Ownership by Directors, Nominees for Directors and Executive Officers,” respectively.
The Equity Compensation Plan table below presents information regarding the Company’s equity based compensation plan
at June 30, 2012.
(A)
(B)
(C)
Number of Securities
To Be Issued Upon
Exercise Of
Outstanding Options,
Warrants And Rights
Weighted-Average
Exercise Price Of
Outstanding
Options, Warrants
And Rights
Number of Securities
Remaining Available
For Future Issuance
Under Equity
Compensation Plans
(Excluding Securities
reflected in Column (A))
389,125
--
389,125
$4.36
--
$4.36
1,268,654
--
1,268,654
Plan Category
Equity compensation plans approved by
stockholders
Equity compensation plans not approved
by stockholders
Total
The Company has one equity compensation plan, approved by stockholders, under which equity securities of the Company
have been authorized for issuance to employees and non-employee directors. This plan is further described in the “Notes to
Consolidated Financial Statements” under the heading “Stock-Based Compensation and Purchase Plans.”
Item 13. Certain Relationships and Related Transactions and Director Independence
Information regarding certain relationships and related transactions is incorporated by reference in the Proxy Statement under
the caption and sub-caption “Certain Relationships and Related Transactions” And “Stock Ownership by Directors,
Nominees for Director and Executive Officers,” respectively.
Information regarding director independence is incorporated by reference in the Proxy Statement under the caption “Election
of Directors - Determination of Independence.”
Item 14. Principal Accountant Fees and Services
This Information in addition to information regarding aggregate fees billed for each of the last two fiscal years for
professional services rendered by the professional accountant for audit of the Company’s annual financial statements and
review of financial statements included in the Company’s Form 10-K as well as others are incorporated by reference in the
Proxy Statement under the caption “Independent Auditors’ Fees.”
68
PART IV
Item 15. Exhibits and Financial Statement Schedules
(a)(1)
Financial Statements
Financial Statements covered by the Report of Independent Registered Public Accounting Firm
(A) Consolidated Statements of Operations for the fiscal years ended June 30, 2012, 2011 and 2010
(B) Consolidated Balance Sheets as of June 30, 2012 and 2011
(C) Consolidated Statements of Stockholders’ Equity and Comprehensive Income (Loss) for the fiscal years
ended June 30, 2012, 2011 and 2010
(D) Consolidated Statements of Cash Flows for the fiscal years ended June 30, 2012, 2011 and 2010
(E) Notes to Consolidated Financial Statements
(2)
Financial Statements Schedule
The following financial statement schedule is included as required by Item 8 to this report on Form 10-K
Schedule II – Valuation and Qualifying Accounts is included in the Notes to Consolidated Financial Statements
All other schedules are not required and have been omitted
(3)
Exhibits
Exhibit
Number
(b) 3.
(i)
Exhibit Description
Incorporated
by Reference
Date
Form
Filed
Herewith
Restated Certificate of Incorporation of Standex,
dated October 27, 1998 filed as Exhibit 3(i).
10-Q
12/31/1998
(ii)
By-Laws of Standex, as amended, and restated on
October 28, 2008 filed as Item 5.03, Exhibit 3.(b)
8-K
10/30/2008
4.
(a)
Agreement of the Company, dated September 15, 1981, 10-K
to furnish a copy of any instrument with respect to
certain other long-term debt to the Securities and
Exchange Commission upon its request filed as
Exhibit 4.
6/30/1981
10.
(a)
Amended and Restated Employment Agreement
dated August 25, 2010 between the Company
and Roger L. Fix*
10-K
6/30/2010
(b)
(c)
(d)
(e)
Amended and Restated Employment Agreement
dated August 25, 2010 between the Company
and John Abbott*
Amended and Restated Employment Agreement
dated August 25, 2010 between the Company
and Thomas D. DeByle*
Amended and Restated Employment Agreement
dated August 25, 2010 between the Company
and Deborah A. Rosen*
Amended and Restated Employment Agreement
dated August 25, 2010 between the Company
and James L. Mettling*
10-K
6/30/2010
10-K
6/30/2010
10-K
6/30/2010
10-K
6/30/2010
(f)
Standex International Corporation Amended and
X
69
(g)
(h)
(i)
(j)
(k)
(l)
(m)
(n)
(o)
(p)
(q)
(r)
21.
23.
And Restated 2008 Long Term Incentive Plan,
effective October 28, 2008. Filed as Exhibit 10.*
Standex International Corporation Executive
Security Program, as amended and restated on
January 31, 2001 filed as Exhibit 10(a).*
Standex International Corporation Executive Life
Insurance Plan effective April 27, 1994 and as
Amended and restated on April 25, 2001 filed
as Exhibit 10(k).*
Standex International Corporation Supplemental
Retirement Plan adopted April 26, 1995 and
Amended on July 26, 1995 filed as Exhibit 10(n).*
Standex International Corporation Key Employee
Share Option Plan dated June 27, 2002 filed
as Exhibit 10(p).*
Form of Indemnification Agreement for directors
and executive officers of the Company filed as
Item 1.01, Exhibit 10.*
10-Q
3/31/2001
10-K
6/30/2001
10-K
6/30/1995
10-K
6/30/2003
8-K
5/5/2008
Executive Officer long-term performance share
Unit awards filed as Item 5.02.*
8-K
8/28/2008
Standex Deferred Compensation Plan for highly
compensated employees filed as Item 5.02.*
8-K
1/31/2008
Restricted stock Unit Award granted to Roger L.
Fix dated January 25, 2006 filed as Item 1.01.*
8-K
1/27/2006
Credit Agreement dated January 5, 2012
between the Company and RBS Citizens, N.A.,
Bank of America, N.A., Sovereign Bank,
T. D. Bank, N.A. and the lenders named in the
Credit Agreement as Lenders filed as Exhibit 10.
8-K
1/05/2012
Amendment to Directors’ Compensation Program
for members of the Board of Directors of the
Company filed as Item 1.01.*
8-K
11/2/2006
Purchase and Sale Agreement dated February 22,
2012 among the Company, Standex Air Distribution,
Products, Inc., Snappy Air Distribution Products, Inc.
as Sellers and BW HVAC Operations, LLC and
BW HVAC Real Estate Holdings, LLC as Buyers
10-Q
3/31/2012
Code of Ethics for chief Executive Officer and
Senior Financial Officers is incorporated by
reference as Exhibit 14.
Subsidiaries of Standex International Corporation
Consent of Independent Registered Public
Accounting Firm
70
10-K
6/30/2005
X
X
24.
31.1
31.2
32.
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
Powers of Attorney of Charles H. Cannon, Thomas E.
Chorman, William R. Fenoglio, Gerald H. Fickenscher,
Daniel B. Hogan, H. Nicholas Muller, III, Ph. D.,
and Edward J. Trainor
Rule 13a-14(a) Certification of President and
Chief Executive Officer
Rule 13a-14(a) Certification of Vice President and
Chief Financial Officer
Section 1350 Certification
XBRL Instance Document**
XBRL Taxonomy Extension Schema Document**
XBRL Taxonomy Extension Calculation Linkbase Document**
XBRL Taxonomy Extension Definition Linkbase Document**
XBRL Taxonomy Extension Label Linkbase Document**
XBRL Taxonomy Extension Presentation Linkbase Document**
X
X
X
X
* Management contract or compensatory plan or arrangement.
** The Company will furnish Exhibit 101 within thirty days of the filing of this Form 10-K, as allowed under the rules of the
Securities and Exchange Commission.
71
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 28, 2012.
STANDEX INTERNATIONAL CORPORATION
(Registrant)
/s/ ROGER L. FIX
Roger L. Fix
President/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 28, 2012:
Signature
/s/ ROGER L. FIX
Roger L. Fix
/s/ THOMAS D. DEBYLE
Thomas D. DeByle
/s/ SEAN VALASHINAS
Sean Valashinas
Title
President/Chief Executive Officer
Vice President/Chief Financial Officer
Chief Accounting Officer
Roger L. Fix, pursuant to powers of attorney which are being filed with this Annual Report on Form 10-K, has signed below
on August 28, 2012 as attorney-in-fact for the following directors of the Registrant:
Charles H. Cannon
William R. Fenoglio
Gerald H. Fickenscher
Edward J. Trainor
Thomas E. Chorman
H. Nicholas Muller, III, Ph.D.
Daniel B. Hogan
/s/ ROGER L. FIX
Roger L. Fix
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 2012 Proxy Statement and proxy materials to security holders subsequent to the filing of the
annual report on this Form. Copies of such material shall be furnished to the Commission when they are sent to security
holders.
72
INDEX TO EXHIBITS
10.
21.
23.
24.
Standex International Corporation 2008 Long Term Incentive Plan
Subsidiaries of Standex
Consent of Independent Registered Public Accounting Firm
Powers of Attorney of Charles H. Cannon, Thomas E. Chorman,
William R. Fenoglio, Gerald Fickenscher, Daniel B. Hogan,
H. Nicholas Muller, III, Ph.D., and Edward J. Trainor
31.1
Rule 13a-14(a) Certification of President and Chief Executive Officer
31.2
Rule 13a-14(a) Certification of Vice President and
Chief Financial Officer
32.
Section 1350 Certification
PAGE
74
88
89
90
97
99
101
73
EXHIBIT 10
STANDEX INTERNATIONAL CORPORATION
2008 LONG TERM INCENTIVE PLAN
SECTION 1. General Purpose of the Plan
The purpose of this Standex International Corporation 2008 Long Term Incentive
Plan (the “Plan”) is to encourage and enable officers and employees of, and other persons
providing services to, Standex International Corporation (the “Company”) and its Affiliates
to acquire a proprietary interest in the Company. It is anticipated that providing such persons
with a direct stake in the Company’s welfare will assure a closer identification of their
interests with those of the Company and its stockholders, thereby stimulating their efforts on
the Company’s behalf and strengthening their desire to remain with the Company.
SECTION 2. Definitions
The following terms shall be defined as set forth below:
“Affiliate” means a parent corporation, if any, and each subsidiary corporation of the
Company, as those terms are defined in Section 424 of the Code.
“Award” or “Awards”, except where referring to a particular category of grant under
the Plan, shall include Incentive Stock Options, Non-Statutory Stock Options, Restricted
Stock Awards, Unrestricted Stock Awards, Performance Share Awards and Stock
Appreciation Rights. Awards shall be evidenced in a writing (which may be in electronic
form and may be electronically acknowledged and accepted by the recipient) containing such
terms and conditions not inconsistent with the provisions of this Plan as the Committee shall
determine.
“Board” means the Board of Directors of the Company.
“Cause” shall mean, with respect to any Participant, a determination by the Company
(including the Board) or any Affiliate that the Participant’s employment or other relationship
with the Company or any such Affiliate should be terminated as a result of (i) a material
breach by the Participant of any agreement to which the Participant and the Company (or any
such Affiliate) are parties, (ii) any act (other than retirement) or omission to act by the
Participant that may have a material and adverse effect on the business of the Company, such
Affiliate or any other Affiliate or on the Participant’s ability to perform services for the
Company or any such Affiliate, including, without limitation, the commission of any crime
(other than an ordinary traffic violation), or (iii) any material misconduct or material neglect
of duties by the Participant in connection with the business or affairs of the Company or any
such Affiliate.
“Change of Control” shall have the meaning set forth in Section 16.
74
“Code” means the Internal Revenue Code of 1986, as amended, and any successor
Code, and related rules, regulations and interpretations.
“Committee” shall have the meaning set forth in Section 3.
“Disability” means disability as set forth in Section 22(e)(3) of the Code.
“Effective Date” means the date on which the Plan is approved by the Board of
Directors as set forth in Section 18.
“Eligible Person” shall have the meaning set forth in Section 5.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
“Fair Market Value” on any given date means the closing price per share of the Stock
on such date as reported by the New York Stock Exchange (“NYSE”) or such other
registered national securities exchange on which the Stock is listed; provided, that, if there is
no trading on such date, Fair Market Value shall be deemed to be the closing price per share
on the last preceding date on which the Stock was traded. If the Stock is not listed on any
registered national securities exchange, the Fair Market Value of the Stock shall be
determined in good faith by the Committee.
“Incentive Stock Option” means any Stock Option designated and qualified as an
“incentive stock option” as defined in Section 422 of the Code.
“Non-Employee Director” means any director who: (i) is not currently an officer of
the Company or an Affiliate, or otherwise currently employed by the Company or an
Affiliate, (ii) does not receive compensation, either directly or indirectly, from the Company
or an Affiliate, for services rendered as a consultant or in any capacity other than as a
director, except for an amount that does not exceed the dollar amount for which disclosure
would be required pursuant to Rule 404(a) of Regulation S-K promulgated by the SEC, (iii)
does not possess an interest in any other transaction for which disclosure would be required
pursuant to Rule 404(a) of Regulation S-K, (iv) is not engaged in a business relationship for
which disclosure would be required pursuant to Rule 404(b) of Regulation S-K, and (v) is an
“independent director” as defined the marketplace rules of the NYSE or such other registered
national securities exchange on which the Stock is listed.
“Non-Statutory Stock Option” means any Stock Option that is not an Incentive Stock
Option.
“Option” or “Stock Option” means any option to purchase shares of Stock granted
pursuant to Section 6.
“Outside Director” means any director who (i) is not an employee of the Company or
of any “affiliated group,” as such term is defined in Section 1504(a) of the Code, which
includes the Company (an “Affiliated Group Member”), (ii) is not a former employee of the
Company or any Affiliated Group Member who is receiving compensation for prior services
(other than benefits under a tax-qualified retirement plan) during the Company’s or any
Affiliated Group Member’s taxable year, (iii) has not been an officer of the Company or any
Affiliated Group Member and (iv) does not receive remuneration from the Company or any
Affiliated Group Member, either directly or indirectly, in any capacity other than as a
75
director. “Outside Director” shall be determined in accordance with Section 162(m) of the
Code and the Treasury regulations issued thereunder.
“Participant” means any Eligible Person who has been granted and holds an
outstanding Award.
“Performance Cash Award” means an Award granted pursuant to Section 9, as
described therein.
“Performance Factor” means any of the following: sales or revenues; earnings,
including but not limited to reported earnings, earnings from continuing operations, operating
income, and earnings either before or after specific items set forth in the Company’s income
statement, such as interest, taxes, and/or depreciation; cash flow, including but not limited to
operating cash flow and free cash flow; return on equity; return on capital; return on assets;
return on investment; gross or net margin; working capital; productivity; operating
efficiency; organic growth rates; growth and diversification through acquisitions and similar
business strategies; diversification; globalization; strategic objectives, such as, without
limitation, management and organizational development and reward systems, technology
implementation and supply chain management, cost reduction goals and stock price, any of
which may be measured in absolute terms, or as compared to a defined benchmark, or as
compared to the results of another corporation or group of corporations.
“Performance Share Award” means an Award granted pursuant to Section 9, as
described therein.
“Restricted Stock Award” means an Award granted pursuant to Section 7.
“Retirement” means retirement from active employment with the Company or an
Affiliate at an age and with the number of years of service that would enable an Eligible
Person to commence receipt of a pension from the Standex International Corporation
Retirement Plan if the Eligible Person was a participant in the plan.
“SEC” means the Securities and Exchange Commission or any successor authority.
“Stock” means the common stock, $1.50 par value per share, of the Company, subject
to adjustments pursuant to Section 4.
“Stock Appreciation Right” means an Award granted pursuant to Section 10.
“Unrestricted Stock Award” means Awards granted pursuant to Section 8.
SECTION 3. Administration of Plan; Committee Authority to Select Participants and
Determine Awards.
(a)
Committee. It is intended that the Plan shall be administered by the
Compensation Committee of the Board (the “Committee”), consisting of not less than three
(3) persons each of whom qualifies as an Outside Director and a Non-Employee Director, but
the authority and validity of any act taken or not taken by the Committee shall not be affected
if any person administering the Plan is not an Outside Director or a Non-Employee Director.
Except as specifically reserved to the Board under the terms of the Plan, and subject to any
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limitations set forth in the charter of the Committee, the Committee shall have full and final
authority to operate, manage and administer the Plan on behalf of the Company.
(b)
Powers of Committee. The Committee shall have the power and authority to
grant and modify Awards consistent with the terms of the Plan, including the power and
authority:
(i)
to select the Eligible Persons to whom Awards may from time to time be
granted;
(ii)
to determine the time or times of grant, and the extent, if any, of Incentive
Stock Options, Non-Statutory Stock Options, Restricted Stock, Unrestricted Stock, Performance
Shares and Stock Appreciation Rights, or any combination of the foregoing, granted to any one or
more Eligible Persons;
(iii)
to determine the number of shares of Stock to be covered by any Award;
(iv)
to determine and modify the terms and conditions, including restrictions, not
inconsistent with the terms of the Plan, of any Award, which terms and conditions may differ among
individual Awards and Participants, and to approve the form of written instruments evidencing the
Awards and to approve any agreements modifying the terms and conditions of any Awards; provided,
however, that no such action shall adversely affect rights under any outstanding Award without the
Participant’s consent;
(v)
to accelerate the exercisability or vesting of all or any portion of any Award;
(vi)
to extend the period in which any outstanding Stock Option or Stock
Appreciation Right may be exercised; and
(vii)
to adopt, alter and repeal such rules, guidelines and practices for
administration of the Plan and for its own acts and proceedings as it shall deem advisable; to interpret
the terms and provisions of the Plan and any Award (including related written instruments); to make
all determinations it deems advisable for the administration of the Plan; to decide all disputes arising
in connection with the Plan; and to otherwise supervise the administration of the Plan.
All decisions and interpretations of the Committee shall be binding on all persons,
including the Company and Participants. No member or former member of the Committee or
the Board shall be liable for any action or determination made in good faith with respect to
this Plan.
SECTION 4. Shares Issuable under the Plan; Mergers; Substitution.
(a)
Shares Issuable. The maximum number of shares of Stock which may be
issued in respect of Awards (including Stock Appreciation Rights) granted under the Plan,
subject to adjustment upon changes in capitalization of the Company as provided in this
Section 4, shall be 1,200,000 shares; provided, however, that as of the date the Plan is
approved by stockholders of the Company, such maximum number of shares issuable shall
be increased by any shares of Stock available for future awards under the Company’s 1998
Long Term Incentive Plan (the “Current Plan”) as of such date. For purposes of this
limitation, the shares of Stock underlying any Awards which are forfeited, cancelled,
reacquired by the Company or otherwise terminated (other than by exercise), whether under
the Plan or under the Current Plan, shall be added back to the shares of Stock with respect to
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which Awards may be granted under the Plan; provided, however, that shares of Stock used
to pay the exercise price of a Stock Option pursuant to Section 6(d)(i)(ii) or (iii), or to pay
withholding taxes with respect to an Award pursuant to Section 12(b), (or shares of Stock
used to pay the exercise price of any award or to pay withholding taxes under corresponding
provisions of the Current Plan), and shares of Stock subject to Stock Appreciation Rights
(whether under the Plan or the Current Plan) that are not issued upon the exercise of such
Stock Appreciation Right, shall not be added back to the shares of Stock with respect to
which Awards may be granted; and provided further any increase in the number of shares as
a result of forfeiture, cancellation or reacquisition by the Company of shares pursuant to
awards under the Current Plan shall not exceed 300,000 shares of Stock (subject to
adjustment as provided in Section 4(c) below). Shares issued under the Plan may be
authorized but unissued shares or shares reacquired by the Company. As of the date the Plan
is approved by stockholders of the Company, no additional awards shall be permitted to be
granted from the Current Plan and all unexpired awards granted from the Current Plan shall
continue in full force and operation except as they may be exercised, be terminated or lapse,
by their own terms and conditions.
(b)
Limitation on Awards. In no event may any Participant be granted Awards
(including Stock Appreciation Rights) with respect to more than 150,000 shares of Stock in
any calendar year. The number of shares of Stock relating to an Award granted to a
Participant in a calendar year that are subsequently forfeited, cancelled or otherwise
terminated shall continue to count toward the foregoing limitation in such calendar year. In
addition, if the exercise price of an Award is subsequently reduced, the transaction shall be
deemed a cancellation of the original Award and the grant of a new one so that both
transactions shall count toward the maximum shares issuable in the calendar year of each
respective transaction.
(c)
Stock Dividends, Mergers, etc. In the event that after the effective date of the
Plan, the Company effects a stock dividend, stock split or similar change in capitalization
affecting the Stock, the Committee shall make appropriate adjustments in (i) the number and
kind of shares of stock or securities with respect to which Awards may thereafter be granted
(including without limitation the limitations set forth in Sections 4(a) and (b) above), (ii) the
number and kind of shares remaining subject to outstanding Awards, and (iii) the exercise or
purchase price in respect of such shares. In the event of any merger, consolidation,
dissolution or liquidation of the Company, the Committee in its sole discretion may, as to any
outstanding Awards, make such substitution or adjustment in the aggregate number of shares
reserved for issuance under the Plan and in the number and purchase price (if any) of shares
subject to such Awards as it may determine and as may be permitted by the terms of such
transaction, or accelerate, amend or terminate such Awards upon such terms and conditions
as it shall provide (which, in the case of the termination of the vested portion of any Award,
shall require payment or other consideration which the Committee deems equitable in the
circumstances), subject, however, to the provisions of Section 16.
(d)
Substitute Awards. The Committee may grant Awards under the Plan in
substitution for stock and stock based awards held by employees of another corporation who
concurrently become employees of the Company or an Affiliate as the result of a merger or
consolidation of the employing corporation with the Company or an Affiliate or the
acquisition by the Company or an Affiliate of property or stock of the employing
corporation. The Committee may direct that the substitute awards be granted on such terms
and conditions as the Committee considers appropriate in the circumstances.
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SECTION 5. Eligibility.
Awards may be granted to officers, directors and employees of, and consultants and
advisers to, the Company or its Affiliates (“Eligible Persons”).
SECTION 6. Stock Options.
The Committee may grant Stock Options to any Eligible Person. Any Stock Option granted
under the Plan shall be in such form as the Committee may from time to time approve. Stock Options
granted under the Plan may be either Incentive Stock Options (subject to compliance with applicable
law) or Non-Statutory Stock Options. Unless otherwise so designated, an Option shall be a Non-
Statutory Stock Option. To the extent that any Option does not qualify as an Incentive Stock Option,
it shall constitute a Non-Statutory Stock Option. No Incentive Stock Option shall be granted under
the Plan after the tenth anniversary of the date of adoption of the Plan by the Board. The Committee
in its discretion may determine the effective date of Stock Options, provided, however, that grants of
Incentive Stock Options shall be made only to persons who are, on the effective date of the grant,
employees of the Company or an Affiliate. Stock Options granted pursuant to this Section 6 shall
contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the
Committee shall deem desirable.
(a)
Exercise Price. The exercise price per share for the Stock covered by a Stock
Option granted pursuant to this Section 6 shall be determined by the Committee at the time of
grant but shall be not less than one hundred percent (100%) of Fair Market Value on the date
of grant. If an employee owns or is deemed to own (by reason of the attribution rules
applicable under Section 424(d) of the Code) more than ten percent (10%) of the combined
voting power of all classes of stock of the Company or any subsidiary or parent corporation
and an Incentive Stock Option is granted to such employee, the exercise price shall be not
less than one hundred ten percent (110%) of Fair Market Value on the date of grant.
(b)
Option Term. The term of each Stock Option shall be fixed by the Committee, but no
Stock Option shall be exercisable more than ten (10) years after the date the Stock Option is granted.
If an employee owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the
Code) more than ten percent (10%) of the combined voting power of all classes of stock of the
Company or any subsidiary or parent corporation and an Incentive Stock Option is granted to such
employee, the term of such Incentive Stock Option shall be no more than five (5) years from the date
of grant.
(c)
Exercisability; Rights of a Stockholder. Stock Options shall become vested and
exercisable at such time or times, whether or not in installments, as shall be determined by the
Committee. The Committee may at any time accelerate the exercisability of all or any portion of any
Stock Option. An optionee shall have the rights of a stockholder only as to shares acquired upon the
exercise of a Stock Option and not as to unexercised Stock Options.
(d) Method of Exercise. Stock Options may be exercised in whole or in part, by
delivering written notice of exercise to the Company, specifying the number of shares of Stock to be
purchased. Payment of the purchase price may be made by delivery of cash or bank check or other
instrument acceptable to the Committee in an amount equal to the exercise price of such Options, or,
to the extent provided in the applicable agreement setting forth the terms and conditions of such
Option, by one or more of the following methods:
(i)
by delivery to the Company of shares of Stock of the Company having a fair
market value equal in amount to the aggregate exercise price of the Options being exercised and not
subject to restriction under any Company incentive plan; or
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(ii)
if the class of Stock is registered under the Exchange Act at such time, by
delivery to the Company of a properly executed exercise notice along with irrevocable instructions to
a broker to deliver promptly to the Company cash or a check payable and acceptable to the Company
for the purchase price; provided that in the event that the optionee chooses to pay the purchase price
as so provided, the optionee and the broker shall comply with such procedures and enter into such
agreements of indemnity and other agreements as the Committee shall prescribe as a condition of
such payment procedure (including, in the case of an optionee who is an executive officer of the
Company, such procedures and agreements as the Committee deems appropriate in order to avoid any
extension of credit in the form of a personal loan to such officer). The Company need not act upon
such exercise notice until the Company receives full payment of the exercise price; or
(iii)
by reducing the number of Option shares otherwise issuable to the optionee
upon exercise of the Option by a number of shares of Common Stock having a fair market value
equal to such aggregate exercise price of the Options being exercised; or
(iv)
by any combination of such methods of payment.
The delivery of certificates representing shares of Stock to be purchased pursuant to
the exercise of a Stock Option will be contingent upon receipt from the Optionee (or a
purchaser acting in his stead in accordance with the provisions of the Stock Option) by the
Company of the full purchase price for such shares and the fulfillment of any other
requirements contained in the Stock Option or imposed by applicable law.
(e)
Non-transferability of Options. Except as the Committee may provide with respect to
a Non-Statutory Stock Option, no Stock Option shall be transferable other than by will or by the laws
of descent and distribution and all Stock Options shall be exercisable, during the optionee’s lifetime,
only by the optionee.
(f)
Annual Limit on Incentive Stock Options. To the extent required for “incentive stock
option” treatment under Section 422 of the Code, the aggregate Fair Market Value (determined as of
the time of grant) of the Stock with respect to which Incentive Stock Options granted under this Plan
and any other plan of the Company or its Affiliates become exercisable for the first time by an
optionee during any calendar year shall not exceed $100,000.
SECTION 7. Restricted Stock Awards.
(a)
Nature of Restricted Stock Award. The Committee in its discretion may grant
Restricted Stock Awards to any Eligible Person, granting the recipient, for such purchase
price, if any, as may be determined by the Committee, shares of Stock subject to such
restrictions and conditions as the Committee may determine at the time of grant (“Restricted
Stock”), including continued employment for a specified period of time and/or achievement
of pre-established performance goals and objectives.
(b)
Acceptance of Award. A Participant who is granted a Restricted Stock Award
shall have no rights with respect to such Award unless the Participant shall have accepted the
Award within sixty (60) days (or such shorter date as the Committee may specify) following
the award date by making payment to the Company of the specified purchase price, if any, of
the shares covered by the Award and by executing and delivering to the Company a written
instrument that sets forth the terms and conditions applicable to the Restricted Stock Award
in such form as the Committee shall determine.
(c)
Rights as a Stockholder. Upon complying with Section 7(b) above, a
participant shall have all the rights of a stockholder with respect to the Restricted Stock,
including voting and dividend rights, subject to non-transferability restrictions and Company
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repurchase or forfeiture rights described in this Section 7 and subject to such other conditions
as are contained in the written instrument evidencing the Restricted Stock Award. Unless the
Committee shall otherwise determine, certificates evidencing shares of Restricted Stock shall
remain in the possession of the Company until such shares are vested as provided in Section
7(e) below.
(d)
Restrictions. Shares of Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of except as specifically provided
herein. Unless otherwise determined by the Committee, in the event of termination of
employment by the Company and its Affiliates for any reason (including death, Disability,
Retirement and for Cause), any shares of Restricted Stock which have not then vested shall
automatically be forfeited to the Company.
(e)
Vesting of Restricted Stock. The Committee at the time of grant shall specify
the date or dates and/or the attainment of pre-established performance goals, objectives and
other conditions on which the non-transferability of the Restricted Stock and the Company’s
right of forfeiture shall lapse. Subsequent to such date or dates and/or the attainment of such
pre-established performance goals, objectives and other conditions, the shares on which all
restrictions have lapsed shall no longer be Restricted Stock and shall be deemed “vested.”
The Committee at any time may accelerate such date or dates and otherwise waive or, subject
to Section 14, amend any conditions of the Award.
(f)
Waiver, Deferral and Reinvestment of Dividends. The written instrument
evidencing the Restricted Stock Award may require or permit the immediate payment,
waiver, deferral or investment of dividends paid on the Restricted Stock.
(g)
Section 162(m) of the Code. Any Restricted Stock Award that is intended to
qualify as performance based compensation under Section 162(m) of the Code shall provide
for the shares of restricted stock to vest upon the achievement of performance goals
established by the Committee based upon one or more Performance Factors.
SECTION 8. Unrestricted Stock Awards.
(a)
Grant or Sale of Unrestricted Stock. The Committee in its discretion may
grant or sell to any Eligible Person shares of Stock free of any restrictions under the Plan
(“Unrestricted Stock”) at a purchase price determined by the Committee. Shares of
Unrestricted Stock may be granted or sold as described in the preceding sentence in respect
of past services or other valid consideration.
(b)
Restrictions on Transfers. The right to receive Unrestricted Stock may not be
sold, assigned, transferred, pledged or otherwise encumbered, other than by will or the laws
of descent and distribution.
SECTION 9. Performance Share Awards and Performance Cash Awards.
(a)
Grants of Performance Share Awards and Performance Cash Awards. A
Performance Share Award is an award which may be granted to any Eligible Person entitling
the person to acquire shares of Stock upon the attainment of specified performance goals. A
Performance Cash Award is an award made under the Plan which may be granted to an
Eligible Person (selected from among those executive officers of the Company who are
designated by the Committee to receive Performance Cash Awards under the Plan) entitling
the person to receive cash upon the attainment of specified performance goals. The
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Committee may make Performance Share Awards and Performance Cash Awards
independent of or in connection with the granting of any other Award under the Plan. The
Committee in its discretion shall determine the performance goals applicable under each such
Award (which may include, without limitation, for Performance Share Awards, continued
employment by the recipient for a specified period of time, and for both Performance Share
Awards and Performance Cash Awards, a specified achievement by the recipient, the
Company, or any Affiliate or business unit of the Company), the periods during which
performance is to be measured, and all other limitations and conditions applicable to the
Award or any Stock issuable thereunder. The specified achievements (other than continued
employment for a specified period of time) by the recipient, the Company or an Affiliate or
business unit of the Company on which a performance goal may be based shall be selected
by the Committee from among one or more Performance Factors. Upon the attainment of the
specified performance goal(s), shares of Stock shall be issued pursuant to the Performance
Share Award, and cash shall be delivered pursuant to any Performance Cash Award, as soon
as practicable thereafter, and in no event later than two and one-half months after the end of
the calendar year in which the performance goal is attained. In no event shall the amount
payable to any one Participant pursuant to each Performance Cash Award exceed $2.5
million. The Committee, in its discretion, may permit a Participant to elect to defer receipt of
all or any part of any cash or payment of Stock under the Plan, or the Committee may require
that any such payment be deferred. The Committee shall determine the terms and conditions
of any such deferral, the manner of deferral, and the method for measuring appreciation on
deferred amounts until their payout, provided that all such deferrals shall be made so as to
comply with Section 409A of the Code.
(b)
Section 162(m) of the Code. Any Performance Share Award or Performance
Cash Award that is intended to qualify as performance based compensation under Section
162(m) of the Code shall provide for the recipient to acquire shares of Stock or cash, as
applicable, upon the achievement of performance goals established by the Committee based
upon one or more Performance Factors.
SECTION 10.
Stock Appreciation Rights.
The Committee in its discretion may grant Stock Appreciation Rights to any Eligible
Person. A Stock Appreciation Right shall entitle the Participant upon exercise thereof to
receive from the Company, upon written request to the Company at its principal offices (the
“Request”), a number of shares of Stock having an aggregate Fair Market Value equal to the
product of (a) the excess of Fair Market Value, on the date of such Request, over the exercise
price per share of Stock specified in such Stock Appreciation Right (which exercise price
shall be not less than one hundred percent (100%) of Fair Market Value on the date of grant),
multiplied by (b) the number of shares of Stock for which such Stock Appreciation Right
shall be exercised. The term of each Stock Appreciation Right shall be fixed by the
Committee, but no Stock Appreciation Right shall be exercisable more than ten (10) years
after the date the Stock Appreciation Right is granted.
SECTION 11. Termination of Stock Options and Stock Appreciation Rights.
(a)
Incentive Stock Options:
(i)
Termination by Death or Disability. If any Participant’s employment by the
Company and its Affiliates terminates by reason of death or Disability, any Incentive Stock Option
owned by such Participant shall immediately become exercisable, and may thereafter be exercised by
the legal representative or legatee of the Participant, for a period of three (3) years from the date of
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death, or until the expiration of the stated term of the Incentive Stock Option, if earlier. An Incentive
Stock Option shall be treated as a Non-Qualified Stock Option to the extent that the Participant
exercises such Option more than one (1) year following the Participant’s termination of employment
due to Disability.
(ii)
Termination by Reason of Retirement. Any Incentive Stock Option held by a
participant whose employment by the Company and its Affiliates has terminated by reason of
Retirement may thereafter be exercised, to the extent it was exercisable at the time of such
Retirement, for a period of three (3) years from the date of Retirement, or until the expiration of the
stated term of the Incentive Stock Option, if earlier. An Incentive Stock Option shall be treated as a
Non-Qualified Stock Option to the extent that the Participant exercises such Option more than three
(3) months following the date of the Participant’s Retirement.
The Committee shall have sole authority and discretion to determine whether a
Participant’s employment has been terminated by reason of Disability or Retirement.
(iii)
Termination for Cause. If any Participant’s employment by the Company
and its Affiliates has been terminated for Cause, as determined by the Committee in its sole
discretion, any Incentive Stock Option held by such Participant shall immediately terminate and be of
no further force and effect.
(iv)
Other Termination. Unless otherwise determined by the Committee, if a
Participant’s employment by the Company and its Affiliates terminates for any reason other than
death, Disability, Retirement or for Cause, any Incentive Stock Option held by such participant may
thereafter be exercised, to the extent it was exercisable on the date of termination of employment, for
three (3) months from the date of termination of employment or until the expiration of the stated term
of the Incentive Stock Option, if earlier.
(b)
Non-Statutory Stock Options and Stock Appreciation Rights. Any Non-
Statutory Stock Option or Stock Appreciation Right granted under the Plan shall contain such
terms and conditions with respect to its termination as the Committee, in its discretion, may
from time to time determine.
SECTION 12.
Tax Withholding and Notice.
(a)
Payment by Participant. Each Participant shall, no later than the date as of
which the value of an Award or of any Stock or other amounts received thereunder first
becomes includable in the gross income of the participant for Federal income tax purposes,
pay to the Company, or make arrangements satisfactory to the Committee regarding payment
of any Federal, state, local and/or payroll taxes of any kind required by law to be withheld
with respect to such income. The Company and its Affiliates shall, to the extent permitted by
law, have the right to deduct any such taxes from any payment of any kind otherwise due to
the participant.
(b)
Payment in Shares. A Participant may elect, with the consent of the
Committee, to have such tax withholding obligation satisfied, in whole or in part, by (i)
authorizing the Company to withhold from shares of Stock to be issued pursuant to an Award
a number of shares with an aggregate Fair Market Value (as of the date the withholding is
effected) that would satisfy the withholding amount due with respect to such Award, or (ii)
delivering to the Company a number of shares of Stock with an aggregate Fair Market Value
(as of the date the withholding is effected) that would satisfy the withholding amount due.
For purposes of Section 4 hereof, shares of stock that are withheld by or delivered to the
Company pursuant to this Section 12 shall not be added back to the shares of Stock with
respect to which Awards may be granted under the Plan.
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(c)
Notice of Disqualifying Disposition. Each holder of an Incentive Stock
Option shall agree to notify the Company in writing immediately after making a
disqualifying disposition (as defined in Section 421(b) of the Code) of any Stock purchased
upon exercise of an Incentive Stock Option.
SECTION 13. Transfer and Leave of Absence.
For purposes of the Plan, the following events shall not be deemed a termination of
employment of a Participant who is an employee of the Company or an Affiliate:
(a)
a transfer to the employment of the Company from an Affiliate or from the
Company to an Affiliate, or from one Affiliate to another;
(b)
an approved leave of absence for military service or sickness, or for any other
purpose approved by the Company, if the employee’s right to re-employment is guaranteed
either by a statute or by contract or under the policy pursuant to which the leave of absence
was granted or if the Committee otherwise so provides in writing; provided, that the vesting
date or dates of any unvested Award held by such employee shall automatically be extended
by a period of time equal to the period of such approved leave of absence.
SECTION 14. Amendments and Termination.
The Board may at any time amend or discontinue the Plan, and the Committee may at
any time amend or cancel any outstanding Award for the purpose of satisfying changes in
law or for any other lawful purpose, but no such action shall adversely affect rights under any
outstanding Award without the holder’s consent. Notwithstanding the foregoing, neither the
Board nor the Committee shall have the power or authority to decrease the exercise price of
any outstanding Stock Option or Stock Appreciation Right, whether through amendment,
cancellation and regrant, exchange or any other means, except for changes made pursuant to
Section 4(c).
This Plan shall terminate as of the tenth anniversary of its effective date. The Board
may terminate this Plan at any earlier time for any reason. No Award may be granted after
the Plan has been terminated. No Award granted while this Plan is in effect shall be
adversely altered or impaired by termination of this Plan, except with the consent of the
holder of such Award. The power of the Committee to construe and interpret this Plan and
the Awards granted prior to the termination of this Plan shall continue after such termination.
SECTION 15.
Status of Plan.
With respect to the portion of any Award which has not been exercised and any
payments in cash, Stock or other consideration not received by a participant, a participant
shall have no rights greater than those of a general creditor of the Company unless the
Committee shall otherwise expressly determine in connection with any Award or Awards.
SECTION 16. Change of Control Provisions.
(a)
Upon the occurrence of a Change of Control as defined in this Section 16:
(i)
subject to the provisions of clause (iii) below, each holder of an outstanding
Stock Option, Restricted Stock Award, Performance Share Award or Stock Appreciation Right shall
be entitled, upon exercise of such Award, to receive, in lieu of shares of Stock (or consideration based
upon the Fair Market Value of Stock), shares of such stock or other securities, cash or property (or
84
consideration based upon shares of such stock or other securities, cash or property) as the holders of
shares of Stock received in connection with the Change of Control;
(ii)
all Options and Stock Appreciation Rights outstanding as of the date on
which a Change in Control occurs shall become fully vested and exercisable in full, whether or not
exercisable in accordance with their terms; and
(iii)
the Committee may accelerate, fully or in part, the time for exercise of, and
waive any or all conditions and restrictions on, each unexercised and unexpired Restricted Stock
Award and Performance Share Award, effective upon a date prior to, on or subsequent to the effective
date of such Change of Control, as specified by the Committee.
(b)
“Change of Control” shall mean the occurrence of any one of the following events:
(i)
any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the
Exchange Act) becomes, after the Effective Date of this Plan, a “beneficial owner” (as such term is
defined in Rule 13d-3 promulgated under the Exchange Act) (other than the Company, any trustee or
other fiduciary holding securities under an employee benefit plan of the Company, or any corporation
owned, directly or indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company), directly or indirectly, of securities of the
Company representing twenty percent (20%) or more of the combined voting power of the
Company’s then outstanding securities; or
(ii)
the consummation of (A) a merger or consolidation of the Company with any
other corporation or other entity, other than (i) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of the surviving entity)
more than eighty percent (80%) of the combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately after such merger or consolidation; or (ii)
a merger or consolidation effected to implement a recapitalization of the Company (or similar
transaction) in which no “person” (as hereinafter defined) acquires more than 20% of the combined
voting power of the Company’s then outstanding securities, or (B) the sale or disposition by the
Company of all or substantially all of the Company’s assets; or
(iii)
the stockholders of the Company approve a plan of complete liquidation of
the Company; or
(iv)
individuals who, as of July 30, 2008, constitute the Board of Directors of the
Company (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board,
provided that any person becoming a director subsequent to July 30, 2008, whose election, or
nomination for election by the Company’s stockholders, was approved by a vote of at least a majority
of the directors then comprising the Incumbent Board (other than an election or nomination of an
individual whose initial assumption of office is in connection with an actual or threatened election
contest relating to the election of the directors of the Company, as such terms are used in Rule 14a-11
of Regulation 14A under the 1934 Act) shall be, for purposes of this Section, considered a member of
the Incumbent Board.
SECTION 17. General Provisions.
(a)
No Distribution; Compliance with Legal Requirements. The Committee may
require each person acquiring shares pursuant to an Award to represent to and agree with the
Company in writing that such person is acquiring the shares without a view to distribution
thereof.
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No shares of Stock shall be issued pursuant to an Award until all applicable securities
laws and other legal and stock exchange requirements have been satisfied. The Committee
may require the placing of such stop orders, with respect to and restrictive legends on,
certificates for Stock and Awards as it deems appropriate.
(b)
Delivery of Stock Certificates. Delivery of stock certificates to Participants
under this Plan shall be deemed effected for all purposes when the Company or a stock
transfer agent of the Company shall have delivered such certificates in the United States
mail, addressed to the participant, at the participant’s last known address on file with the
Company.
(c)
Other Compensation Arrangements; No Employment Rights. Nothing
contained in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, including trusts, subject to stockholder approval if such
approval is required; and such arrangements may be either generally applicable or applicable
only in specific cases. The adoption of the Plan or grant of any Award under the Plan does
not confer upon any employee any right to continued employment with the Company or any
Affiliate.
(d)
Lock-Up Agreement. By accepting any Award, the recipient shall be deemed to have
agreed that, if so requested by the Company or by the underwriters managing any offering of
securities of the Company that is the subject of a registration statement filed under the United States
Securities Act of 1933, as amended from time to time (the “Act”), the recipient will not, without the
prior written consent of the Company or such underwriters, as the case may be, sell, make any short
sale of, loan, grant any option for the purchase of, or otherwise dispose of any shares subject to any
such Award during the Lock-up Period, as defined below. The “Lock-Up Period” shall mean a period
of time not to exceed 180 days, plus such additional number of days (not to exceed 35) as may
reasonably be requested to enable the underwriter(s) of such offering to comply with Rule 2711(f) of
the Financial Industry Regulatory Authority or any amendment or successor thereto from the effective
date of the registration statement under the Act for such offering, or, if greater, such number of days
as shall have been agreed to by each director and executive officer of the Company in connection
with such offering in a substantially similar lock-up agreement by which each such director and
executive officer is bound. If requested by the Company or such underwriters, the recipient shall
enter into an agreement with such underwriters consistent with the foregoing.
(e)
Section 409A of the Code. This Plan shall be interpreted, construed and administered
so as to comply with Section 409A of the Code and any regulations or guidance promulgated
thereunder, and, as applicable, to preserve an Award’s status as exempt from Section 409A of the
Code. In the event that any payment to be made under this Plan to a “specified employee” (as defined
under Section 409A of the Code) as a result of his or her separation from service is deemed to be
“deferred compensation” subject to Section 409A of the Code, payment of such compensation shall
be delayed for six months following such separation from service.
(f)
Foreign Jurisdiction. The Committee may adopt, amend and terminate such
arrangements, not inconsistent with the intent of the Plan, as it may deem necessary or desirable to
make available tax or other benefits of the laws of the foreign jurisdictions to recipients of Awards
who are subject to such laws.
(g)
Recapture of Cash Paid or Stock Issued Upon Certain Events. In the event the
Company is required to restate its publicly-reported financial results for any required reporting period
because of material non-compliance with the financial reporting requirements of the federal securities
laws, which non-compliance is determined by the independent members of the Board of Directors of
the Company to be due to misconduct, as defined and determined by said Board members, on the part
of the Chief Executive Officer, the Chief Financial Officer, or any other executive of the Company,
86
the Chief Executive Officer, Chief Financial Officer, and/or any such other executive shall be
required to reimburse the Company for any excess payments made under the Plan to such executive
on the basis of the Company’s having met or exceeded specific targets for performance periods
occurring in whole or in part during the performance period following the first public issuance or
filing with the Securities and Exchange Commission (whichever first occurs) of the financial
document embodying such financial reporting requirement for periods beginning after June 30, 2008.
SECTION 18. Effective Date of Plan.
This Plan shall become effective on the date on which it is approved by the
affirmative vote of the holders of a majority of the outstanding Stock.
SECTION 19. Governing Law.
This Plan shall be governed by, and construed and enforced in accordance with, the
substantive laws of the State of Delaware, without regard to its principles of conflicts of
laws.
* * *
87
STANDEX INTERNATIONAL CORPORATION AND SUBSIDIARIES
SUBSIDIARIES OF REGISTRANT
Exhibit 21
Information is set forth below concerning all operating subsidiaries of the Company as of June 30, 2012 (except subsidiaries
which, considered in the aggregate do not constitute a significant subsidiary).
Name of Subsidiary
Associated American Industries, Inc.
Custom Hoists, Inc.
Dornbusch & Cia Industria E. Comercio Ltda.
Mold-Tech Singapore Pte. Ltd.
Nor-Lake, Incorporated
Jurisdiction of
Incorporation
Texas
Ohio
Brazil
Singapore
Wisconsin
Precision Engineering International Limited
United Kingdom
S. I. de Mexico S.A. de C.V.
Standex de Mexico S.A. de C.V.
Standex Electronics, Inc.
Standex Electronics (U.K.) Limited
Standex Engraving L.L.C.
Standex Europe B.V.
Standex Holdings Limited
Standex International GmbH
Standex International Limited
Standex International S.r.l.
Standex (Ireland) Limited
SXI Limited
Mexico
Mexico
Delaware
United Kingdom
Virginia
The Netherlands
United Kingdom
Germany
United Kingdom
Italy
Ireland
Canada
88
Exhibit 23
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement No. 333-162044 on Form S-3 and Nos. 333-161647,
333-147190 and 333-179513 on Form S-8 of our reports dated August 28, 2012, relating to the consolidated financial
statements of Standex International Corporation and the effectiveness of Standex International Corporation’s internal control
over financial reporting, appearing in this Annual Report on Form 10-K of Standex International Corporation for the year
ended June 30, 2012.
/s/ Deloitte & Touche LLP
August 28, 2012
Boston, Massachusetts
89
EXHIBIT 24
POWER OF ATTORNEY
The undersigned, being a director of Standex International Corporation
(“Standex”), hereby constitutes Roger L. Fix and Deborah A. Rosen, and each of them
singly, my true and lawful attorney with full power to them, and each of them singly, to
sign for me and in my name in my capacity as a director of Standex, the Annual Report of
Standex on Form 10-K for the fiscal year ended June 30, 2012, and any and all
amendments thereto and generally to do such things in my name and behalf to enable
Standex to comply with the requirements of the Securities and Exchange Commission
relating to Form 10-K.
Witness my signature as of the 20th day of August, 2012.
/s/ Charles H. Cannon, Jr.
_______________________________
Charles H. Cannon, Jr.
90
EXHIBIT 24
POWER OF ATTORNEY
The undersigned, being a director of Standex International Corporation
(“Standex”), hereby constitutes Roger L. Fix and Deborah A. Rosen, and each of them
singly, my true and lawful attorney with full power to them, and each of them singly, to
sign for me and in my name in my capacity as a director of Standex, the Annual Report of
Standex on Form 10-K for the fiscal year ended June 30, 2012, and any and all
amendments thereto and generally to do such things in my name and behalf to enable
Standex to comply with the requirements of the Securities and Exchange Commission
relating to Form 10-K.
Witness my signature as of the 20th day of August, 2012.
/s/ Thomas E. Chorman
_______________________________
Thomas E. Chorman
91
EXHIBIT 24
POWER OF ATTORNEY
The undersigned, being a director of Standex International Corporation
(“Standex”), hereby constitutes Roger L. Fix and Deborah A. Rosen, and each of them
singly, my true and lawful attorney with full power to them, and each of them singly, to
sign for me and in my name in my capacity as a director of Standex, the Annual Report of
Standex on Form 10-K for the fiscal year ended June 30, 2012, and any and all
amendments thereto and generally to do such things in my name and behalf to enable
Standex to comply with the requirements of the Securities and Exchange Commission
relating to Form 10-K.
Witness my signature as of the 20th day of August, 2012.
/s/ William R. Fenoglio
_______________________________
William R. Fenoglio
92
EXHIBIT 24
POWER OF ATTORNEY
The undersigned, being a director of Standex International Corporation
(“Standex”), hereby constitutes Roger L. Fix and Deborah A. Rosen, and each of them
singly, my true and lawful attorney with full power to them, and each of them singly, to
sign for me and in my name in my capacity as a director of Standex, the Annual Report of
Standex on Form 10-K for the fiscal year ended June 30, 2012, and any and all
amendments thereto and generally to do such things in my name and behalf to enable
Standex to comply with the requirements of the Securities and Exchange Commission
relating to Form 10-K.
Witness my signature as of the 20th day of August, 2012.
/s/ Gerald H. Fickenscher
_______________________________
Gerald H. Fickenscher
93
EXHIBIT 24
POWER OF ATTORNEY
The undersigned, being a director of Standex International Corporation
(“Standex”), hereby constitutes Roger L. Fix and Deborah A. Rosen, and each of them
singly, my true and lawful attorney with full power to them, and each of them singly, to
sign for me and in my name in my capacity as a director of Standex, the Annual Report of
Standex on Form 10-K for the fiscal year ended June 30, 2012, and any and all
amendments thereto and generally to do such things in my name and behalf to enable
Standex to comply with the requirements of the Securities and Exchange Commission
relating to Form 10-K.
Witness my signature as of the 20th day of August, 2012.
/s/ Daniel B. Hogan
_______________________________
Daniel B. Hogan
94
EXHIBIT 24
POWER OF ATTORNEY
The undersigned, being a director of Standex International Corporation
(“Standex”), hereby constitutes Roger L. Fix and Deborah A. Rosen, and each of them
singly, my true and lawful attorney with full power to them, and each of them singly, to
sign for me and in my name in my capacity as a director of Standex, the Annual Report of
Standex on Form 10-K for the fiscal year ended June 30, 2012, and any and all
amendments thereto and generally to do such things in my name and behalf to enable
Standex to comply with the requirements of the Securities and Exchange Commission
relating to Form 10-K.
Witness my signature as of the 20th day of August, 2012.
/s/ H. Nicholas Muller, III
_______________________________
H. Nicholas Muller, III
95
EXHIBIT 24
POWER OF ATTORNEY
The undersigned, being a director of Standex International Corporation
(“Standex”), hereby constitutes Roger L. Fix and Deborah A. Rosen, and each of them
singly, my true and lawful attorney with full power to them, and each of them singly, to
sign for me and in my name in my capacity as a director of Standex, the Annual Report of
Standex on Form 10-K for the fiscal year ended June 30, 2012, and any and all
amendments thereto and generally to do such things in my name and behalf to enable
Standex to comply with the requirements of the Securities and Exchange Commission
relating to Form 10-K.
Witness my signature as of the 20th day of August, 2012
.
/s/ Edward J. Trainor
_______________________________
Edward J. Trainor
96
EXHIBIT 31.1
RULE 13a-14(a) CERTIFICATION
I, Roger L. Fix, certify that:
1.
I have reviewed this Annual Report on Form 10-K of Standex International Corporation for the
period ending June 30, 2012;
2.
3.
4.
Based on my knowledge, this 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 report;
Based on my knowledge, the financial statements, and other financial information
included in this 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 report;
The registrant’s other certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-
15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material
its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
information relating
the registrant,
including
to
(b) Designed such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial
reporting that occurred during the registrant’s most recent fiscal quarter (the
registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrant’s auditors and the
audit committee of the registrant’s board of directors (or persons performing the
equivalent functions):
97
(a) All significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to adversely
affect the registrant’s ability to record, process, summarize and report financial
information; and
(b) Any fraud, whether or not material, that involves management or other employees
who have a significant role in the registrant’s internal control over financial
reporting.
Date: August 28, 2012
/s/ Roger L. Fix
______________________________
Roger L. Fix
President/Chief Executive Officer
98
EXHIBIT 31.2
RULE 13a-14(a) CERTIFICATION
I, Thomas D. DeByle, certify that:
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10-K of Standex International Corporation
for the period ending June 30, 2012;
Based on my knowledge, this 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 report;
Based on my knowledge, the financial statements, and other financial information
included in this 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 report;
The registrant’s other certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-
15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, 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 report is being
prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such evaluation;
and
(d) Disclosed in this report any change in the registrant’s internal control over financial
reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s
fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant’s internal control over financial
reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrant’s auditors and the audit
committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the
registrant’s ability to record, process, summarize and report financial information; and
99
(b) Any fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant’s internal control over financial reporting.
Date: August 28, 2012
/s/ Thomas D. DeByle
______________________________
Thomas D. DeByle
Vice President/Chief Financial Officer
100
EXHIBIT 32
SECTION 1350 CERTIFICATION
The following statement is being made to the Securities and Exchange Commission solely for
purposes of Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350), which carries with
it certain criminal penalties in the event of a knowing or willful misrepresentation.
Each of the undersigned hereby certifies that the Annual Report on Form 10-K for the period
ended June 30, 2012 fully complies with the requirements of Section 13(a) or Section 15(d), as
applicable, of the Securities Exchange Act of 1934, as amended, and that the information
contained in such report fairly presents, in all material respects, the financial condition and results
of operations of the registrant.
Dated: August 28, 2012
Dated: August 28, 2012
/s/ Roger L. Fix
_______________________________
Roger L. Fix
President/Chief Executive Officer
/s/ Thomas D. DeByle
_______________________________
Thomas D. DeByle
Vice President/Chief Financial Officer
101
END OF FORM 10-K
SUPPLEMENTAL INFORMATION FOLLOWS
102
Board of Directors
Edward J. Trainor4
Title
Chairman
Charles H. Cannon, Jr.,2, 4
Chairman and CEO, JBT Corporation
Thomas E. Chorman1, 3
William R. Fenoglio1, 4
Gerald H. Fickenscher1, 3
Roger L. Fix4
Daniel B. Hogan, Ph. D. 2, 3
H. Nicholas Muller, III, Ph.D. 2, 3
CEO, Solar LED Innovations, LLC
Former President/CEO, Augat, Inc.
Retired Vice President, Europe, Middle East,
and Africa, Crompton Corporation
President and Chief Executive Officer
Executive Director, Passim Folk Music and Cultural Center
Former President/CEO, Frank Lloyd Wright Foundation
________________________
1 Member of Audit Committee
2 Member of Compensation Committee
3 Member of Corporate Governance/Nominating Committee
4 Member of Executive Committee
Corporate Officers
Roger L. Fix
Thomas D. DeByle
Deborah A. Rosen
Stacey S. Constas
Sean Valashinas
E. James Haggerty
President and Chief Executive Officer
Vice President, Chief Financial Officer and Treasurer
Vice President, Chief Legal Officer and Secretary
Corporate Governance Officer and Assistant Secretary
Chief Accounting Officer and Assistant Treasurer
Tax Director
103
Operating Management
FOOD SERVICE EQUIPMENT GROUP
John Abbott
Group Vice President of Food Service Equipment Group
Cooking Solutions Group
Kevin Clark
Refrigerated Solutions Group
Nor-Lake, Incorporated
Charles Dullea
American Foodservice
Michael Palmer
Federal Industries
John W. Minahan
Master-Bilt Products
Scott Jordan
Procon Products
Paul Roberts
ENGINEERING TECHNOLOGIES
Spincraft
Leonard Paolillo
ENGRAVING GROUP
Standex Engraving
Phillip R. Whisman
International Operations
Flavio Maschera
President
President
President
President
President
President
President
President
President
ELECTRONICS PRODUCTS GROUP
Standex Electronics, Inc.
John Meeks
President
HYDRAULICS PRODUCTS GROUP
Custom Hoists, Inc.
Richard Hiltunen
President
104
Shareholder Information
Corporate Headquarters
Standex International Corporation
11 Keewaydin Drive
Salem, NH 03079
(603) 893-9701
Facsimile: (603) 893-7324
www.standex.com
Common Stock
Listed on the New York Stock Exchange
(Ticker symbol: SXI)
Transfer Agent and Registrar
Independent Auditors
Shareholder Services
Stockholders’ Meeting
Registrar and Transfer Company
10 Commerce Drive
Cranford, NJ 07016
(800) 866-1340
www.RTCO.com
Deloitte & Touche LLP
200 Berkeley Street
Boston, MA 02116-5022
Stockholders should contact Standex’s Transfer Agent (Registrar and
Transfer Company, 10 Commerce Drive, Cranford, NJ 07016)
regarding changes in name, address or ownership of stock; lost
certificates of dividends; and consolidation of accounts.
The Annual Meeting of Stockholders will be held at 11:00 a.m. on
Wednesday, October 31, 2012 at the Burlington Marriott, One
Burlington Mall Road, Burlington, MA 01803, (781) 229-6565.
105