Standex International
Annual Report 2017

Plain-text annual report

Morningstar® Document Research℠ FORM 10-KSTANDEX INTERNATIONAL CORP/DE/ - SXIFiled: August 28, 2017 (period: June 30, 2017)Annual report with a comprehensive overview of the companyThe information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The userassumes all risks for any damages or losses arising from any use of this information, except to the extent such damages or losses cannot belimited or excluded by applicable law. Past financial performance is no guarantee of future results.Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.YES [X] NO [ ]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 is a shell company (as defined in Rule 12b-2 of the Exchange Act).YES [ ] NO [X] 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, 2017Commission File Number 1-7233 STANDEX INTERNATIONAL CORPORATION(Exact name of registrant as specified in its Charter) DELAWARE31-0596149(State of incorporation)(I.R.S. Employer Identification No.) 11 KEEWAYDIN DRIVE, SALEM, NEW HAMPSHIRE03079(Address of principal executive offices)(Zip Code) (603) 893-9701(Registrant’s telephone number, including area code) SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THESECURITIES EXCHANGE ACT OF 1934: Title of Each Class Name of Each Exchange on Which RegisteredCommon Stock, Par Value $1.50 Per Share New York Stock ExchangeIndicate 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 Actof 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has beensubject 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 website, if any, every Interactive DataFile required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (orfor 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 becontained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form10-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 reportingcompany. 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 X Accelerated filer Non-accelerated filer __ Smaller Reporting Company __The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant at the close of business onDecember 30, 2016 was approximately $1,108,193,137. Registrant’s closing price as reported on the New York Stock Exchange forDecember 30, 2016 was $87.85 per share.The number of shares of Registrant's Common Stock outstanding on August 22, 2017 was 12,775,165.DOCUMENTS INCORPORATED BY REFERENCEPortions of the Proxy Statement for the Registrant’s 2017 Annual Meeting of Stockholders (the “Proxy Statement”) are incorporated byreference into Part III of this report.Forward Looking StatementStatements 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,” “intend,” “continue,” or similarterms or variations of those terms or the negative of those terms. There are many factors that affect theCompany’s business and the results of its operations and that may cause the actual results of operations infuture periods to differ materially from those currently expected or anticipated. These factors include, butare not limited to: materially adverse or unanticipated legal judgments, fines, penalties or settlements;conditions in the financial and banking markets, including fluctuations in exchange rates and the inabilityto repatriate foreign cash; domestic and international economic conditions, including the impact, lengthSource: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.···and degree of economic downturns on the customers and markets we serve and more specificallyconditions in the food service equipment, automotive, construction, aerospace, energy, oil and gas,transportation, consumer appliance and general industrial markets; lower-cost competition; the relativemix of products which impact margins and operating efficiencies in certain of our businesses; the impact ofhigher raw material and component costs, particularly steel, petroleum based products and refrigerationcomponents; an inability to realize the expected cost savings from restructuring activities includingeffective completion of plant consolidations; cost reduction efforts including procurement savings andproductivity enhancements, capital management improvements, strategic capital expenditures, and theimplementation of lean enterprise manufacturing techniques; the inability to achieve the savings expectedfrom global sourcing of raw materials and diversification efforts in emerging markets; the inability toattain expected benefits from strategic alliances or acquisitions and the inability to effectively consummateand integrate such acquisitions and achieve synergies envisioned by the Company; market acceptance ofour products; our ability to design, introduce and sell new products and related product components; theability to redesign certain of our products to continue meeting evolving regulatory requirements; theimpact of delays initiated by our customers; and our ability to increase manufacturing production to meetdemand. Another factor that could impact the Company is potential changes to future pension fundingrequirements. In addition, any forward-looking statements represent management's estimates only as ofthe day made and should not be relied upon as representing management's estimates as of any subsequentdate. While the Company may elect to update forward-looking statements at some point in the future, theCompany and management specifically disclaim any obligation to do so, even if management's estimateschange.PART IItem 1. BusinessStandex International Corporation was incorporated in 1975 and is the successor of a corporation organized in 1955. As usedin this report, the terms “we,” “us,” “our,” the “Company” and “Standex” mean Standex International Corporation and itssubsidiaries. We have paid dividends each quarter since Standex became a public corporation in November 1964. Unless otherwise noted, references to years are to fiscal years.We are a leading manufacturer of a variety of products and services for diverse commercial and industrial markets. We have12 operating segments, aggregated and organized for reporting purposes into five segments: Food Service Equipment,Engraving, Engineering Technologies, Electronics and Hydraulics. Overall management, strategic development and financialcontrol are maintained by the executive staff from our corporate headquarters located in Salem, New Hampshire.Our long-term strategy is to build larger industrial platforms through a value creation system that assists management inmeeting specific corporate and business unit financial and strategic performance goals in order to create, improve, andenhance shareholder value. The Standex Value Creation System is a standard methodology which provides consistent toolsused throughout the company in order to achieve our organization’s goals. The Standex Value Creation System employs fourcomponents: Balanced Performance Plan, Standex Growth Disciplines, Standex Operational Excellence, and Standex TalentManagement. The Balanced Performance Plan process aligns annual goals throughout the business and provides a standardreporting, management and review process. It is focused on setting and meeting annual and quarterly targets that support ourshort and long term goals. The Standex Growth Disciplines use a set of tools and processes including market maps, growthlane ways, and market tests to identify opportunities to expand the business organically and through acquisitions. StandexOperational Excellence employs a standard playbook and processes, including LEAN, to eliminate waste and improveprofitability, cash flow and customer satisfaction. Finally, the Standex Talent Management process is an organizationaldevelopment process that provides training, development, and succession planning for our employees throughout ourworldwide organization. The Standex Value Creation System ties all disciplines in the organization together under a commonumbrella by providing standard tools and processes to deliver our business objectives.It is our objective to grow larger and more profitable business units through both organic initiatives and acquisitions. We seek to identify and implement organic growth initiatives such as new product development, geographicexpansion, introduction of products and technologies into new markets and applications, key accounts and strategicsales channel partners. Also, we have a long-term objective to create sizable business platforms by addingstrategically aligned or “bolt on” acquisitions to strengthen the individual businesses, create both sales and costsynergies with our core business platforms, and accelerate their growth and margin improvement. We look to createboth sales and cost synergies within our core business platforms, accelerate growth and improve margins. We have aparticular focus on identifying and investing in opportunities that complement our products and will increase theglobal presence and capabilities of our businesses. From time to time, we have divested, and likely will continue todivest, businesses that we feel are not strategic or do not meet our growth and return expectations.We create “Customer Intimacy” by utilizing the Standex Growth Disciplines to partner with our customers in order todevelop and deliver custom solutions or engineered components that solve problems for our customers or otherwisemeet their needs. This relationship generally provides us with the ability to identify new sales opportunities with ourcustomers, increase profit over time and provide operating margins that enhance shareholder returns. Further, wehave made a priority of developing new sales channels and leveraging strategic customer relationships.Standex Operational Excellence drives continuous improvement in the efficiency of our businesses. We recognizethat our businesses are competing in a global economy that requires us to improve our competitive position. Wehave deployed a number of management competencies to drive improvements in cost structure of our business unitsincluding operational excellence through lean enterprise, the use of low cost manufacturing facilities in countriesSource: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.·-----------such as Mexico and China, the consolidation of manufacturing facilities to achieve economies of scale andleveraging of fixed infrastructure costs, alternate sourcing to achieve procurement cost reductions, and capitalimprovements to increase productivity in both the shop floor and back-office.The Company’s strong historical cash flow has been a cornerstone for funding our capital allocation strategy. We usecash flow generated from operations to fund the strategic growth programs described above, including acquisitionsand investments for organic growth, maintenance of our capital assets and to return cash to our shareholders throughpayment of dividends and stock buybacks.Please visit our website at www.standex.com to learn more about us or to review our most recent SEC filings. The informationon our website is for informational purposes only and is not incorporated into this Annual Report on Form 10-K.Description of SegmentsFood Service EquipmentThe Food Service Equipment business is comprised of three groups. The Refrigeration Solutions group consists of twobusinesses that manufacture walk-in and cabinet coolers and freezers, one for commercial food facilities and one for industrial,life science and scientific applications. The Cooking Solutions group manufacturers cooking equipment such as ovens,fryers, warmers and grills used in commercial food preparation and service. The Specialty Solutions group consists of amanufacturer of specialty pumps used in beverage applications and a custom display merchandising manufacturer. Our products are used throughout the entire commercial food service process – from storage, to preparation, to cooking and todisplay. The equipment that we design and manufacture is utilized in restaurants, convenience stores, quick-servicerestaurants, supermarkets, drug stores and institutions such as hotels, hospitals, and both corporate and school cafeterias tomeet the challenges of providing food and beverages that are fresh and appealing while at the same time providing for foodsafety, and energy efficiency. In the scientific markets, our product portfolio is used for research, testing and storage ofpharmaceuticals, reagents, enzymes, plasma, whole blood, bone marrow, viruses, stem cells DNA and plant samples.Food Service Equipment and Scientific products are manufactured in Hudson, WI; New Albany, MS; Summerville, SC;Nogales, Mexico; Simpsonville, SC; San Antonio, TX; Belleville, WI; and Mountmellick, Ireland. In addition, we have ourculinary demonstration center in Allen, TX. Our products are sold predominantly in North America directly, through dealers,and through industry representatives in the Americas, Europe, Asia and Middle East.Our product brands include: NorLake® walk-in coolers and freezers and reach-in and under counter refrigerated cabinets to meet food serviceneeds;Master-Bilt® refrigerated reach-in and under counter refrigerated cabinets, cases, display units, and walk-in coolersand freezers;Lab Research products (LRP), American BioTech Supply (ABS), Cryosafe, CryoGuard and NorLake Scientific® coldstorage equipment and protective apparel to meet pharmacy and scientific needs;APW Wyott®, Bakers Pride®, and Tri-Star commercial ovens, char broilers, ranges, griddles, toasters, warmers, rollergrills and countertop merchandisers used in cooking, toasting, warming and merchandising food;BKI® and Barbecue King commercial cook and hold units, rotisseries, pressure fryers, ovens and baking equipment;Ultrafryer® commercial deep fryers for restaurant and commercial installations;Federal merchandizing display cases for bakery, deli and confectionary products; andProcon® pump systems used in beverage and industrial fluid handling applications.EngravingThe Engraving segment consists of services and products. Mold-Tech is a world-wide leader in applying textures to molds onwhich manufacturers produce a final product with the desired surface textures on molded plastic parts, slush-molded and in-mold grained parts. Mold-Tech serves the global auto industry as well as consumer goods. We simplify the supply chain for global Original Equipment Manufacturers, “OEM”, as a single source texture solutionssupplier. We provide texturizing services for the production of automotive components, particularly for interior dashboardsand upholstery, textiles for paper towels and hygiene products, consumer products and cosmetic appearances, and surfaces inelectronics such as computers, cell phones and printers.Our worldwide Mold-Tech locations enable us to better serve our customers within key geographic areas including in theUnited States, Canada, Europe, China, India, Southeast Asia, Korea, Australia, South Africa, and South America. Our productsare primarily sold directly through our global sales network. The Engraving segment serves a number of industries includingautomotive, plastics, building products, synthetic materials, converting, textile and paper, computer, housewares, hygieneproduct tooling and aerospace industries. Innovent is a specialized supplier of tools and machines used to produce diapers and products which contain absorbentmaterials between layers of non-woven fabric. The Engraving segment brands include:Mold-Tech® which provides design and program management services texturizes molds used in the production ofplastic parts and manufactures nickel shell slush mold tooling.Mullen® Burst Testers used worldwide to measure the burst strength of paper, textiles, and board fibersInnovent is an engineering and manufacturing company delivering innovative product and service solutions tohygiene, aerospace and other industrial clients around the world.Our extensive worldwide network of 38 manufacturing and design centers provide uniform engravings to satisfy the needs ofSource: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.our global customers. We expect to continue to strengthen our market leadership position through continuously expandingthe breadth of products and services we provide customers such as development of patterns by proprietary digital basedprocess technology, engraving of molds with chemical and laser technology, welding and polishing and production of nickelshells.Engineering TechnologiesThe Engineering Technologies segment, “ETG”, provides critical engineered parts in all workable metal alloys using variousforming processes combined with the essential value added processes for innovative cost effective solutions. Our competitiveadvantage is to deliver components or assemblies that can be inserted directly into the production line with no or little surfacefinishing required. Our precision manufacturing capabilities include metal spinning, metal forming, press forming, stretchforming, hydroforming, heat treating and brazing, computer numerical control and electrical discharge machining, high speedmilling, and other fabrication services in all thickness and size ranges for all workable metal alloys.ETG solutions are in a wide variety of advanced applications, where the utilization of our broad metal forming capabilitieswith vertically integrated operations are used to reduce part count, decrease input material, and/or optimize the manufacturingprocess. These solutions are found in the aviation, defense, energy, industrial, medical, marine, oil and gas, and manned andunmanned space markets. Our components and assemblies have been present on major commercial aviation aircraft enginesand nacelles as well as defense and navy nuclear programs. We provide complex assemblies and formed solutions for theenergy and oil and gas OEM’s, MRI machine formed components, and single piece formed and machined fuel and liquidoxygen tanks and tank domes for commercial and government space programs.The segment includes our Spincraft units, with locations in North Billerica, MA, New Berlin, WI, and Newcastle upon Tyne inthe U.K, along with, Enginetics, which has a plant in Huber Heights, OH. Our sales are direct with the OEM’s and the TierOne’s in the particular markets, throughout the world, with the majority of our sales in North America and Europe.ElectronicsThe Electronics segment is a manufacturer of custom magnetic sensing and power conversion components and assemblies. The magnetic sensing products employ technologies such as reed switches, hall effect, and magneto-resistive to produce reedrelays, fluid level sensors, flow, pressure differential, proximity, as well as custom electronics assemblies containing thesedevices. The power conversion products include custom wound transformers and inductors for low and high frequencyapplications, value added assemblies and mechanical packaging and advanced planar transformers technology.The Electronics segment is a global components solutions provider which designs and manufactures innovative engineeredcomponents and assemblies to solve our customers’ application needs with a Partner/Solve/Deliver® approach. The productsare vital to a diverse array of markets to provide safe and efficient power transformation, monitoring and isolation, as well ascritical feedback to control systems for function and safety. The end user is typically an OEM industrial equipmentmanufacturer. End-user markets include, but are not limited to transportation, smart-grid, alternative energy, appliances,HVAC, security, military, medical, aerospace, test and measurement, power distribution, and general industrial applications.Components are manufactured in plants located in the USA, Mexico, the U.K., Germany, Japan and China. The business sellsglobally through a direct sales force, regional sales managers, field applications engineers, commissioned agents,representative groups, and distribution channels. With the most recent acquisition of the OKI Sensor Device corporation’sreed switch business (now called Standex Electronics Japan), product sales are evenly split among North America, EMEA andAPAC.The brand names are Standex Electronics, Standex-Meder Electronics, Northlake Engineering, Standex Electronics Japan, andtheir top three reed switch product brands of MEDER, KENT, and KOFU switches. The Company continues to expand thebusiness through organic growth with current customers, new customers, developing new products and technologies,geographic expansion, and strategic acquisitions.HydraulicsThe Hydraulics segment is a global manufacturer of mobile hydraulic cylinders including single or double acting telescopicand piston rod hydraulic cylinders. Additionally, we manufacture a specialty pneumatic cylinder and promote complete wetline kits, which are complete hydraulic systems that include a pump, valves, hoses and fittings. The wet line kits are utilizedon dump truck OEM applications that include the single acting telescopic cylinder. The pumps used on these applicationshave several different options in terms of controls and performance. These pumps are also sold into the aftermarket forcompetitive replacement. Industries that use our products are construction equipment, refuse, airline support, mining, oil and gas, and other materialhandling applications. Our products are utilized by OEMs on vehicles such as dump trucks, dump trailers, bottom dumps,garbage trucks, container roll off vehicles, hook lift trucks, liquid waste handlers, compactors, balers, airport catering vehicles,container handling equipment for airlines, lift trucks, yard tractors, and underground mining vehicles.We manufacture our cylinders in Hayesville, OH and Tianjin, China. Our products are sold directly to OEMs, as well asdistributors, dealers, and aftermarket repair outlets primarily in North America with some sales in South America and Asia. We provide Custom Hoists® branded single and double acting telescopic hydraulic cylinders and single stage, welded typepiston rod hydraulic cylinders for use in the mobile hydraulics industry.Responsiveness to new opportunities drives continuous top line growth. We leverage our full line of products for the dumptruck and trailer market and deep expertise in their application to expand into new markets, targeting challenging customapplications. Our flexible design capability and global supply chain enable us to be successful in our expansion efforts. Ourteam is dedicated to superior customer service through our technical engineering support and on-time delivery.Source: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Raw MaterialsRaw 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 ofmaterials or supplies which would have a significant adverse effect on any of our businesses, nor any of our segments, in thenear term.SeasonalityWe are a diversified business with generally low levels of seasonality; however, our fiscal third quarter is typically the periodwith the lowest level of sales volume.Patents and TrademarksWe hold approximately 42 United States patents and patents pending covering processes, methods and devices andapproximately 41 United States trademarks with six additional trademark applications filed. Many counterparts of thesepatents have also been registered in various foreign countries. In addition, we have various foreign registered and commonlaw trademarks. Due to the diversity of our businesses and the markets served, the loss of any single patent or trademark would not, in ouropinion, materially affect any individual segment. While we believe that many of our patents are important, we credit our competitive position in our niche markets to customerintimacy, engineering capabilities, manufacturing techniques and skills, marketing and sales promotions, service and thedelivery of quality products. CustomersOur business is not dependent upon a single customer or a few large customers, the loss of any one of which would not have amaterial adverse effect on our operations. No customer accounted for more than 5% of our consolidated revenue in fiscal2017 or any of the years presented. Working CapitalOur primary source of working capital is the cash generated from continuing operations. No segments require any specialworking capital needs outside of the normal course of business. BacklogBacklog includes all active or open orders for goods and services that have a firm fixed customer purchase order with defineddelivery dates. Backlog also includes any future deliveries based on executed customer contracts, so long as such deliveriesare based on agreed upon delivery schedules. Backlog is not generally a significant factor in the Company’s businessesbecause of our relatively short delivery periods and rapid inventory turnover with the exception of Engineering Technologies. Due to the nature of long term agreements in the Engineering Technologies segment, the timing of orders and delivery datescan vary considerably resulting in significant backlog changes from one period to another.Backlog orders in place at June 30, 2017 and 2016 are as follows (in thousands): As of June 30, 2017 As of June 30, 2016 TotalBacklog Backlogunder 1year TotalBacklog Backlogunder 1yearFood ServiceEquipment$49,660$47,039 $37,202$35,395Engraving 21,584 21,584 19,046 19,046EngineeringTechnologies 92,154 61,329 90,241 60,520Electronics 60,092 56,741 44,713 42,983Hydraulics 6,846 6,846 4,951 4,951 Total$230,336$193,539 $196,153$162,895Backlog realizable within one year increased $30.6 million, or 18.8%, to $193.5 million at June 30, 2017 from $162.9 millionat June 30, 2016. Backlog realizable under a year increased for each of our segments with Food Service EquipmentElectronics, and Hydraulics each increasing over 30% year over year. Food Service Equipment backlog realizable within oneyear increased $11.7 million, or 32.9%. Without the impact of the newly acquired Horizon business, Food Service Equipmentbacklog realizable within one year increased 28.9%. Higher demand for Refrigeration, Federal Industries, and Proconproducts drove the majority of the Food Service Equipment increase. Engraving backlog realizable within one year increased$2.5 million, or 13.3%. Adjusting for the impact of the divestiture of the roll plate engraving business, Engraving backlogrealizable within one year increased 39.0%. The increase is a result of increased demand and the effect of some automotiveprojects that were delayed to fiscal year 2018. Electronics backlog realizable under a year increased $13.8 million, or 32.0%. Without the impact of the Standex Electronics Japan acquisition, Electronics backlog realizable within one year decreased4.9%. CompetitionStandex manufactures and markets products many of which have achieved a unique or leadership position in their market.Source: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. However, we encounter competition in varying degrees in all product groups and for each product line. Competitors includedomestic and foreign producers of the same and similar products. The principal methods of competition are productperformance and technology, price, delivery schedule, quality of services, and other terms and conditions.International OperationsWe have international operations in all of our business segments. International operations are conducted at 58 locations, inEurope, Canada, China, India, Southeast Asia, Korea, Australia, Mexico, Brazil, and South Africa. See the Notes toConsolidated Financial Statements for international operations financial data. Our net sales from international operationsincreased from 27% in 2016 to 31% in 2017. International operations are subject to certain inherent risks in connection withthe conduct of business in foreign countries including, exchange controls, price controls, limitations on participation in localenterprises, nationalizations, expropriation and other governmental action, restrictions of repatriation of earnings, andchanges in currency exchange rates.Research and DevelopmentDeveloping new and improved products, broadening the application of established products, continuing efforts to improveour methods, processes, and equipment continues to drive our success. However, due to the nature of our manufacturingoperations and the types of products manufactured, expenditures for research and development are not significant to anyindividual segment or in the aggregate. Research and development costs are quantified in the Notes to ConsolidatedFinancial Statements. We develop and design new products to meet customer needs in order to offer enhanced products or toprovide customized solutions for customers.Environmental MattersBased on our knowledge and current known facts, we believe that we are presently in substantial compliance with all existingapplicable environmental laws and regulations and do not anticipate any instances of non-compliance that will have amaterial effect on our future capital expenditures, earnings or competitive position. Financial Information about Geographic AreasInformation regarding revenues from external customers attributed to the United States, all foreign countries and anyindividual foreign country, if material, is contained in the Notes to Consolidated Financial Statements for “Industry SegmentInformation.” Number of EmployeesAs of June 30, 2017, we employed approximately 5,500 employees of which approximately 2,900 were in the United States. About 350 of our U.S. employees were represented by unions. Approximately 26% of our production workforce is situated inlow-cost manufacturing regions such as Mexico, Brazil and Asia. Executive Officers of StandexThe executive officers of the Company as of June 30, 2017 were as follows:NameAgePrincipal Occupation During the Past Five YearsDavid Dunbar55President and Chief Executive Officer of the Company since January 2014. President of theValves and Controls global business unit of Pentair Ltd from 2009 through 2013.Thomas D. DeByle57Vice President and Chief Financial Officer of the Company since March 2008.Alan J. Glass53Vice President, Chief Legal Officer and Secretary of the Company since April 2016. VicePresident, General Counsel and Secretary of CIRCOR International, Inc. from 2000 through 2016.Ross McGovern39Vice President of Human Resources of the Company since August 2015. Director of HumanResources of Keurig Green Mountain 2015, Vice President of Human Resources of Datacolor from2012 through 2015, and Global Human Resources Manager of R&D GE Healthcare, MedicalDiagnostics, a subsidiary of General Electric from 2009 through 2011.Sean Valashinas45Chief Accounting Officer and Assistant Treasurer of the Company since October 2007.Anne De Greef-Safft55Segment President of Food Service Equipment since January 2015; President of Danaher’s Gems,Setra, Sonix and Anderson Companies, where she directed the worldwide operations, marketingand sales, engineering, accounting and human resources functions of these businesses from 2009through 2014.Paul Burns44Vice President of Strategy and Business Development since July 2015, Director of CorporateDevelopment and Global Mergers & Acquisitions at General Motors from 2013 through 2015,Director of Strategy and Business Development at Tyco Flow Control from 2011 through 2013.The executive officers are elected each year at the first meeting of the Board of Directors subsequent to the annual meeting ofstockholders, to serve for one-year terms of office. There are no family relationships among any of the directors or executiveofficers of the Company.Long-Lived AssetsLong-lived assets are described and discussed in the Notes to Consolidated Financial Statements under the caption “Long-Lived Assets.” Available InformationStandex’s corporate headquarters are at 11 Keewaydin Drive, Salem, New Hampshire 03079, and our telephone number at thatlocation is (603) 893-9701.Source: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.••••••••••••••The U.S. Securities and Exchange Commission (the “SEC”) maintains an internet website at www.sec.gov that contains ourannual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and proxy statements, and allamendments thereto. All reports that we file with the SEC may be read and copied at the SEC’s Public Reference Room at 100F Street, N.E., Washington, DC 20549. Information about the operation of the Public Reference Room can be obtained bycalling 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, areavailable free of charge on our website as soon as reasonably practicable after such reports are electronically filed with, orfurnished to, the SEC. In addition, our code of business conduct, our code of ethics for senior financial management, ourcorporate governance guidelines, and the charters of each of the committees of our Board of Directors (which are not deemedfiled 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, NewHampshire, 03079.”The certifications of Standex’s Chief Executive Officer and Chief Financial Officer, as required by the rules adopted pursuantto Section 302 of the Sarbanes-Oxley Act of 2002, are filed as exhibits to this Form 10-K. Item 1A. Risk FactorsAn investment in the Company involves various risks, including those mentioned below and those that are discussed fromtime to time in our other periodic filings with the Securities and Exchange Commission. Investors should carefully considerthese risks, along with the other information filed in this report, before making an investment decision regarding theCompany. Any of these risks could have a material adverse effect on our financial condition, results of operations and/orvalue of an investment in the Company.A deterioration in the domestic and international economic environment could adversely affect our operating results,cashflow and financial condition.Recessionary economic conditions, with or without a tightening of credit, could adversely impact major markets served byour businesses, including cyclical markets such as automotive, aviation, energy and power, heavy construction vehicle,general industrial, consumer appliances and food service. An economic recession could adversely affect our business by:reducing demand for our products and services, particularly in markets where demand for our products andservices 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; andreducing the availability of credit and spending power 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, in part along with operating cash flow, to provide us with sufficient capital to operateour businesses. The availability of borrowings under our revolving credit facility is dependent upon our compliance with thecovenants set forth in the facility, including the maintenance of certain financial ratios. Our ability to comply with thesecovenants is dependent upon our future performance, which is subject to economic conditions in our markets along withfactors that are beyond our control. Violation of those covenants could result in our lenders restricting or terminating ourborrowing ability under our credit facility, cause us to be liable for covenant waiver fees or other obligations, or trigger anevent of default under the terms of our credit facility, which could result in acceleration of the debt under the facility andrequire prepayment of the debt before its due date. Even if new financing is available in the event of a default under ourcurrent credit facility, the interest rate charged on any new borrowing could be substantially higher than under the currentcredit facility, thus adversely affecting our overall financial condition. If our lenders reduce or terminate our access toamounts under our credit facility, we may not have sufficient capital to fund our working capital needs or we may need tosecure additional capital or financing to fund our working capital requirements or to repay outstanding debt under our creditfacility.Our credit facility contains covenants that restrict our activities.Our revolving credit facility contains covenants that restrict our activities, including our ability to:incur additional indebtedness;make investments, including acquisitions;create liens;pay cash dividends to shareholders unless we are compliant with the financial covenants set forth in the creditfacility; andsell material assets.Our global operations subject us to international business risks.We operate in 58 locations outside of the United States in Europe, Canada, China, Japan, India, Singapore, Korea, Australia,Mexico, Brazil, Turkey, Malaysia, and South Africa. If we are unable to successfully manage the risks inherent to theoperation and expansion of our global businesses, those risks could have a material adverse effect on our results of operations,cashflow or financial condition. These international business risks include:Source: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.•••••••••••••••fluctuations in currency exchange rates;changes in government regulations;restrictions on repatriation of earnings;import and export controls;political, social and economic instability;potential adverse tax consequences;difficulties in staffing and managing multi-national operations;unexpected changes in zoning or other land-use requirements;difficulties in our ability to enforce legal rights and remedies; andchanges 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, improvingworking capital management, developing new and enhanced products, consolidating factories where appropriate, automatingmanufacturing processes, diversification efforts and completing acquisitions which deliver synergies to stimulate sales andgrowth. If we are unable to successfully execute these programs, such failure could adversely affect our operating profits andcash flows. In addition, actions we may take to consolidate manufacturing operations to achieve cost savings or adjust tomarket 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 protectionfrom reckless or criminal acts of our employees, business partners or agents that might violate United States or internationallaws relating to anti-bribery or similar topics. A violation of these laws could subject us to civil or criminal investigationsthat 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 netsales, profits and cash flows could decline.Our businesses operate in highly competitive markets. To compete effectively, we must retain long standing relationshipswith significant customers, offer attractive pricing, maintain product quality, develop enhancements to products that offerperformance features that are superior to our competitors and which maintain our brand recognition, continue to automate ourmanufacturing capabilities, continue to grow our business by establishing relationships with new customers, diversify intoemerging markets and penetrate new markets. If we are unable to compete effectively, our net sales, profitability and cashflows 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 affectour 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 andtechnologies 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, aluminum, refrigeration components, freight services, foam insulation and other metalcommodities for the manufacture of our products. Historically, prices for commodities have fluctuated, and we are unable toenter into long term contracts or other arrangements to hedge the risk of price increases in many of these commodities. Significant price increases for these commodities could adversely affect our operating profits if we cannot timely mitigate theprice increases by successfully sourcing lower cost commodities or by passing the increased costs on to customers. Shortagesor other disruptions in the supply of these commodities could delay sales or increase costs.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 ourbusinesses and enable us to leverage our competitive strengths. While we continue to evaluate potential acquisitions, we maynot be able to identify and successfully negotiate suitable acquisitions, obtain financing for future acquisitions onsatisfactory terms, obtain regulatory approval for certain acquisitions or otherwise complete acquisitions in the future. Aninability to identify or complete future acquisitions could limit our future growth.We may experience difficulties in integrating acquisitions.Integration of acquired companies involves several risks, including: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 synergies and growth opportunities; andpossible future impairment charges for goodwill and non-amortizable intangible assets that are recorded due toacquisitions.Additionally, our level of indebtedness may increase in the future if we finance acquisitions with debt, which would cause usto incur additional interest expense and could increase our vulnerability to general adverse economic and industry conditionsand limit our ability to service our debt or obtain additional financing. We cannot assure that future acquisitions will notSource: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.••••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 aninterim basis if a potential impairment factor arises that indicates the fair value of the reporting unit may fall below itscarrying value. Various uncertainties, including continued adverse conditions in the capital markets or changes in generaleconomic conditions, could impact the future operating performance at one or more of our businesses which couldsignificantly affect our valuations and could result in additional future impairments. The recognition of an impairment of asignificant portion of goodwill would negatively affect our results of operations. Materially adverse or unforeseen legal judgments, fines, penalties or settlements could have an adverse impact on ourprofits and cash flows.We are and may, from time to time, become a party to legal proceedings incidental to our businesses, including, but notlimited to, alleged claims relating to product liability, environmental compliance, patent infringement, commercial disputesand employment and regulatory matters. In accordance with United States generally accepted accounting principles, weestablish reserves based on our assessment of contingent liabilities. Subsequent developments in legal proceedings mayaffect our assessment and estimates of loss contingencies, recorded as reserves, which could require us to record additionalreserves or make material payments which could adversely affect our profits and cash flows. Even the successful defense oflegal proceedings may cause us to incur substantial legal costs and may divert management's time and resources away fromour businesses.The costs of complying with existing or future environmental regulations, and of correcting any violations of theseregulations, could impact our profitability.We are subject to a variety of environmental laws relating to the storage, discharge, handling, emission, generation, use anddisposal of chemicals, hazardous waste and other toxic and hazardous materials used to manufacture, or resulting from theprocess of manufacturing, our products. We cannot predict the nature, scope or effect of regulatory requirements to which ouroperations might be subject or the manner in which existing or future laws will be administered or interpreted. We are alsoexposed to potential legacy environmental risks relating to businesses we no longer own or operate. Future regulations couldbe applied to materials, products or activities that have not been subject to regulation previously. The costs of complyingwith new or more stringent regulations, or with more vigorous enforcement of these or existing regulations, could besignificant.In addition, properly permitted waste disposal facilities used by us as a legal and legitimate repository for hazardous wastemay in the future become mismanaged or abandoned without our knowledge or involvement. In such event, legacy landfillliability 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 tomaintain and update training programs and safety data regarding materials used in our processes. Violations of theserequirements could result in financial penalties and other enforcement actions. We could be required to halt one or moreportions of our operations until a violation is cured. Although we attempt to operate in compliance with these environmentallaws, we may not succeed in this effort at all times. The costs of curing violations or resolving enforcement actions that mightbe initiated by government authorities could be substantial.The costs of complying with existing or future regulations applicable to our products, and of correcting any violations ofsuch regulations, could impact our profitability.Certain of our products are subject to regulations promulgated by administrative agencies such as the Department of Energy,Occupations Health and Safety Administration and the Food and Drug Administration. Such regulations, among othermatters, specify requirements regarding energy efficiency and product safety. Regulatory violations could result in financialpenalties and other enforcement actions. We could be required to halt production of one or more products until a violation iscured. Although we attempt to produce our products in compliance with these requirements, the costs of curing violations orresolving enforcement actions that might be initiated by administrative agencies could be substantial.Strategic divestitures and contingent liabilities from businesses that we sell could adversely affect our results of operationsand financial condition.From time to time, we have sold and may continue to sell business that we consider to be either underperforming or no longerpart of our strategic vision. The sale of any such business could result in a financial loss and/or write-down of goodwill whichcould have a material adverse effect on our results for the financial reporting period during which such sale occurs. Inaddition, in connection with such divestitures, we have retained, and may in the future retain responsibility for some of theknown and unknown contingent liabilities related to certain divestitures such as lawsuits, tax liabilities, product liabilityclaims, and environmental matters. The trading price of our common stock has been volatile, and investors in our common stock may experience substantiallosses.The trading price of our common stock has been volatile and may become volatile again in the future. The trading price ofour 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 securitiesanalysts;fluctuations in our quarterly operating results;substantial sales of our common stock;Source: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.••••••••changes in the amount or frequency of our payment of dividends or repurchases of our common stock;general stock market conditions; orother economic or external factors.Decreases in discount rates and actual rates of return could require future pension contributions to our pension plans whichcould limit our flexibility in managing our Company.The discount rate and the expected rate of return on plan assets represent key assumptions inherent in our actuariallycalculated pension plan obligations and pension plan expense. If discount rates and actual rates of return on invested planassets were to decrease significantly, our pension plan obligations could increase materially. Although our pension planshave been frozen, the size of future required pension contributions could require us to dedicate a greater portion of our cashflow from operations to making contributions, which could negatively impact our financial flexibility.Our business could be negatively impacted by cybersecurity threats, information systems and network interruptions, andother security threats or disruptions.Our information technology networks and related systems are critical to the operation of our business and essential to ourability to successfully perform day-to-day operations. Cybersecurity threats are persistent, evolve quickly, and include, butare not limited to, computer viruses, ransomware, attempts to access information, denial of service and other electronicsecurity breaches. These events could disrupt our operations or customers and other third party IT systems in which we areinvolved and could negatively impact our reputation among our customers and the public which could have a negativeimpact on our financial conditions, results of operations, or liquidity.Various restrictions in our charter documents, Delaware law and our credit agreement could prevent or delay a change incontrol that is not supported by our board of directors.We are subject to several provisions in our charter documents, Delaware law and our credit facility that may discourage, delayor prevent a merger, acquisition or change of control that a stockholder may consider favorable. These anti-takeoverprovisions include:maintaining a classified board and imposing advance notice procedures for nominations of candidates forelection as directors and for stockholder proposals to be considered at stockholders' meetings;a provision in our certificate of incorporation that requires the approval of the holders of 80% of the outstandingshares of our common stock to adopt any agreement of merger, the sale of substantially all of the assets of theCompany to a third party or the issuance or transfer by the Company of voting securities having a fair marketvalue of $1 million or more to a third party, if in any such case such third party is the beneficial owner of 10% ormore of the outstanding shares of our common stock, unless the transaction has been approved prior to itsconsummation by all of our directors;requiring the affirmative vote of the holders of at least 80% of the outstanding shares of our common stock forstockholders to amend our amended and restated by-laws;covenants in our credit facility restricting mergers, asset sales and similar transactions; andthe 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 businesscombination between the Company and any stockholder of 15% or more of our voting stock for a period of three years afterthe stockholder acquires 15% or more of our voting stock, unless (1) the transaction is approved by our board of directorsbefore the stockholder acquires 15% or more of our voting stock, (2) upon completing the transaction the stockholder owns atleast 85% of our voting stock outstanding at the commencement of the transaction, or (3) the transaction is approved by ourboard of directors and the holders of 66 2/3% of our voting stock, excluding shares of our voting stock owned by thestockholder.Item 1B. Unresolved Staff CommentsNone.Item 2. PropertiesWe have a total of 98 facilities, of which we operate 84 manufacturing plants and warehouses located throughout the UnitedStates, Europe, Canada, Australia, Southeast Asia, Korea, Japan, China, India, Brazil, South Africa, and Mexico. TheCompany owns 21 of the facilities and the balance are leased. For the year ended June 30, 2017 the approximate buildingspace utilized by each segment is as follows: Area in Square Feet (in thousands)Segment locationNumber of FacilitiesLeasedOwnedTotalEMEA(1)220-20Other Americas432185217United States153867901,176Food Service Equipment214389751,413Asia Pacific16165-165EMEA(1)1530236338Other Americas243-43United States617224241Engraving39527260787EMEA(1)380-80Source: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.United States7273171444Engineering Technologies10353171524Asia Pacific676-76EMEA(1)588997Other Americas261-61United States4296190Electronics17174150324Asia Pacific275-75Other Americas11-1United States515101116Hydraulics891101192United States315022172Corporate & Other315022172Total981,7331,6793,412(1) EMEA consists primarily of Europe, Middle East and S. Africa.In general, the buildings are in sound operating condition and are considered to be adequate for their intended purposes andcurrent uses.We own substantially all of the machinery and equipment utilized in our businesses.Item 3. Legal ProceedingsDiscussion of legal matters is incorporated by reference to Part II, Item 8, Note 12, “CONTINGENCIES,” in the Notes to theConsolidated Financial Statements.Item 4. Mine Safety DisclosuresNot ApplicablePART IIItem 5. Market for Standex Common StockRelated Stockholder Matters and Issuer Purchases of Equity SecuritiesThe principal market in which the Common Stock of Standex is traded is the New York Stock Exchange under the tickersymbol “SXI”. The high and low sales prices for the Common Stock on the New York Stock Exchange and the dividends paidper Common Share for each quarter in the last two fiscal years are as follows: Common Stock Price Range Dividends Per Share 2017 2016 Year Ended June30HighLow HighLow 20172016First quarter$ 93.29 $ 80.90 $ 83.20$ 66.98 $ 0.14$ 0.12Second quarter 97.55 74.35 93.10 72.94 0.160.14Third quarter 101.24 85.80 82.45 65.53 0.160.14Fourth quarter100.30 84.30 89.29 75.59 0.160.14The approximate number of stockholders of record on July 31, 2017 was 1,663. Additional information regarding our equity compensation plans is presented in the Notes to Consolidated FinancialStatements under the caption “Stock-Based Compensation and Purchase Plans” and Item 12 “Security Ownership of CertainBeneficial Owners and Management and Related Stockholder Matters.”Issuer Purchases of Equity Securities(1) Quarter Ended June 30, 2017 Period (a) TotalNumber ofShares (orunits)Purchased(b) Average PricePaid per Share (orunit)(c) Total Numberof Shares (orunits) Purchasedas Part ofPubliclyAnnounced Plansor Programs(d) Maximum Number (orAppropriate Dollar Value) ofShares (or units) that May YetBe Purchased Under the Plansor ProgramsApril 1 - April30, 2017 - $ - - $ 90,126,230May 1 - May31, 2017 2,655 91.72 2,655 $ 89,882,702June 1 - June30, 2017 1,370 90.06 1,370 $ 89,759,320 TOTAL 4,025 $ 91.16 4,025 $ 89,759,320Source: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(1) The Company has a Stock Buyback Program (the “Program”) which was originally announced on January 30, 1985 and most recentlyamended on April 26, 2016. Under the Program, the Company was authorized to repurchase up to an aggregate of $100 million of its shares. Under the program, purchases may be made from time to time on the open market, including through 10b5-1 trading plans, or through privatelynegotiated transactions, block transactions, or other techniques in accordance with prevailing market conditions and the requirements of theSecurities and Exchange Commission. The Board’s authorization is open-ended and does not establish a timeframe for the purchases. TheCompany is not obligated to acquire a particular number of shares, and the program may be discontinued at any time at the Company’sdiscretion.The following graph compares the cumulative total stockholder return on the Company’s Common Stock as of the end of eachof the last five fiscal years, with the cumulative total stockholder return on the Standard & Poor’s Small Cap 600 (IndustrialSegment) Index and on the Russell 2000 Index, assuming an investment of $100 in each at their closing prices onJune 30, 2012 and the reinvestment of all dividends.Source: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Item 6. Selected Consolidated Financial DataSelected financial data for the five years ended June 30, is as follows:See Item 7 for discussions on comparability of the below. 2017 2016 2015 2014 2013SUMMARY OF OPERATIONS (in thousands) Net sales Food Service Equipment $ 380,970 $ 381,867 $ 408,706 $ 377,848 $ 367,008 Engraving 105,943 124,120 110,781 109,271 93,380 Engineering Technologies 90,506 82,235 97,018 79,642 74,838 Electronics 136,689 118,319 114,196 114,881 108,085 Hydraulics 41,150 45,045 41,441 34,538 30,079 Total $ 755,258 $ 751,586 $ 772,142 $ 716,180 $ 673,390Gross profit $ 252,754 $ 252,253 $ 247,486 $ 238,269 $ 218,191Operating income (loss) Food Service Equipment $ 33,436 $ 40,142 $ 37,456 $ 38,203 $ 37,533 Engraving 25,584 29,579 24,250 22,145 15,596 Engineering Technologies 9,662 8,258 13,097 12,676 13,241 Electronics 27,663 21,104 20,884 19,732 16,147 Hydraulics 6,712 7,947 7,013 5,781 4,968 Restructuring (1) (5,825) (4,232) (3,443) (10,077) (2,666) Gain on sale of real estate 652 - - - - Acquisition relatedexpenses (7,843) - - - - Other operating income(expense), net - (7,458) 438 3,462 - Corporate and Other (25,015) (24,996) (21,051) (26,054) (22,924) Total 65,026 $ 70,344 $ 78,644 $ 65,868 $ 61,895Interest expense (4,043) (2,871) (3,161) (2,249) (2,469)Other non-operating (loss)income 949 1,052 634 4,184 (128)Provision for income taxes (15,355) (16,295) (20,874) (18,054) (15,244)Income from continuingoperations 46,577 52,230 55,243 49,749 44,054Income/(loss) fromdiscontinued operations (32) (174) (500) (6,883) 794Net income $ 46,545 $ 52,056 $ 54,743 $ 42,866 $ 44,848(1) See discussion of restructuring activities in Note 16 of the consolidated financial statements. 2017 2016 2015 2014 2013PER SHARE DATA Basic Income from continuing operations $ 3.68 $ 4.12 $ 4.37 $ 3.94 $ 3.51Income/(loss) from discontinued operations- (0.01) (0.04) (0.55) 0.06 Total $ 3.68 $ 4.11 $ 4.33 $ 3.39 $ 3.57 Diluted Income from continuing operations $ 3.65 $ 4.09 $ 4.31 $ 3.89 $ 3.45Income/(loss) from discontinued operations- (0.01) (0.04) (0.54) 0.06 Total $ 3.65 $ 4.08 $ 4.27 $ 3.35 $ 3.51 Dividends declared $ 0.62 $ 0.54 $ 0.46 $ 0.38 $ 0.31 2017 2016 2015 2014 2013BALANCE SHEET (in thousands) Total assets $ 867,676 $ 690,457 $ 659,063 $ 577,785 $ 509,947 Accounts receivable 127,060 103,974 110,478 107,674 97,995Inventories 119,401 105,402 108,305 97,065 81,811Accounts payable 96,487 77,099 80,764 85,206 67,552Goodwill 242,690 157,354 154,732 125,965 111,905 Source: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.·ooo·Long-term debt $ 191,976 $ 92,114 $ 101,753 $ 44,681 $ 49,446Total debt 191,976 92,114 101,753 44,681 49,446Less cash 88,566 121,988 96,128 74,260 51,064Net debt (cash) $ 103,410 $ (29,874) $ 5,625 $ (29,579) $ (1,618) Stockholders' equity $ 408,664 $ 369,959 $ 348,570 $ 340,726 $ 290,988 KEY STATISTICS 2017 2016 2015 2014 2013Gross profit margin 33.5% 33.6% 32.1% 33.3% 32.4%Operating income margin 8.6% 9.4% 10.2% 9.2% 9.2%Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsOverviewWe are a leading manufacturer of a variety of products and services for diverse commercial and industrial markets. We havetwelve operating segments, aggregated and organized for reporting purposes into five reportable segments: Food ServiceEquipment, Engraving, Engineering Technologies, Electronics and Hydraulics. Overall management, strategic developmentand financial control are maintained by the executive staff from our corporate headquarters located in Salem, New Hampshire.Our long-term strategy is to build larger industrial platforms through a value creation system that assists management inmeeting specific corporate and business unit financial and strategic performance goals in order to create, improve, andenhance shareholder value. The Standex Value Creation System is a standard methodology which provides consistent toolsused throughout the company in order to achieve our organization’s goal of transforming from its historic roots as a holdingcompany to an efficient operating company. The Standex Value Creation System employs four components: BalancedPerformance Plan, Standex Growth Disciplines, Standex Operational Excellence, and Standex Talent Management. TheBalanced Performance Plan process aligns annual goals throughout the business and provides a standard reporting,management and review process. It is focused on setting and meeting annual and quarterly targets that support our short andlong term goals. The Standex Growth Disciplines use a set of tools and processes including market maps, growth lane ways,and market tests to identify opportunities to expand the business organically and through acquisitions. Standex OperationalExcellence employs a standard playbook and processes, including LEAN, to eliminate waste and improve profitability, cashflow and customer satisfaction. Finally, the Standex Talent Management process is an organizational development processthat provides training, development, and succession planning for our employees throughout our worldwide organization. TheStandex Value Creation System ties all disciplines in the organization together under a common umbrella by providingstandard tools and processes to deliver our business objectives.It is our objective to grow larger and more profitable business units through both organic initiatives andacquisitions. We seek to identify and implement organic growth initiatives such as new product development,geographic expansion, introduction of products and technologies into new markets and applications, key accountsand strategic sales channel partners. Also, we have a long-term objective to create sizable business platforms byadding strategically aligned or “bolt on” acquisitions to strengthen the individual businesses, create both sales andcost synergies with our core business platforms, and accelerate their growth and margin improvement. We look tocreate both sales and cost synergies within our core business platforms, accelerate growth and improve margins. We have a particular focus on identifying and investing in opportunities that complement our products and willincrease the global presence and capabilities of our businesses. From time to time, we have divested, and likelywill continue to divest, businesses that we feel are not strategic or do not meet our growth and return expectations.As part of our ongoing strategy, we acquired all of the outstanding shares of Oki Sensor DeviceCorporation from OKI Electric Industry Co., Ltd. during the third quarter of fiscal year 2017. Located inKofu City, Japan, OKI Sensor Device Corporation is the world’s leading designer and supplier of magneticreed switches. Now named Standex Electronics Japan Corporation, (“Standex Electronics Japan”) theacquisition enhances the Company’s access to important Asian markets and enables the Company to offera world class suite of reed switches and related magnetic solutions while continuing to serve StandexElectronics Japan’s diverse distribution channels. Standex Electronics Japan’s results are reported withinour Electronics segment. During our second quarter of 2017, we acquired Horizon Scientific, Inc., (“Horizon Scientific”) a SouthCarolina-based supplier of laboratory refrigerators and freezers, as well as cryogenic equipment for thescientific, bio-medical and pharmaceutical markets. We have included the operating results of HorizonScientific in our Food Service Equipment segment in our Condensed Consolidated Financial Statements. Horizon Scientific expands our access to higher-margin refrigeration markets in the growing scientificsector that provides solutions for exacting temperature storage requirements. Horizon Scientific’s productscomplement the scientific offerings in our Nor-Lake division. During the first quarter of fiscal year 2017, we sold our U.S. Roll Plate and Machinery (“RPM”) business, asit was not strategic, and did not meet our growth and return expectations. This divestiture also allows ourEngraving management to focus on higher growth and better return businesses within the segment. Inpreparation for this sale during the fourth quarter of 2016, we adjusted the net assets of the business totheir net realizable value.We create “Customer Intimacy” by utilizing the Standex Growth Disciplines to partner with our customers in orderto develop and deliver custom solutions or engineered components. By partnering with our customers duringlong-term product development cycles, we become an extension of their development teams. Through this Partner,Solve, Deliver ® methodology, we are able to secure our position as a preferred long-term solution provider for ourproducts and components. This strategy results in increased sales and operating margins that enhance shareholderreturns. Standex Operational Excellence drives continuous improvement in the efficiency of our businesses, both on theSource: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.··shop floor and in the office environment. We recognize that our businesses are competing in a global economythat requires us to improve our competitive position. We have deployed a number of management competencies todrive improvements in the cost structure of our business units including operational excellence through leanenterprise, the use of low cost manufacturing facilities in countries such as Mexico and China, the consolidation ofmanufacturing facilities to achieve economies of scale and leveraging of fixed infrastructure costs, alternatesourcing to achieve procurement cost reductions, and capital improvements to increase productivity.The Company’s strong historical cash flow has been a cornerstone for funding our capital allocation strategy. Weuse cash flow generated from operations to fund the strategic growth programs described above, includingacquisitions and investments for organic growth, investments in capital assets to improve productivity and lowercosts and to return cash to our shareholders through payment of dividends and stock buybacks.Restructuring expenses reflect costs associated with the Company’s efforts of continuously improving operational efficiencyand expanding globally in order to remain competitive in the end-user markets we serve. The Company incurs costs foractions to size its businesses to a level appropriate for current economic conditions, improve its cost structure, enhance ourcompetitive position and increase operating margins. Such expenses include costs for moving facilities to locations thatallow for lower fixed and variable costs, starting up plants after relocation, downsizing operations because of changingeconomic conditions, and other costs resulting from asset redeployment decisions. Shutdown costs include severance,benefits, stay bonuses, lease and contract terminations, asset write-downs, costs of moving fixed assets, and moving andrelocation costs. Vacant facility costs include maintenance, utilities, property taxes and other costs.Because of the diversity of the Company’s businesses, end user markets and geographic locations, management does not usespecific external indices to predict the future performance of the Company, other than general information about broadmacroeconomic trends. Each of our individual business units serves niche markets and attempts to identify trends other thangeneral business and economic conditions which are specific to its business and which could impact their performance. Thoseunits report pertinent information to senior management, which uses it to the extent relevant to assess the future performanceof 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, effectiveincome tax rate, gross profit margin, and operating cash flow. A discussion of these KPIs is included below. We may alsosupplement the discussion of these KPIs by identifying the impact of foreign exchange rates, acquisitions, and othersignificant items when they have a material impact on a specific KPI. We believe the discussion of these items provides enhanced information to investors by disclosing their impact on the overalltrend which provides a clearer comparative view of the KPI, as applicable. For discussion of the impact of foreign exchangerates on KPIs, the Company calculates the impact as the difference between the current period KPI calculated at the currentperiod exchange rate as compared to the KPI calculated at the historical exchange rate for the prior period. For discussion ofthe impact of acquisitions, we isolate the effect on 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 organicgrowth for the purposes of our discussion.Unless otherwise noted, references to years are to fiscal years.Consolidated Results from Continuing Operations (in thousands): 2017 2016 2015Net sales$755,258$ 751,586$ 772,142Gross profit margin 33.5% 33.6% 32.1%Restructuring costs 5,825 4,232 3,443Other income/(expense) operating (7,843) (7,458) 438Income from operations 65,026 70,344 78,644 Backlog (realizable within 1 year)$ 193,539$162,895$ 168,157 2017 2016 2015Net sales$755,258$ 751,586$ 772,142Components of change in sales: Effect of acquisitions 38,498 11,672 38,155 Effect of exchange rates (6,195) (15,011) (16,423) Effect of business divestitures (17,446) 2,791 9,096 Organic sales growth (11,185) (20,008) 25,134Net sales for the fiscal year 2017 increased by $3.7 million, or 0.5%, when compared to the prior year. Incremental salesincreases of $38.5 million from our recent acquisitions were partially offset by organic sales declines of $11.2 million, or1.5%, the impact of $17.4 million, or 2.3%, from the divestiture of the RPM business, and an unfavorable impact of $6.2million, or 0.8%, due to the effect of exchanges rates. The organic sales decrease was primarily driven by lower sales in FoodService, Refrigeration and Cooking Solutions. Net sales for the fiscal year 2016 decreased slightly by $20.6 million, or 2.7%, when compared to the prior year. The decreaseis driven by $20.0 million, or 2.7% of organic sales declines and $15.0 million, or 1.9%, of unfavorable foreign exchangepartially offset by $11.7 million, or 1.5% from the Northlake and Enginetics acquisitions. The organic sales decrease wasprimarily driven by lower sales to the refrigeration and oil and gas markets, partially offset by higher sales to the automotiveand other markets. Gross Profit MarginDuring 2017, gross margin remained essentially flat at 33.5% as compared to 33.6% in 2016. Excluding the effects ofpurchase accounting in both years, our gross margins increased 29 basis points compared to prior year. During fiscal yearSource: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.2017, we incurred $3.1 million of purchase accounting charges related to the Standex Electronics Japan and HorizonScientific acquisitions as compared to charges of $0.4 million in the prior year for the Northlake acquisition. During 2016, gross margin increased to 33.6% as compared to 32.1% in 2015. The increase was the result of higher sales inthe Engraving segment, which typically carry higher margins than sales in our other segments and operationalimprovements in our Food Service Equipment segment as our Operational Excellence initiatives generated positive grossmargin results. We also experienced gross margin improvements due to reduced purchase accounting charges of $1.3million. During fiscal year 2016 we incurred $0.4 million of purchase accounting charges related to the Northlakeacquisition as compared to charges of $1.7 million in the prior year for the Enginetics and Ultrafryer acquisitions.Restructuring Charges and Acquisition Related ExpensesFor fiscal year 2017, we incurred restructuring costs of $5.8 million which were spent in three primary areas. First,Engineering Technologies incurred $3.6 million of expense related to manufacturing footprint optimization at theEnginetics, Huber Heights, Ohio facility which allowed us to close its East Lake, Ohio facility. We vacated and sublet theEast Lake facility for approximately the same aggregate lease costs for which we are obligated under the lease. Second, wespent $1.2 million to gain organizational efficiencies within the Food Service Equipment segment. Finally, we spent $0.5million in order to move our Electronics facility in China due to government directives related to all businesses in the areawhere our facility was located.Also during fiscal year 2017, we incurred acquisition related expenses of $7.8 million comprised of three items. First, werecognized $2.1 million for deferred compensation earned by the Horizon Scientific seller during the year. The paymentsare contingent on the seller remaining an employee of the Company and are therefore treated as compensation expense. Second, we spent $2.7 million on investment banker fees for services provided in connection with the Standex ElectronicsJapan transaction. Third, we incurred $3.0 million for third party due diligence and legal expenses related to StandexElectronics Japan and other acquisition activity.Selling, General, and Administrative ExpensesSelling, general, and administrative expenses, (“SG&A”) for the fiscal year 2017 were $174.1 million, or 23.0%, of salescompared to $170.2 million, or 22.6%, of sales during the prior year. The increase in SG&A is primarily due to $5.6 millionand $2.6 million of on-going SG&A expenses related to the Horizon Scientific and Standex Electronics Japan businesses,respectively, which were not in prior year. These increases were partially offset by declines of $2.5 million from thedivestiture of the RPM business, lower administrative compensation costs of $2.0 million, and lower variable expensesincluding commission and distribution costs.Selling, general, and administrative expenses, (“SG&A”) for the fiscal year 2016 were $170.2 million or 22.6% of salescompared to $165.8 million or 21.5% of sales during the prior year. The increase in SG&A was due to higher health careexpenses, compensation, along with SG&A embedded in the Northlake business partially offset by declines in distributionexpense.Income from OperationsIncome from operations for the fiscal year 2017 was $65.0 million, compared to $70.3 million during the prior year. Thedecrease of $5.5 million is primarily to due acquisition related costs of $7.8 million, an increase in restructuring costs of $1.6million, and overall organic sales volume declines. These decreases were partially offset by the positive performance of ourHorizon Scientific and Standex Electronic Japan acquisitions. Discussion of the performance of each of our reportablesegments is more fully explained in the segment analysis that follows. Income from operations for the fiscal year 2016 decreased by $8.3 million or 10.6%, when compared to the prior year. Thedecrease was a result of a $7.3 million non-cash loss incurred to adjust the net realizable value of the Roll Plate andMachinery business, increases in health care and compensation expenses, partially offset by gross profit improvements due tobusiness segment mix. Discussion of the performance of each of our reportable segments is more fully explained in thesegment analysis that follows. Interest ExpenseInterest expense for the fiscal year 2017 was $4.0 million, an increase of $1.2 million as compared to the prior year. Interestexpense increases were due to higher borrowing costs and an increase in outstanding borrowings, primarily to fundacquisition activity.Interest expense for the fiscal year 2016 was $2.9 million, a decrease of $0.3 million as compared to the prior year. Thedecrease was primarily due to lower average borrowings outstanding during the year.Income TaxesThe Company's income tax provision from continuing operations for the fiscal year ended June 30, 2017 was $15.4 million, oran effective rate of 24.8%, compared to $16.3 million, or an effective rate of 23.8% for the year ended June 30, 2016, and$20.9 million, or an effective rate of 27.4% for the year ended June 30, 2015. Changes in the effective tax rates from period toperiod may be significant as they depend on many factors including, but not limited to, the amount of the Company's incomeor loss, the mix of income earned in the US versus outside the US, the effective tax rate in each of the countries in which weearn income, and any one-time tax issues which occur during the period.The Company's income tax provision from continuing operations for the fiscal year ended June 30, 2017 was impacted by thefollowing items: (i) a provision of $0.4 million related to non-deductible transaction costs, (ii) a benefit of $0.6 million relatedto the R&D tax credit, and (iii) a benefit of $5.3 million due to the mix of income earned in jurisdictions with beneficial taxrates.Source: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The Company's income tax provision from continuing operations for the fiscal year ended June 30, 2016 was impacted by thefollowing items: (i) a net benefit of $0.9 million related to a bargain-sale of idle property to a charitable organization, and (ii)a benefit of $0.7 million related to the R&D tax credit, and (iii) a benefit of $4.9 million due to the mix of income earned injurisdictions with beneficial tax rates.The Company's income tax provision from continuing operations for the fiscal year ended June 30, 2015 was impacted by thefollowing items: (i) a benefit of $0.5 million related to the R&D tax credit that expired during the fiscal year on December 31,(ii) a benefit of $4.0 million due to the mix of income earned in jurisdictions with beneficial tax rates.Capital ExpendituresDuring 2017, capital expenditures increased to $25.8 million or 3.4% of net sales, as compared to $17.9 million, or 2.4%, ofnet sales in the prior year. Capital spending is focused on growth initiatives, cost reduction, and upgrades to extend thecapabilities of our capital assets. In general, we anticipate our capital expenditures over the long term will be approximately2% to 3% of net sales. We expect 2018 capital spending to be between $27.0 and $29.0 million which includes amounts notspent in 2017 and an incremental $2.8 million for Standex Electronics Japan.BacklogBacklog includes all active or open orders for goods and services that have a firm fixed customer purchase order with defineddelivery dates. Backlog also includes any future deliveries based on executed customer contracts, so long as such deliveriesare based on agreed upon delivery schedules. Backlog is not generally a significant factor in the Company’s businessesbecause of our relatively short delivery periods and rapid inventory turnover with the exception of Engineering Technologies. Due to the nature of long term agreements in the Engineering Technologies segment, the timing of orders and delivery datescan vary considerably resulting in significant backlog changes from one period to another.Backlog orders in place at June 30, 2017 and 2016 are as follows (in thousands): As of June 30, 2017 As of June 30, 2016 TotalBacklog Backlogunder 1year TotalBacklog Backlogunder 1yearFood ServiceEquipment$49,660$47,039 $37,202$35,395Engraving 21,584 21,584 19,046 19,046EngineeringTechnologies 92,154 61,329 90,241 60,520Electronics 60,092 56,741 44,713 42,983Hydraulics 6,846 6,846 4,951 4,951 Total$230,336$193,539 $196,153$162,895Backlog realizable within one year increased $30.6 million, or 18.8%, to $193.5 million at June 30, 2017 from $162.9million at June 30, 2016. Backlog realizable under a year increased for each of our segments with Food Service Equipment,Electronics, and Hydraulics each increasing over 30% year over year. Food Service Equipment backlog realizable withinone year increased $11.7 million, or 32.9%. Without the impact of the newly acquired Horizon Scientific business, FoodService Equipment backlog realizable within one year increased 28.9%. Higher demand for Refrigeration and SpecialtySolutions drove the majority of the Food Service Equipment increase. Engraving backlog realizable within one yearincreased $2.5 million, or 13.3%. Adjusting for the impact of the divestiture of the Standex Engraving business, Engravingbacklog realizable within one year increased 39.0%. The increase is a result of increased demand and the effect of someautomotive projects that were delayed to fiscal year 2018. Electronics backlog realizable under a year increased $13.8million, or 32.0%. Without the impact of the Standex Electronics Japan acquisition, Electronics backlog realizable withinone year decreased 4.9%Segment Analysis (in thousands)Food Service Equipment 2017 compared to 2016 2016 compared to 2015(in thousands except % %percentages)2017 2016 Change 2016 2015 ChangeNet sales $ 380,970 $ 381,867 (0.2%) $ 381,867 $ 408,706 (6.6%)Income from operations 33,436 40,142 (16.7%) 40,142 37,456 7.2%Operating incomemargin8.8% 10.5% 10.5% 9.2% Net sales for fiscal year 2017 decreased $0.9 million, or 0.2% when compared to the prior year. The Horizon Scientificacquisition added $23.4 million or 6.1%, while organic sales declined by $24.2 million or 6.3%. The organic sales declinewas driven by a 7.4% decrease in Refrigeration and a 9.9% decrease in Cooking Solutions, partially offset by a 2.7% increasein Specialty Solutions. Four factors contributed to the organic Refrigeration sales decline: (i) continued loss of market shareinto the dollar store market, (ii) delayed growth in the pharmacy sector due to merger delays, and (iii) second halfmanufacturing issues which, in the short term, lengthened our delivery lead-times and (iv) increasing importance of buyinggroups as a sales channel and their resultant lower margins. Sales from the Cooking Solutions group decreased due to non-recurring rollouts in the supermarket channel, lower sales on rationalized low-margin products and lower sales to a few majordealers. Specialty Solutions sales increased due to strong volume in our beverage segment and modest growth inmerchandising. Looking forward, we anticipate continued momentum in our Specialty Solutions group while we focus onenhancing profitability through product rationalization and tighter customer focus. Source: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Net sales for fiscal year 2016 decreased $26.8 million, or 6.6% when compared to the prior year. The reduction was primarilyin the Refrigeration Solutions group where sales decreased by 12.2%. Three factors contributed to the Refrigeration salesdecline: (i) loss of market share into the dollar store market, (ii) reduced sales to major chains due to reduced capital spending,and (iii) reduced sales in Canada due to the strength of the U.S. dollar. Sales from the Cooking Solutions group increased, by0.5% year over year due to growth in sales to retail supermarkets. Specialty Solutions sales decreased 1.1% as our Europeanpump business was impacted by a weak Euro early in the year. Income from operations for fiscal year 2017 decreased $6.7 million, or 16.7%, when compared to the prior year, and operatingincome margin decreased from 10.5% to 8.8%. Fiscal year results were primarily impacted by sales declines in theRefrigeration Solutions group due to the factors discussed above. We are currently evaluating our options to realign ourRefrigeration and Cooking Solutions plant operations to improve efficiencies and reduce costs of standard products in thesebusinesses. In addition, we are restructuring the Food Service Equipment group to streamline reporting and further reducecosts and improve operating margins. Details of the costs and expected savings related to these initiatives will be available inthe first quarter of fiscal year 2018. Finally, our focus in fiscal year 2018 is to continue driving growth in the differentiatedproducts within cooking, scientific, pump and merchandising businesses. Income from operations for fiscal year 2016 increased $2.7 million, or 7.2%, when compared to the prior year, and operatingincome margin grew from 9.2% to 10.5%, up 130 basis points. Operating efficiencies, portfolio focus, paring of low-marginproducts and expense controls have increased our leverage and have positively impacted income from operations for thesegment. Engraving 2017 compared to 2016 2016 compared to 2015(in thousands except % %percentages)2017 2016 Change 2016 2015 ChangeNet sales$ 105,943 $ 124,120 -14.6% $ 124,120 $ 110,781 12.0%Income from operations 25,584 29,579 -13.5% 29,579 24,250 22.0%Operating income margin24.1% 23.8% 23.8% 21.9% Net sales for fiscal year 2017 decreased by $18.2 million or 14.6%, compared to the prior year. Excluding the impact of theprior year divesture of the Roll Plate and machinery business and foreign exchange, net sales grew $2.0 million or 1.6%. Overall, Mold Tech increased its global market share for new automotive model introductions. Asia Pacific and Europe salesgrew $4.2 million in fiscal year 2017, partially offset by lower sales volume in North America which was due to delayed newautomotive launches. Sales at our Innovent business declined by $3.0 million due to the prior year completion of a keycustomer product roll-out which did not repeat in 2017. We expect Mold-Tech sales growth in all regions in fiscal year 2018including the recovery of the delayed new automotive model launches in North America.Net sales for fiscal year 2016 increased by $13.3 million or 12.0%, compared to the prior year. Sales growth excluding foreignexchange losses of $8.7 million was driven by sales gains at Mold-Tech for new automotive model introductions along withmarket share gains throughout the world. The Engraving segment also experienced sales gains in its Roll Plate andMachinery business and core forming tooling business. In fiscal 2017, we completed the sale of our U.S. Roll Plate and Machinery business as it was not strategic and did not meetour growth and return expectations. This divestiture allows the Company’s management to focus on higher growth and betterreturn businesses within the Engraving segment. In preparation of this sale, during the fourth quarter of 2016, we recorded a$7.3 million non-cash loss to adjust the net assets of this business to their net realizable value. This expense is recorded as acomponent of Other Operating Income (Expense), net.Income from operations in fiscal year 2017 decreased by $4.0 million, or 13.5%, when compared to the prior year. Net of theRoll Plate and Machinery business, income from operations decreased by $2.8 million, or 9.8%. The operating incomedecline is driven by decreased automotive volume in North America, the impact of the sales decline at Innovent, increasedinvestments in growth laneways and new technologies to fuel future opportunities.Income from operations in fiscal year 2016 increased by $5.3 million, or 22%, when compared to the prior year. Theoperating income improvement was driven by increased volume in all regions, partially offset by unfavorable foreignexchange and market declines in South America. Engineering Technologies 2017 compared to 2016 2016 compared to 2015(in thousands except % %percentages)2017 2016 Change 2016 2015 ChangeNet sales$ 90,506 $ 82,235 10.1% $ 82,235 $ 97,018 (15.2%)Income from operations9,662 8,258 17.0% 8,258 13,097 (36.9%)Operating incomemargin10.7% 10.0% 10.0% 13.5% Net sales in the fiscal year 2017 increased $8.3 million or 10.1% when compared to the prior year. Sales distribution bymarket in 2017 was as follows: 43% aviation, 29% space, 14% oil and gas, 5% medical, and 9% other markets. Althoughenergy sales rebounded from historical lows, we continued our conversion of this business to an aviation focused business. Aviation sales increased 2.8% from the prior year, despite delays experienced by key customers on new engine platforms.Space market sales increased 15.8% from the prior year driven by higher sales in both the satellite launch and vehicle markets. Defense related sales improved 11.6% from the prior year. Sales in the energy markets were up $4.6 million primarily due tocontract awards in the land based energy market. We expect continued strong growth in the aviation market from the variousplatforms with nacelle lipskin & inlet duct products, along with aircraft engine components with the various OEM’s and TierOne customers.Source: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Net sales in the fiscal year 2016 decreased $14.8 million or 15.2% when compared to the prior year. Sales distribution bymarket in 2016 was as follows: 46% aviation, 27% space, 10% oil and gas, 8% medical, and 9% other markets. Sales in theland based gas turbine and oil and gas markets were down over 60% from the prior year level. The decline was a result ofreduced demand in the oil and gas industry due to lower oil prices. Total space sales decreased by 20.5% due to thecompletion of project based contracts in the manned space market. Sales in the unmanned space market were up 18.0%compared to the prior year. Aviation sales increased 29.7% from the prior year due to strong customer demand and recentcontract awards. Income from operations in the fiscal year 2017 increased $1.4 million or 17.0% when compared to the prior year. The increasein operating income was due to higher sales volume, and a favorable product mix in the energy and space markets comparedto the prior year period.Income from operations in the fiscal year 2016 decreased $4.8 million, or 36.9%, when compared to the prior year. Operatingincome results were negatively impacted by the significant sales declines in both the energy and oil and gas related markets.This impact was partially offset by improved margins in the aviation market along with cost reduction programs implementedas a result of lower volume. Electronics 2017 compared to 2016 2016 compared to 2015(in thousands except % %percentages)2017 2016 Change 2016 2015 ChangeNet sales $ 136,689 $ 118,319 15.5% $ 118,319 $ 114,196 3.6%Income fromoperations 27,663 21,104 31.1% 21,104 20,884 1.1%Operating incomemargin20.2% 17.8% 17.8% 18.3% Net sales in the fiscal year 2017 increased $18.4 million, 15.5%, when compared to the prior year. Organic sales growth was$5.2 million, or 4.3%, and acquisitions contributed $15.1 million or 12.7%. Organic sales growth was primarily driven byincreases in expanding sensor applications in Europe, while North America and Asia remained relatively flat. Northlake,acquired October 1, 2015, added $2.7 million of incremental sales in fiscal year 2017. Standex Electronics Japan, acquiredMarch 31, 2017, added $12.4 million. Foreign exchange rates adversely affected sales by $1.9 million. We expect continuedmomentum in fiscal year 2018 as our investments in organic growth laneways mature and as we realize the synergies from ourStandex Electronics Japan acquisition. Net sales in the fiscal year 2016 increased $4.1 million, 3.6%, when compared to the prior year. Organic sales growth was $0.7million, or 0.6%, while the Northlake acquisition contributed $7.5 million. Foreign exchange rates adversely affected salesby $4.1 million. Sales growth in local currency was particularly strong in Europe driven by volume increases in the sensorcomponents. We experienced sales declines in both Asia and North America due to general market softness, particularlyearlier in the fiscal year. Income from operations in the fiscal year 2017 increased $6.6 million, or 31.1%, when compared to the prior year. Theoperating improvements were a result of operating efficiencies, acquisitions, and product mix as well as higher organic salesgrowth. Purchase accounting related to acquisitions had a negative impact of $1.6 million.Income from operations in the fiscal year 2016 increased $0.2 million, or 1.1%, when compared to the prior year. Theoperating improvements were a result of a facility consolidation into our Northlake site partially offset by $0.4 million ofpurchase accounting charges associated with the Northlake acquisition.Hydraulics 2017 compared to 2016 2016 compared to 2015(in thousandsexcept % %percentages)2017 2016 Change 2016 2015 ChangeNet sales$ 41,150 $ 45,045 (8.6%) $ 45,045 $ 41,441 8.7%Income fromoperations6,712 7,947 (15.5%) 7,947 7,013 13.3%Operatingincome margin16.3% 17.6% 17.6% 16.9% Net sales in fiscal year 2017 decreased $3.9 million, or 8.6% compared to the prior year. Sales distribution by channel in 2017was as follows: 37% dump trailer and truck, 22% refuse, 24% after-market, 6% export, and 11% other markets. The decreasein sales primarily resulted from a significant reduction in demand from the traditional North American dump trailer and truckmarkets. In the last quarter of the year, however, we did see an increase in the order rate for the dump truck and trailer marketfrom several of our OEM’s. In addition, we see positive trends in the Hydraulics segment due to the introduction of severalnew applications in the refuse and construction space. Net sales in fiscal year 2016 increased $3.6 million, or 8.7% compared to the prior year. Sales distribution by market in 2016was as follows: 40% dump trailer and truck, 22% refuse, 22% after market, 6% export, and 10% other markets. Strong demandSource: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.in the traditional North American dump trailer and truck markets was the largest contributor for the net sales increase inaddition to market share gains experienced in the refuse market. Income from operations in the fiscal year 2017 decreased $1.2 million or 15.5% when compared to the prior year due mostlyto the reduction of volume requirements for cylinders in the North American dump trailer and truck markets.Income from operations in the fiscal year 2016 increased $0.9 million or 13.3% when compared to the prior year due to marketgrowth, increased sales volume and cost containment efforts.Corporate, Restructuring and Other 2017 compared to 2016 2016 compared to 2015(in thousands except % %percentages)2017 2016 Change 2016 2015 Change Corporate $ (25,015) $ (24,996) 0.1% $ (24,996) $ (21,051) 18.7% Restructuring (5,825) (4,232) 37.6% (4,232) (3,443) 22.9% Acquisition-relatedcosts (7,843) (7,458) 5.2% (7,458) 438 -1,802.7%Corporate expenses in fiscal year 2017 were flat when compared to the prior year. Corporate expenses in fiscal year 2016 increased $3.9 million or 18.7% when compared to the prior year. The increase isdue to increased health care expenses, compensation, and professional services.The restructuring and acquisition-related costs have been discussed above in the Company Overview.Discontinued OperationsIn pursuing our business strategy, we have divested certain businesses and recorded activities of these businesses asdiscontinued operations.On March 30, 2012, the Air Distribution Products Group, (“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 promissory note from the buyer. The note was secured bya mortgage on the ADP real estate sold in the transaction in Detroit Lakes, MN, Medina, NY, and Powder Springs, GA. Duringthe first quarter 2016, the private equity buyer of ADP sold one of the facilities securing the note. The Company released allmortgages on the properties and accepted an advanced payment of $2.8 million during October 2015 in order to reducerepayment risk and settle all obligations under the note. The Company recorded a $0.2 million loss in discontinuedoperations during the first quarter 2016 related to this transaction.During 2014, the Company received notice that its obligations under a guarantee provided to the buyers of ADP weretriggered as a result of its withdrawal from both of the multi-employer pension plans in which ADP previously participated. The last of these obligations were settled in July of fiscal year 2016 by a $0.5 million payment to the final multi-employerplan.The following table summarizes the Company’s discontinued operations activity, by operation, for the years ended June 30,(in thousands): Year Disposed2017 2016 2015 Income (loss) before taxes: American FoodserviceCompany2014 $(8) $3 $(492)Air Distribution ProductsGroup2012 (38) (225) (137)Other loss fromdiscontinued operations (13) (7) (130)Income (loss) before taxes fromdiscontinued operations (59) (229) (759)(Provision) benefit for tax 27 55 259Net income (loss) from discontinuedoperations $(32) $(174) $ (500)Liquidity and Capital ResourcesAt June 30, 2017, our total cash balance was $88.6 million, of which $76.6 million was held by foreign subsidiaries. Therepatriation of cash balances from certain of our subsidiaries could have adverse tax consequences or be subject to capitalcontrols; however, those balances are generally available without legal restrictions to fund ordinary business operations. Ourcurrent plans are not expected to require a repatriation of cash to fund our U.S. operations and, as a result, we intend toindefinitely reinvest our foreign earnings to fund our overseas growth. If the undistributed earnings of our foreign subsidiariesare needed for operations in the United States, we would be required to accrue and pay U.S. taxes upon repatriation. Cash FlowNet cash provided by operating activities from continuing operations for the year ended June 30, 2017 was $64.0 million,compared to $81.2 million for the same period in 2016. The decrease is primarily due to increases in accounts receivable andinventory as well as a decrease in net income from continuing operations of $5.7 million. Net cash used for investingSource: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.activities from continuing operations for the year ended June 30, 2017 was $179.1 million, consisting primarily of $26.4million for capital expenditure and $153.8 million to acquire the Horizon Scientific and Standex Electronics Japanbusinesses. Net cash used by financing activities for continuing operations for the year ended June 30, 2017, was $84.7million consisting of debt borrowings of $99.5 million, cash dividends of $7.9 million, and repurchased treasury stock of $7.8million.Net cash provided by operating activities from continuing operations for the year ended June 30, 2016 was $81.2 million,compared to $66.2 million for the same period in 2015. Changes to net cash provided by operating activities of $15.1 millionprimarily related to net working capital changes of $17.8 million between periods. Net cash used in investing activities fromcontinuing operations for the year ended June 30, 2016 was $31.6 million, consisting primarily of $17.9 million for capitalexpenditure and $13.7 million to acquire Northlake Engineering, Inc. Net cash used by financing activities for continuingoperations for the year ended June 30, 2016, was $20.7 million consisting of debt repayments of $10.0 million, cashdividends of $6.8 million, and repurchased treasury stock of $5.6 million.Capital StructureDuring fiscal year 2015, the Company entered into an Amended and Restated Credit Agreement (“Credit Facility”, or“facility”). This five-year Credit Facility expires in December 2019 and has a borrowing limit of $400 million, which can beincreased by an amount of up to $100 million, in accordance with specified conditions contained in the agreement. Thefacility also includes a $10 million sublimit for swing line loans and a $30 million sublimit for letters of credit.Under the terms of the Credit Facility, we will pay a variable rate of interest and a commitment fee on borrowed amounts aswell as a commitment fee on unused amounts under the facility. The amount of the commitment fee will depend upon boththe undrawn amount remaining available under the facility and the Company’s funded debt to EBITDA (as defined in theagreement) ratio at the last day of each quarter. As our funded debt to EBITDA ratio increases, the commitment fee willincrease. Funds borrowed under the 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 generalcorporate purposes. As of June 30, 2017, the Company has used $8.9 million against the letter of credit sub-facility and hadthe ability to borrow $193.4 million under the facility based on our current EBITDA. The facility contains customaryrepresentations, warranties and restrictive covenants, as well as specific financial covenants. The Company’s currentfinancial 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 Facility”), to interest expense for the trailing twelve months of at least 3.0:1. Adjusted EBITper the Credit Facility specifically excludes extraordinary and certain other defined items such as cash restructuring andacquisition-related charges up to $7.5 million, and unlimited non-cash charges including gains or losses on sale of propertyand goodwill adjustments. At June 30, 2017, the Company’s Interest Coverage Ratio was 22.37:1.Leverage Ratio - The Company’s ratio of funded debt to trailing twelve month Adjusted EBITDA per the facility, calculatedas Adjusted EBIT per the Credit Facility plus depreciation and amortization, may not exceed 3.5:1. At June 30, 2017, theCompany’s Leverage Ratio was 1.79:1.As of June 30, 2017, we had borrowings under our facility of $192.5 million and the effective rate of interest for outstandingborrowings under the facility was 2.41%. Our primary cash requirements in addition to day-to-day operating needs includeinterest payments, capital expenditures, acquisitions, share repurchases, and dividends. Our primary sources of cash forthese requirements are cash flows from continuing operations and borrowings under the facility. We expect 2018 capitalspending to be between $27.0 and $29.0 million which includes amounts not spent in 2017, and expect that depreciationand amortization expense will be between $18.0 and $19.0 million and $8.0 and $9.0 million, respectively.In order to manage our interest rate exposure, at June 30, 2017 we are party to $100.0 million of active floating to fixed rateswaps. These swaps convert our interest payments from LIBOR to a weighted average rate of 1.60%.The following table sets forth our capitalization at June 30, (in thousands): 2017 2016Long-term debt, net of issuance cost$191,976 $92,114Less cash and cash equivalents 88,566 121,988 Net (cash) debt 103,410 (29,874)Stockholders’ equity 408,664 369,959 Total capitalization$ 512,074 $ 340,085Stockholders’ equity increased year over year by $38.7 million, primarily as a result of current year net income of $46.5million and a favorable change of $6.1 million in unrealized pension losses, partially offset by $7.9 million for dividends paidand an increase of $3.5 million in OCI fair value derivatives. The Company's net (cash) debt to capital percentage changed to20.2% net cash to capital for the year ended June 30, 2017 from (8.8%) net debt to capital for the year ended June 30, 2016. The change in net debt to capital is primarily driven by increased borrowings and cash generated through operations. We participate in two multi-employer pension plans and sponsor five defined benefit plans including two in the U.S. and onein Germany, U.K. and Ireland. The Company’s pension plan is frozen for U.S. employees and participants in the plan ceasedaccruing future benefits. The fair value of the Company's U.S. pension plan assets was $195.3 million at June 30, 2017 andthe projected benefit obligation in the U.S. was $260.0 million at that time. As a result of past contributions, our primary U.S.defined benefit plan is not expected to be 100% funded under ERISA rules at June 30, 2017, but we do not expect to makemandatory contributions to the plan until 2020. We expect to pay $1.4 million in prescribed contributions to our U.K.defined benefit plan and other unfunded defined benefit plans in both the U.S. and Europe during fiscal year 2018.Source: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(1)(2)We have evaluated the current and long-term cash requirements of our defined benefit and defined contribution plans as ofJune 30, 2017 and determined our operating cash flows from continuing operations and available liquidity are expected to besufficient to cover the required contributions under ERISA and other governing regulations. We have an insurance program in place to fund supplemental retirement income benefits for six retired executives. Currentexecutives and new hires are not eligible for this program. At June 30, 2017, the underlying policies had a cash surrendervalue of $20.4 million and are reported net of loans of $10.4 million for which we have the legal right of offset.Contractual obligations of the Company as of June 30, 2017 are as follows (in thousands): Payments Due by Period Less More than 1 1-3 3-5 than 5ContractualObligations Total Year Years Years YearsLong-term debtobligations$192,506 $6 $192,500 $ - $ - Operating leaseobligations 45,665 8,393 14,047 10,588 12,637Estimated interestpayments (1) 12,666 4,906 7,459 301 -Post-retirement benefitpayments (2)37,993 1,336 17,235 17,146 2,276 Total$288,830 $14,641 $231,241 $28,035 $14,913Estimated interest payments are based upon effective interest rates as of June 30, 2017, and include theimpact of interest rate swaps. See Item 7A for further discussions surrounding interest rate exposure onour variable rate borrowings. Post-retirement benefits and pension plan contribution payments represents’ future pension payments tocomply with local funding requirements. Our policy is to fund domestic pension liabilities inaccordance with the minimum and maximum limits imposed by the Employee Retirement IncomeSecurity Act of 1974 (“ERISA”), federal income tax laws and the funding requirements of the PensionProtection Act of 2006.At June 30, 2017, we had $2.6 million of non-current liabilities for uncertain tax positions. We are not able to provide areasonable estimate of the timing of future payments related to these obligations.Off Balance Sheet ItemsAt June 30, 2017, and 2016, the Company had standby letters of credit outstanding, primarily for insurance and tradefinancing purposes, of $8.9 million and $7.7 million, respectively.We had no other material off balance sheet items at June 30, 2017, other than the operating leases summarized above in the“Contractual obligations” table.Other MattersInflation – Certain of our expenses, such as wages and benefits, occupancy costs and equipment repair and replacement, aresubject to normal inflationary pressures. Inflation for medical costs can impact both our reserves for self-insured medicalplans as well as our reserves for workers' compensation claims. We monitor the inflationary rate and make adjustments toreserves whenever it is deemed necessary. Our ability to manage medical costs inflation is dependent upon our ability tomanage claims and purchase insurance coverage to limit the maximum exposure for us. Each of our segments is subject to theeffects of changing raw material costs caused by the underlying commodity price movements. In general, we do not enter intopurchase contracts that extend beyond one operating cycle. While Standex considers our relationship with our suppliers to begood, there can be no assurances that we will not experience any supply shortage.Foreign Currency Translation – Our primary functional currencies used by our non-U.S. subsidiaries are the Euro, BritishPound Sterling (Pound), Mexican (Peso), Japanese (Yen), and Chinese (Yuan). During the current year, the Pound, Euro, Pesoand Yuan all decreased in value related to the U.S. Dollar, our reporting currency. Since June 30, 2016 the Pound, Yen andYuan have depreciated by 2.2%, 8.7%, and 2.1%, respectively (all relative to the U.S. Dollar), while the Euro, Pesoappreciated by 2.9% and 5.7%, respectively. These 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. Defined Benefit Pension Plans – We record expenses related to these plans based upon various actuarial assumptions such asdiscount rates and assumed rates of returns. The Company’s pension plan was frozen for substantially all remaining eligibleU.S. employees in 2015 and participants in the plan ceased accruing future benefits. Environmental Matters – To the best of our knowledge, we believe that we are presently in substantial compliance with allexisting applicable environmental laws and regulations and do not anticipate any instances of non-compliance that will havea material effect on our future capital expenditures, earnings or competitive position.Seasonality – We are a diversified business with generally low levels of seasonality, however our fiscal third quarter istypically the period with the lowest level of activity.Employee Relations – The Company has labor agreements with several union locals in the United States and several Europeanemployees belong to European trade unions. There were two union contracts in the U.S. scheduled to expire during fiscal yearSource: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.2017, both of which have been successfully negotiated. Critical Accounting PoliciesThe Consolidated Financial Statements include accounts of the Company and all of our subsidiaries. The preparation offinancial statements in conformity with accounting principles generally accepted in the United States of America requires usto make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying ConsolidatedFinancial Statements. Although, we believe that materially different amounts would not be reported due to the accountingpolicies described below, the application of these accounting policies involves the exercise of judgment and use ofassumptions as to future uncertainties and, as a result, actual results could differ from these estimates. We have listed anumber of accounting policies which we believe to be the most critical. The Company’s product sales are recorded when persuasive evidence of an arrangement exists, delivery has occurred, theprice to the buyer is fixed or determinable, and collectability is reasonably assured. For products that include installation, andif the installation meets the criteria to be considered a separate element, product revenue is recognized upon delivery, andinstallation revenue is recognized when the installation is complete. Revenues under certain fixed price contracts aregenerally recorded when deliveries are made.Sales and estimated profits under certain long-term contracts are recognized under the percentage-of-completion methods ofaccounting, whereby profits are recorded pro rata, based upon current estimates of costs to complete such contracts. Losses oncontracts are provided for in the period in which the losses become determinable. Revisions in profit estimates are reflectedon a cumulative basis in the period in which the basis for such revision becomes known. Any excess of the billings over costand estimated earnings on long-term contracts is included in deferred revenue.Collectability of Accounts Receivable – Accounts Receivable are reduced by an allowance for amounts that may becomeuncollectible in the future. Our estimate for the allowance for doubtful accounts related to trade receivables includesevaluation of specific accounts where we have information that the customer may have an inability to meet its financialobligation 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 inventoryvalues on hand using specific aging categories, and records a provision for obsolete and excess inventory based on historicalusage and estimated future usage. As actual future demand or market conditions may vary from those projected bymanagement, adjustments to inventory valuations may be required.Realization of Goodwill - Goodwill and certain indefinite-lived intangible assets are not amortized, but instead are tested forimpairment at least annually and more frequently whenever events or changes in circumstances indicate that the fair value ofthe asset may be less than its carrying amount of the asset. The Company’s annual test for impairment is performed using aMay 31st measurement date.We have identified our reporting units for impairment testing as our twelve operating segments, which are aggregated into ourfive 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 estimatedfair value (Step 1). To the extent that the carrying value of the reporting unit exceeds its estimated fair value, a second step isperformed, wherein the reporting unit’s carrying value is compared to the implied fair value (Step 2). To the extent that thecarrying 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 determinedusing a discounted cash flow model (income approach). This method uses various assumptions that are specific to eachindividual reporting unit in order to determine the fair value. In addition, the Company compares the estimated aggregate fairvalue 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-termgrowth rates, a terminal growth rate of 2.5%, and detailed management forecasts of future cash flows prepared by the relevantreporting unit. Fair values were determined primarily by discounting estimated future cash flows at a weighted average cost ofcapital of 10.46%. During our annual impairment testing, we evaluated the sensitivity of our most critical assumption, thediscount rate, and determined that a 200 basis point change in the discount rate selected would not have impacted the testresults. Additionally, the Company could reduce the terminal growth rate from its current 2.5% to 1.0% and the fair value ofall reporting units would still exceed their carrying value.While we believe that our estimates of future cash flows are reasonable, changes in assumptions could significantly affect ourvaluations and result in impairments in the future. The most significant assumption involved in the Company’s determinationof fair value is the cash flow projections of each reporting unit. As a result of our annual assessment, the Company determined that the fair value of the reporting units exceeded theirrespective carrying values. Therefore, no impairment charges were recorded in connection with our annual assessment during2017. Subsequent to our fiscal year 2016 annual impairment test, we disposed of $273 thousand of goodwill recorded in theEngraving segment in connection with our sale of the RPM business. Cost of Employee Benefit Plans – We provide a range of benefits to certain retirees, including pensions and somepostretirement benefits. We record expenses relating to these plans based upon various actuarial assumptions such asdiscount rates, assumed rates of return, compensation increases and turnover rates. The expected return on plan assetsassumption of 7.0% in the U.S. is based on our expectation of the long-term average rate of return on assets in the pensionfunds and is reflective of the current and projected asset mix of the funds and considers the historical returns earned on thefunds. 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 ourpension assets. The U.S. discount rate of 4.0% reflects the current rate at which pension liabilities could be effectively settledSource: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.at the end of the year. The discount rate is determined by matching our expected benefit payments from a stream of AA- orhigher bonds available in the marketplace, adjusted to eliminate the effects of call provisions. We review our actuarialassumptions, including discount rate and expected long-term rate of return on plan assets, on at least an annual basis andmake modifications to the assumptions based on current rates and trends when appropriate. Based on information providedby 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 inthe expected return on plan assets assumptions, holding our discount rate and other assumptions constant, would increase ordecrease pension expense by approximately $0.5 million per year. A twenty-five basis point change in our discount rate,holding all other assumptions constant, would have no impact on 2017 pension expense as changes to amortization of netlosses would be offset by changes to interest cost. In future years, the impact of discount rate changes could yield differentsensitivities. 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 forfuture cash flows of the acquired business and the allocation of those cash flows to identifiable intangible assets indetermining the estimated fair values for assets acquired and liabilities assumed. The fair values assigned to tangible andintangible assets acquired and liabilities assumed, are based on management’s estimates and assumptions, as well as otherinformation compiled by management, including valuations that utilize customary valuation procedures and techniques. Ifthe actual results differ from the estimates and judgments used in these fair values, the amounts recorded in the consolidatedfinancial statements could result in a possible impairment of the intangible assets and goodwill, or require acceleration of theamortization 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 aresubject to adjustment upon finalization of the purchase price allocation. During this measurement period, the Company willadjust assets or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition datethat, if known, would have resulted in the recognition of those assets and liabilities as of that date. All changes that do notqualify as measurement period adjustments are included in current period earnings.Recently Issued Accounting PronouncementsSee "Item 8. Financial Statements and Supplementary Data, Note 1. Summary of Accounting Policies” for informationregarding the effect of recently issued accounting pronouncements on our consolidated statements of operations,comprehensive income, stockholders’ equity, cash flows, and notes for the year ended June 30, 2017.Item 7A. Quantitative and Qualitative Disclosures About Market RiskRisk ManagementWe 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 managementtechniques. We have internal policies and procedures that place financial instruments under the direction of the Treasurer andrestrict all derivative transactions to those intended for hedging purposes only. The use of financial instruments for tradingpurposes (except for certain investments in connection with the non-qualified defined contribution plan) or speculation isstrictly prohibited. The Company has no majority-owned subsidiaries that are excluded from the consolidated financialstatements. Further, we have no interests in or relationships with any special purpose entities. Exchange RiskWe are exposed to both transactional risk and translation risk associated with exchange rates. The transactional risk ismitigated, in large part, by natural hedges developed with locally denominated debt service on intercompany accounts. Wealso mitigate certain of our foreign currency exchange rate risks by entering into forward foreign currency contracts from timeto 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 currencyexchange contracts are sensitive to changes in foreign currency exchange rates, as an adverse change in foreign currencyexchange rates from market rates would decrease the fair value of the contracts. However, any such losses or gains wouldgenerally be offset by corresponding gains and losses, respectively, on the related hedged asset or liability. At June 30, 2017and 2016, the fair value, in the aggregate, of the Company’s open foreign exchange contracts was a liability of $2.8 millionand an asset of $0.1 million, respectively. Our primary translation risk is with the Euro, British Pound Sterling, Peso, Japanese Yen and Chinese Yuan. A hypothetical10% appreciation or depreciation of the value of any these foreign currencies to the U.S. Dollar at June 30, 2017, would notresult in a material change in our operations, financial position, or cash flows. We hedge our most significant foreign currencytranslation risks primarily through cross currency swaps and other instruments, as appropriate.Interest RateThe Company’s effective rate on variable-rate borrowings under the revolving credit agreement is 2.41% and 1.76% atJune 30, 2017 and 2016, respectively. Our interest rate exposure is limited primarily to interest rate changes on our variablerate borrowings. From time to time, we will use interest rate swap agreements to modify our exposure to interest ratemovements. We currently have $100.0 million of active floating to fixed rate swaps with terms ranging from one to threeyears. These swaps convert our interest payments from LIBOR to a weighted average rate of 1.60%. At June 30, 2017 and2016, the fair value, in the aggregate, of the Company’s interest rate swaps was $0.2 million and $1.0 million in a liabilityposition, respectively. Due to the impact of the swaps, an increase in interest rates would not materially impact our annualinterest expense at June 30, 2017. Concentration of Credit RiskSource: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.We have a diversified customer base. As such, the risk associated with concentration of credit risk is inherently minimized. As of June 30, 2017, no one customer accounted for more than 5% of our consolidated outstanding receivables or of our sales.Commodity PricesThe Company is exposed to fluctuating market prices for all commodities used in its manufacturing processes. Each of oursegments is subject to the effects of changing raw material costs caused by the underlying commodity price movements. Ingeneral, we do not enter into purchase contracts that extend beyond one operating cycle. While Standex considers ourrelationship 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, Electronics, and Hydraulics segments are all sensitive to priceincreases for steel products, other metal commodities and petroleum based products. In the past year, we have experiencedprice fluctuations for a number of materials including steel, copper wire, other metal commodities, refrigeration componentsand foam insulation. These materials are some of the key elements in the products manufactured in these segments. Whereverpossible, we will implement price increases to offset the impact of changing prices. The ultimate acceptance of these priceincreases, if implemented, will be impacted by our affected divisions’ respective competitors and the timing of their priceincreases.Item 8. Financial Statements and Supplementary DataConsolidated Balance Sheets Standex International Corporation and Subsidiaries As of June 30 (in thousands, except share data)2017 2016 ASSETS Current assets: Cash and cash equivalents $88,566 $ 121,988 Accounts receivable, net 127,060 103,974 Inventories 119,401 105,402 Prepaid expenses and other current assets 8,397 4,784 Income taxes receivable 2,469 1,325Source: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Deferred tax asset 14,991 16,013 Assets held for sale - 2,363 Total current assets 360,884 355,849 Property, plant and equipment, net 133,160 106,686Intangible assets, net 102,503 40,412Goodwill 242,690 157,354Deferred tax asset 1,135 11,361Other non-current assets 27,304 18,795 Total non-current assets 506,792 334,608 Total assets $ 867,676 $ 690,457 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 96,487 $ 77,099 Accrued liabilities 58,694 50,785 Income taxes payable 4,783 4,695 Liabilities held for sale - 1,528 Total current liabilities 159,964 134,107 Long-term debt 191,976 92,114Deferred income taxes 24,986 5,941Pension obligations 70,745 78,013Other non-current liabilities 11,341 10,323 Total non-current liabilities 299,048 186,391 Commitments and Contingencies (Notes 11 and 12) Stockholders' equity: Common stock, par value $1.50 per share - 60,000,000 shares authorized, 27,984,278 issued, 12,662,661 and 12,674,458 shares outstanding in 2017 and 2016 41,976 41,976 Additional paid-in capital 56,783 52,374 Retained earnings 716,605 678,002 Accumulated other comprehensive loss (115,938) (117,975) Treasury shares (15,321,617 shares in2017 and 15,309,820 shares in 2016) (290,762) (284,418) Total stockholders' equity 408,664 369,959 Total liabilities and stockholders' equity$ 867,676 $ 690,457 See notes to consolidated financial statements. Consolidated Statements of Operations Standex International Corporation and Subsidiaries For the Years Ended June 30(in thousands, except per share data) 2017 2016 2015Net sales $ 755,258 $ 751,586 $ 772,142Cost of sales (502,504) (499,333) (524,656)Gross profit 252,754 252,253 247,486 Selling, general and administrative 174,060 170,219 165,837Restructuring costs 5,825 4,232 3,443Acquisition related expenses 7,843 - -Other operating (income) expense, net - 7,458 (438)Income from operations 65,026 70,344 78,644 Interest expense 4,043 2,871 3,161Other non-operating (income) expense, net (949) (1,052) (634)Total 3,094 1,819 2,527 Income from continuing operations before incometaxes 61,932 68,525 76,117Provision for income taxes (15,355) (16,295) (20,874)Income from continuing operations 46,577 52,230 55,243 Income (loss) from discontinued operations, net oftax (32) (174) (500) Source: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Net income $ 46,545 $ 52,056 $ 54,743 Basic earnings per share: Income (loss) from continuing operations $ 3.68 $ 4.12 $ 4.37Income (loss) from discontinued operations - (0.01) (0.04)Total $ 3.68 $ 4.11 $ 4.33 Diluted earnings per share: Income (loss) from continuing operations $ 3.65 $ 4.09 $ 4.31Income (loss) from discontinued operations - (0.01) (0.04)Total $ 3.65 $ 4.08 $ 4.27 See notes to consolidated financial statements. Consolidated Statements of Comprehensive Income Standex International Corporation and Subsidiaries For the Years Ended June 30, (in thousands) 2017 2016 2015 Net income (loss)$ 46,545 $ 52,056 $54,743Other comprehensive income (loss): Defined benefit pension plans: Actuarial gains (losses) and other changes in unrecognized costs$3,689 $ (26,619) $ (27,344) Amortization of unrecognized costs 5,729 4,779 4,690 Derivative instruments: Change in unrealized gains and (losses) (2,896) (1,010) (687) Amortization of unrealized gains and (losses) into interestexpense (462) 567 1,034 Amortization of unrealized gains and (losses) into cost of goodssold 75 112 - Foreign currency translation gains (losses) (472) (11,303) (23,133)Other comprehensive income (loss) before tax$ 5,663 $ (33,474) $(45,440) Income tax (provision) benefit: Defined benefit pension plans: Actuarial gains (losses) and other changes in unrecognized costs$ (1,354) $ 10,075 $ 10,045 Amortization of unrecognized costs (2,012) (1,685) (1,671) Derivative instruments: Change in unrealized gains and (losses) (80) 384 262 Amortization of unrealized gains and (losses) into interestexpense (152) (216) (394) Amortization of unrealized gains and (losses) into cost of goodssold (28) (42) -Income tax (provision) benefit to other comprehensive income (loss)$(3,626) $ 8,516 $ 8,242 Other comprehensive income (loss), net of tax 2,037 (24,958) (37,198)Comprehensive income (loss)$48,582 $ 27,098 $ 17,545 See notes to consolidated financial statements. Source: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Consolidated Statements of Stockholders' Equity Standex International Corporation and Subsidiaries Accumulated OtherTreasury Stock For the Years EndedJune 30(in thousands, except asspecified)CommonStock AdditionalPaid-inCapital RetainedEarnings ComprehensiveIncome (Loss)Shares AmountTotalStockholders’EquityBalance, June 30,2014$ 41,976$ 43,388$ 584,014$ (55,819)15,345$(272,833)$ 340,726Stock issued foremployee stockoption andpurchase plans,including relatedincome taxbenefit and other 102 (150) 2,682 2,784Stock-basedcompensation 3,764 3,764Treasury stockacquired 138 (10,356) (10,356)Comprehensiveincome: Net Income 54,743 54,743Foreign currencytranslationadjustment (23,133) (23,133)Pension and OPEBadjustments, netof tax of $8.4million (14,280) (14,280)Change in fairvalue ofderivatives, net oftax of ($0.2)million 215 215Dividends declared($0.46 per share) (5,893) (5,893)Balance, June 30,2015$ 41,976$ 47,254$ 632,864$ (93,017)15,333$(280,507)$ 348,570Stock issued foremployee stockoption andpurchase plans,including relatedincome taxbenefit and other 31 (94) 1,725 1,756Stock-basedcompensation 5,089 5,089Treasury stockacquired 71 (5,636) (5,636)Comprehensiveincome: Net Income 52,056 52,056Foreign currencytranslationadjustment (11,303) (11,303)Pension and OPEBadjustments, netof tax of $8.4million (13,450) (13,450)Source: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Change in fairvalue ofderivatives, net oftax of $0.2million (205) (205)Dividends declared($0.54 per share) (6,918) (6,918)Balance, June 30,2016$ 41,976$ 52,374$ 678,002$ (117,975)15,310$(284,418)$ 369,959Stock issued foremployee stockoption andpurchase plansand other (614) (78) 1,462 848Stock-basedcompensation 5,023 5,023Treasury stockacquired 90 (7,806) (7,806)Comprehensiveincome: Net Income 46,545 46,545Foreign currencytranslationadjustment (472) (472)Pension and OPEBadjustments, netof tax of $3.4million 6,052 6,052Change in fairvalue ofderivatives, net oftax of $0.3million (3,543) (3,543)Dividends declared($0.62 per share) (7,942) (7,942)Balance, June 30,2017$ 41,976$56,783$ 716,605$ (115,938)15,322$(290,762)$408,664 See notes to consolidated financial statements. Consolidated Statements of Cash Flows Standex International Corporation and Subsidiaries For the Years Ended June 30 (in thousands) 2017 2016 2015 Cash Flows from Operating Activities Net income $ 46,545 $ 52,056 $ 54,743 Income (loss) from discontinued operations (32) (174) (500) Income (loss) from continuing operations 46,577 52,230 55,243 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 20,315 17,953 16,684 Stock-based compensation 5,023 5,089 3,764 Deferred income taxes (121) (6,756) (249) Non-cash portion of restructuring charge 1,414 2,323 (171) Loss on assets held for sale - 7,267 - (Gain) loss on disposal of real estate and equipment (652) 191 - Excess tax benefit from share-based paymentactivity - (795) (2,088) Increase/(decrease) in cash from changes in assets and liabilities, net of effects from discontinued operations and business acquisitions:Accounts receivables, net (6,013) 4,144 (5,564) Inventories (3,796) 1,729 (6,073) Contributions to defined benefit plans (1,443) (1,320) (1,484) Prepaid expenses and other 61 1,092 4,619 Accounts payable 4,552 (3,368) (3,657) Accrued payroll, employee benefits and other liabilities3,726 6,731 (4,334) Income taxes payable (5,610) (5,289) 9,477 Net cash provided by operating activities from continuing operations 64,033 81,221 66,167 Net cash used for operating activities from discontinued operations (594) (897) (2,128) Net cash provided by operating activities 63,439 80,324 64,039 Cash Flows from Investing Activities Expenditures for capital assets (26,448) (17,851) (22,561) Expenditures for acquisitions, net of cash acquired (153,815) (13,700) (57,149) Expenditures for executive life insurance policies (377) (417) (408) Proceeds from sale of real estate and equipment 1,106 383 66 Other investing activity 483 - 1,536 Source: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Net cash provided by (used for) investing activities from continuingoperations(179,051) (31,585) (78,516) Net cash provided by investing activities from discontinuedoperations- 2,803 - Net cash provided by (used for) investing activities (179,051) (28,782) (78,516) Cash Flows from Financing Activities Proceeds from borrowings 263,700 65,000 274,700 Payments of debt (164,200) (75,000) (216,700) Stock issued under employee stock option andpurchase plans 848 942 696 Excess tax benefit from share-based paymentactivity - 795 2,088 Purchase of treasury stock (7,806) (5,636) (10,356) Cash dividends paid (7,852) (6,846) (5,820) Net cash provided by (used for) financing activities 84,690 (20,745) 44,608 Effect of exchange rate changes on cash (2,500) (4,937) (8,263) Net change in cash and cash equivalents (33,422) 25,860 21,868 Cash and cash equivalents at beginning of year 121,988 96,128 74,260 Cash and cash equivalents at end of year $88,566 $ 121,988 $ 96,128 Supplemental Disclosure of Cash Flow Information: Cash paid during the year for: Interest $ 3,258 $ 2,351 $ 2,547 Income taxes, net of refunds $20,413 $ 24,769 $12,891 See notes to consolidated financial statements. STANDEX INTERNATIONAL CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS1. SUMMARY OF ACCOUNTING POLICIESBasis of Presentation and ConsolidationStandex International Corporation (“Standex” or the “Company”) is a diversified manufacturing company with operations inthe United States, Europe, Asia, Africa, and Latin America. The accompanying consolidated financial statements include theaccounts of Standex International Corporation and its subsidiaries and are prepared in accordance with accounting principlesgenerally accepted in the United States of America (“GAAP”). All intercompany accounts and transactions have beeneliminated in consolidation.The Company considers events or transactions that occur after the balance sheet date, but before the financial statements areissued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. Weevaluated subsequent events through the date and time our consolidated financial statements were issued. Accounting EstimatesThe preparation of consolidated financial statements in conformity with GAAP requires the use of estimates, judgments andassumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingentassets and liabilities at the date of the financial statements and for the period then ended. Estimates are based on historicalexperience, actuarial estimates, current conditions and various other assumptions that are believed to be reasonable under thecircumstances. These estimates form the basis for making judgments about the carrying values of assets and liabilities whenthey are not readily apparent from other sources. These estimates assist in the identification and assessment of the accountingtreatment necessary with respect to commitments and contingencies. Actual results may differ from these estimates underdifferent assumptions or conditions.Cash and Cash EquivalentsCash and cash equivalents include highly liquid investments purchased with a maturity of three months or less. Theseinvestments are carried at cost, which approximates fair value. At June 30, 2017 and 2016, the Company’s cash wascomprised solely of cash on deposit.Trading SecuritiesThe Company purchases investments for its non-qualified defined contribution plan for employees who exceed certainthresholds under our traditional 401(k) plan. These investments are classified as trading and reported at fair value. Theinvestments generally consist of mutual funds, are included in other non-current assets and amounted to $2.4 million atJune 30, 2017 and $2.3 million at June 30, 2016. Gains and losses on these investments are recorded as other non-operatingincome (expense), net in the Consolidated Statements of Operations.Accounts Receivable AllowancesThe Company has provided an allowance for doubtful accounts reserve which represents the best estimate of probable lossinherent in the Company’s account receivables portfolio. This estimate is derived from the Company’s knowledge of its endmarkets, customer base, products, and historical experience.Source: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The changes in the allowances for uncollectible accounts during 2017, 2016, and 2015 were as follows (in thousands): 2017 2016 2015Balance at beginning of year$ 2,119 $ 2,226 $ 2,282Acquisitions and other 52 3 4Provision charged to expense 416 8 496Write-offs, net of recoveries (181) (118) (556)Balance at end of year$2,406 $ 2,119 $ 2,226InventoriesInventories are stated at the lower of (first-in, first-out) cost or market. Inventory quantities on hand are reviewed regularly,and provisions are made for obsolete, slow moving, and non-saleable inventory, based primarily on management’s forecast ofcustomer demand for those products in inventory.Long-Lived AssetsLong-lived assets that are used in operations, excluding goodwill and identifiable intangible assets, are tested forrecoverability 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 liabilitiesat the lowest level where identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Animpairment loss is the amount by which the carrying amount of a long-lived asset (asset group) exceeds its estimated fairvalue. Fair value is determined based on discounted cash flows or appraised values, depending upon the nature of the assets.Property, Plant and EquipmentProperty, plant and equipment are reported at cost less accumulated depreciation. Depreciation is recorded on assets overtheir estimated useful lives, generally using the straight-line method. Lives for property, plant and equipment are as follows:Buildings40 to 50 yearsLeasehold improvementsLesser of useful life or term, unless renewals aredeemed to be reasonably assuredMachinery and equipment8 to 15 yearsFurniture and Fixtures3 to 10 yearsComputer hardware and software3 to 7 years Routine maintenance costs are expensed as incurred. Major improvements are capitalized. Major improvements to leasedbuildings are capitalized as leasehold improvements and depreciated over the lesser of the lease term or the life of theimprovement.Amortization of computer hardware and software of $0.6 million, $0.6 million, and $0.5 million is included as a component ofdepreciation expense for the years ended June 30, 2017, 2016, and 2015, respectively.Goodwill and Identifiable Intangible AssetsAll business combinations are accounted for using the acquisition method. Goodwill and identifiable intangible assets withindefinite 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 over the following useful lives: Customer relationships5 to 16 yearsPatents12 yearsNon-compete agreements5 to 10 yearsOther10 yearsDeveloped technology15 yearsTrade namesIndefinite lifeSee discussion of the Company’s assessment of impairment in Note 5 – Goodwill and Note 6 – Intangible Assets.Fair Value of Financial InstrumentsThe financial instruments, shown below, are presented at fair value. Fair value is defined as the price that would be receivedto 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. When observable prices or inputs are not available, valuation models may be applied.Assets and liabilities recorded at fair value in the consolidated balance sheet are categorized based upon the level of judgmentassociated with the inputs used to measure their fair values. Hierarchical levels directly related to the amount of subjectivityassociated with the inputs to fair valuation of these assets and liabilities and the methodologies used in valuation are asfollows:Level 1 – Quoted prices in active markets for identical assets and liabilities. The Company’s deferred compensationplan 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 publiclyquoted market prices for the funds’ shares as of the balance sheet dates. For pension assets (see Note 17 – EmployeeSource: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.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 indirectlythrough correlation with market data. For foreign exchange forward contracts and interest rate swaps, the Companyvalues the instruments based on the market price of instruments with similar terms, which are based on spot andforward rates as of the balance sheet dates. For pension assets held in commingled funds (see Note 17 – EmployeeBenefit Plans), the Company values investments based on the net asset value of the funds, which are derived from thequoted market prices of the underlying fund holdings. The Company has considered the creditworthiness ofcounterparties in valuing all assets and liabilities.Level 3 – Unobservable inputs based upon the Company’s best estimate of what market participants would use inpricing the asset or liability.We did not have any transfers of assets and liabilities among Levels of the fair value measurement hierarchy at June 30, 2017and 2016.Cash and cash equivalents, accounts receivable, accounts payable and debt are carried at cost, which approximates fair value.The fair values of our financial instruments at June 30, 2017 and 2016 were (in thousands): 2017 Total Level 1 Level 2 Level 3Financial Assets Marketable securities - deferredcompensation plan$ 2,397 $ 2,397 $ - $ - Foreign exchange contracts 399 - 399 - Interest rate swaps 3,777 - 3,777 - Financial Liabilities Foreign exchange contracts$ 3,232 $ - $ 3,232 $ - Interest rate swaps 3,958 - 3,958 - Contingent acquisition payments (a) 2,108 - - 2,108 2016 Total Level 1 Level 2 Level 3Financial Assets Marketable securities - deferredcompensation plan$ 2,333 $ 2,333 $ - $ - Foreign exchange contracts 11 - 11 - Financial Liabilities Foreign exchange contracts$ 94 $ - $ 94 $ - Interest rate swaps 1,038 - 1,038 - (a) The fair value of our contingent consideration arrangement is determined based on our evaluation as to the probabilityand amount of any deferred compensation that has been earned to date.Our financial liabilities based upon Level 3 inputs include a contingent consideration arrangement relating to our acquisitionof Horizon Scientific. We are contractually obligated to pay contingent consideration payments based on the criteria ofcontinued employment of the seller on the second and third anniversary of the closing date of the acquisition. We will updateour assumptions each reporting period based on new developments and record such amounts at fair value based on the revisedassumptions until the consideration is paid.Contingent acquisition payment liabilities are scheduled to be paid in periods through fiscal year 2020. As of June 30, 2017,we could be required to pay up to $8.4 million for contingent consideration arrangements if specific criteria are achieved. Wehave determined the fair value of the liabilities for the contingent consideration based on a probability-weighted discountedcash flow analysis. This fair value measurement is based on significant inputs not observable in the market and thusrepresents a Level 3 measurement within the fair value hierarchy. The fair value of the contingent consideration liabilityassociated with future payments was based on several factors, the most significant of which are continued employment of theseller and the risk-adjusted discount rate for the fair value measurement. As of June 30, 2017, neither the amount recognizedfor the contingent consideration arrangement, nor the range of outcomes or the assumptions used to develop the estimate hadchanged.Concentration of Credit RiskThe Company is subject to credit risk through trade receivables and short-term cash investments. Concentration of risk withrespect to trade receivables is minimized because of the diversification of our operations, as well as our large customer baseand our geographical dispersion. No individual customer accounts for more than 5% of revenues or accounts receivable in theperiods presented.Short-term cash investments are placed with high credit-quality financial institutions. The Company monitors the amount ofcredit exposure in any one institution or type of investment instrument. Revenue RecognitionSource: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The Company’s product sales are recorded when persuasive evidence of an arrangement exists, delivery has occurred, theprice to the buyer is fixed or determinable, and collectability is reasonably assured. For products that include installation, andif the installation meets the criteria to be considered a separate element, product revenue is recognized upon delivery, andinstallation revenue is recognized when the installation is complete. Revenues under certain fixed price contracts aregenerally recorded when deliveries are made.Sales and estimated profits under certain long-term contracts are recognized under the percentage-of-completion methods ofaccounting, whereby profits are recorded pro rata, based upon current estimates of costs to complete such contracts. Losses oncontracts are fully recognized in the period in which the losses become determinable. Revisions in profit estimates arereflected on a cumulative basis in the period in which the basis for such revision becomes known. Any excess of the billingsover cost and estimated earnings on long-term contracts is included in deferred revenue.Cost of Goods Sold and Selling, General and Administrative ExpensesThe Company includes expenses in either cost of goods sold or selling, general and administrative categories based upon thenatural 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, internal transfer costs as well as depreciation, amortization, wages, benefitsand other costs that are incurred directly or indirectly to support the manufacturing process. Selling, general andadministrative includes expenses associated with the distribution of our products, sales effort, administration costs and othercosts that are not incurred to support the manufacturing process. The Company records distribution costs associated with thesale of inventory as a component of selling, general and administrative expenses in the Consolidated Statements ofOperations. These expenses include warehousing costs, outbound freight charges and costs associated with distributionpersonnel. Our gross profit margins may not be comparable to those of other entities due to different classifications of costsand expenses.The Company purchased $2.4 million, $3.3 million, and $2.1 million from a 20% owned equity interest during the yearsended June 30, 2017, 2016, and 2015 respectively. The inventory was purchased under customary terms and conditions andsold to customers in the ordinary course of business. Earnings from this investment are not material and are accounted forunder the equity method.Our total advertising expenses, which are classified under selling, general, and administrative expenses are primarily related totrade shows, and totaled $5.1 million, $4.3 million, and $5.0 million for the years ended June 30, 2017, 2016, and 2015,respectively.Research and DevelopmentResearch and development expenditures are expensed as incurred. Total research and development costs, which are classifiedunder selling, general, and administrative expenses, were $5.5 million, $4.9 million, and $4.1 million for the years endedJune 30, 2017, 2016, and 2015, respectively.WarrantiesThe expected cost associated with warranty obligations on our products is recorded when the revenue is recognized. TheCompany’s estimate of warranty cost is based on contract terms and historical warranty loss experience that is periodicallyadjusted for recent actual experience. Since warranty estimates are forecasts based on the best available information, claimscosts may differ from amounts provided. Adjustments to initial obligations for warranties are made as changes in theobligations become reasonably estimable.The changes in continuing operations warranty reserve, which are recorded as accrued liabilities, during 2017, 2016, and2015 were as follows (in thousands): 2017 2016 2015Balance at beginning of year$9,085 $ 7,436 $6,941Acquisitions and other charges 301 (5) 3Warranty expense 9,203 13,503 11,086Warranty claims (9,346) (11,849) (10,594)Balance at end of year$ 9,243 $ 9,085 $ 7,436The decrease in warranty expense during 2017 compared to 2016 is primarily due to the conclusion of the warranty period forpotential claims arising from production and manufacturing issues experienced in the Cooking Solutions business when theCompany transitioned from the Cheyenne plant to Nogales in fiscal year 2015. In addition, warranty expense changes weredue to the decline in sales volume for warrantable products which reduced the potential for future claims. Stock-Based Compensation PlansRestricted stock awards generally vest over a three-year period. Compensation expense associated with these awards isrecorded based on their grant-date fair values and is generally recognized on a straight-line basis over the vesting periodexcept for awards with performance conditions, which are recognized on a graded vesting schedule. Compensation cost for anaward with a performance condition is based on the probable outcome of that performance condition. The stated vestingperiod is considered non-substantive for retirement eligible participants. Accordingly, the Company recognizes anyremaining unrecognized compensation expense upon participant reaching retirement eligibility.Foreign Currency TranslationThe 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 ofSource: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.these operations are translated using average exchange rates. The resulting translation adjustment is reported as a componentof comprehensive income (loss) in the consolidated statements of stockholders’ equity and comprehensive income. Gains andlosses from foreign currency transactions are included in results of operations and were not material for any period presented.Derivative Instruments and Hedging ActivitiesThe 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 certainanticipated foreign cash flows, such as foreign purchases of materials and loan payments from subsidiaries. The Companyenters into such contracts for hedging purposes only. The Company has designated certain of these currency contracts ashedges, and changes in the fair value of these contracts are recognized in other comprehensive income until the hedged itemsare recognized in earnings. Hedge ineffectiveness, if any, associated with these contracts will be reported in net income. 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 hasdesignated its interest rate swap agreements, including those that are forward-dated, as cash flow hedges, and changes in thefair value of the swaps are recognized in other comprehensive income 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 TaxesThe Company's income tax provision from continuing operations for the fiscal year ended June 30, 2017 was $15.4 million, oran effective rate of 24.8%, compared to $16.3 million, or an effective rate of 23.8% for the year ended June 30, 2016, and$20.9 million, or an effective rate of 27.4% for the year ended June 30, 2015. Changes in the effective tax rates from period toperiod may be significant as they depend on many factors including, but not limited to, the amount of the Company's incomeor loss, the mix of income earned in the US versus outside the US, the effective tax rate in each of the countries in which weearn income, and any one-time tax issues which occur during the period.The Company's income tax provision from continuing operations for the fiscal year ended June 30, 2017 was impacted by thefollowing items: (i) a provision of $0.4 million related to non-deductible transaction costs, (ii) a benefit of $0.6 million relatedto the R&D tax credit, and (iii) a benefit of $5.3 million due to the mix of income earned in jurisdictions with beneficial taxrates.The Company's income tax provision from continuing operations for the fiscal year ended June 30, 2016 was impacted by thefollowing items: (i) a net benefit of $0.9 million related to a bargain-sale of idle property to a charitable organization, and(ii) a benefit of $0.7 million related to the R&D tax credit, and (iii) a benefit of $4.9 million due to the mix of income earnedin jurisdictions with beneficial tax rates.The Company's income tax provision from continuing operations for the fiscal year ended June 30, 2015 was impacted by thefollowing items: (i) a benefit of $0.5 million related to the R&D tax credit that expired during the fiscal year on December 31,(ii) a benefit of $4.0 million due to the mix of income earned in jurisdictions with beneficial tax rates.Earnings Per Share(share amounts in thousands) 2017 2016 2015Basic – Average Shares Outstanding 12,666 12,682 12,655Effect of Dilutive Securities – Stock Options and Restricted Stock Awards 102 102 150Diluted – Average Shares Outstanding 12,768 12,784 12,805Both basic and dilutive income is the same for computing earnings per share. There were no outstanding instruments that hadan anti-dilutive effect at June 30, 2017, 2016 and 2015.Recently Issued Accounting PronouncementsIn May 2014, the Financial Accounting Standards Board (“FASB”) and the International Accounting Standards Board jointlyissued a comprehensive new revenue recognition standard, ASU 2014-09, Revenue from Contract with Customers, that willsupersede nearly all existing revenue recognition guidance under US GAAP and IFRS. The standard’s primary principle isthat a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects theconsideration to which the Company expects to be entitled in exchange for those goods or services. Our analysis andevaluation of the new standard will continue through its effective date and we do not expect to early adopt. We will adoptthis standard on July 1, 2018. In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory, whichmodifies existing requirements regarding measuring inventory at the lower of cost or market. Under prior standards, themarket amount required consideration of replacement cost, net realizable value (NRV), and NRV less an approximatelynormal profit margin. The new ASU replaces market with NRV, defined as estimated selling prices in the ordinary course ofbusiness, less reasonably predictable costs of completion, disposal, and transportation. This eliminates the need to determineand consider replacement cost or NRV less an approximately normal profit margin when measuring inventory. The standard iseffective for annual and interim periods with those annual periods beginning after December 15, 2016. The amendment is tobe applied prospectively. The Company is continuing to evaluate the impact of adopting ASU 2015-11 but currently we donot expect the adoption to have a material impact on the Company’s consolidated financial statements.In November 2015, the FASB issued ASC Update 2015-17, Income Taxes (Topic 740): Balance Sheet Classification ofSource: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Deferred Taxes, as part of its simplification initiatives. This update requires deferred tax liabilities and assets to be classifiedas non-current on the consolidated condensed balance sheet for fiscal years beginning after December 15, 2016, and interimperiods within those annual periods. Early application is permitted. An entity can elect adoption prospectively orretrospectively to all periods presented. The Company is continuing to evaluate the impact of adopting ASU 2015-17.In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 increases transparency andcomparability among organizations by recognizing lease assets and liabilities on the balance sheet and disclosing keyinformation about leasing arrangements. A modified retrospective transition approach is required for lessees for capital andoperating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financialstatements, with certain practical expedients available. For leases with a term or twelve months or less, a lessee is permitted tomake an accounting policy election by class of underlying asset not to recognize lease assets and liabilities. ASU 2016-02 iseffective for fiscal years beginning after December 15, 2018. Although the Company is continuing to evaluate the impact ofadopting ASU 2016-02, we anticipate the adoption of the new standard will have a material impact on the Company’sconsolidated financial statements based on the materiality of the underlying leases subject to the new guidance. In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, which simplifies theaccounting for goodwill impairments by eliminating step two from the goodwill impairment test. Instead, if the carryingamount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess,limited to the total amount of goodwill allocated to that reporting unit. ASU 2017-04 also clarifies the requirements forexcluding and allocating foreign currency translation adjustments to reporting units related to an entity's testing of reportingunits for goodwill impairment. It further clarifies that an entity should consider income tax effects from any tax-deductiblegoodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. ASU2017-04 is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The Company is currently assessing the potential impact of the adoption of ASU 2017-04 on our consolidated financialstatements.In March 2017, the FASB issued ASU 2017-07, Compensation-Retirement Benefits (Topic 715): Improving the Presentationof Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which changes how employers that sponsordefined benefit pension or other postretirement benefit plans present the net periodic benefit cost in the income statement. The new guidance requires the service cost component of net periodic benefit cost to be presented in the same incomestatement line items as other employee compensation costs arising from services rendered during the period. Othercomponents of the net periodic benefit cost are to be stated separately from service cost and outside of operating income. Thisguidance is effective for fiscal years beginning after December 15, 2017 (fiscal 2019 for the Company) and interim periodswithin those annual periods. The amendment is to be applied retrospectively.In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. The newstandard simplifies several aspects of the accounting for employee share-based payment transactions, including theaccounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statementof cash flows. Under this guidance, a company recognizes all excess tax benefits and tax deficiencies as income tax expenseor benefit in the income statement. This change eliminates the notion of the additional paid-in capital pool and reduces thecomplexity in accounting for excess tax benefits and tax deficiencies. The Company has decided to adopt this ASU prior tothe effective date as prescribed within the ASU. The primary impact of our adoption was the recognition of excess tax benefitsrelated to equity compensation in our provision for income taxes rather than paid-in capital, which is a change required to beapplied on a prospective basis in accordance with ASU 2016-09. Accordingly, we recorded discrete income tax benefits in theconsolidated statements of income of $0.6 million during the fiscal year ended June 30, 2017, for excess tax benefits relatedto equity compensation.2. ACQUISITIONSEach of the Company’s recent acquisitions are strategically significant to the future growth prospects of the Company. TheCompany evaluated the significance of each acquisition on a standalone basis and in aggregate, considering both qualitativeand quantitative factors. OKI Sensor Device CorporationDuring the third quarter of fiscal year 2017, the Company acquired all of the outstanding shares of OKI Sensor DeviceCorporation from OKI Electric Industry Co., Ltd. Located in Kofu City, Japan, OKI Sensor Device Corporation is the world’sleading designer and supplier of magnetic reed switches. Now named Standex Electronics Japan Corporation (“StandexElectronics Japan”), the acquisition enhances the Company’s access to important Asian markets and enables the Company tooffer a world class suite of reed switches and related magnetic solutions while continuing to serve Standex Electronics Japan’sdiverse distribution channels. We have included the results of Standex Electronics Japan in our Electronics segment in ourCondensed Consolidated Financial Statements. The Company paid $129.2 million in cash, net of cash acquired, for 100% of the outstanding stock of Standex ElectronicsJapan. While the final purchase price is subject to cash and net working capital adjustments that have not yet been finalized,no such adjustment is anticipated. The preliminary purchase price was allocated to the net tangible and identifiableintangible assets acquired and liabilities assumed based on their fair values on the closing date. Goodwill recorded from thistransaction is attributable to potential revenue increases from enhanced access to our Asian markets and synergies createdfrom the vertical integration with a key supplier. Intangible assets of $53.8 million were preliminarily recorded, consisting of $50.1 million of developed technology to beamortized over a period of 10-20 years, $3.6 million of customer relationships to be amortized over a period of fifteen years,and $0.1 million of product order backlog which was amortized during fiscal year 2017. During the fourth quarter of FY2017, the Company adjusted goodwill by $2.9 million as a result of purchase accounting changes including a decrease in thefair value of developed technology and customer relationships of $2.3 million and $0.2 million, respectively, and anadditional $0.1 million of product order backlog which was amortized during fiscal year 2017. The goodwill of $78.9 millioncreated by the transaction is not deductible for income tax purposes.Source: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The components of the fair value of the Standex Electronics Japan acquisition, including the preliminary allocation of thepurchase price at June 30, 2017, are as follows (in thousands): PreliminaryAllocation Adjustments AdjustedAllocation March 31, 2017 June 30,2017Fair value of businesscombination: Cash payments $137,676 $ - $137,676Less: cash acquired (8,521) - (8,521)Total $129,155 $ - $129,155Identifiable assets acquired andliabilities assumed: Other acquired assets $12,497 $ - $12,497Inventories 7,387 815 8,202Property, plant, and equipment 12,703 5,750 18,453Identifiable intangible assets 53,800 (2,400) 51,400Goodwill 75,985 2,916 78,901Liabilities assumed (10,811) (8,405) (19,216)Deferred taxes (22,406) 1,324 (21,082)Total $129,155 $ - $129,155 The initial allocation of the purchase price is based upon a preliminary valuation, and accordingly, our estimates andassumptions are subject to change as we obtain additional information during the measurement period. The Companyanticipates finalizing the purchase price allocation during the current calendar year.The following table reflects the unaudited pro forma operating results of the Company for the years ended June 30, 2017 and2016, which give effect to the acquisition of Standex Electronics Japan as if it had occurred at the beginning of each periodpresented. The pro forma information combines the historical financial results of the Company and Standex ElectronicsJapan, adjusted for changes in foreign exchange rates. The pro forma results are not necessarily indicative of the operatingresults that would have occurred had the acquisition been effective at the beginning of each period, nor are they intended tobe indicative of results that may occur in the future. The pro forma information does not include the effects of any synergiesrelated to the Standex Electronics Japan acquisition, transactions between the entities prior to acquisition, or the pre-acquisition impact of other businesses acquired by the Company during this period as they were not material to theCompany’s historical results of operations. (Unaudited Pro Forma) For years ended June 30,In thousands2017 2016Net Sales$805,235 $808,691 Net Income$57,810 $58,720 Earnings per share: Basic$4.56 $4.63 Diluted$4.53 $4.59 Pro forma earnings during the year ended June 30, 2017 were adjusted to include expense of $1.8 million for amortization ofintangible assets recognized at fair value, depreciation expense of $0.9 million for the fair value adjustment of the acquiredfixed assets, and $0.8 million of interest expense associated with incremental borrowings under the Company’s CreditFacility. Pro forma earnings were also adjusted to exclude non-recurring acquisition-related costs of $4.2 million.Pro forma earnings during the year ended June 30, 2016 were adjusted to include expense of $2.3 million for amortization ofintangible assets recognized at fair value, depreciation expense of $1.1 million for the fair value adjustment of the acquiredfixed assets, and $1.0 million of interest expense associated with incremental borrowings under the Company’s CreditFacility.Horizon ScientificDuring the second quarter of fiscal year 2017, the Company acquired Horizon Scientific, a supplier of laboratory refrigeratorsand freezers, as well as cryogenic equipment for the scientific, bio-medical and pharmaceutical markets. We believe theacquisition of Horizon Scientific enhances Standex’s penetration of the refrigeration markets in the growing scientific sector. We have included the operating results of Horizon Scientific in our Food Service Equipment segment in our CondensedConsolidated Financial Statements.The Company paid $24.7 million in cash, net of cash acquired, for 100% of the outstanding stock of Horizon Scientific. Thepurchase price was subject to cash and net working capital adjustments of $0.3 million which will be paid in fiscal year 2018along with deferred compensation of up to $8.4 million. The purchase price was allocated to the net tangible and identifiableintangible assets acquired and liabilities assumed based on their fair values on the closing date. Intangible assets of $17.6 million have been recorded, consisting of $16.1 million of customer relationships which areexpected to be amortized over a period of fifteen years, $1.2 million of trademarks which are indefinite lived, and $0.3 millionSource: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.of product order backlog which amortized during the current fiscal year. During the fourth quarter of FY 2017, goodwillincreased by $1.2 million primarily as a result of purchase accounting adjustments. The goodwill of $6.7 million created bythe transaction is not deductible for income tax purposes.The components of the fair value of the Horizon Scientific acquisition, including the allocation of the purchase price atJune 30, 2017, are as follows (in thousands): PreliminaryAllocation Adjustments FinalFair value of businesscombination: Cash payments $26,457 $ - $26,457Identified cash and networking capital adjustment - 341 341Less: cash acquired (1,797) - (1,797)Total $ 24,660 $341 $25,001Identifiable assets acquired andliabilities assumed: Current assets $ 4,863 $ - $ 4,863Inventories 4,470 - 4,470Property, plant, andequipment 1,616 - 1,616Identifiable intangible assets 17,550 (1,400) 16,150Goodwill 5,452 1,208 6,660Liabilities assumed (2,374) - (2,374)Deferred taxes (6,917) 533 (6,384) Total $24,660 $341 $25,001 The Company finalized the purchase price allocation during fiscal year 2017. Transaction costs associated with thisacquisition were immaterial. All transaction costs were recorded as general and administrative expense during the year endedJune 30, 2017.NorthlakeOn October 1, 2015, the Company acquired Northlake Engineering, Inc., (“Northlake”), a Wisconsin-based designer,manufacturer and distributor of high reliability electromagnetic products and solutions serving the North America powerdistribution and medical equipment markets. Northlake reports to our Electronics segment.The Company paid $13.7 million in cash for 100% of the outstanding stock of Northlake and has recorded intangible assets of$6.8 million, consisting of $4.1 million of customer relationships which primarily are expected to be amortized over a periodof twelve and half years, $2.4 million of trademarks which are indefinite-lived and $0.3 million of non-compete which areexpected to amortized over a period of five years. Acquired goodwill of $5.1 million is deductible for income tax purposes. The Company finalized the purchase price allocation during the quarter ending June 30, 2016.The components of the fair value of the Northlake acquisition, including the allocation of the purchase price at June 30, 2016,are as follows (in thousands): FinalFair value of business combination: Cash payments$ 14,015Less: cash acquired (315)Total$ 13,700Identifiable assets acquired and liabilities assumed: Current assets$2,810Property, plant, and equipment 1,407Identifiable intangible assets 6,824Goodwill 5,121Other non-current assets 158Liabilities assumed (2,620)Total$13,700Acquisition-Related CostsAcquisition-related costs include costs related to acquired businesses and other pending acquisitions. These costs consist of(i) deferred compensation and (ii) acquisition-related professional service fees and expenses, including financial advisory,legal, accounting, and other outside services incurred in connection with acquisition activities, and regulatory matters relatedto acquired entities. These costs do not include the amortization of the acquired intangible assets or purchase accountingexpenses, which we define as acquired backlog and the step-up of inventory to fair value.Source: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Deferred compensation costs relate to payments due to the seller of Horizon Scientific for $2.8 million on the secondanniversary and $5.6 million on the third anniversary of the closing date of the purchase. For the year ended June 30, 2017,we recorded deferred compensation costs of $2.1 million for estimated deferred compensation earned by the HorizonScientific seller to date. The payments are contingent on the seller remaining an employee of the Company with limitedexceptions at each anniversary date.Acquisition related costs of $5.7 million consisted of $2.7 million of investment banker fees for services provided inconnection with the Standex Electronics Japan transaction and $3.0 million for third-party due diligence expenses alsorelated to Standex Electronics Japan and other acquisitions.The components of acquisition-related costs, net are as follows (dollars in thousands): June 30, 2017Deferred compensation arrangements $ 2,108 Acquisition-related costs 5,735Total$7,8433. INVENTORIESInventories are comprised of (in thousands):June 30 2017 2016Raw materials$53,313 $ 46,616Work in process 28,110 26,541Finished goods 37,978 32,245 Total$119,401 $ 105,402Distribution costs associated with the sale of inventory are recorded as a component of selling, general and administrativeexpenses and were $20.4 million, $20.1 million, and $23.3 million in 2017, 2016, and 2015, respectively.4. PROPERTY, PLANT AND EQUIPMENTProperty, plant and equipment consist of the following (in thousands):June 30 2017 2016 Land, buildings and leasehold improvements $ 78,048 $ 67,187 Machinery, equipment and other 199,419 177,745 Total 277,467 244,932 Less accumulated depreciation 144,307 138,246Property, plant and equipment - net $ 133,160 $ 106,686Depreciation expense for the years ended June 30, 2017, 2016, and 2015 totaled $14.7 million, $13.7 million, and $13.4million, respectively.5. GOODWILLGoodwill and certain indefinite-lived intangible assets are not amortized, but instead are tested for impairment at leastannually and more frequently whenever events or changes in circumstances indicate that the fair value of the asset may be lessthan its carrying amount. 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 twelve operating segments, which are aggregatedinto 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 determinedusing a discounted cash flow model (income approach). This method uses various assumptions that are specific to eachindividual reporting unit in order to determine the fair value. In addition, the Company compares the estimated aggregate fairvalue 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 significantlyaffect valuations and result in impairments in the future. The most significant assumption involved in the Company’sdetermination of fair value is the cash flow projections of each reporting unit. If the estimates of future cash flows for eachreporting unit may be insufficient to support the carrying value of the reporting units, the Company will reassess itsconclusions related to fair value and the recoverability of goodwill.We completed our annual impairment testing as of May 31, 2017, and determined that the fair value of each of its reportingunits substantially exceeded each unit’s respective carrying value, therefore, no impairment charges were recorded inconnection with our testing and assessment during 2017 and 2016. Subsequent to our 2016 annual impairment test, wedisposed of $273 thousand of goodwill recorded in the Engraving segment in connection with the July 1, 2016 sale of theRoll, Plate, and Machinery business. Source: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Changes to goodwill during the years ended June 30, 2017 and 2016 are as follows (in thousands): 2017 2016Balance at beginning of year$ 175,293 $ 172,671Accumulated impairment losses 17,939 17,939Balance at beginning of year, net 157,354 154,732Acquisitions 85,561 5,121Disposals - (273)Foreign currency translation (225) (2,226)Balance at end of year$ 242,690 $ 157,3546. INTANGIBLE ASSETSIntangible assets consist of the following (in thousands): Tradenames CustomerRelationships (Indefinite-lived) DevelopedTechnology Other TotalJune 30,2017 Cost$ 64,247 $ 18,715 $47,586 $4,503 $135,051Accumulatedamortization (28,764) - (826) (2,958) (32,548)Balance, June30, 2017$ 35,483 $ 18,715 $46,760 $ 1,545 $ 102,503 June 30,2016 Cost$ 46,297 $ 17,263 $ - $4,471 $ 68,031Accumulatedamortization (24,892) - - (2,727) (27,619)Balance, June30, 2016$ 21,405 $ 17,263 $ - $ 1,744 $ 40,412Amortization expense from continuing operations for the years ended June 30, 2017, 2016, and 2015 totaled $5.0 million,$3.6 million, and $2.8 million, respectively. At June 30, 2017, aggregate amortization expense is estimated to be $8.1million in fiscal 2018, $8.1 million in fiscal 2019, $7.6 million in fiscal 2020, $7.1 million in fiscal 2021, $6.7 million infiscal 2022, and $46.2 million thereafter.During the fourth quarter of 2016, the Company discontinued a previously acquired product line within the Food ServiceEquipment Group. As part of this discontinuation, the Company concluded that the trademark value assigned to this productline was no longer realizable and the Company recorded a $0.6 million expense to reduce the trademark to zero.7. DEBTLong-term debt is comprised of the following at June 30 (in thousands): 2017 2016Bank credit agreements$ 192,500 $ 93,000Other 6 18 Total funded debt 192,506 93,018Issuance Cost (530) (904) Total long-term debt$ 191,976 $ 92,114Long-term debt is due as follows (in thousands): 2018$62019 -2020 (matures December 2019) 192,5002021 -2022 -Thereafter - Funded Debt 192,506Issuance costs (530)Debt, net issuance cost$191,976Bank Credit AgreementsDuring fiscal year 2015, the Company entered into an Amended and Restated Credit Agreement (“Credit Facility”, or“facility”). This five-year Credit Facility expires in December 2019 and has a borrowing limit of $400 million, which can beincreased by an amount of up to $100 million, in accordance with specified conditions contained in the agreement. Thefacility also includes a $10 million sublimit for swing line loans and a $30 million sublimit for letters of credit. The facilityamends and restates a previously existing $225 million revolving credit agreement, which was scheduled to expire inJanuary 2017.Source: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Under the terms of the Credit Agreement, we will pay a variable rate of interest and a commitment fee on borrowed amountsas well as a commitment fee on unused amounts under the facility. The amount of the commitment fee will depend uponboth the undrawn amount remaining available under the facility and the Company’s funded debt to EBITDA (as defined inthe agreement) ratio at the last day of each quarter. As our funded debt to EBITDA ratio increases, the commitment fee willincrease. Funds borrowed under the 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 generalcorporate purposes. As of June 30, 2017, the Company had the ability to borrow $193.4 million under the facility based onour current EBITDA. The facility contains customary representations, warranties and restrictive covenants, as well asspecific financial covenants which the Company was compliant with as of June 30, 2017. The Company’s current financialcovenants 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 3.0:1. AdjustedEBIT per the Credit Agreement specifically excludes extraordinary and certain other defined items such as cash restructuringand acquisition-related charges up to $7.5 million, and unlimited non-cash charges including gains or losses on sale ofproperty and goodwill adjustments. At June 30, 2017, the Company’s Interest Coverage Ratio was 22.37:1.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. AtJune 30, 2017, the Company’s Leverage Ratio was 1.79:1.As of June 30, 2017, we had borrowings under our facility of $192.5 million and the effective rate of interest for outstandingborrowings under the facility was 2.41%. Our primary cash requirements in addition to day-to-day operating needs includeinterest payments, capital expenditures, and dividends. Our primary sources of cash for these requirements are cash flowsfrom continuing operations and borrowings under the facility. In order to manage our interest rate exposure, we are party to $100.0 million of active floating to fixed rate swaps. Theseswaps convert our interest payments from LIBOR to a weighted average rate of 1.60%.Other Long-Term BorrowingsAt June 30, 2017, and 2016, the Company had standby letter of credit sub-facility outstanding, primarily for insurance andcommercial trade purposes of $8.9 million and $7.7 million, respectively.8. ACCRUED LIABILITIESAccrued expenses recorded in our Consolidated Balance Sheets at June 30, consist of the following (in thousands): 2017 2016Payroll and employee benefits$28,522 $ 28,375Workers' compensation 2,399 1,984Warranty 9,243 9,085Fair value of derivatives 3,014 1,132Other 15,516 10,209 Total$ 58,694 $ 50,785The increase in other liabilities during 2017 compared to 2016 is primarily due to the inclusion of $2.4 million of otherliabilities from acquired entities.9. DERIVATIVE FINANCIAL INSTRUMENTSInterest Rate SwapsIn order to manage our interest rate exposure, we are party to $100.0 million of active floating to fixed rate swaps. Theseswaps convert our interest payments from LIBOR to a weighted average rate of 1.60% at June 30, 2017.The fair value of the swaps recognized in accrued liabilities and in other comprehensive income (loss) at June 30, 2017 and2016 is as follows (in thousands): Fair Value at June 30,Effective Date NotionalAmountFixed InterestRateMaturity 2017 2016December 19, 2014 20,0001.18%December 19, 2017$8 $(201)December 19, 2014 5,0001.20%December 19, 2017 1 (52)December 18, 2015 15,0001.46%December 19, 2018 (1) (325)December 19, 2015 10,0002.01%December 19, 2019 (106) (460)May 24, 2017 25,0001.88%April 24, 2022 (60) -May 24, 2017 25,0001.67%May 24, 2020 (23) - $(181) $(1,038)The Company reported no losses for the years ended June 30, 2017, 2016, and 2015, as a result of hedge ineffectiveness.Future changes in these swap arrangements, including termination of the agreements, may result in a reclassification of anygain or loss reported in accumulated other comprehensive income (loss) into earnings as an adjustment to interest expense. Accumulated other comprehensive income (loss) related to these instruments is being amortized into interest expenseSource: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.concurrent with the hedged exposure.Foreign Exchange ContractsForward foreign currency exchange contracts are used to limit the impact of currency fluctuations on certain anticipatedforeign cash flows, such as foreign purchases of materials and loan payments between subsidiaries. The Company enters intosuch contracts for hedging purposes only. The Company has designated certain of these currency contracts as hedges, andchanges in the fair value of these contracts are recognized in other comprehensive income until the hedged items arerecognized in earnings. Hedge ineffectiveness, if any, associated with these contracts will be reported in net income. At June30, 2017 and 2016, the Company had outstanding forward contracts related to hedges of intercompany loans with netunrealized gain / (losses) of $(2.8) million and $(0.1) million, respectively, which approximate the unrealized gains or losseson the related loans. The contracts have maturity dates ranging from 2018-2023, which correspond to the relatedintercompany loans. The notional amounts of these instruments, by currency in thousands, are as follows:Currency 2017 2016USD 73,000 -Euro 21,335 2,477Pound Sterling 6,962 594Peso 54,000 -Canadian 20,600 -The table below presents the fair value of derivative financial instruments as well as their classification on the balance sheet atJune 30, (in thousands): Liability Derivatives 2017 2016Derivative designated asBalance Balance hedging instrumentsSheet Sheet Line Item Fair Value Line Item Fair ValueInterest rate swapsAccrued Liabilities $181 Accrued Liabilities $ 1,038Foreign exchange contractsAccrued Liabilities 2,833 Accrued Liabilities 94 $ 3,014 $ 1,132The table below presents the amount of gain (loss) recognized in comprehensive income on our derivative financialinstruments (effective portion) designated as hedging instruments and their classification within comprehensive income forthe periods ended (in thousands): 2017 2016 2015Interest rate swaps $282 $ (743) $ (533)Foreign exchange contracts (3,178) (267) (154) $(2,896) $(1,010) $(687)The table below presents the amount reclassified from accumulated other comprehensive income (loss) to net income for theperiods ended (in thousands):Details aboutAccumulated Affected line itemOther Comprehensive in the StatementsIncome (Loss)Components 2017 2016 2015 of OperationsInterest rate swaps $ 399 $ 567 $ 1,034 Interest expenseForeign exchangecontracts 75 112 - Cost of goods soldForeign exchangecontracts (861) - - Interest expense $(387) $679 $1,034 10. INCOME TAXESThe components of income from continuing operations before income taxes are as follows (in thousands): 2017 2016 2015U.S. Operations$ 16,257 $ 23,996 $ 33,161Non-U.S. Operations 45,675 44,529 42,956 Total$ 61,932 $ 68,525 $ 76,117The Company utilizes the asset and liability method of accounting for income taxes. Deferred income taxes are determinedbased on the estimated future tax effects of differences between the financial and tax bases of assets and liabilities given theprovisions of the enacted tax laws. The components of the provision for income taxes on continuing operations (inthousands) were as shown below: 2017 2016 2015Current: Federal$ 2,229 $ 11,014 $ 9,195State 230 523 556Non-U.S. 13,017 11,514 11,372 Total Current 15,476 23,051 21,123Source: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Deferred: Federal$ 2,141 $ (5,214) $ 556State (290) (1,060) (495)Non-U.S. (1,972) (482) (310) Total Deferred (121) (6,756) (249) Total$ 15,355 $ 16,295 $ 20,874A reconciliation from the U.S. Federal income tax rate on continuing operations to the total tax provision is as follows (inthousands): 2017 2016 2015Provision at statutory tax rate35.0% 35.0% 35.0%State taxes(0.1%) (0.5%) 0.1%Impact of foreign operations(8.0%) (6.7%) (5.0%)Federal tax credits(1.3%) (1.8%) (1.2%)Life insurance proceeds0.0% 0.0% 0.0%Contributions, net0.0% (1.3%) 0.0%Other(0.8%) (0.9%) (1.5%)Effective income tax provision24.8% 23.8% 27.4%Changes in the effective tax rates from period to period may be significant as they depend on many factors including, but notlimited 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, 2017 was impacted by thefollowing items: (i) a benefit of $0.6 million related to the R&D tax credit and (ii) a benefit of $5.3 million due to the mix ofincome earned in jurisdictions with beneficial tax rates.The Company's income tax provision from continuing operations for the fiscal year ended June 30, 2016 was impacted by thefollowing items: (i) a net benefit of $0.9 million related to a bargain-sale of idle property to a charitable organization, and(ii) a benefit of $0.7 million related to the R&D tax credit, and (iii) a benefit of $4.9 million due to the mix of income earnedin jurisdictions with beneficial tax rates.The Company's income tax provision from continuing operations for the fiscal year ended June 30, 2015 was impacted by thefollowing items: (i) a benefit of $0.5 million related to the R&D tax credit that expired during the fiscal year on December 31,and (ii) a benefit of $4.0 million due to the mix of income earned in jurisdictions with beneficial tax rates.Significant components of the Company’s deferred income taxes are as follows (in thousands): 2017 2016Deferred tax liabilities: Depreciation and amortization$ (55,041) $ (27,437)Total deferred tax liability$ (55,041) $ (27,437) Deferred tax assets: Accrued compensation$ 4,127 $ 3,707 Accrued expenses and reserves 6,886 6,154 Pension 26,309 29,730 Inventory 2,677 2,548 Other 939 1,432 Net operating loss and credit carry forwards 6,773 5,948Total deferred tax asset$ 47,711 $ 49,519 Less: Valuation allowance (1,530) (649) Net deferred tax asset (liability)$ (8,860) $21,433The Company estimates the degree to which deferred tax assets, including net operating loss and credit carry forwards willresult in a benefit based on expected profitability by tax jurisdiction and provides a valuation allowance for tax assets andloss carry forwards that it believes will more likely than not go unrealized. The valuation allowance at June 30, 2017 appliesto state and foreign loss carry forwards, which management has concluded that it is more likely than not that these tax benefitswill not be realized. The increase (decrease) in the valuation allowance from the prior year was less than $0.9 million.As of June 30, 2017, the Company had gross state net operating loss ("NOL") and credit carry forwards of approximately $56.6million and $2.5 million, respectively, which may be available to offset future state income tax liabilities and expire atvarious dates from 2017 through 2036. In addition, the Company had foreign NOL carry forwards of approximately $2.4million, $1.9 million of which carry forward indefinitely and $0.5 million that carry forward for 10 years.In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. The newstandard simplifies several aspects of the accounting for employee share-based payment transactions, including theaccounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statementof cash flows. Under this guidance, a company recognizes all excess tax benefits and tax deficiencies as income tax expenseor benefit in the income statement. This change eliminates the notion of the additional paid-in capital pool and reduces thecomplexity in accounting for excess tax benefits and tax deficiencies. The Company has decided to adopt this ASU prior tothe effective date as prescribed within the ASU. The primary impact of our adoption was the recognition of excess tax benefitsrelated to equity compensation in our provision for income taxes rather than paid-in capital, which is a change required to beapplied on a prospective basis in accordance with the new guidance. Accordingly, we recorded discrete income tax benefitsin the consolidated statements of income of $0.6 million during the fiscal year ended June 30, 2017, for excess tax benefitsrelated to equity compensation.Source: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.A provision has not been made for U.S. or additional non-U.S. taxes on $229.3 million of undistributed earnings ofinternational subsidiaries that could be subject to taxation if remitted to the U.S. It is not practicable to estimate the amountof tax that might be payable on the remaining undistributed earnings. Our intention is to reinvest these earnings permanentlyor to repatriate the earnings only when it is tax effective to do so. Accordingly, we believe that U.S. tax on any earnings thatmight be repatriated would be substantially offset by U.S. foreign tax credits.The total provision for income taxes included in the consolidated financial statements was as follows (in thousands): 2017 2016 2015Continuing operations$ 15,355 $ 16,295 $ 20,874Discontinued operations (27) (55) (259)Total Provision$ 15,328 $ 16,240 $ 20,615The changes in the amount of gross unrecognized tax benefits during 2016, 2015 and 2014 were as follows (in thousands): 2017 2016 2015Beginning Balance$2,978 $ 1,054 $ 1,033 Additions based on tax positions relatedto the current year 12 2,125 17 Additions for tax positions of prior years 1 - 4 Reductions for tax positions of prioryears - (201) -Ending Balance$ 2,991 $ 2,978 $1,054If the unrecognized tax benefits in the table above were recognized in a future period, $2.5 million of the unrecognized taxbenefit 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 aresult, it is reasonably expected that net unrecognized tax benefits from these various jurisdictions would be recognizedwithin the next twelve months. The recognition of these tax benefits is not expected to have a material impact to theCompany's financial statements. The Company does not reasonably expect any other significant changes in the next twelvemonths. The following tax years, in the major tax jurisdictions noted, are open for assessment or refund:CountryYears Ending June 30,United States2014 to 2017Canada2013 to 2017Germany2012 to 2017Ireland2017 to 2017Portugal2014 to 2017United Kingdom2013 to 2017The Company’s policy is to include interest expense and penalties related to unrecognized tax benefits within the provisionfor income taxes on the consolidated statements of operations. At both June 30, 2017 and June 30, 2016, the company hadless than $0.1 million for accrued interest expense on unrecognized tax benefits.11. COMMITMENTSThe 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, 2017, 2016, and 2015 was approximately $8.0million, $6.6 million and $6.1 million, respectively.The gross minimum annual rental commitments under non-cancelable operating leases, principally real-estate at June 30,2017:(in thousands) Lease Sublease Net obligation2018 $8,393 $303 $8,0902019 8,303 328 7,9752020 5,744 333 5,4112021 5,022 338 4,6842022 5,566 344 5,222Thereafter 12,637 2,762 9,87512. CONTINGENCIESFrom time to time, the Company is subject to various claims and legal proceedings, including claims related to environmentalremediation, either asserted or unasserted, that arise in the ordinary course of business. While the outcome of theseproceedings and claims cannot be predicted with certainty, the Company’s management does not believe that the outcome ofany of the currently existing legal matters 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’smanagement considers a potential loss probable and can reasonably estimate such potential loss.13. STOCK-BASED COMPENSATION AND PURCHASE PLANSStock-Based Compensation PlansUnder incentive compensation plans, the Company is authorized to make grants of stock options, restricted stock andSource: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.performance share units to provide equity incentive compensation to key employees and directors. The stock award programoffers employees and directors the opportunity to earn shares of our stock over time, rather than options that give theemployees and directors the right to purchase stock at a set price. The Company has stock plans for directors, officers andcertain key employees. Total compensation cost recognized in income for equity based compensation awards was $5.0 million, $5.1 million, and $3.8million for the years ended June 30, 2017, 2016, and 2015, respectively, primarily within Selling, General, and AdministrativeExpenses. The total income tax benefit recognized in the consolidated statement of operations for equity-basedcompensation plans was $1.9 million, $1.8 million, and $1.3 million for the years ended June 30, 2017, 2016 and 2015,respectively.There were 227,986 shares of common stock reserved for issuance under various compensation plans at June 30, 2017. Restricted Stock AwardsThe Company may award shares of restricted stock to eligible employees and non-employee directors of the Company at nocost, giving them in most instances all of the rights of stockholders, except that they may not sell, assign, pledge or otherwiseencumber such shares and rights during the restriction period. Such shares and rights are subject to forfeiture if certainemployment conditions are not met. During the restriction period, recipients of the shares are entitled to dividend equivalentson such shares, providing that such shares are not forfeited. Dividends are accumulated and paid out at the end of therestriction period. During 2017, 2016, and 2015, the Company granted 51,563, 48,984, and 43,598 shares, respectively, ofrestricted stock to eligible participants. Restrictions on the stock awards generally lapse between fiscal 2018 and fiscal 2020. For the years ended June 30, 2017, 2016, and 2015, $3.6 million, $2.6 million, and $2.3 million, respectively, was recognizedas compensation expense related to restricted stock awards. Substantially all awards are expected to vest.A summary of restricted stock awards activity during the year ended June 30, 2017 is as follows: Restricted Stock Awards Number Aggregate of Intrinsic Shares ValueOutstanding, June 30, 2016104,525 $ 8,636,901Granted51,563 Exercised / vested(36,422) $ 841,757Canceled(3,963) Outstanding, June 30, 2017115,703 $ 10,494,262Restricted stock awards granted during 2017, 2016 and 2015 had a weighted average grant date fair value of $85.07, $77.38,and $76.47, respectively. The grant date fair value of restricted stock awards is determined based on the closing price of theCompany’s common stock on the date of grant. The total intrinsic value of awards exercised during the years endedJune 30, 2017, 2016, and 2015 was $0.8 million, $1.1 million, and $2.8 million, respectively. As of June 30, 2017, there was $3.4 million of unrecognized compensation costs related to awards expected to be recognizedover a weighted-average period of 1.44 years.Executive Compensation ProgramThe Company operates a compensation program for key employees. The plan contains both an annual component as well as along-term component. Under the annual component, participants may elect to defer up to 50% of their annual incentivecompensation in restricted stock which is purchased at a discount to the market. Additionally, non-employee directors of theCompany 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 suchshares are not forfeited. Dividend equivalents are accumulated and paid out at the end of the restriction period. Therestrictions on the units expire after three years. At June 30, 2017 and 2016, respectively, 35,707 and 30,597 shares ofrestricted stock units are outstanding and subject to restrictions that lapse between fiscal 2018 and fiscal 2020. Thecompensation expense associated with this incentive program is charged to income over the restriction period. The Companyrecorded compensation expense related to this program of $0.4 million, $0.2 million, and $0.3 million for the years endedJune 30, 2017, 2016 and 2015, respectively.As of June 30, 2017, there was $0.3 million of unrecognized compensation costs related to awards expected to be recognizedover a weighted-average period of 1.32 yearsThe fair value of the awards under the annual component of this incentive program is measured using the Black-Scholesoption-pricing model. Key assumptions used to apply this pricing model are as follows: 2017 2016 2015Risk-free interest rates 0.71% 1.10% 0.88%Expected life of option grants (inyears) 3 3 3Expected volatility of underlyingstock 25.7% 26.6% 32.0%Expected quarterly dividends (pershare)$ 0.14 $ 0.12 $ 0.10Under the long-term component, grants of performance share units (“PSUs”) are made annually to key employees and theshare units are earned based on the achievement of certain overall corporate financial performance targets over theSource: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.performance period. At the end of the performance period, the number of shares of common stock issued will be determinedby adjusting upward or downward from the target in a range between 50% and 200%. No shares will be issued if the minimumperformance threshold is not achieved. The final performance percentage, on which the payout will be based, considering theperformance metrics established for the performance period, will be certified by the Compensation Committee of the Board ofDirectors. Beginning in 2017, awards granted by the Committee provide that the PSUs will be converted to shares of common stock ifthe Company’s EBITDA (earnings before interest, taxes, depreciation and amortization) and return on invested capital meetspecified levels approved by the Committee. A participant’s right to any shares that are earned will cliff vest in three years. An executive whose employment terminates prior to the vesting of any award for a reason other than death, disability,retirement, or following a change in control, will forfeit the shares represented by that award. In certain circumstances, such asdeath, disability, or retirement, PSUs are paid on a pro-rata basis. In the event of a change in control, vesting of the awardsgranted is accelerated.A summary of the awards activity under the executive compensation program during the year ended June 30, 2017 is asfollows: Annual Component Performance Stock Units Weighted Number Average Aggregate Number Aggregate of Exercise Intrinsic of Intrinsic Shares Price Value Shares ValueNon-vested, June 30,201630,597 $ 52.62 $ 286,195 54,736 $ 3,926,057Granted16,661 61.97 30,326 Vested(11,226) $ 45.65 $ 472,362 (26,749) $ 1,814,874 Forfeited(325) 59.52 (5,422) Non-vested, June 30,201735,707 $ 59.11 $ 318,334 52,890 $ 4,254,256Restricted stock awards granted under the annual component of this program in fiscal 2017, 2016, and 2015 had a grant datefair value of $87.05, $82.79, and $80.98, respectively. The PSUs granted in fiscal 2017, 2016 and 2015 had a grant date fairvalue of $83.92, $76.61, and $74.82, respectively. The total intrinsic value of awards vested under the executivecompensation program during the years ended June 30, 2017 and June 30, 2016 was $2.3 million, and $1.5 million for theyear ended June 30, 2015.The Company recognized compensation expense related to the PSUs of $1.0 million, $2.3 million, and $1.3 million for theyears ended June 30, 2017, 2016 and 2015 respectively based on the probability of the performance targets being met. Thetotal unrecognized compensation costs related to non-vested performance share units was $1.3 million at June 30, 2017,which is expected to be recognized over a weighted average period of 1.41 years.Employee Stock Purchase PlanThe Company has an Employee Stock Purchase Plan that allows employees to purchase shares of common stock of theCompany at a discount from the market each quarter. The ESPP plan, which was effective as of July 1, 2005, providedemployees the option to purchase Standex stock at a discount of 5%. The Plan was modified, effective as of April 1, 2017, toincrease the stock purchase discount to 15% and is considered a compensatory Plan. Under this new Plan, shares of our stockmay be purchased by employees quarterly at 85% of the fair market value on the last day of each quarter. The 15% discount isrecorded as a component of SG&A in the Company’s Consolidated Statements of Operations. Shares of stock reserved for theplan were 86,937 at June 30, 2017. Shares purchased under this plan aggregated to 3,742, 3,809, and 3,382 in 2017, 2016 and2015, respectively, at an average price of $84.17, $75.66, and $74.42, respectively. 14. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)The components of the Company’s accumulated other comprehensive income (loss) at June 30 are as follows (in thousands): 2017 2016Foreign currency translation adjustment $ (25,107) $ (24,636)Unrealized pension losses, net of tax (86,646) (92,698)Unrealized losses on derivative instruments, net of tax (4,185) (641)Total $ (115,938) $ (117,975)15. DISCONTINUED OPERATIONSIn pursuing our business strategy, we have divested certain businesses and recorded activities of these businesses asdiscontinued operations.On March 30, 2012, Air Distribution Products Group, (“ADP”) was sold to a private equity buyer for consideration of $16.1million consisting of $13.1 million in cash and a $3.0 million promissory note from the buyer. The note was secured by amortgage on the ADP real estate sold in the transaction in Detroit Lakes, MN, Medina, NY, and Powder Springs, GA. Duringthe first quarter 2016, the private equity buyer of ADP sold one of the facilities securing the note. The Company released allmortgages on the properties and accepted an advanced payment of $2.8 million during October 2015 in order to reducerepayment risk and settle all obligations under the note. The Company recorded a $0.2 million loss in discontinuedoperations during the first quarter 2016 related to this transaction.During 2014, the Company received notice that its obligations under a guarantee provided to the buyers of ADP wereSource: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.triggered as a result of its withdrawal from both of the multi-employer pension plans in which ADP previously participated. The last of these obligations were settled in July of fiscal year 2016 by a $0.5 million payment to the final multi-employerplan.The following table summarizes the Company’s discontinued operations activity, by operation, for the years ended June 30,(in thousands): Year Disposed2017 2016 2015Income (loss) beforetaxes: American FoodserviceCompany (1)2014 $(8) $3 $ (492)Air DistributionProducts Group2012 (38) (225) (137)Other loss fromdiscontinuedoperations (13) (7) (130)Income (loss) before taxes fromdiscontinued operations (59) (229) (759)(Provision) benefit for tax 27 55 259Net income (loss) fromdiscontinued operations $ (32) $ (174) $ (500)(1) American Foodservice Company incurred a pretax operational loss of $3.5 million and pretax loss on sale of $4.8million in 2014.Assets and liabilities related to discontinued operations to be retained by the Company are recorded in the ConsolidatedBalance Sheets at June 30 under the following captions (in thousands): 2017 2016Current assets$ - $ - Non-current assets 14 14Current liabilities 786 1,204Non-current liabilities - 5516. RESTRUCTURINGThe Company has undertaken a number of initiatives that have resulted in severance, restructuring, and related charges. Asummary of charges by initiative is as follows (in thousands): Involuntary Employee Severance and Year Ended June 30, Benefit Costs Other Total 2017 RestructuringInitiatives $ 1,863 $3,590 $ 5,453 Prior YearInitiatives - 372 372 Total expense $ 1,863 $ 3,962 $ 5,825 2016 RestructuringInitiatives $ 1,046 $ 893 $ 1,939 Prior YearInitiatives 96 2,197 2,293 Total expense $ 1,142 $ 3,090 $ 4,232 2015 RestructuringInitiatives $ 847 $ 2,319 $ 3,166 Prior YearInitiatives 11 266 277 Total expense $ 858 $ 2,585 $ 3,4432017 Restructuring InitiativesThe Company continues to focus on our efforts to reduce cost and improve productivity across our businesses, particularlythrough headcount reductions, facility closures, and consolidations. The Company’s 2017 initiatives are from three primaryareas. First, Engineering Technologies incurred $3.6 million of expense related to manufacturing footprint optimization atthe Enginetics, Huber Heights, Ohio facility which allowed us to close its East Lake, Ohio facility. We vacated and sublet theEast Lake facility for approximately the same aggregate lease costs for which we are obligated under the lease. Second, wespent $1.2 million to gain organizational efficiencies within the Food Service Equipment segment. Finally, we spent $0.5million to move our Electronics facility in China due to government directives related to all businesses in the area where ourfacility was located.The Company anticipates further restructuring charges in 2018 based upon market conditions and cost reduction activities toimprove our competitive advantage. Activity in the reserves related to 2017 restructuring initiatives is as follows (in thousands):Source: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Involuntary Employee Severance and Benefit Costs Other TotalRestructuring Liabilities atJune 30, 2016$ - $ - $ - Additions 1,927 3,512 5,439 Payments (1,421) (2,711) (4,132)Restructuring Liabilities atJune 30, 2017$506 $ 801 $ 1,3072016 Restructuring InitiativesThe Company’s 2016 initiatives included the movement of manufacturing from a legacy Canadian facility into our newlyacquired Northlake facility and a reduction of personnel in those locations impacted by the slowdown in the oil and gasmarket.Restructuring expenses during fiscal year 2016 were $4.2 million primarily related to a $1.7 million non-cash charge fromthe sale of a vacant property and a $0.7 million non-cash charge to discontinue a product line at our Refrigeration Solutionsgroup. Restructuring activities related to all prior year initiatives are substantially complete.Activity in the reserves related to prior year restructuring initiatives is as follows (in thousands): Involuntary Employee Severance and Benefit Costs Other TotalRestructuring Liabilities atJune 30, 2016$ 74 $ 256 $ 330 Additions - 230 230 Payments (74) (49) (123)Restructuring Liabilities atJune 30, 2017$ - $ 437 $ 437The Company’s total restructuring expenses by segment are as follows (in thousands): Involuntary Employee Severance and Year Ended June 30, Benefit Costs Other TotalFiscal Year 2017 Food Service Equipment $ 1,101 $ 85 $ 1,186Engineering Technologies 809 3,070 3,879Engraving 6 - 6Electronics 11 488 499Corporate and Other (64) 319 255 Total expense $ 1,863 $ 3,962 $ 5,825 Fiscal Year 2016 Food Service Equipment $ 138 $ 2,841 $ 2,979Engineering Technologies 160 - 160Engraving 92 - 92Electronics 624 217 841Corporate and Other 128 32 160 Total expense $ 1,142 $ 3,090 $ 4,232 Fiscal Year 2015 Food Service Equipment $ 215 $ 2,363 $ 2,578Engineering Technologies 75 - 75Engraving 220 - 220Electronics 348 222 570 Total expense $ 858 $ 2,585 $ 3,443 17. EMPLOYEE BENEFIT PLANSRetirement PlansThe Company has defined benefit pension plans covering certain current and former employees both inside and outside of theU.S. The Company’s pension plan for U.S. salaried employees was frozen as of December 31, 2007, and participants in theplan ceased accruing future benefits. The Company’s pension plan for U.S. hourly employees was frozen for substantially allparticipants as of July 31, 2013, and replaced with a defined contribution benefit plan. Source: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Net periodic benefit cost for U.S. and non-U.S. plans included the following components (in thousands): U.S. Plans Foreign Plans Year Ended June 30, Year Ended June 30, 2017 2016 2015 2017 2016 2015Service Cost$3 $70 $211 $37 $34 $44 Interest Cost 10,451 11,489 10,476 1,022 1,428 1,618 Expected returnon plan assets (13,761) (13,864) (13,954) (1,152) (1,294) (1,474)Recognized netactuarial loss 4,760 3,979 3,945 1,016 835 750 Amortizationof priorservice cost(benefit) - 14 54 (48) (49) (53)Curtailment - - 244 - - -Net periodicbenefit cost(benefit)$1,453 $1,688 $976 $875 $954 $885The following table sets forth the funded status and amounts recognized as of June 30, 2017 and 2016 for our U.S. and foreigndefined benefit pension plans (in thousands): U.S. Plans Foreign Plans Year Ended June 30, Year Ended June 30, 2017 2016 2017 2016Change in benefit obligation Benefit obligation at beginning of year$269,162 $252,215 $41,820 $43,681Service cost 3 70 37 34Interest cost 10,451 11,489 1,022 1,428Actuarial loss (gain) (3,624) 20,964 1,016 3,929Benefits paid (16,029) (15,576) (1,352) (1,686)Foreign currency exchange rate - - (402) (5,566)Projected benefit obligation at end of year$259,963 $269,162 $42,141 $41,820Change in plan assets Fair value of plan assets at beginning of year$197,850 $204,710 $35,007 $37,366Actual return on plan assets 13,223 8,510 2,677 3,670Employer contribution 284 206 1,143 1,264Benefits paid (16,029) (15,576) (1,352) (1,686)Foreign currency exchange rate - - (554) (5,607)Fair value of plan assets at end of year$195,328 $197,850 $36,921 $35,007 Funded Status$(64,635) $(71,312) $(5,220) $(6,813)Amounts recognized in the consolidated balance sheetsconsists of: Prepaid Benefit Cost$- $- $1,324 $422Current liabilities (220) (248) (330) (286)Non-current liabilities (64,415) (71,064) (6,330) (6,949)Net amount recognized$(64,635) $(71,312) $(5,336) $(6,813) Unrecognized net actuarial loss$129,207 $137,053 $8,484 $10,122Unrecognized prior service cost - - (33) (81)Accumulated other comprehensive income,pre-tax$129,207 $137,053 $8,451 $10,041The accumulated benefit obligation for all defined benefit pension plans was $301.6 million and $310.4 million at June 30,2017 and 2016, respectively.The estimated actuarial net loss and prior service benefit for the defined benefit pension plans that will be amortized fromaccumulated other comprehensive income into net periodic benefit cost over the next fiscal year are $5.5 million and less than$0.1 million, respectively.Plan Assets and AssumptionsThe fair values of the Company’s pension plan assets at June 30, 2017 and 2016 by asset category, as classified in the threelevels of inputs described in Note 1 under the caption Fair Value of Financial Instruments, are as follows (in thousands): June 30, 2017 Total Level 1 Level 2 Level 3Cash and cashequivalents$11,160 $452 $10,708 $ - Source: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Common andpreferred stocks 94,951 16,976 77,975 - U.S. Governmentsecurities 11,989 - 11,989 - Corporate bonds andother fixed incomesecurities 97,691 6,728 90,963 - Other 16,458 - 16,458 - $232,249 $24,156 $208,093 $ - June 30, 2016 Total Level 1 Level 2 Level 3Cash and cashequivalents$6,924 $511 $6,413 $ - Common andpreferred stocks 91,536 17,227 74,309 - U.S. Governmentsecurities 15,032 - 15,032 - Corporate bonds andother fixed incomesecurities 107,520 6,328 101,192 - Other 11,845 - 11,845 - $232,857 $24,066 $208,791 $ - Asset allocation at June 30, 2017 and 2016 and target asset allocations for 2017 are as follows: U.S. Plans Foreign Plans Year Ended June 30, Year Ended June 30,Asset Category2017 2016 2017 2016Equity securities33% 31% 21% 26%Debt securities29% 34% 44% 57%Global balanced securities26% 25% 28% 13%Other12% 10% 7% 4%Total100% 100% 100% 100% 2017Asset Category – TargetU.S. U.K.Equity securities32% 18%Debt and market neutral securities33% 45%Global balanced securities25% 32%Other10% 5%Total100% 100%Our investment policy for the U.S. pension plans targets a range of exposure to the various asset classes. Standex rebalancesthe portfolio periodically when the allocation is not within the desired range of exposure. The plan seeks to provide returns inexcess of the various benchmarks. The benchmarks include the following indices: S&P 500; Citigroup PMI EPAC; CitigroupWorld Government Bond and Barclays Aggregate Bond. A third-party investment consultant tracks the plan’s portfoliorelative to the benchmarks and provides quarterly investment reviews which consist of a performance and risk assessment onall investment managers and on the portfolio. Certain managers within the plan use, or have authorization to use, derivative financial instruments for hedging purposes, thecreation of market exposures and management of country and asset allocation exposure. Currency speculation derivatives arestrictly prohibited.Year Ended June 302017 2016 2015Plan assumptions - obligation Discount rate1.90 - 4.00% 1.50 - 4.00% 2.30 - 4.70%Rate of compensation increase3.70% 3.30% 3.80% Plan assumptions - cost Discount rate1.50 - 4.00% 2.30 - 4.70% 2.90 - 4.50%Expected return on assets3.75 - 7.10% 3.90 - 7.10% 4.20 - 7.25%Rate of compensation increase3.30% 3.75% 3.80%Included in the above are the following assumptions relating to the obligations for defined benefit pension plans in theUnited States at June 30, 2017; a discount rate of 4.0% and expected return on assets of 7.10%. The U.S. defined benefitpension plans represent the majority of our pension obligations. The expected return on plan assets assumption is based onour expectation of the long-term average rate of return on assets in the pension funds and is reflective of the current andprojected asset mix of the funds. The discount rate reflects the current rate at which pension liabilities could be effectivelySource: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.···settled at the end of the year. The discount rate is determined by matching our expected benefit payments from a stream ofAA- 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: 2018, $17.4 million; 2019, $17.2 million; 2020, $17.3million; 2021, $17.1 million; 2022, $17.5 and thereafter, $87.8 million. The Company expects to make $1.4 million ofcontributions to its pension plans in 2018.The Company operates a defined benefit plan in Germany which is unfunded.Multi-Employer Pension PlansWe contribute to a number of multiemployer defined benefit plans under the terms of collective bargaining agreements thatcover our union-represented employees. These plans generally provide for retirement, death and/or termination benefits foreligible 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 ofother participating employers.If a participating employer stops contributing to the multiemployer plan, the unfunded obligations of the plan maybe 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 anamount based on the underfunded status of the plan, referred to as a withdrawal liability. However, cessation ofparticipation in a multiemployer plan and subsequent payment of any withdrawal liability is subject to thecollective bargaining process.The following table outlines the Company’s participation in multiemployer pension plans for the periods ended June 30,2017, 2016, and 2015, and sets forth the yearly contributions into each plan. The “EIN/Pension Plan Number” columnprovides the Employer Identification Number (“EIN”) and the three-digit plan number. The most recent Pension ProtectionAct zone status available in 2016 and 2015 relates to the plans’ two most recent fiscal year-ends. The zone status is based oninformation that we received from the plans’ administrators and is certified by each plan’s actuary. Among other factors, planscertified in the red zone are generally less than 65% funded, plans certified in the orange zone are both less than 80% fundedand have an accumulated funding deficiency or are expected to have a deficiency in any of the next six plan years, planscertified 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/orangezone plans, or a rehabilitation plan (“RP”) for red zone plans, is either pending or has been implemented. For all plans, theCompany’s contributions do not exceed 5% of the total contributions to the plan in the most recent year.Pension FundEIN/PlanNumberPension Protection ActZone StatusContributionsSurchargeImposed?ExpirationDate ofCollectiveBargainingAgreement20172016FIP/RPStatus 2017 2016 2015New EnglandTeamsters andTruckingIndustryPension Fund04-6372430-001RedRedYes/Implemented$530 $485 $437 No4/15/2018 IAM NationalPension Fund,NationalPension Plan51-6031295-002GreenGreenN/A 633 575 633 No05/31/2018-10/04/2019 $1,163 $1,060 $1,070 Retirement Savings PlansThe 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 theBoard of Directors, may make contributions on behalf of our employees under the plans. Company contributions were $4.0million, $4.0 million, and $3.8 million for the years ended June 30, 2017, 2016, and 2015, respectively. At June 30, 2017, thesalaried plan holds approximately 72,000 shares of Company common stock, representing approximately 6% of the holdingsof the plan.Postretirement Benefits Other Than PensionsThe Company sponsors an unfunded postretirement medical plan covering certain full-time employees who retire and haveattained the requisite age and years of service. Retired employees are required to contribute toward the cost of coverageaccording to various established rules.The accumulated benefit obligation of the post-retirement medical plan was less than $0.2 million at both June 30, 2017 andSource: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.•••••June 30, 2016. The plan holds no assets as the Company makes contributions as benefits are due. Contributions for each ofthe last two fiscal years were less than $0.1 million. The net periodic benefit cost for each of the last three fiscal years was lessthan $0.1 million. A 1% increase in the assumed health care cost trend rate does not impact either the accumulated benefitobligation or the net postretirement cost, as the employer contribution for each participant is a fixed amount.18. INDUSTRY SEGMENT INFORMATIONThe Company has determined that it has five reportable segments organized around the types of product sold:Food Service Equipment – an aggregation of eight operating segments that manufacture and sell commercial foodservice equipment;Engraving – provides mold texturizing, slush molding tools, project management and design services, rollengraving, hygiene product tooling, low observation vents for stealth aircraft, and process machinery for a numberof industries;Engineering Technologies – provides net and near net formed single-source customized solutions in themanufacture of engineered components for the aviation, aerospace, defense, energy, industrial, medical, marine, oiland gas, and manned and unmanned space markets.Electronics – manufacturing and selling of electronic components for applications throughout the end-user marketspectrum; andHydraulics – manufacturing and selling of single and double-acting telescopic and piston rod hydraulic cylinders.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 Corporatesegment consist primarily of cash, office equipment, and other non-current assets.Given the nature of our corporate expenses, management has concluded that it would not be appropriate to allocate theexpenses associated with corporate activities to our operating segments. These corporate expenses include the costs for thecorporate headquarters, salaries and wages for the personnel in corporate, professional fees related to corporate matters andcompliance efforts, stock-based compensation and post-retirement benefits related to our corporate executives, officers anddirectors, and other compliance related costs. The Company has a process to allocate and recharge certain direct costs to theoperating segments when such direct costs are administered and paid at corporate. Such direct expenses that are recharged onan intercompany basis each month include such costs as insurance, workers’ compensation programs, audit fees and pensionexpense. The accounting policies applied by the reportable segments are the same as those described in the Summary ofAccounting Policies footnote to the consolidated financial statements. There are no differences in accounting policies whichwould be necessary for an understanding of the reported segment information.IndustrySegments (in thousands)Net Sales Depreciation and Amortization 2017 2016 2015 2017 2016 2015Food ServiceEquipment$380,970 $ 381,867 $ 408,706 $5,206 $ 5,030 $ 5,176Engraving 105,943 124,120 110,781 3,100 3,403 3,497EngineeringTechnologies 90,506 82,235 97,018 5,976 5,363 4,278Electronics 136,689 118,319 114,196 4,960 3,200 2,759Hydraulics 41,150 45,045 41,441 730 651 665Corporate andOther - - - 343 306 309Total$ 755,258 $ 751,586 $ 772,142 $20,315 $17,953 $ 16,684 Income (Loss) From Operations Capital Expenditures(2) 2017 2016 2015 2017 2016 2015Food ServiceEquipment$ 33,436 $ 40,142 $ 37,456 $5,088 $4,560 $4,791Engraving 25,584 29,579 24,250 7,807 4,031 5,856EngineeringTechnologies 9,662 8,258 13,097 6,510 6,562 8,025Electronics 27,663 21,104 20,884 4,000 2,796 2,298Hydraulics 6,712 7,947 7,013 1,058 988 784Restructuringcharge (5,825) (4,232) (3,443) - - - Acquisition-related costs (7,843) - - - - - Gain on sale ofreal estate 652 - - - - - Otheroperatingincome(expense),net (1) - (7,458) 438 - - - Corporate (25,015) (24,996) (21,051) 418 96 268Total$ 65,026 $ 70,344 $ 78,644 $24,881 $19,033 $22,022Interestexpense (4,043) (2,871) (3,161) Other, net 949 1,052 634 Income fromcontinuingoperationsbeforeincome taxes$ 61,932 $ 68,525 $76,117 Source: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(1) Other operating expense in 2016 consists primarily of a $7.3 million charge to adjust the Roll, Plate, and Machinery business in the Engraving segment to itsnet realizable value. Amounts in 2015 are gains on insurance proceeds related to an event at an Engineering Technologies facility.(2) Includes capital expenditures in accounts payable of $0.5 million, $2.1 million, and $0.9 million at June 30, 2017, 2016, and 2015 respectively. Restructuring Expense 2017 2016 2015 Food ServiceEquipment$1,186 $ 2,979 $2,578 Engraving 6 92 220 EngineeringTechnologies 3,880 160 75 Electronics 498 841 570 Hydraulics - - - Corporate andOther 255 160 - Totalexpense$ 5,825 $ 4,232 $3,443 Goodwill Identifiable Assets 2017 2016 2017 2016 (4)Food ServiceEquipment$63,464 $ 56,804 $ 243,414 $ 206,875Engraving 20,000 19,935 115,664 117,026EngineeringTechnologies 44,120 44,321 150,805 147,866Electronics 112,047 33,235 292,776 114,001Hydraulics 3,059 3,059 21,405 19,084Corporate & Other (3) - - 43,612 85,605Total$ 242,690 $ 157,354 $867,676 $ 690,457(3) The decrease of Corporate identifiable assets in the periods presented reflects the use of foreign corporate cash in 2017 to acquire Standex Electronics Japan. Seediscussion related to the purchase in Note 2 of the consolidated financial statements.(4) The identified assets as of June 30, 2016 for certain segments have been revised from amounts previously reported due to certain immaterial allocationdifferences. Net sales (5) 2017 2016 2015United States$523,266 $ 548,058 $ 561,923Asia Pacific 86,480 70,269 64,840EMEA (6) 124,990 107,765 117,816Other Americas 20,522 25,494 27,563Total$ 755,258 $ 751,586 $ 772,142(5) Net sales were identified based on geographic location where our products and services were initiated.(6) EMEA consists primarily of Europe, Middle East and S. Africa.Long-lived assets 2017 2016 2015United States$84,365 $ 76,545 $ 76,274Asia Pacific 30,268 7,035 7,047EMEA (6) 15,816 17,287 18,604Other Americas 2,711 5,819 6,611Total$133,160 $ 106,686 $ 108,536(6) EMEA consists primarily of Europe, Middle East and S. Africa.19. INSURANCE PROCEEDSThe Company recorded $0.4 million in 2015 as a component of other operating income net, from insurance proceeds wereceived related to a catastrophic failure of a large vertical machining center located at our Engineering Technologies facilityin Massachusetts.Source: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(1)20. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)The unaudited quarterly results of operations for the years ended June 30, 2017 and 2016 are as follows (in thousands, exceptfor per share data): 2017 First Second Third FourthNet sales$179,600 $ 173,854 $184,715 $ 217,089Gross profit 61,776 56,894 61,348 72,736Net income 14,344 10,442 7,660 14,131EARNINGSPER SHARE(1) Basic$1.13 $0.82 $0.60 $1.12 Diluted$1.12 $0.82 $0.60 $1.11 2016 First Second Third FourthNet sales$ 198,398 $ 181,948 $ 177,465 $ 193,775Gross profit 68,552 58,235 58,638 66,828Net income 15,981 12,371 11,516 12,188EARNINGSPER SHARE(1) Basic$1.26 $0.97 $0.91 $0.96 Diluted$1.25 $0.96 $0.91 $0.95Basic and diluted earnings per share are computed independently for each reporting period. Accordingly, thesum of the quarterly earnings per share amounts may not agree to the year-to-date amounts.During the fourth quarter of fiscal 2017, we adopted Accounting Standards Update (ASU) 2016-09 requiring therecognition of excess tax benefits as a component of income tax expense which were historically recognized in equity. Asrequired, our Q1-Q3 2017 results have been recast to allocate $0.6 million of the benefit to the applicable periods. Inaddition, the ASU requires a prospective update to the treasury method of calculating weighted average diluted sharesoutstanding resulting in the inclusion of additional shares in our diluted EPS calculation.21. DISPOSAL OF A BUSINESSDuring the first quarter of fiscal year 2017, the Company sold its U.S. Roll Plate and Machinery business, as it was notstrategic and did not meet our growth and return expectations. This divestiture also allows the Company’s management tofocus on higher growth and better return businesses within the Engraving segment.During the fourth quarter of fiscal year 2016, the Company recorded a $7.3 million non-cash loss to adjust the net assets ofthe business to their net realizable value. The expense is recorded as a component of Other Operating Income, net. Thesale of the business does not constitute a significant strategic shift that will have a major effect on the entity’s operationsand financial results.22. SUBSEQUENT EVENTOn August 2, 2017, the Company announced that it had acquired Italy-based Piazza Rosa Group, a leading provider of moldand tool treatment and finishing services for the automotive and consumer products markets. Privately held Piazza RosaGroup reported consolidated revenues of €9.4M for the year ended December 31, 2016. The acquisition closed during July2017, and will be reporting operating results into our Engraving segment.REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMBoard of Directors and StockholdersStandex International CorporationWe have audited the accompanying consolidated balance sheets of Standex International Corporation (a Delawarecorporation) and subsidiaries (the “Company”) as of June 30, 2017 and 2016, and the related consolidated statements ofincome, comprehensive income, changes in stockholders’ equity, and cash flows for each of the three years in the periodended June 30, 2017. These financial statements are the responsibility of the Company’s management. Our responsibility isto 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 (UnitedStates). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financialstatements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amountsand disclosures in the financial statements. An audit also includes assessing the accounting principles used and significantSource: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our auditsprovide a reasonable basis for our opinion.In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financialposition of Standex International Corporation and subsidiaries as of June 30, 2017 and 2016, and the results of theiroperations and their cash flows for each of the three years in the period ended June 30, 2017 in conformity with accountingprinciples generally accepted in the United States of America.We also have 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, 2017, based on criteria established in the 2013 InternalControl—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO),and our report dated August 28, 2017 expressed an unqualified opinion./s/ GRANT THORNTON LLPBoston, MassachusettsAugust 28, 2017Item 9. Changes In and Disagreements with Accountants on Accounting and Financial DisclosureNot ApplicableItem 9A. Controls and ProceduresThe management of the Company including its Chief Executive Officer, and Chief Financial Officer, have conducted anevaluation 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 theperiod covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded asof June 30, 2016, that the disclosure controls and procedures are effective in ensuring that the information required to bedisclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarizedand reported within the time periods specified in the Commission's rules and forms and (ii) that such information isaccumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief FinancialOfficer as appropriate to allow timely decisions regarding required disclosure. SEC guidance permits the exclusion of an evaluation of the effectiveness of a registrant's disclosure controls and proceduresas they relate to the internal control over financial reporting for an acquired business during the first year following suchacquisition. As discussed in Note 2 to the consolidated financial statements contained in this Report, the Company acquiredall of the outstanding stock of Horizon Scientific, Inc. and Standex Electronics Japan in 2017. These acquisitions representapproximately 4.7% of the Company's consolidated revenue for the year ended June 30, 2017, and approximately 15.1% ofthe Company's consolidated assets at June 30, 2017. Management's evaluation and conclusion as to the effectiveness of thedesign and operation of the Company’s disclosure controls and procedures as of June 30, 2017 excludes any evaluation of theinternal control over financial reporting of Horizon Scientific or Standex Electronics Japan.There were no changes in the Company’s internal control over financial reporting identified in connection withmanagement’s evaluation that occurred during the fourth quarter of our fiscal year (ended June 30, 2017) that has materiallyaffected, or is reasonably likely to materially affect our internal control over financial reporting.Management's Report on Internal Control over Financial ReportingThe management of Standex is responsible for establishing and maintaining adequate internal control over financial reportingSource: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(as defined in Section 240.13a-15(f) of the Exchange Act). The Company’s internal control over financial reporting isdesigned to provide reasonable assurance as to the reliability of the Company’s financial reporting and the preparation offinancial 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 overfinancial 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 (2013).” 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 ChiefFinancial Officer, has concluded that our internal control over financial reporting was effective as of June 30, 2017 to providereasonable assurance of achieving its objectives. These results were reviewed with the Audit Committee of the Board ofDirectors. Grant Thornton, LLP, the independent registered public accounting firm that audited our consolidated financialstatements included in this Annual Report on Form 10-K, has issued an unqualified attestation report on the Company’sinternal control over financial reporting, which is included below.Inherent Limitation on Effectiveness of ControlsNo matter how well designed, internal control over financial reporting has inherent limitations. Internal control over financialreporting determined to be effective can provide only reasonable, not absolute, assurance with respect to financial statementpreparation and may not prevent or detect all misstatements that might be due to error or fraud. In addition, a design of acontrol system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relativeto their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absoluteassurance that all control issues and instances of fraud, if any, within the Company have been detected.REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMBoard of Directors and StockholdersStandex International CorporationWe have audited the internal control over financial reporting of Standex International Corporation (a Delaware corporation)and subsidiaries (the “Company”) as of June 30, 2017, based on criteria established in the 2013 Internal Control—IntegratedFramework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’smanagement is responsible for maintaining effective internal control over financial reporting and for its assessment of theeffectiveness of internal control over financial reporting, included in the accompanying Management’s Report on InternalControl over Financial Reporting (“Management’s Report”). Our responsibility is to express an opinion on the Company’sinternal control over financial reporting based on our audit. Our audit of, and opinion on, the Company’s internal controlover financial reporting does not include the internal control over financial reporting of Horizon Scientific Inc. or StandexElectronics Japan Corporation, wholly-owned subsidiaries, which combined reflect total assets of 15.1 percent and revenuesconstituting 4.7 percent, of the related consolidated financial statement amounts as of and for the year ended June 30, 2017. As indicated in Management’s Report, Horizon Scientific Inc. and Standex Electronics Japan Corporation were acquiredduring fiscal 2017. Management’s assertion on the effectiveness of the Company’s internal control over financial reportingexcluded internal control over financial reporting of Horizon Scientific Inc. and Standex Electronics Japan Corporation.We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (UnitedStates). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effectiveinternal control over financial reporting was maintained in all material respects. Our audit included obtaining anunderstanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing andevaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such otherprocedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for ouropinion.A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company’s internal control over financial reporting includes those policies and proceduresthat (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary topermit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts andexpenditures of the company are being made only in accordance with authorizations of management and directors of thecompany; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, ordisposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequatebecause 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 ofJune 30, 2017, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States),the consolidated financial statements of the Company as of and for the year ended June 30, 2017, and our report datedAugust 28, 2017 expressed an unqualified opinion on those financial statements.Source: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results./s/ GRANT THORNTON LLPBoston, MassachusettsAugust 28, 2017Item 9B. Other InformationNonePART IIIItem 10. Directors, Executive Officers and Corporate GovernanceThe Company will file with the Securities and Exchange Commission (“SEC”) a definitive Proxy Statement no later than 120days after the close of the fiscal year ended June 30, 2017 (the “Proxy Statement”). The information required by this item andnot provided in Part 1 of this report under Item 1 “Executive Officers of Standex” is incorporated by reference from the ProxyStatement under the captions “Election of Directors,” “Stock Ownership in the Company,” “Other Information Concerningthe 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 ofDirectors. Information regarding the process for identifying and evaluating candidates for director are set forth andincorporated in reference to the information in the Proxy Statement under the caption “Corporate Governance/NominatingCommittee Report.”Information regarding the Audit Committee Financial Expert and the identification of the Audit Committee is incorporatedby 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 Section3(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 financialmanagement that applies to our chief executive officer, principal financial officer, principal accounting officer, controller orpersons performing similar functions. Our corporate governance section also includes our code of business conduct andethics for all employees. In addition, we will promptly post any amendments to or waivers of the code of ethics for seniorfinancial management on our website. You can find this and other corporate governance information at www.standex.com. Item 11. Executive CompensationInformation regarding executive compensation is incorporated by reference from the Proxy Statement under the captions andsub-captions: “Executive Compensation,” “Compensation Discussion and Analysis,” “Compensation Committee Report,”“2017 Summary Compensation Table,” “Other Information Concerning the Company, Board of Directors and ItsCommittees,” and “Directors Compensation.” Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersThe stock ownership of each person known to Standex to be the beneficial owner of more than 5% of its Common Stock isincorporated by reference in the Proxy Statement under the caption “Stock Ownership of Certain Beneficial Owners.” Thebeneficial ownership of Standex Common Stock of all directors and executive officers of the Company is incorporated byreference in the Proxy Statement under the caption and sub-caption “Stock Ownership in the Company” and “StockOwnership by Directors, Nominees for Director and Executive Officers,” respectively.The Equity Compensation Plan table below represents information regarding the Company’s equity based compensation planat June 30, 2017. (A) (B) (C) Number of Securities To Weighted-Average Number of Securities Remaining Be Issued Upon Exercise Exercise Price Of Available For Future Issuance Under Of Outstanding Options, Outstanding Options, Equity Compensation Plans(ExcludingPlan CategoryWarrants And Rights Warrants And Rights Securities reflected in Column (A))Equity compensation plansapproved by stockholders 204,300 $ 10.33 227,986Equity compensation plans notapproved by stockholders - - - Total204,300 $ 10.33 227,986The Company has one equity compensation plan, approved by stockholders, under which equity securities of the Companyhave been authorized for issuance to employees and non-employee directors. This plan is further described in the “Notes toConsolidated Financial Statements” under the heading “Stock-Based Compensation and Purchase Plans.”Source: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(a)1.(A)(B)(C)(D)(E)(F) 2. 3.Exhibit by Reference Number Exhibit Description Form Date(b)3.(i)Restated Certificate of Incorporation of Standex,10-Q(ii)By-Laws of Standex, as amended, and restated8-K10.(a)Employment Agreement dated10-KJanuary,20,2014betweentheCompanyandDavid Dunbar*(b)Amended and Restated Employment Agreement10-KdatedAugust25,2010betweentheCompanyandThomasD.DeByle*(c)Employment Agreement dated10-KApril4,2016betweentheCompanyandAlan J.Glass*(d)Employment Agreement dated10-KJanuary26,2015betweentheCompanyandAnneDeGreef-Safft*(e)Employment Agreement dated10-KAugustandItem 13. Certain Relationships and Related Transactions and Director IndependenceInformation regarding certain relationships and related transactions is incorporated by reference in the Proxy Statement underthe 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 “Electionof Directors - Determination of Independence.”Item 14. Principal Accountant Fees and ServicesThis Information in addition to information regarding aggregate fees billed for each of the last two fiscal years for professionalservices rendered by the professional accountant for audit of the Company’s annual financial statements and review offinancial statements included in the Company’s Form 10-K as well as others are incorporated by reference in the ProxyStatement under the caption “Independent Auditors’ Fees.”PART IVItem 15. Exhibits and Financial Statement SchedulesFinancial StatementsFinancial Statements covered by the Reports of Independent Registered Public Accounting FirmConsolidated Statements of Operations for the fiscal years ended June 30, 2017, 2016 and 2015Consolidated Balance Sheets as of June 30, 2017 and 2016Comprehensive Income for the fiscal years ended June 30, 2017, 2016 and 2015Consolidated Statements of Stockholders’ Equity for the fiscal years ended June 30, 2017, 2016 and 2015Consolidated Statements of Cash Flows for the fiscal years ended June 30, 2017, 2016 and 2015Notes to Consolidated Financial StatementsFinancial Statements ScheduleThe following financial statement schedule is included as required by Item 8 to this report on Form 10-KSchedule II – Valuation and Qualifying Accounts is included in the Notes to Consolidated Financial StatementsAll other schedules are not required and have been omittedExhibits Incorporated Filed Herewith12/31/1998dated October 27, 1998 filed as Exhibit 3(i).2/4/2015effective January 30, 2015 filed as Item 5.03, Exhibit 3.16/30/20166/30/20106/30/20166/30/20166/30/2016Source: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.17,2015betweentheCompanyRossMcGovern*(f)Employment Agreement dated10-KJuly27,2015betweentheCompanyandPaulBurns*(g)Standex International Corporation Amended and10-KAndRestated2008LongTermIncentivePlan,effectiveOctober28,2008. FiledasExhibit10.*(h)Standex International Corporation Executive Life10-KInsurancePlaneffectiveApril27,1994and asAmendedandrestatedonApril25,2001filedasExhibit10(k).*(i)Standex International Corporation Supplemental10-KRetirementPlanadoptedApril26,1995andAmendedon July26,1995filed asExhibit10(n).*(j)Form of Indemnification Agreement for directors8-Kandexecutiveofficersof theCompanyfiled asItem1.01,Exhibit10.*(k)Executive Officer long-term performance share8-KUnitawardsfiled asItem5.02.*(l)Standex Deferred Compensation Plan for highly8-Kcompensatedemployeesfiled asItem5.02.*(m)Code of Ethics for Chief Executive Officer and10-KSeniorFinancialOfficersisincorporatedbyreferenceasExhibit14.(n)Amended and Restated Credit Agreement8-KDatedDecember19,StandexInternationalCorporation,BankofAmerica,JPMorganChaseBank,&TrustCompanyFiledas Item1.01,6/30/20166/30/20126/30/20016/30/19955/5/20088/28/20081/31/20086/30/200512/19/2014Source: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.2014by andamongCitizensBank,N.A.;N.A.;TDBank,N.A.;N.A.;BranchBankingandSantanderBank,N.A.Exhibit10(o)Stock Purchase Agreement by and among MPE10Q/AAeroengines,Inc. thestockholdersandoptionholdersofMPEAeroengines,Inc.MorgenthalerManagementPartnersVIII,LLC,asRepresentativeandStandexInternationalCorporationDatedAugust14,2014filed asItem1.01,Exhibit10(p)Purchase and Sale Agreement dated July 1, 201410-KBetweenStandexInternationalCorporationandAFSAllAmericanMillworkAndFabrication,LLC.(q)Purchase and Sale Agreement dated February 22,10-Q2012amongtheCompany,StandexAirDistribution,Products,Inc.,SnappyAirDistributionProducts,Inc.asSellersandBWHVACOperations,LLCandBWHVACRealEstateHoldings,LLC asBuyersFiledasExhibit10(r)Stock Purchase Agreement dated as of October 17,10-Q2016by andamongStandexInternationalCorporation,asbuyer,andGregoryJ.Deutschmann,assellers,ofHorizonScientific,Inc.,filed asExhibit10(s)Share Purchase Agreement dated as of February 2,10-Q2017byMold-TechSingaporePte.Ltd. asubsidiaryofStandexInternationalCorporation,asbuyerandOkiElectricIndustryCo.,Ltd. assellers,of allOutstandingstockof OkiSensorDeviceCorporation(EnglishtranslationofJapaneseoriginaldocument)21.Subsidiaries of Standex International Corporation23.1Consent of Independent Registered PublicAccountingFirmGrantThorntonLLP24.Powers of Attorney of Charles H. Cannon, Thomas E.Chorman,JeffreyS.Edwards,GeraldH.Fickenscher,RogerL. Fix,ThomasJ.Hansen,andDanielB.Hogan31.1Rule 13a-14(a) Certification of President andChiefExecutiveOfficer31.2Rule 13a-14(a) Certification of Vice President and11/3/20146/30/20153/31/20129/30/20163/31/2017XXXXXSource: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.ChiefFinancialOfficer32.Section 1350 Certification101.INS101.SCH101.CAL101.DEF101.LAB101.PRESignature/s/ DAVID DUNBAR/s/ THOMAS D. DEBYLE/s/ SEAN VALASHINASXXBRL Instance DocumentXBRL Taxonomy Extension Schema DocumentXBRL Taxonomy Extension Calculation Linkbase DocumentXBRL Taxonomy Extension Definition Linkbase DocumentXBRL Taxonomy Extension Label Linkbase DocumentXBRL Taxonomy Extension Presentation Linkbase Document* Management contract or compensatory plan or arrangement.SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Standex InternationalCorporation has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto dulyauthorized, on August 25, 2016.STANDEX INTERNATIONAL CORPORATION(Registrant)/s/ DAVID DUNBARDavid DunbarPresident/Chief Executive OfficerPursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the followingpersons on behalf of Standex International Corporation and in the capacities indicated on August 28, 2017:TitlePresident/Chief Executive OfficerDavid DunbarVice President/Chief Financial OfficerThomas D. DeByleChief Accounting Officer / Assistant TreasurerSean ValashinasDavid Dunbar, pursuant to powers of attorney which are being filed with this Annual Report on Form 10-K, has signed belowon August 28, 2017 as attorney-in-fact for the following directors of the Registrant:Charles H. CannonRoger L. FixThomas E. ChormanThomas J. HansenJeffrey S. EdwardsDaniel B. HoganGerald H. Fickenscher /s/ DAVID DUNBARDavid DunbarSupplemental Information to be furnished with reports filed pursuant to Section 15(d) of the Act by Registrants which haveSource: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.2123Consent2431.131.232Roger L. Fix 4Charles H. Cannon, Jr., 1, 2, 4Thomas E. Chorman 1, 2, 3David Dunbar 4Jeffrey S Edwards 2, 3Gerald H. Fickenscher 1, 3Thomas J. Hansen 1, 4not registered securities pursuant to Section 12 of the Act.The Company will furnish its 2017 Proxy Statement and proxy materials to security holders subsequent to the filing of theannual report on this Form. Copies of such material shall be furnished to the Commission when they are sent to securityholders.INDEX TO EXHIBITSSubsidiaries of Standexof Independent Registered Public Accounting FirmGrant Thornton LLPPowers of Attorney of Charles H. Cannon, Thomas E. Chorman,Jeffrey S. Edwards, Gerald Fickenscher, Roger L. Fix, Thomas J.Hansen, and Daniel B. Hogan.Rule 13a-14(a) Certification of President and Chief Executive OfficerRule 13a-14(a) Certification of Vice President and Chief FinancialOfficerSection 1350 CertificationEND OF FORM 10-KSUPPLEMENTAL INFORMATION FOLLOWSBoard of DirectorsTitleFormer President and Chief Executive OfficerRetired Chairman and CEO, JBT CorporationCEO, Foam Partners LLCPresident and Chief Executive OfficerChairman and Chief Executive Officer, Cooper StandardHoldings, Inc.Retired Vice President, Europe, Middle East,and Africa, Crompton CorporationFormer Vice Chairman of Illinois Tool Works, Inc.Executive Director, Passim Folk Music and Cultural CenterSource: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Daniel B. Hogan, Ph. D. 31234David DunbarThomas D. DeByleAlan J. GlassStacey S. ConstasSean ValashinasChristopher J. SeilerRoss McGovernPaul BurnsAnne De Greef-SafftLeonard PaolilloFlavio MascheraJohn MeeksRichard HiltunenCorporate HeadquartersCommon StockTransfer Agent and RegistrarIndependent AuditorsShareholder ServicesStockholders’ Meeting________________________Member of Audit CommitteeMember of Compensation CommitteeMember of Corporate Governance/Nominating CommitteeMember of Executive CommitteeCorporate OfficersPresident and Chief Executive OfficerVice President, Chief Financial Officer and TreasurerVice President, Chief Legal Officer and SecretaryCorporate Governance Officer and Assistant SecretaryChief Accounting Officer and Assistant TreasurerTax DirectorVice President, Human ResourcesVice President of Strategy and Business DevelopmentOperating ManagementFOOD SERVICE EQUIPMENTSegment President of Food Service EquipmentENGINEERING TECHNOLOGIESPresidentENGRAVINGPresidentELECTRONICSPresidentHYDRAULICSPresidentShareholder InformationStandex International Corporation11 Keewaydin Drive, Suite 300Salem, NH 03079(603) 893-9701Facsimile: (603) 893-7324www.standex.comListed on the New York Stock Exchange(Ticker symbol: SXI)Computershare250 Royall StreetCanton, MA 07021(800) 368-5948www.Computershare.comGrant Thornton LLP75 State Street, 13th FloorBoston, MA 02109-1827Stockholders should contact Standex’s Transfer Agent(Computershare, 250 Royall Street, Canton, MA 02021)regarding changes in name, address or ownership of stock; lostcertificates of dividends; and consolidation of accounts.The Annual Meeting of Stockholders will be held at 11:00 a.m. onThursday, October 26, 2017 at the Burlington Marriott, OneBurlington Mall Road, Burlington, MA 01803.1Source: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Name of SubsidiaryAssociated American Industries, LLCCustom Hoists, Inc.Dornbusch & Cia Industria E. Comercio Ltda.Horizon Scientific, Inc.Mold-Tech Singapore Pte. Ltd.Nor-Lake, IncorporatedNorthlake Engineering, Inc.Precision Engineering International LimitedS. I. de Mexico S.A. de C.V.Standex de Mexico S.A. de C.V.Standex Electronics, Inc.Standex Electronics Japan CorporationStandex Electronics (U.K.) LimitedStandex Engraving L.L.C.Standex Europe B.V.Standex Holdings LimitedStandex International GmbHStandex International LimitedStandex International S.r.l.Standex (Ireland) LimitedSXI LimitedUltrafryer Systems, LLCExhibit 21STANDEX INTERNATIONAL CORPORATION AND SUBSIDIARIESSUBSIDIARIES OF REGISTRANTInformation is set forth below concerning all operating subsidiaries of the Company as ofJune 30, 2017 (except subsidiaries which, considered in the aggregate do not constitute asignificant subsidiary).Jurisdiction ofIncorporationTexasOhioBrazilSouth CarolinaSingaporeWisconsinWisconsinUnited KingdomMexicoMexicoDelawareJapanUnited KingdomVirginiaThe NetherlandsUnited KingdomGermanyUnited KingdomItalyIrelandCanadaDelawareSource: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.EXHIBIT 23CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe have issued our reports dated August 28, 2017, with respect to the consolidated financialstatements, and internal control over financial reporting included in the Annual Report of StandexInternational Corporation on Form 10-K for the year ended June 30, 2017. We consent to theincorporation by reference of said reports in the Registration Statements of Standex InternationalCorporation on Form S-3/A (File No. 333-207143) and on Forms S-8 (File No. 333-147190 andFile No. 333-179513)./s/ GRANT THORNTON LLPBoston, MassachusettsAugust 28, 2017Source: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 24POWER OF ATTORNEYThe undersigned, being a director of Standex International Corporation(“Standex”), hereby constitutes David A. Dunbar and Alan J. Glass, and each ofthem singly, my true and lawful attorney with full power to them, and each ofthem singly, to sign for me and in my name in my capacity as a director ofStandex, the Annual Report of Standex on Form 10-K for the fiscal year endedJune 30, 2017, and any and all amendments thereto and generally to do suchthings in my name and behalf to enable Standex to comply with the requirementsof the Securities and Exchange Commission relating to Form 10-K.Witness my signature as of the 17th day of August, 2017./s/ Charles H. Cannon, Jr._______________________________Charles H. Cannon, Jr.Source: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.EXHIBIT 24POWER OF ATTORNEYThe undersigned, being a director of Standex International Corporation(“Standex”), hereby constitutes David A. Dunbar and Alan J. Glass, and each ofthem singly, my true and lawful attorney with full power to them, and each ofthem singly, to sign for me and in my name in my capacity as a director ofStandex, the Annual Report of Standex on Form 10-K for the fiscal year endedJune 30, 2017, and any and all amendments thereto and generally to do suchthings in my name and behalf to enable Standex to comply with the requirementsof the Securities and Exchange Commission relating to Form 10-K.Witness my signature as of the 17th day of August, 2017./s/ Thomas E. Chorman_______________________________Thomas E. ChormanSource: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.EXHIBIT 24POWER OF ATTORNEYThe undersigned, being a director of Standex International Corporation(“Standex”), hereby constitutes David A. Dunbar and Alan J. Glass, and each ofthem singly, my true and lawful attorney with full power to them, and each ofthem singly, to sign for me and in my name in my capacity as a director ofStandex, the Annual Report of Standex on Form 10-K for the fiscal year endedJune 30, 2017, and any and all amendments thereto and generally to do suchthings in my name and behalf to enable Standex to comply with the requirementsof the Securities and Exchange Commission relating to Form 10-K.Witness my signature as of the 17th day of August, 2017./s/ Jeffrey S. Edwards_______________________________Jeffrey S. EdwardsSource: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.EXHIBIT 24POWER OF ATTORNEYThe undersigned, being a director of Standex International Corporation(“Standex”), hereby constitutes David A. Dunbar and Alan J. Glass, and each ofthem singly, my true and lawful attorney with full power to them, and each ofthem singly, to sign for me and in my name in my capacity as a director ofStandex, the Annual Report of Standex on Form 10-K for the fiscal year endedJune 30, 2017, and any and all amendments thereto and generally to do suchthings in my name and behalf to enable Standex to comply with the requirementsof the Securities and Exchange Commission relating to Form 10-K.Witness my signature as of the 17th day of August, 2017.Source: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results./s/ Gerald H. Fickenscher_______________________________Gerald H. FickenscherSource: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.EXHIBIT 24POWER OF ATTORNEYThe undersigned, being a director of Standex International Corporation(“Standex”), hereby constitutes David A. Dunbar and Alan J. Glass, and each ofthem singly, my true and lawful attorney with full power to them, and each ofthem singly, to sign for me and in my name in my capacity as a director ofStandex, the Annual Report of Standex on Form 10-K for the fiscal year endedJune 30, 2017, and any and all amendments thereto and generally to do suchthings in my name and behalf to enable Standex to comply with the requirementsof the Securities and Exchange Commission relating to Form 10-K.Witness my signature as of the 17th day of August, 2017./s/ Roger L. Fix_______________________________Roger L. FixSource: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.EXHIBIT 24POWER OF ATTORNEYThe undersigned, being a director of Standex International Corporation(“Standex”), hereby constitutes David A. Dunbar and Alan J. Glass, and each ofthem singly, my true and lawful attorney with full power to them, and each ofthem singly, to sign for me and in my name in my capacity as a director ofStandex, the Annual Report of Standex on Form 10-K for the fiscal year endedJune 30, 2017, and any and all amendments thereto and generally to do suchthings in my name and behalf to enable Standex to comply with the requirementsof the Securities and Exchange Commission relating to Form 10-K.Witness my signature as of the 17th day of August, 2017./s/ Thomas J. Hansen_______________________________Thomas J. HansenSource: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.EXHIBIT 24POWER OF ATTORNEYThe undersigned, being a director of Standex International Corporation(“Standex”), hereby constitutes David A. Dunbar and Alan J. Glass, and each ofthem singly, my true and lawful attorney with full power to them, and each ofthem singly, to sign for me and in my name in my capacity as a director ofStandex, the Annual Report of Standex on Form 10-K for the fiscal year endedJune 30, 2017, and any and all amendments thereto and generally to do suchthings in my name and behalf to enable Standex to comply with the requirementsof the Securities and Exchange Commission relating to Form 10-K.Witness my signature as of the 17th day of August, 2017./s/ Daniel B. Hogan_______________________________Daniel B. HoganSource: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Source: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.1.2.3.4.(a)(b)(c)(d)EXHIBIT 31.1RULE 13a-14(a) CERTIFICATIONI, David Dunbar, certify that:I have reviewed this Annual Report on Form 10-K of Standex International Corporation forthe period ending June 30, 2017;Based on my knowledge, this report does not contain any untrue statement of a material factor omit to state a material fact necessary to make the statements made, in light of thecircumstances under which such statements were made, not misleading with respect to theperiod covered by this report;Based on my knowledge, the financial statements, and other financial information includedin this report, fairly present in all material respects the financial condition, results ofoperations and cash flows of the registrant as of, and for, the periods presented in thisreport;The registrant’s other certifying officer(s) and I are responsible for establishing andmaintaining 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 ExchangeAct Rules 13a-15(f) and 15d-15(f)) for the registrant and have:Designed such disclosure controls and procedures, or caused such disclosure controlsand procedures to be designed under our supervision, to ensure that materialinformation relating to the registrant, including its consolidated subsidiaries, is madeknown to us by others within those entities, particularly during the period in whichthis report is being prepared;Designed such internal control over financial reporting, or caused such internal controlover financial reporting to be designed under our supervision, to provide reasonableassurance regarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generally acceptedaccounting principles;Evaluated the effectiveness of the registrant’s disclosure controls and procedures andpresented in this report our conclusions about the effectiveness of the disclosurecontrols and procedures, as of the end of the period covered by this report based onsuch evaluation; andDisclosed in this report any change in the registrant’s internal control over financialreporting that occurred during the registrant’s most recent fiscal quarter (theregistrant’s fourth fiscal quarter in the case of an annual report) that has materiallySource: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.5.(a)(b)affected, or is reasonably likely to materially affect, the registrant’s internal controlover financial reporting; andThe registrant’s other certifying officer(s) and I have disclosed, based on our most recentevaluation of internal control over financial reporting, to the registrant’s auditors and theaudit committee of the registrant’s board of directors (or persons performing the equivalentfunctions): All significant deficiencies and material weaknesses in the design or operation ofinternal control over financial reporting which are reasonably likely to adversely affectthe registrant’s ability to record, process, summarize and report financial information;andAny fraud, whether or not material, that involves management or other employeeswho have a significant role in the registrant’s internal control over financial reporting.Date: August 28, 2017/s/ David Dunbar______________________________David DunbarPresident/Chief Executive OfficerSource: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.1.2.3.4.(a)(b)(c)(d)EXHIBIT 31.2RULE 13a-14(a) CERTIFICATIONI, Thomas D. DeByle, certify that:I have reviewed this Annual Report on Form 10-K of Standex International Corporation forthe period ending June 30, 2017;Based on my knowledge, this report does not contain any untrue statement of a material factor omit to state a material fact necessary to make the statements made, in light of thecircumstances under which such statements were made, not misleading with respect to theperiod covered by this report;Based on my knowledge, the financial statements, and other financial information includedin this report, fairly present in all material respects the financial condition, results ofoperations and cash flows of the registrant as of, and for, the periods presented in thisreport;The registrant’s other certifying officer(s) and I are responsible for establishing andmaintaining 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 ExchangeAct Rules 13a-15(f) and 15d-15(f)) for the registrant and have:Designed such disclosure controls and procedures, or caused such disclosure controlsand procedures to be designed under our supervision, to ensure that materialinformation relating to the registrant, including its consolidated subsidiaries, is madeknown to us by others within those entities, particularly during the period in whichthis report is being prepared;Designed such internal control over financial reporting, or caused such internal controlover financial reporting to be designed under our supervision, to provide reasonableassurance regarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generally acceptedaccounting principles;Evaluated the effectiveness of the registrant’s disclosure controls and procedures andpresented in this report our conclusions about the effectiveness of the disclosurecontrols and procedures, as of the end of the period covered by this report based onsuch evaluation; andDisclosed in this report any change in the registrant’s internal control over financialreporting that occurred during the registrant’s most recent fiscal quarter (theregistrant’s fourth fiscal quarter in the case of an annual report) that has materiallyaffected, or is reasonably likely to materially affect, the registrant’s internal controlover financial reporting; andSource: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.5.(a)(b)The registrant’s other certifying officer(s) and I have disclosed, based on our most recentevaluation of internal control over financial reporting, to the registrant’s auditors and theaudit committee of the registrant’s board of directors (or persons performing the equivalentfunctions):All significant deficiencies and material weaknesses in the design or operation ofinternal control over financial reporting which are reasonably likely to adversely affectthe registrant’s ability to record, process, summarize and report financial information;and Any fraud, whether or not material, that involves management or other employeeswho have a significant role in the registrant’s internal control over financial reporting.Date: August 28, 2017/s/ Thomas D. DeByle______________________________Thomas D. DeByleVice President/Chief Financial OfficerSource: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.EXHIBIT 32SECTION 1350 CERTIFICATIONThe following statement is being made to the Securities and Exchange Commission solely forpurposes of Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350), which carries withit 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 periodended June 30, 2017 fully complies with the requirements of Section 13(a) or Section 15(d), asapplicable, of the Securities Exchange Act of 1934, as amended, and that the informationcontained in such report fairly presents, in all material respects, the financial condition and resultsof operations of the registrant.Dated: August 28, 2017/s/ David Dunbar_______________________________David DunbarPresident/Chief Executive OfficerDated: August 28, 2017/s/ Thomas D. DeByle_______________________________Thomas D. DeByleVice President/Chief Financial OfficerSource: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Source: STANDEX INTERNATIONAL CORP/DE/, 10-K, August 28, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.

Continue reading text version or see original annual report in PDF format above