Standex International Annual Report 2019

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, 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, 2019Commission File Number 001-07233 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 ClassTrading Symbol(s)Name of Each Exchange on Which RegisteredCommon Stock, Par Value $1.50 Per ShareSXINew York Stock Exchange Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES [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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. YES [X] NO [ ] Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 ofRegulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit suchfiles). YES [X] NO [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to thebest of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment tothis Form 10-K. [ ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or anemerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growthcompany” in Rule 12b-2 of the Exchange Act. Large accelerated filer XAccelerated filer Non-accelerated filer __Smaller Reporting Company __ Emerging growth company __ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any newor revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. __ Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES [ ] NO [X] The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant at the close of business on December31, 2018 was approximately $839,087,807. Registrant’s closing price as reported on the New York Stock Exchange for December 31, 2018 was $67.18 pershare. The number of shares of Registrant's Common Stock outstanding on August 13, 2019 was 12,454,640. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Proxy Statement for the Registrant’s 2019 Annual Meeting of Stockholders (the “Proxy Statement”) are incorporated by reference into PartIII of this report. Forward Looking Statement Statements contained in this Annual Report on Form 10-K that are not based on historical facts are “forward-looking statements” within the meaningof the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of forward-looking terminology suchas “should,” “could,” “may,” “will,” “expect,” “believe,” “estimate,” “anticipate,” “intend,” “continue,” or similar terms or variations of thoseterms or the negative of those terms. There are many factors that affect the Company’s business and the results of its operations and that may cause theactual results of operations in future periods to differ materially from those currently expected or anticipated. These factors include, but are not limitedto: materially adverse or unanticipated legal judgments, fines, penalties or settlements; conditions in the financial and banking markets, includingfluctuations in exchange rates and the inability to repatriate foreign cash; domestic and international economic conditions, including the impact,length and degree of economic downturns on the customers and markets we serve and more specifically conditions in the food service equipment,automotive, construction, aerospace, energy, oil and gas, transportation, consumer appliance and general industrial markets; lower-cost competition;the relative mix of products which impact margins and operating efficiencies in certain of our businesses; the impact of higher raw material andcomponent costs, particularly steel, petroleum based products and refrigeration components; an inability to realize the expected cost savings fromrestructuring activities including effective completion of plant consolidations, cost reduction efforts including procurement savings and productivityenhancements, capital management improvements, strategic capital expenditures, and the implementation of lean enterprise manufacturingtechniques; the inability to achieve the savings expected from global sourcing of raw materials and diversification efforts in emerging markets; theimpact on cost structure and on economic conditions as a result of actual and threatened increases in trade tariffs; the inability to attain expectedbenefits from strategic alliances or acquisitions and the inability to effectively consummate and integrate such acquisitions and achieve synergiesenvisioned by the Company; market acceptance of our products; our ability to design, introduce and sell new products and related productcomponents; the ability to redesign certain of our products to continue meeting evolving regulatory requirements; the impact of delays initiated by ourcustomers; and our ability to increase manufacturing production to meet demand; and potential changes to future pension funding requirements. Inaddition, any forward-looking statements represent management's estimates only as of the day made and should not be relied upon as representingmanagement's estimates as of any subsequent date. 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 estimates change. PART I Item 1. Business Standex International Corporation was incorporated in 1975 and is the successor of a corporation organized in 1955. As used in this report, the terms“we,” “us,” “our,” the “Company” and “Standex” mean Standex International Corporation and its subsidiaries. We have paid dividends each quarter sinceStandex 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 have 9 operating business units,aggregated and organized for reporting purposes into five segments: Food Service Equipment, Engraving, Engineering Technologies, Electronics andHydraulics. Overall management, strategic development and financial control are led by the executive staff at our corporate headquarters in Salem, NewHampshire. Our long-term strategy is to enhance shareholder value by building larger, more profitable industrial platforms through a value creation system thatassists management in meeting specific corporate and business unit financial and strategic performance goals in order to create, improve, and enhanceshareholder value. The Standex Value Creation System is a standard methodology which provides consistent tools used throughout the company in orderto achieve our organization’s goals. The Standex Value Creation System employs four components: Balanced Performance Plan, Standex GrowthDisciplines, Standex Operational Excellence, and Standex Talent Management. The Balanced Performance Plan process aligns annual goals throughoutthe business and provides a standard reporting, management and review process. It is focused on setting and meeting annual and quarterly targets thatsupport our short and long-term goals. The Standex Growth Disciplines use a set of tools and processes including market maps, growth laneways, andmarket tests to identify opportunities to expand the business organically and through acquisitions. Standex Operational Excellence employs a standardplaybook and processes, including LEAN, to eliminate waste and improve profitability, cash flow and customer satisfaction. Finally, the Standex TalentManagement process is an organizational development process that provides training, development, and succession planning for our employeesthroughout our worldwide organization. The Standex Value Creation System ties all disciplines in the organization together under a common umbrella byproviding standard tools and processes to deliver our business objectives. 1 ●It is our objective to grow larger and more profitable business units through both organic initiatives and acquisitions. We seek to identify andimplement organic growth initiatives such as new product development, geographic expansion, introduction of products and technologies intonew markets and applications, key accounts and strategic sales channel partners. Also, we have a long-term objective to create sizable businessplatforms by adding strategically aligned or “bolt on” acquisitions to strengthen the individual businesses, create both sales and cost synergieswith our core business platforms, and accelerate their growth and margin improvement. We look to drive continuous improvement within ourcore business platforms, accelerate growth and improve margins. We have a particular focus on identifying and investing in opportunities thatcomplement our products and will increase the global presence and capabilities of our businesses. From time to time, we have divested, andlikely will continue to divest, businesses that we feel are not strategic or do not meet our growth and return expectations. ●We create “Customer Intimacy” by collaborating with our customers in order to develop and deliver custom solutions or engineered componentsthat solve problems for our customers or otherwise meet their needs. This relationship generally provides us with the ability to identify newsales opportunities with our customers, 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 recognize that our businesses arecompeting in a global economy that requires us to improve our competitive position. We have deployed a number of management competenciesto drive improvements in the cost structure of our business units including operational excellence through lean enterprise, the use of low costmanufacturing facilities in countries 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 capital improvements to increaseproductivity 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 use cash flow generated fromoperations to fund the strategic growth programs described above, including acquisitions and investments for organic growth, maintenance ofour capital assets and to return cash to our shareholders through the payment 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 information on our website is forinformational purposes only and is not incorporated into this Annual Report on Form 10-K. Description of Segments Engraving Standex Engraving Mold-Tech creates textures and surface finishes on tooling to enhance the beauty and function of a wide range of consumer goodsand automotive products. Standex Engraving Mold-Tech focuses on continuing to meet the needs of a changing marketplace by offering experiencedcraftsmanship while investing in new technologies. Our growth strategy is to continue to expand our capacity to service our customers both organicallyand inorganically across our global market and to innovate new technologies to enhance the functionalization of surface textures. We are one companyoperating in 27 countries using the same approach in service of our customers to guarantee harmony on global programs. Markets and Applications Standex Engraving Mold-Tech has become the global leader by offering a full range of services to Original Equipment Manufacturers (OEM) markets.From start to finish, these services include the design of bespoke textures, the verification of the texture on a prototype, engraving the mold, enhancingand polishing it, and then offering on-site try-out support with ongoing tool maintenance and texture repair capabilities. Specialized Standex Engraving Mold-Tech companies and brands also include: ●Piazza Rosa and World Client Services which offer laser engraving and tool finishing in Europe and Mexico. ●Innovent, located in North America and Europe, is a specialized supplier of tools and machines used to produce diapers and products thatcontain absorbent materials between layers of non-woven fabric. This engineering and manufacturing company provides innovative solutions tohygiene, aerospace and various industrial clients around the world. Tenibac-Graphion provides additional texturizing and protyping capabilities in North America and China. GS Engineering provides us with cutting edge technology to rapidly produce molds for the creation of the soft-touch surfaces rapidly gainingfavor with automotive manufacturers. 2 Products and Services Laser Engraving offers superior features previously unavailable on products, such as multiple gloss levels, the elimination of paint and optimized scratchperformance, including the ability to create nano-finishes to enhance function. Chemical Engraving produces carefully designed textures and finishes without seams or distortion. Exclusive to Standex Engraving Mold-Tech, DigitalTransfer Technology guarantees consistency, pattern integrity and texture harmony around the world. Architexture Design Studio uses proprietary technology with proven expertise to create and test custom textures. An original texture is designed to offerbeauty and function, then a graphic hybrid of the texture is wrapped on digital 3D forms using Fit-to-Form technology. The texture is printed out usingRapid Texture Prototype technology to create a large-format skin that can be wrapped on a model for testing. This verification process is called Model-Tech® which is exclusive to Standex Engraving Mold-Tech. Tool Enhancement services increase the wear resistance of the mold. Processes include advanced tool finishing services, anti-scratch, laser hardening inlocalized areas, Tribocoat® and Release Coat. Tool Finishing and ongoing support allows customers to achieve outstanding quality while saving valuable time. These services include laser micro-welding, polishing and lapping, laser cladding to accommodate engineering changes, mold assembly, tool management, maintenance, texture repair andon-site support. Zero Parting Line is an exclusive Standex Engraving Mold-Tech process that eliminates the appearance of matched-insert parting lines. Nickel Shell Molds are specifically designed to withstand extreme production conditions and extend the life of the mold. Slush molds, IMG molds, IMGLmolds and IMC molds are also produced. Standex Engraving Mold-Tech is the leading nickel shell supplier in three global locations: Portugal, USA andChina. Customers This division has become the global leader by offering a full range of services to Original Equipment Manufacturers (OEM), product designers, Tier OneSuppliers and Toolmakers all around the world. Electronics Electronics is a global component and value-added solutions provider of custom magnetic sensing and power conversion components and assemblies.We are focused on designing, engineering, and manufacturing innovative electro-magnetic solutions, components and assemblies to solve ourcustomers’ application needs with an absolute commitment to a customer first attitude through the Partner/Solve/Deliver® approach. We continue to expand this business through organic growth with current customers, new customers, developing new products and technologies,geographic expansion, and inorganic growth through strategic acquisitions. Components are manufactured in plants located in the USA, Mexico, the U.K., Germany, Japan, China and India. Markets and Applications The diverse products and vertically integrated manufacturing capabilities offered for engineered solutions are vital to an array of markets for providingsafe and efficient power transformation, current monitoring, isolation, as well as sensors to monitor systems for function and safety. The end-user istypically an OEM industrial equipment manufacturer. 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. Brands Business unit names are Standex Electronics, Standex-Meder Electronics, Northlake Engineering, Agile Magnetics Standex Electronics Japan, and worldrenown reed switch product brands of MEDER, KENT, and KOFU switches. 3 Products The magnetic sensing products employ technologies such as reed switch, Hall Effect, inductive, conductive and other technologies. Sensing basedsolutions include a complete portfolio of reed relays, fluid level, proximity, motion, flow, HVAC condensate, hydraulic pressure differential as well ascustom electronics sensors containing these technologies. The magnetics or power conversion products include custom wound transformers andinductors for low and high frequency applications, current sense technology, advanced planar transformer technology, value added assemblies, andmechanical packaging. Customers The business sells to a wide variety of automotive, industrial, medical, power and consumer goods customers globally through a direct sales force,regional sales managers, and field applications engineers, commissioned agents, representative groups, and distribution channels Engineering Technologies The Engineering Technologies Group, “ETG”, is a provider of innovative, turnkey metal-formed solutions for OEM and Tier-1 manufacturers on theiradvanced engineering designs. ETG solutions seek to reduce input weight and material cost, lower part count, and reduce complexity for unique customer design challenges ofteninvolving exotic materials, large dimensions, large thicknesses or thin-wall construction, complex shapes and contours, and/or single-piece constructionrequirements. We devise and manufacture these cost-effective components and assemblies by combining a portfolio of best-in-class formingtechnologies, vertically integrated manufacturing processes, proven forming technical experience, and on-site technical and design assistance. We plan to grow the Engineering Technologies Group by identifying new cutting-edge solutions for our metal-forming capabilities in existing andadjacent markets via customer and research collaboration. Our segment is comprised of two businesses including Spincraft, with locations in North Billerica, MA, New Berlin, WI, and Newcastle upon Tyne in theU.K, as well as Enginetics, located in Huber Heights, OH. Markets and Applications Engineering Technologies Group products serve applications within the space, aviation, defense, energy, medical, and general industrial markets. -The space market we serve is comprised of components for space launch systems, -Our aviation market includes a large portfolio of components and assemblies for OEM turbine engines, -The defense market we serve covers a wide spectrum of metal applications, -The energy market includes components and assemblies for new and MRO gas turbines, as well as solutions for oil & gas explorationoperations. Brands This business unit’s names are Spincraft and Enginetics. Products -fuel tanks, tank domes, combustion liners, nozzles, and crew vehicle structures -seals, heat shields, and combustor elements, as well as aerostructures, including air intake lipskins -missile nose cones and fabrications, large dimension exhaust systems, navy-nuclear propulsion, and others -components and assemblies for new and MRO gas turbines, as well as solutions for oil & gas exploration operations -MRI scanner vessel ends, shields, and centrifuge bowls Customers Engineering Technologies components are sold directly to large space, aviation, defense, energy and medical companies, or suppliers to thosecompanies. 4 Hydraulics The Hydraulics segment is a leading global manufacturer of mobile hydraulic cylinders and complete hydraulic systems for the heavy off-roadconstruction and refuse markets. We are focused on custom designs and manufacturing of products that meet customer specific requirements or applications. Our in house custom designabilities and responsiveness to our customers’ needs drive our top line growth opportunities. We leverage our full line of products for the dump truckand trailer market and deep expertise in their application to expand into new markets, targeting the most challenging custom applications. Our flexibledesign capability, global supply chain and speed to market enable us to be successful in our expansion efforts. Our team is dedicated to superiorcustomer service through our technical engineering support and on-time delivery. We plan to grow Hydraulics by expanding our cylinder offering, completing the hydraulics system with wet kits and sensors. We manufacture our cylinders in Hayesville, OH and Tianjin, China. Markets and Applications Industries that use our products are construction equipment, refuse, airline support, mining, oil and gas, and other material handling applications. Ourproducts are utilized by OEMs on vehicles such as dump trucks, dump trailers, bottom dumps, garbage trucks (both recycling and rear loader), containerroll off vehicles, hook lift trucks, liquid waste handlers, vacuum trucks, compactors, balers, airport catering vehicles, container handling equipment forairlines, lift trucks, yard tractors, and underground mining vehicles. Brands Our products are marketed through the Custom Hoists® brand. Products Products include single and double acting telescopic and piston rod hydraulic cylinders. Additionally, we manufacture specialty pneumatic cylinders andpromote complete wet line kits, which are complete hydraulic systems that include a pump, valves, hoses and fittings. Customers Our products are sold directly to OEMs, as well as distributors, dealers, and aftermarket repair outlets primarily in North America with some sales in SouthAmerica and Asia. Food Service Equipment Food Service Equipment is a provider of refrigeration, display merchandising and component pumps for the Commercial Food Service and Life Sciencesmarkets. Our products are used throughout the entire commercial food service process – from storage, to preparation, and to display. We focus on the challengesof enabling retail and food service establishments to provide 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 to control the temperatures of critical health care products, medicinesand laboratory samples. In recent years, much of this segment (with the exception of Scientific) has experienced head winds and operational challenges—especially with regard tostandard products. We have invested in order to improve margin performance in these standard products businesses. At the same time, we plan to investin further growing our differentiated products businesses through new product development, geographic expansion and selective acquisitions.5 Food Service Locations Food Service Equipment and Scientific products are manufactured in Hudson, WI; New Albany, MS; Summerville, SC; Belleville, WI; and Mountmellick,Ireland. Markets and Applications The commercial food service equipment that we design and manufacture is utilized in restaurants, convenience stores, quick-service restaurants,supermarkets, drug stores and institutions such as hotels, hospitals, and school cafeterias. The life science equipment that we design and manufacture isused in hospitals, pharmacies, clinical laboratories, reference laboratories, physicians’ offices and other clinical testing facilities. Brands NorLake®, Master-Bilt®, Lab Research products (LRP), American BioTech Supply (ABS), Cryosafe, CryoGuard, NorLake Scientific®, Federal andProcon®. Products ●refrigerated reach-in and under counter refrigerated cabinets, cases, display units, walk-in coolers and freezers; ●cold storage equipment for use in the life sciences ●merchandizing display cases for bakery, deli and confectionary products; and ●pump systems used in beverage and industrial fluid handling applications. Customers Food Service Equipment products are sold to end-users, dealers, buying groups, consultants, government agencies and manufacturers. Working Capital Our primary source of working capital is the cash generated from continuing operations. No segments require any special working capital needs outsideof the normal course of business. Competition Standex manufactures and markets products many of which have achieved a unique or leadership position in their market, however, we encountercompetition in varying degrees in all product groups and for each product line. Competitors include domestic and foreign producers of the same andsimilar products. The principal methods of competition are product performance and technology, price, delivery schedule, quality of services, and otherterms and conditions. International Operations We have international operations in all of our business segments. International operations are conducted at 69 locations, in Europe, Canada, China,Japan, India, Southeast Asia, Korea, Mexico, Brazil, and South Africa. See the Notes to Consolidated Financial Statements for international operationsfinancial data. Our net sales from continuing international operations decreased from 36% in 2018 to 34% in 2019. International operations are subject tocertain inherent risks in connection with the conduct of business in foreign countries including, exchange controls, price controls, limitations onparticipation in local enterprises, nationalizations, expropriation and other governmental action, restrictions of repatriation of earnings, and changes incurrency exchange rates. Research and Development We develop and design new products to meet customer needs in order to offer enhanced products or to provide customized solutions for customers.Developing new and improved products, broadening the application of established products, and continuing efforts to improve our methods, processes,and equipment continues to drive our success. However, due to the nature of our manufacturing operations and the types of products manufactured,expenditures for research and development are not significant to any individual segment or in the aggregate. Research and development costs arequantified in the Notes to Consolidated Financial Statements. 6 Environmental Matters Based on our knowledge and current known facts, we believe that we are presently in substantial compliance with all existing applicable environmentallaws and regulations and do not anticipate (i) any instances of non-compliance that will have a material effect on our future capital expenditures, earningsor competitive position or (ii) any material capital expenditures for environmental control facilities. Financial Information about Geographic Areas Information regarding revenues from external customers attributed to the United States, all foreign countries and any individual foreign country, ifmaterial, is contained in the Notes to Consolidated Financial Statements,“Industry Segment Information.” Number of Employees As of June 30, 2019, we employed approximately 5,000 employees of which approximately 2,200 were in the United States.About 393 of our U.S.employees were represented by unions. Approximately 35% of our production workforce is situated in low-cost manufacturing regions such as Mexicoand Asia. Executive Officers of Standex The executive officers of the Company as of June 30, 2019 were as follows: NameAgePrincipal Occupation During the Past Five Years David Dunbar57President and Chief Executive Officer of the Company since January 2014. President of the Valves and Controlsglobal business unit of Pentair Ltd from 2009 through 2013. Thomas D. DeByle59Vice President and Chief Financial Officer of the Company since March 2008. Alan J. Glass55Vice President, Chief Legal Officer and Secretary of the Company since April 2016. Vice President, General Counseland Secretary of CIRCOR International, Inc. from 2000 through 2016. Sean Valashinas48Chief Accounting Officer and Assistant Treasurer of the Company since October 2007. Paul Burns46Vice President of Strategy and Business Development since July 2015, Director of Corporate Development andGlobal Mergers & Acquisitions at General Motors from 2013 through 2015. Annemarie Bell55Vice President of Human Resources since June 2019, Interim Vice President of Human Resources from October 2018through June 2019; Vice President of Human Resources for four of Standex business units from October 2015through October 2018, Director of Human Resources and Human Resources Business Partner at PerkinElmer from2007 through 2015. The executive officers are elected each year at the first meeting of the Board of Directors subsequent to the annual meeting of stockholders, to serve forone-year terms of office. There are no family relationships among any of the directors or executive officers of the Company. Long-Lived Assets Long-lived assets are described and discussed in the Notes to Consolidated Financial Statements under the caption “Long-Lived Assets.” Available Information Standex’s corporate headquarters are at 11 Keewaydin Drive, Salem, New Hampshire 03079, and our telephone number at that location is (603) 893-9701. 7 The U.S. Securities and Exchange Commission (the “SEC”) maintains an internet website at www.sec.gov that contains our annual reports on Form 10-K,quarterly reports on Form 10-Q, current reports on Form 8-K and proxy statements, and all amendments thereto. All reports that we file with the SEC maybe read and copied at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, DC 20549. Information about the operation of the PublicReference Room can be obtained by calling the SEC at 1-800-SEC-0330. Standex’s internet website address is www.standex.com. Our annual reports onForm 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and proxy statements, and all amendments thereto, are available free of charge onour website as soon as reasonably practicable after such reports are electronically filed with or furnished to the SEC. In addition, our code of businessconduct, our code of ethics for senior financial management, our corporate governance guidelines, and the charters of each of the committees of ourBoard of Directors (which are not deemed filed by this reference), are available on our website and are available in print to any Standex shareholder,without charge, upon request in writing to “Chief Legal Officer, Standex International Corporation, 11 Keewaydin Drive, Salem, New Hampshire, 03079.” The certifications of Standex’s Chief Executive Officer and Chief Financial Officer, as required by the rules adopted pursuant to Section 302 of theSarbanes-Oxley Act of 2002, are filed as exhibits to this Form 10-K. Item 1A. Risk Factors An investment in the Company involves various risks, including those mentioned below and those that are discussed from time to time in our otherperiodic filings with the Securities and Exchange Commission. Investors should carefully consider these risks, along with the other information filed inthis report, before making an investment decision regarding the Company. Any of these risks could have a material adverse effect on our financialcondition, results of operations and/or value of an investment in the Company. A deterioration in the domestic and international economic environment could adversely affect our operating results, cashflow and financialcondition. Recessionary economic conditions, with or without a tightening of credit, could adversely impact major markets served by our businesses, includingcyclical 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 and services is cyclical; •causing delays or cancellations of orders for our products or services; •reducing capital spending by our customers; •increasing price competition in our markets; •increasing difficulty in collecting accounts receivable; •increasing the risk of excess or obsolete inventories; •increasing the risk of impairment to long-lived assets due to reduced use of manufacturing facilities; •increasing the risk of supply interruptions that would be disruptive to our manufacturing processes; and •reducing the availability of credit and spending power for our customers. We rely on our credit facility to provide us with sufficient capital to operate our businesses and to fund acquisitions. We rely on our revolving credit facility, in part along with operating cash flow, to provide us with sufficient capital to operate our businesses and to fundacquisitions. The availability of borrowings under our revolving credit facility is dependent upon our compliance with the covenants set forth in thefacility, including the maintenance of certain financial ratios. Our ability to comply with these covenants is dependent upon our future performance, whichis subject to economic conditions in our markets along with factors that are beyond our control. Violation of those covenants could result in our lendersrestricting or terminating our borrowing 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 and require prepayment of the debtbefore its due date. Even if new financing is available, in the event of a default under our current credit facility, the interest rate charged on any newborrowing could be substantially higher than under the current credit facility, thus adversely affecting our overall financial condition. If our lendersreduce or terminate our access to amounts under our credit facility, we may not have sufficient capital to fund our working capital needs and/oracquisitions or we may need to secure additional capital or financing to fund our working capital requirements or to repay outstanding debt under ourcredit facility or to fund acquisitions. 8 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 credit facility; and •sell material assets. Our global operations subject us to international business risks. We operate in 69 locations outside of the United States in Europe, Canada, China, Japan, India, Singapore, Korea, Mexico, Brazil, Turkey, Malaysia, andSouth Africa. If we are unable to successfully manage the risks inherent to the operation and expansion of our global businesses, those risks could havea material adverse effect on our results of operations, cashflow or financial condition. These international business risks include: •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; and •changes in regulatory requirements. Failure to achieve expected savings and synergies could adversely impact our operating profits and cash flows. We focus on improving profitability through LEAN enterprise, low cost sourcing and manufacturing initiatives, improving working capital management,developing new and enhanced products, consolidating factories where appropriate, automating manufacturing processes, diversification efforts andcompleting acquisitions which deliver synergies to stimulate sales and growth. If we are unable to successfully execute these programs, such failurecould adversely affect our operating profits and cash flows. In addition, actions we may take to consolidate manufacturing operations to achieve costsavings or adjust to market developments may result in restructuring charges that adversely affect our profits. Violation of anti-bribery or similar laws by our employees, business partners or agents could result in fines, penalties, damage to our reputation orother adverse consequences. We cannot assure that our internal controls, code of conduct and training of our employees will provide complete protection from reckless or criminal actsof our employees, business partners or agents that might violate United States or international laws relating to anti-bribery or similar topics. A violation ofthese laws could subject us to civil or criminal investigations that could result in substantial civil or criminal fines and penalties and which could damageour reputation. We face significant competition in our markets and, if we are not able to respond to competition in our markets, our net sales, profits and cash flowscould decline. Our businesses operate in highly competitive markets. To compete effectively, we must retain long standing relationships with significant customers,offer attractive pricing, maintain product quality, meet customer delivery requirements, develop enhancements to products that offer performance featuresthat are superior to our competitors and which maintain our brand recognition, continue to automate our manufacturing capabilities, continue to grow ourbusiness by establishing relationships with new customers, diversify into emerging markets and penetrate new markets. In addition, many of ourbusinesses experience sales churn as customers seek lower cost suppliers. We attempt to offset this churn through our continual pursuit of new businessopportunities. However, if we are unable to compete effectively or succeed in our pursuit of new business opportunities, our net sales, profitability andcash flows could decline. Pricing pressures resulting from competition may adversely affect our net sales and profitability. 9 If we are unable to successfully introduce new products and product enhancements, our future growth could be impaired. Our ability to develop new products and innovations to satisfy customer needs or demands in the markets we serve can affect our competitive positionand often requires significant investment of resources. Difficulties or delays in research, development or production of new products and services orfailure to gain market acceptance of new products and technologies may significantly reduce future net sales and adversely affect our competitiveposition. 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 metal commodities for themanufacture of our products. We also purchase significant quantities of relatively rare elements used in the manufacture of certain of our electronicsproducts. Historically, prices for commodities and rare elements have fluctuated, and we are unable to enter into long term contracts or otherarrangements to hedge the risk of price increases in many of these commodities. Significant price increases for these commodities and rare elements couldadversely affect our operating profits if we cannot timely mitigate the price increases by successfully sourcing lower cost commodities or rare elements orby passing the increased costs on to customers. Shortages or other disruptions in the supply of these commodities or rare elements could delay sales orincrease costs. Current and threatened tariffs on components and finished goods from China and other countries could result in lower net sales, profits and cashflows and could impair the value of our investments in our Chinese operations. As part of our low-cost country sourcing strategy, we (i) maintain manufacturing facilities in China and (ii) import certain components and finished goodsfrom our own facilities and third-party suppliers in China. Many of the components and finished goods we import from China are subject to tariffsrecently enacted by the United States government as well as additional proposed tariffs. While we attempt to pass on these additional costs to ourcustomers, competitive factors (including competitors who import from other countries not subject to such tariffs) may limit our ability to sustain priceincreases and, as a result, may adversely impact our net sales, profits and cash flows. The maintenance of such tariffs over the long-term also couldimpair the value of our investments in our Chinese operations. In addition, the imposition of tariffs may influence the sourcing habits of certain end usersof our products and services which, in turn, could have a direct impact on the requirements of our direct customers for our products and services. Suchan impact could adversely affect our net sales, profits and cash flows. An inability to identify or complete future acquisitions could adversely affect our future growth. As part of our growth strategy, we intend to pursue acquisitions that provide opportunities for profitable growth for our businesses and enable us toleverage our competitive strengths. While we continue to evaluate potential acquisitions, we may not be able to identify and successfully negotiatesuitable acquisitions, obtain financing for future acquisitions on satisfactory terms, obtain regulatory approval for certain acquisitions or otherwisecomplete acquisitions in the future. An inability to identify or complete future acquisitions could limit our future growth. We may experience difficulties in integrating acquisitions. Integration of acquired companies involves 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; and •possible future impairment charges for goodwill and non-amortizable intangible assets that are recorded as a function of acquisitions. Additionally, our level of indebtedness may increase in the future if we finance acquisitions with debt, which would cause us to incur additional interestexpense and could increase our vulnerability to general adverse economic and industry conditions and limit our ability to service our debt or obtainadditional financing. We cannot assure that future acquisitions will not have a material adverse effect on our financial condition, results of operations andcash flows. Impairment charges could reduce our profitability. We test goodwill and our other intangible assets with indefinite useful lives for impairment on an annual basis or on an interim basis if a potentialimpairment factor arises that indicates the fair value of the reporting unit may fall below its carrying value. Various uncertainties, including continuedadverse conditions in the capital markets or changes in general economic conditions, could impact the future operating performance at one or more of ourbusinesses which could significantly 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. 10 Materially adverse or unforeseen legal judgments, fines, penalties or settlements could have an adverse impact on our profits and cash flows. We are and may, from time to time, become a party to legal proceedings incidental to our businesses, including, but not limited to, alleged claims relatingto product liability, environmental compliance, patent infringement, commercial disputes and employment and regulatory matters. In accordance withUnited States generally accepted accounting principles, we establish reserves based on our assessment of contingent liabilities. Subsequentdevelopments in legal proceedings may affect our assessment and estimates of loss contingencies, recorded as reserves, which could require us to recordadditional reserves or make material payments which could adversely affect our profits and cash flows. Even the successful defense of legal proceedingsmay cause us to incur substantial legal costs and may divert management's time and resources away from our businesses. The costs of complying with existing or future environmental regulations, and of correcting any violations of these regulations, could impact ourprofitability. We are subject to a variety of environmental laws relating to the storage, discharge, handling, emission, generation, use and disposal of chemicals,hazardous waste and other toxic and hazardous materials used to manufacture, or resulting from the process of manufacturing, our products. We cannotpredict the nature, scope or effect of regulatory requirements to which our operations might be subject or the manner in which existing or future laws willbe administered or interpreted. We are also exposed to potential legacy environmental risks relating to businesses we no longer own or operate. Futureregulations could be applied to materials, products or activities that have not been subject to regulation previously. The costs of complying with new ormore stringent regulations, or with more vigorous enforcement of these or existing regulations, could be significant. In addition, properly permitted waste disposal facilities used by us as a legal and legitimate repository for hazardous waste may in the future becomemismanaged or abandoned without our knowledge or involvement. In such event, legacy landfill liability could attach to or be imposed upon us inproportion to the waste deposited at any disposal facility. Environmental laws require us to maintain and comply with a number of permits, authorizations and approvals and to maintain and update trainingprograms and safety data regarding materials used in our processes. Violations of these requirements could result in financial penalties and otherenforcement actions. We could be required to halt one or more portions of our operations until a violation is cured. Although we attempt to operate incompliance with these environmental laws, we may not succeed in this effort at all times. The costs of curing violations or resolving enforcement actionsthat might be 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 of such regulations, couldimpact our profitability. Certain of our products are subject to regulations promulgated by administrative agencies such as the Department of Energy, Occupational Health andSafety Administration and the Food and Drug Administration. Such regulations, among other matters, specify requirements regarding energy efficiencyand product safety. Regulatory violations could result in financial penalties and other enforcement actions. We could be required to halt production ofone or more products until a violation is cured. Although we attempt to produce our products in compliance with these requirements, the costs of curingviolations or resolving enforcement actions that might be initiated by administrative agencies could be substantial. Our results could be adversely affected by natural disasters, political crises, or other catastrophic events. Natural disasters, such as hurricanes, tornadoes, floods, earthquakes, and other adverse weather and climate conditions; political crises, such as terroristattacks, war, labor unrest, and other political instability; or other catastrophic events, such as disasters occurring at our suppliers' manufacturing facilities,whether occurring in the United States or internationally, could disrupt our operations or the operations of one or more of our suppliers. Certain of ourkey manufacturing facilities are located in geographic areas with a higher than nominal risk of earthquake and flood. To the extent any of these eventsoccur, our operations and financial results could be adversely affected. We depend on our key personnel and the loss of their services may adversely affect our business. We believe that our success depends on our ability to hire new talent and the continued employment of our senior management team and other keypersonnel. If one or more members of our senior management team or other key personnel were unable or unwilling to continue in their present positions,our business could be seriously harmed. In addition, if any of our key personnel joins a competitor or forms a competing company, some of our customersmight choose to use the services of that competitor or those of a new company instead of our own. Other companies seeking to develop capabilities andproducts or services similar to ours may hire away some of our key personnel. If we are unable to maintain our key personnel and attract new employees,the execution of our business strategy may be hindered and our growth limited. 11 Strategic divestitures and contingent liabilities from businesses that we sell could adversely affect our results of operations and financial condition. From time to time, we have sold and may continue to sell business that we consider to be either underperforming or no longer part of our strategic vision.The sale of any such business could result in a financial loss and/or write-down of goodwill which could have a material adverse effect on our results forthe financial reporting period during which such sale occurs. In addition, in connection with such divestitures, we have retained, and may in the futureretain responsibility for some of the known and unknown contingent liabilities related to certain divestitures such as lawsuits, tax liabilities, productliability claims, and environmental matters. The trading price of our common stock has been volatile, and investors in our common stock may experience substantial losses. The trading price of our common stock has been volatile and may become volatile again in the future. The trading price of our common stock coulddecline or fluctuate in response to a variety of factors, including: •our failure to meet the performance estimates of securities analysts; •changes in financial estimates of our net sales and operating results or buy/sell recommendations by securities analysts; •fluctuations in our quarterly operating results; •substantial sales of our common stock; •changes in the amount or frequency of our payment of dividends or repurchases of our common stock; •general stock market conditions; or •other economic or external factors. Decreases in discount rates and actual rates of return could require an increase in future pension contributions to our pension plans which couldlimit our flexibility in managing our Company. The discount rate and the expected rate of return on plan assets represent key assumptions inherent in our actuarially calculated pension plan obligationsand pension plan expense. If discount rates and actual rates of return on invested plan assets were to decrease significantly, our pension plan obligationscould increase materially. Although our pension plans have been frozen, the size of future required pension contributions could require us to dedicate agreater portion of our cash flow 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, and other security threats ordisruptions. Our information technology networks and related systems are critical to the operation of our business and essential to our ability to successfully performday-to-day operations. Cybersecurity threats are persistent, evolve quickly, and include, but are not limited to, computer viruses, ransomware, attempts toaccess information, denial of service and other electronic security breaches. These events could disrupt our operations or customers and other third-party IT systems in which we are involved 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. We are subject to increasing regulation associated with data privacy and processing, the violation of which could result in significant penalties andharm our reputation. Regulatory scrutiny of privacy, data protection, collection, use and sharing of data is increasing on a global basis. Like all global companies, we aresubject to a number of laws, rules and directives (“privacy laws”) relating to the collection, use, retention, security, processing and transfer(“processing”) of personally identifiable information about our employees, customers and suppliers (“personal data”) in the countries where we operate.The most notable of these privacy laws is the EU’s General Data Protection Regulation (“GDPR”), which came into effect in 2018. GDPR extends the scopeof the EU data protection law to all foreign companies processing data of EU residents and imposes a strict data protection compliance regime with severepenalties for non-compliance of up to the greater of 4% of worldwide turnover and €20 million. While we continue to strengthen our data privacy andprotection policies and to train our personnel accordingly, a determination that there have been violations of GDPR or other privacy or data protectionlaws could expose us to significant damage awards, fines and other penalties that could, individually or in the aggregate, materially harm our results ofoperations and reputation. 12 Various restrictions in our charter documents, Delaware law and our credit agreement could prevent or delay a change in control that is notsupported by our board of directors. We are subject to several provisions in our charter documents, Delaware law and our credit facility that may discourage, delay or prevent a merger,acquisition or change of control that a stockholder may consider favorable. These anti-takeover provisions include: •maintaining a classified board and imposing advance notice procedures for nominations of candidates for election as directors and forstockholder 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 outstanding shares of our commonstock to adopt any agreement of merger, the sale of substantially all of the assets of the Company to a third party or the issuance or transferby the Company of voting securities having a fair market value of $1 million or more to a third party, if in any such case such third party isthe beneficial owner of 10% or more 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 for stockholders to amend ouramended and restated by-laws; •covenants in our credit facility restricting mergers, asset sales and similar transactions; and •the Delaware anti-takeover statute contained in Section 203 of the Delaware General Corporation Law. Section 203 of the Delaware General Corporation Law prohibits a merger, consolidation, asset sale or other similar business combination between theCompany and any stockholder of 15% or more of our voting stock for a period of three years after the stockholder acquires 15% or more of our votingstock, unless (1) the transaction is approved by our board of directors before the stockholder acquires 15% or more of our voting stock, (2) uponcompleting the transaction the stockholder owns at least 85% of our voting stock outstanding at the commencement of the transaction, or (3) thetransaction is approved by our board of directors and the holders of 66 2/3% of our voting stock, excluding shares of our voting stock owned by thestockholder. Item 1B. Unresolved Staff Comments None. Item 2. Properties We have a total of 108 facilities, of which we operate 91 manufacturing plants and warehouses located throughout the United States, Europe, Canada,Southeast Asia, Korea, Japan, China, India, Brazil, South Africa, and Mexico. The Company owns 22 of the facilities and the balance are leased. For theyear ended June 30, 2019 the approximate building space utilized by each segment is as follows: Area in Square Feet (in thousands) Segment location Number ofFacilities Leased Owned Total Asia Pacific 17 328 - 328 EMEA(1) 21 362 36 398 Other Americas 6 89 - 89 United States 11 142 134 276 Engraving 55 921 170 1,091 Asia Pacific 11 77 29 106 EMEA(1) 5 34 66 100 Other Americas 2 5 56 61 United States 5 100 30 130 Electronics 23 216 181 397 EMEA(1) 3 80 - 80 United States 6 243 171 414 Engineering Technologies 9 323 171 494 Asia Pacific 2 76 - 76 Other Americas 1 1 - 1 United States 5 15 101 116 Hydraulics 8 92 101 193 EMEA(1) 1 13 - 13 United States 11 378 597 975 Food Service Equipment 12 391 597 988 United States 1 12 - 12 Corporate & Other 1 12 - 12 Total 108 1,955 1,220 3,175 (1) EMEA consists Europe, Middle East and S. Africa. 13 In general, the buildings are in sound operating condition and are considered to be adequate for their intended purposes and current uses. We own substantially all of the machinery and equipment utilized in our businesses. Item 3. Legal Proceedings Discussion of legal matters is incorporated by reference to Part II, Item 8, Note 12, “CONTINGENCIES,” in the Notes to the Consolidated FinancialStatements. Item 4. Mine Safety Disclosures Not Applicable PART II Item 5. Market for Standex Common Stock Related Stockholder Matters and Issuer Purchases of Equity Securities The principal market in which the Common Stock of Standex is traded is the New York Stock Exchange under the ticker symbol “SXI”. The high and lowsales prices for the Common Stock on the New York Stock Exchange and the dividends paid per Common Share for each quarter in the last two fiscal yearsare as follows: Common Stock Price Range Dividends Per Share 2019 2018 Year Ended June 30 High Low High Low 2019 2018 First quarter $114.20 $99.95 $109.30 $89.70 $0.18 $0.16 Second quarter 109.77 62.02 110.00 98.38 0.20 0.18 Third quarter 83.18 66.02 106.90 93.15 0.20 0.18 Fourth quarter 76.78 62.79 106.40 89.40 0.20 0.18 The approximate number of stockholders of record on July 31, 2019 was 1,625. Additional information regarding our equity compensation plans is presented in the Notes to Consolidated Financial Statements under the caption“Stock-Based Compensation and Purchase Plans” and Item 12 “Security Ownership of Certain Beneficial Owners and Management and RelatedStockholder Matters.” 14 Issuer Purchases of Equity Securities (1) Quarter Ended June 30, 2019 Period (a) TotalNumber ofShares (orunits)Purchased (b) AveragePrice Paid perShare (or unit) (c) TotalNumber ofShares (orunits)Purchased asPart ofPubliclyAnnouncedPlans orPrograms (d) MaximumNumber (orAppropriateDollar Value)of Shares (orunits) thatMay Yet BePurchasedUnder thePlans orPrograms April 1 - April 30, 2019 - $- - $67,834,396 May 1 - May 31, 2019 202,216 69.93 202,216 53,693,431 June 1 - June 30, 2019 150 90.26 150 53,679,892 TOTAL 202,366 $69.95 202,366 $53,679,892 (1) The Company has a Stock Buyback Program (the “Program”) which was originally announced on January 30, 1985 and most recently amended onApril 26, 2016. Under the Program, the Company is 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 privately negotiated transactions, blocktransactions, or other techniques in accordance with prevailing market conditions and the requirements of the Securities and Exchange Commission. TheBoard’s authorization is open-ended and does not establish a timeframe for the purchases. The Company is not obligated to acquire a particular numberof shares, and the program may be discontinued at any time at the Company’s discretion. 15 The following graph compares the cumulative total stockholder return on the Company’s Common Stock as of the end of each of the last five fiscal years,with the cumulative total stockholder return on the Standard & Poor’s Small Cap 600 (Industrial Segment) Index and on the Russell 2000 Index, assumingan investment of $100 in each at their closing prices on June 30, 2014 and the reinvestment of all dividends. 16 Item 6. Selected Consolidated Financial Data Selected financial data for the five years ended June 30, is as follows: See Item 7 for discussions on comparability of the below. 2019 2018 2017 2016 2015 SUMMARY OF OPERATIONS (in thousands) Net sales Engraving $149,693 $136,275 $105,943 $124,120 $110,781 Electronics 204,073 196,291 136,689 118,319 114,196 Engineering Technologies 105,270 90,781 90,506 82,235 97,018 Hydraulics 53,943 48,169 41,150 45,045 41,441 Food Service Equipment 278,600 298,936 273,597 262,705 290,085 Total 791,579 770,452 647,885 632,424 653,521 Gross profit $268,060 $269,602 $215,553 $210,191 $214,554 Operating income (loss) Engraving $23,996 $29,618 $26,139 $30,214 $24,996 Electronics 41,227 45,501 27,855 21,323 21,143 Engineering Technologies 11,169 6,506 9,758 8,328 13,165 Hydraulics 8,891 7,398 6,802 8,047 7,139 Food Service Equipment 22,773 28,131 23,633 28,242 35,067 Restructuring (1) (1,635) (6,964) (5,761) (2,064) (869)Acquisition related expenses (3,075) (3,749) (7,843) - - Other operating income (expense), net (500) - - (7,067) 473 Corporate and Other (24,729) (26,430) (23,664) (23,829) (20,499)Total $78,117 $80,011 $56,919 $63,194 $80,615 Interest expense (10,760) (8,029) (4,043) (2,871) (3,161)Other non-operating (loss) income (1,744) (1,735) (1,917) (2,113) (1,642)Provision for income taxes (18,424) (38,904) (11,822) (13,784) (21,081)Income from continuing operations 47,189 31,343 39,137 44,426 54,731 Income/(loss) from discontinued operations 20,725 5,261 7,408 7,630 12 Net income $67,914 $36,604 $46,545 $52,056 $54,743 (1) See discussion of restructuring activities in Note 16 of the consolidated financial statements. 2019 2018 2017 2016 2015 PER SHARE DATA Basic Income from continuing operations $3.75 $2.47 $3.09 $3.50 $4.32 Income/(loss) from discontinued operations 1.65 0.41 0.59 0.61 0.01 Total $5.40 $2.88 $3.68 $4.11 $4.33 Diluted Income from continuing operations $3.74 $2.45 $3.07 $3.48 $4.27 Income/(loss) from discontinued operations 1.64 0.41 0.58 0.60 0.00 Total $5.38 $2.86 $3.65 $4.08 $4.27 Dividends declared $0.78 $0.70 $0.62 $0.54 $0.46 17 2019 2018 2017 2016 2015 BALANCE SHEET (in thousands) Total assets $921,889 $916,937 $867,676 $690,457 $659,063 Accounts receivable 119,589 119,783 114,219 88,878 93,865 Inventories 88,645 104,300 96,085 81,402 84,696 Accounts payable 72,603 78,947 82,146 61,820 68,544 Goodwill 281,503 211,751 202,679 117,343 114,721 Long-term debt $197,610 $193,772 $191,976 $92,114 $101,753 Total debt 197,610 193,772 191,976 92,114 101,753 Less cash 93,145 109,602 88,566 121,988 96,128 Net debt (cash) $104,465 $84,170 $103,410 $(29,874) $5,625 Stockholders' equity $464,313 $450,795 $408,664 $369,959 $348,570 KEY STATISTICS 2019 2018 2017 2016 2015 Gross profit margin 33.9% 35.0% 33.3% 33.2% 32.8%Operating income margin 9.9% 10.4% 8.8% 10.0% 12.3% Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Overview We are a leading manufacturer of a variety of products and services for diverse commercial and industrial markets. We have nine operating businessunits, aggregated and organized for reporting purposes into five reportable segments: Engraving, Electronics, Engineering Technologies, Hydraulics andFood Service Equipment. Overall management, strategic development and financial control are led by the executive staff at our corporate headquarterslocated in Salem, New Hampshire. Our long-term strategy is to build larger industrial platforms through a value creation system that assists management in meeting specific corporate andbusiness unit financial and strategic performance goals in order to create, improve, and enhance shareholder value. The Standex Value Creation System isa standard methodology which provides consistent tools used throughout the company in order to achieve our organization’s goal of transforming fromits historic roots as a holding company 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. The Balanced Performance Plan processaligns annual goals throughout the business and provides a standard reporting, management and review process. It is focused on setting and meetingannual and quarterly targets that support our short and long term goals. The Standex Growth Disciplines use a set of tools and processes includingmarket maps, growth laneways, 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 improve profitability, cash flow andcustomer satisfaction. Finally, the Standex Talent Management process is an organizational development process that provides training, development,and succession planning for our employees throughout our worldwide organization. The Standex Value Creation System ties all disciplines in theorganization together under a common umbrella by providing standard tools and processes to deliver our business objectives. Through the use of ourStandex Value Creation System, we have developed a balanced approach to value creation. While we intend to continue investing acquisition capital inhigh margin and growth segments such as Electronics and Engraving, we will continue to support all of our businesses as they enhance value throughdeployment of our GDP+ and OpEx playbooks. ●It is our objective to grow larger and more profitable business units through both organic initiatives and acquisitions. We seek to identifyand implement organic growth initiatives such as new product development, geographic expansion, introduction of products andtechnologies into new markets and applications, key accounts and strategic sales channel partners. Also, we have a long-term objective tocreate sizable business platforms by adding strategically aligned or “bolt on” acquisitions to strengthen the individual businesses, createboth sales and cost synergies 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 a particular focus onidentifying and investing in opportunities that complement our products and will increase the global presence and capabilities of ourbusinesses. From time to time, we have divested, and likely will continue to divest, businesses that we feel are not strategic or do not meetour growth and return expectations. 18 As part of our ongoing strategy: oDuring the first quarter of 2019, the Company decided to divest its Cooking Solutions Group, which consisted of threeoperating segments, Associated American Industries, BKI, and Ultrafryer, and a minority interest investment. Wecompleted this divestiture during the third quarter of 2019 and received proceeds for the sale on the first day of the fourthquarter. In connection with the divestiture efforts, we also sold our minority interest in a European oven manufacturerback to the majority owners. Results of the Cooking Solutions Group in current and prior periods have been classified asdiscontinued operations in the Consolidated Financial Statements. oIn April 2019, we acquired Ohio-based Genius Solutions Engineering Company (d/b/a GS Engineering), a provider ofspecialized “soft surface” skin texturized tooling, primarily serving the automotive end market. GS Engineering brings uscritical proprietary technologies that offer significant advantages in creating tools for “soft surface” components whichare used increasingly in vehicle interiors. The tooling for soft surface products offered by GS is highly complementary toour current industry-leading capabilities in texturing molds and tools used to create “hard surface” components. Thistechnology also complements and enables us to improve our existing nickel shell technology that produces soft surfacetooling. We intend to immediately introduce the GS technology across our global production footprint which will enablecustomers worldwide to benefit from a combined offering for harmonized designs across a variety of surfaces andmaterials. GS operates one facility in Ohio and its results are reported within our Engraving segment. oIn September 2018, we acquired New Hampshire-based Regional Mfg. Specialists, Inc. (now named Agile Magnetics, Inc.),a provider of high-reliability magnetics. The addition of Agile Magnetics is an important step forward in building out thehigh reliability magnetics business of Standex Electronics. As a result of this combination, we have broadened ourexposure to several high-growth end-markets and added a valuable manufacturing and sales base in the Northeast.Additionally, we can now offer complementary products from Standex’s broader portfolio to Agile’s customer base. AgileMagnetics products include transformers, inductors and coils for mission critical applications for blue chip OEMs in thesemiconductor, military, aerospace, healthcare, and industrial markets. Agile operates one manufacturing facility in NewHampshire and its results are reported within our Electronics segment. oIn August 2018, we acquired Michigan-based Tenibac-Graphion, Inc., a provider of chemical and laser texturing services. The combination of Tenibac and Standex Engraving will expand services available to customers, increase responsivenessto customer demands, and drive innovative approaches to solving customer needs. The combined customer base now hasaccess to the full line of mold and tool services, such as the Architexture design consultancy,chemical and laser engraving,tool finishing, and tool enhancements. Tenibac serves automotive, packaging, medical and consumer products customers,and operates three facilities, two in Michigan and one in China. The Tenibac results are reported within our Engravingsegment. oWe acquired Italy-based Piazza Rosa Group (“Piazza Rosa”) in July 2017. The privately held company is a leading providerof mold, tool treatment and finishing services for the automotive and consumer products markets. The combination ofthese competencies with Standex Engraving’s worldwide presence and texturizing capabilities creates a global toolfinishing service leader and provides additional opportunities in the broader surface engineering market. The Piazza RosaGroup’s results are reported within our Engraving segment. ●We develop “Customer Intimacy” by utilizing the Standex Growth Disciplines to partner with our customers in order to develop and delivercustom solutions or engineered components. By partnering with our customers during long-term product development cycles, we becomean extension of their development teams. Through this Partner, Solve, Deliver ® methodology, we are able to secure our position as apreferred long-term solution provider for our products and components. This strategy results in increased sales and operating margins thatenhance shareholder returns. ●Standex Operational Excellence drives continuous improvement in the efficiency of our businesses, both on the shop floor and in the officeenvironment. We recognize that our businesses are competing in a global economy that requires us to improve our competitive position. We have deployed a number of management competencies to drive improvements in the cost structure of our business units includingoperational excellence through lean enterprise, the use of low cost manufacturing facilities, the consolidation of manufacturing facilities toachieve economies of scale and leveraging of fixed infrastructure costs, alternate sourcing to achieve procurement cost reductions, andcapital improvements to increase productivity. 19 ●The Company’s strong historical cash flow has been a cornerstone for funding our capital allocation strategy. We use cash flow generatedfrom operations to fund the strategic growth programs described above, including acquisitions and investments for organic growth,investments in capital assets to improve productivity and lower costs and to return cash to our shareholders through payment of dividendsand stock buybacks. Restructuring expenses reflect costs associated with the Company’s efforts of continuously improving operational efficiency and expanding globally inorder to remain competitive in our end-user markets. We incur costs for actions to size our businesses to a level appropriate for current economicconditions, improve our cost structure, enhance our competitive position and increase operating margins. Such expenses include costs for movingfacilities to locations that allow for lower fixed and variable costs, external consultants who provide additional expertise starting up plants after relocation,downsizing operations because of changing economic conditions, and other costs resulting from asset redeployment decisions. Shutdown costs includeseverance, benefits, stay bonuses, lease and contract terminations, asset write-downs, costs of moving fixed assets, and moving and relocation 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 use specific external indices topredict the future performance of the Company, other than general information about broad macroeconomic trends. Each of our individual business unitsserves niche markets and attempts to identify trends other than general business and economic conditions which are specific to its business and whichcould impact their performance. Those units report pertinent information to senior management, which uses it to the extent relevant to assess the futureperformance of the Company. A description of any such material trends is described below in the applicable segment analysis. We monitor a number of key performance indicators (“KPIs”) including net sales, income from operations, backlog, effective income tax rate, gross profitmargin, and operating cash flow. A discussion of these KPIs is included below. We may also supplement the discussion of these KPIs by identifying theimpact of foreign exchange rates, acquisitions, and other significant 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 overall trend which provides aclearer comparative view of the KPI, as applicable. For discussion of the impact of foreign exchange rates on KPIs, the Company calculates the impact asthe difference between the current period KPI calculated at the current period exchange rate as compared to the KPI calculated at the historical exchangerate for the prior period. For discussion of the impact of acquisitions, we isolate the effect on the KPI amount that would have existed regardless of ouracquisition. Sales resulting from synergies between the acquisition and existing operations of the Company are considered organic growth for thepurposes of our discussion. Unless otherwise noted, references to years are to fiscal years. Consolidated Results from Continuing Operations (in thousands): 2019 2018 2017 Net sales $791,579 $770,452 $647,885 Gross profit margin 33.9% 35.0% 33.3%Restructuring costs (1,635) (6,964) (5,761)Acquisition related expenses (3,075) (3,749) (7,843)Income from operations 78,117 80,011 56,919 Backlog (realizable within 1 year) $205,175 $204,683 $185,180 2019 2018 2017 Net sales $791,579 $770,452 $647,885 Components of change in sales: Effect of acquisitions 29,122 59,855 38,498 Effect of exchange rates (12,041) 14,394 (6,195)Effect of business divestitures - - (17,446)Organic sales growth 4,046 48,318 608 Net sales for the fiscal year 2019 increased by $21.1 million, or 2.7%, when compared to the prior year. Incremental sales from our recent acquisitionsaccounted for $29.1 million or 3.8% of the increase, while organic sales gains accounted for $4.0 million or 0.5%. Changes in foreign exchange ratescontributed to sales declines of $12.0 million or 1.6%. The organic sales increases occurred in all of our segments except the Food Service EquipmentGroup. 20 Net sales for the fiscal year 2018 increased by $122.6 million, or 18.9%, when compared to the prior year. Incremental sales increases from our recentacquisitions accounted for $59.9 million or 9.2%, while increased organic sales accounted for $48.3 million or 7.5%. We also recognized sales growth of$14.4 million or 2.2% related to favorable foreign exchange impacts. The organic sales increases occurred in all segments except EngineeringTechnologies. Gross Profit Margin Gross margin in 2019 declined to 33.9% as compared to 35.0% in 2018 as a result of incremental purchase accounting, material and wage inflation,manufacturing inefficiencies, country specific site performance and an asset impairment charge. Gross Margins are anticipated to improve in FY 20 as costreduction activities have been put in place along with the non-repeating onetime items. During 2018, gross margin increased to 35.0% as compared to 33.3% in 2017. Gross margin increases during fiscal year 2018 were primarily driven by theleverage on our 7.5% organic sales increase. Restructuring Charges and Acquisition Related Expenses During fiscal year 2019, we incurred restructuring expenses of $1.6 million primarily related to restructuring efforts that are intended to improveprofitability, streamline production and enhance capacity to support future growth. These efforts include approximately $0.6 million related to headcountreductions and the closure of an unprofitable European Engraving site. Acquisition related expenses in fiscal year 2019 were $3.6 million. These expenses were comprised primarily of $2.8 million for deferred compensationearned by the Horizon Scientific seller during the year. Because these payments are contingent on the seller remaining an employee of the Company, theyare treated as compensation expense. Other acquisition related expenses consist of due diligence and valuation expenses incurred during the acquisitionof Tenibac, Agile, and GS Engineering. Selling, General, and Administrative Expenses Selling, general, and administrative expenses, (“SG&A”) for the fiscal year 2019 were $184.7 million, or 23.3% of sales compared to $178.9 million, or 23.2%of sales during the prior year. SG&A expenses were impacted by on-going expenses related to our fiscal year 2019 acquisitions of $7.4 million partiallyoffset by a decrease in distribution and selling expenses of $2.0 million due to sales mix, and a $1.7 million reduction in corporate expenses. Selling, general, and administrative expenses, (“SG&A”) for the fiscal year 2018 were $178.9 million, or 23.2% of sales compared to $145.0 million, or 22.4%of sales during the prior year. SG&A expenses were impacted by: (i) on-going SG&A expenses related to our recent acquisitions of $7.8 million, (ii) anincrease in distribution and selling expenses of $10.2 million, (iii) an increase in administrative expenses related to investments to support our recentacquisitions and growth laneways and (iv) a $3.1 million increase in administrative compensation costs due to improved performance. Income from Operations Income from operations for the fiscal year 2019 was $78.1 million, compared to $80.0 million during the prior year. The $1.9 million decrease, or 2.4%, isprimarily due to material and wage inflation, and business mix, partially offset by lower restructuring costs. Income from operations for the fiscal year 2018 was $80.0 million, compared to $56.9 million during the prior year. The $23.1 million increase, or 40.6%, isprimarily due to increased sales volume, including 7.5% organic sales growth and 9.2% growth attributed to our recent acquisitions. The increase inoperating income is also partially due to the reduction in acquisition related expenses of $4.1 million as compared to fiscal year 2017. Discussion of the performance of each of our reportable segments is fully explained in the segment analysis that follows. Interest Expense Interest expense for the fiscal year 2019 was $10.8 million, an increase of $2.7 million as compared to the prior year. Increased interest expense was a resultof higher borrowing costs and an increase in average outstanding borrowings for the year, primarily to fund acquisition activity. Our effective interestrate of 3.88% was 59 basis points or 18% higher than the 2018 effective interest rate of 3.29%. Interest expense for fiscal year 2018 was $8.0 million, an increase from $4.0 million in fiscal year 2017. The increase is due to higher borrowings associatedwith the recent acquisitions, in addition to working capital increases to support increased sales activity. In addition, we incurred $0.9 million of chargesassociated with derivative activity related to the Standex Electronics Japan acquisition. 21 Income Taxes The Company's income tax provision from continuing operations for fiscal year 2019 was $18.4 million, or an effective rate of 28.1% compared to $38.9million, or an effective rate of 55.4% for fiscal year 2018, and $11.8 million, or an effective rate of 23.2% for the year ended June 30, 2017. Changes in theeffective tax rate from period to period may be significant as they depend on many factors including, but not limited to, the amount of the Company'sincome or loss, the mix of income earned in the U.S. versus in foreign jurisdictions, the effective tax rate in each of the countries in which we earn income,and any one-time tax issues which occur during the period. The Company's income tax provision from continuing operations for the fiscal year ended June 30, 2019 was impacted by the following items: (i) $2.1million of expenses related to expected foreign withholding taxes on cash repatriation (ii) a tax expense of $0.3 million related to the elimination of theperformance based compensation exception for executive compensation under Sec. 162(m) of the Internal Revenue Code, offset by (iii) a tax benefit of $0.8million related to the impact of the Sec. 965 toll tax. During the second quarter of fiscal year 2019, the Company recorded a tax benefit of approximately $0.8 million to its provision for income taxes related toa mandatory deemed repatriation of foreign earnings and considers the toll tax calculation to be complete. The provision for fiscal year ending June 30, 2019 was impacted by several law changes implemented by the Act such as the repeal of the Section 199manufacturing deduction, changes to the calculation for Section 162(m) executive compensation deduction, interest deduction limitation and the GlobalIntangible Low Taxed Income (GILTI) provision. As allowed under US GAAP, the Company has elected to treat any taxes due on future U.S. inclusions intaxable income under the GILTI provision as a current-period expense when incurred. The Company will continue to monitor guidance regarding thesechanges for any impacts that the changes might have on future period financial statements. The Company's income tax provision from continuing operations for the fiscal year ended June 30, 2018 was impacted by the following items: (i) a taxexpense of $11.7 million related to the impact of the Sec. 965 toll tax, (ii) a tax expense of $1.3 million related to a revaluation of deferred taxes due to thefederal rate reduction, and (iii) a tax expense of $7.8 million related to expected foreign withholding taxes on cash repatriation. On December 22, 2017, the Tax Cuts and Jobs Act (the “Act” or “TCJA”) was passed which, among other things, reduced the federal corporate tax rate to21.0% effective for taxable years starting on or after January 1, 2018. For transition year ending June 30, 2018, the Company recorded federal taxes using ablended federal rate of 28.0%. For the year ending June 30, 2019, the Company recorded federal taxes at a federal rate of 21.0%. Capital Expenditures Capital spending is focused on growth initiatives, cost reduction, and upgrades to extend the capabilities of our capital assets. In general, we anticipateour capital expenditures over the long term will be approximately 3% to 4% of net sales. During 2019, capital expenditures increased to $34.5 million or 4.4% of net sales, as compared to $25.6 million, or 3.3%, of net sales in the prior year. Capital spending in 2019 included $5.8 million for a new Electronics facility in Cincinnati which replaced a legacy facility sold in fiscal year 2018. Weexpect 2020 capital spending to be between $33 million and $34 million which includes $2.0 million allocated to begin construction for a new Electronicsfacility in Germany to replace a legacy facility sold in fiscal year 2019. Backlog Backlog includes all active or open orders for goods and services. Backlog also includes any future deliveries based on executed customer contracts, solong as such deliveries are based on agreed upon delivery schedules. With the exception of our Engineering Technologies group, backlog is notgenerally a significant factor in the Company’s businesses because of our relatively short delivery periods and rapid inventory turnover. Backlog ordersare not necessarily an indicator of future sales levels because of variations in lead times and customer production demand pull systems. Customers maydelay delivery of products or cancel orders prior to shipment, subject to possible cancellation penalties. Due to the nature of long term agreements in theEngineering Technologies group, the timing of orders and delivery dates can vary considerably resulting in significant backlog changes from one periodto another. In general, the majority of net realizable backlog beyond one year comes from the Engineering Technologies Group. 22 Backlog orders in place at June 30, 2019 and 2018 are as follows (in thousands): As of June 30, 2019 As of June 30, 2018 Total Backlog under Total Backlog under Backlog 1 year Backlog 1 year Engraving $22,160 $22,160 $19,279 $19,269 Electronics 62,381 56,243 69,059 64,180 Engineering Technologies 113,714 79,062 98,289 74,199 Hydraulics 13,440 13,440 14,481 14,377 Food Service Equipment 37,724 34,270 36,130 32,658 Total $249,419 $205,175 $237,238 $204,683 Backlog realizable within one year increased $0.5 million, or 0.2% to $205.2 million at June 30, 2019 from $204.7 million at June 30, 2018. Segment Analysis (in thousands) Engraving 2019 compared to 2018 2018 compared to 2017 (in thousands except % % percentages) 2019 2018 Change 2018 2017 Change Net sales $149,693 $136,275 9.8% $136,275 $105,943 28.6%Income from operations 23,996 29,618 (19.0)% 29,618 26,139 13.3%Operating income margin 16.0% 21.7% 21.7% 24.7% Net sales for fiscal year 2019 increased by $13.4 million or 9.8% compared to the prior year. Growth was driven by two acquisitions which contributed$19.8 million or 14.5%. Organic sales were nearly flat as compared to prior year while currency negatively impacted sales by 4.8%. We expect salesgrowth in fiscal year 2020 due to an increase in the number of new automotive launches along with the introduction of soft skin and tool finishingofferings throughout our global sales network. Net sales for fiscal year 2018 increased by $30.3 million or 28.6% compared to the prior year with an organic growth rate of 10.2%. The Piazza Rosa Groupacquisition contributed sales $13.2 million or 12.5%. Sales in our Mold-Tech businesses grew due to launches of new automotive models in the currentyear. New technologies sales of Architexture, laser, nickel shell, finishing and treatment grew by $17.8 million or 139% during the year. Income from operations in fiscal year 2019 decreased by $5.6 million, or 19.0%, when compared to the prior year. The decrease was primarily due to anunfavorable geographic mix, lower automotive sales in North America, reduced demand at our higher profit China facilities due to concerns regardingtrade conflicts, and the increased costs associated with the integration process following the Tenibac acquisition. Based on a strategic analysis, we havedecided to close underperforming sites and reduce administrative headcount. In fiscal 2020, we expect positive results from organic growth, returns fromacquisitions and a positive impact from the reorganization efforts. Upon completion, we anticipate that these actions will save $2.7 million on an annualbasis by the end of the second quarter in fiscal 2020. Income from operations in fiscal year 2018 increased by $3.5 million, or 13.3%, when compared to the prior year. While overall operating income improveddue to our new product offerings, these offerings required up-front investments which negatively impacted operating income margins for the year. Electronics 2019 compared to 2018 2018 compared to 2017 (in thousands except % % percentages) 2019 2018 Change 2018 2017 Change Net sales $204,073 $196,291 4.0% $196,291 $136,689 43.6%Income from operations 41,227 45,501 (9.4)% 45,501 27,855 63.3%Operating income margin 20.2% 23.2% 23.2% 20.4% 23 Net sales in fiscal year 2019 increased $7.8 million, or 4.0%, when compared to the prior year with organic sales growth contributing $2.6 million, or 1.3%.The sales impact of the Agile Magnetics acquisition was $9.3 million and foreign exchange rates unfavorably affected sales by $4.2 million or 2.1%. Weanticipate a sales volume decline in the first half of fiscal year 2020 due to customer inventory corrections, trade war impacts, and lower automotive marketdemand followed by a modest recovery in the second half of the fiscal year. Net sales in the fiscal year 2018 increased $59.6 million, or 43.6%, when compared to the prior year. Organic sales growth was $16.6 million, or 12.1%. Thesales impact of the Standex Electronics Japan (“SEJ”) reed switch operation, acquired March 31, 2017, as compared to the prior year was $37.1 million.Foreign exchange rates favorably affected sales by $5.9 million for the year. Organic sales growth was strong in all major geographic areas and all majorproduct lines with particular strength in sensors and reed switches. Income from operations in the fiscal year 2019 decreased $4.3 million, or 9.4%, when compared to the prior year. The operating income decline was due togovernment mandated wage increases in our Mexico operation, platinum group metal material increases, acquisition purchase accounting of $0.3 million,and India facility start-up costs, partially offset by cost saving initiatives. Income from operations in the fiscal year 2018 increased $17.6 million, or 63.3%, when compared to the prior year. The operating improvements were aresult of the acquisition of SEJ reed switch business, along with operating efficiencies, product mix and higher organic sales growth in our base business,and the absence of $2.3 million of purchase accounting expenses from the prior year. Engineering Technologies 2019 compared to 2018 2018 compared to 2017 (in thousands except % % percentages) 2019 2018 Change 2018 2017 Change Net sales $105,270 $90,781 16.0% $90,781 $90,506 0.3%Income from operations 11,169 6,506 71.7% 6,506 9,758 (33.3)%Operating income margin 10.6% 7.2% 7.2% 10.8% Net sales in the fiscal year 2019 increased $14.5 million or 16.0% when compared to the prior year. Sales distribution by market in 2019 was as follows: 46%aviation, 26% space, 13% oil and gas, 8% defense, 5% medical, and 2% other markets. Aviation sales grew 9.0% from the prior year due to sales on newaircraft and engine platforms. Space market sales increased 13.5% from the prior year driven by higher sales in the manned space segment on newdevelopment programs. Growth in 2019 was also driven by increased sales in the oil and gas and defense markets. While we anticipate sales growth infiscal 2020, we expect our first quarter will show a sales decline due to project timing. Net sales in the fiscal year 2018 increased $0.3 million or 0.3% when compared to the prior year. Sales distribution by market in 2018 was as follows: 50%aviation, 27% space, 11% oil and gas, 5% medical, and 7% other markets. aviation sales grew 14.3% from the prior year due to sales on new aircraft andengine platforms, including the Airbus A320 NEO and Boeing 737 Max platforms. Space market sales decreased 7.9% from the prior year driven by lowersales in the satellite launch vehicle segment, partially offset by an increase in the manned space segment. Defense and oil and gas market sales alsodeclined in fiscal 2018. Income from operations in fiscal 2019 increased $4.7 million or 71.7% when compared to the prior year. The increase in operating income was driven byhigher sales volume, improved manufacturing efficiencies on production programs, and price increases in the Aviation segment, partially offset by anasset impairment charge of $1.2M due to a customer contract termination. Looking forward, we anticipate improved margins as aviation programscontinue to ramp to higher production rates in calendar year 2020. Income from operations in fiscal 2018 decreased $3.3 million or 33.3% when compared to the prior year. The decrease in operating income was due todelays in major aircraft programs, decreased spending on development programs in the space and aviation markets, and pricing pressure on legacyaircraft parts. Hydraulics 2019 compared to 2018 2018 compared to 2017 (in thousands except % % percentages) 2019 2018 Change 2018 2017 Change Net sales $53,943 $48,169 12.0% $48,169 $41,150 17.1%Income from operations 8,891 7,398 20.2% 7,398 6,802 8.8%Operating income margin 16.5% 15.4% 15.4% 16.5% 24 Net sales increased $5.8 million, or 12.0%, when compared to the prior year. The increase is due to new product introductions during the year and marketshare gains in the refuse OEM marketplace. Moving forward we anticipate demand in our end markets to remain positive due to construction andinfrastructure projects. We also expect additional market share gains at the OEM level in the refuse market. Net sales in fiscal year 2018 increased by $7.0 million, or 17.1% compared to the prior year. Sales distribution by channel in 2018 was as follows: 37% dumptrailer and truck, 26% refuse, 25% after-market, 5% export, and 7% other markets. The majority of the increase in sales was from strong demand in therefuse and dump markets. Additionally, several new OEM cylinder applications on front-end loading garbage trucks and container handlers were securedduring the year. Income from operations increased $1.5 million, or 20.2%, when compared to the prior year. The operating income increase was driven by the revenuegrowth in the refuse market partially offset by higher material costs and higher manufacturing overhead as a result of sales volume. The group receivedtariff relief on both rod and telescopic cylinders, but this relief is scheduled to end in the third quarter of fiscal year 2020. We can not be certain if thetariff relief will be extended by the U.S. government. Income from operations in fiscal year 2018 increased $0.6 million or 8.8% when compared to the prior year. Operating income margins in fiscal 2018 wereimpacted by material cost increases, however, we implemented price increases in the latter half of the fiscal year to mitigate some of these material priceincreases. Food Service Equipment 2019 compared to 2018 2018 compared to 2017 (in thousands except % % percentages) 2019 2018 Change 2018 2017 Change Net sales $278,600 $298,936 (6.8)% $298,936 $273,597 9.3%Income from operations 22,773 28,131 (19.0)% 28,131 23,633 19.0%Operating income margin 8.2% 9.4% 9.4% 8.6% Net sales for fiscal year 2019 decreased $20.3 million, or 6.8% when compared to the prior year. The Refrigeration group experienced a 12.8% sales declinein fiscal year 2019 primarily due to slow market conditions in buying group markets, increased competition in the cabinet market space, and reduced salesto regional retail chains as a result of customer financial constraints. Additionally, pump business sales decreased 8.6% compared to prior year due to adecline in the European espresso and carbonated beverage markets. The sales declines in the Refrigeration and pump businesses were partially offset bya 10.6% sales increase in our Scientific group. The increased volume in the Scientific group was due to increased sales to retail pharmacy customers andnational clinical distributors. During June, fire destroyed a third party warehouse leased by the Refrigeration group. We anticipate that RefrigerationGroup sales will be lower in the first half of fiscal year 2020 as we rebuild our finished goods inventory levels in order to meet customer demand. Net sales for fiscal year 2018 increased $25.3 million, or 9.3% when compared to the prior year. Organic sales increased $14.2 million or 5.2% while theacquisition of Horizon Scientific contributed $9.5 million or 3.5% and foreign exchange added $1.6 million or 0.6%. Refrigeration Solutions sales increasedby 9.4%, which included organic sales increases of 5.2% and acquisition growth of 4.2%. Refrigeration sales increased in the scientific and food servicemarkets while the dealer, direct, and retail food service markets recovered from prior year declines. Specialty Solutions sales increased 9.4% with solidvolume from the beverage market and strong growth in merchandising. Income from operations for fiscal year 2019 decreased $5.4 million, or 19.0%, when compared to the prior year, and operating income margin decreased by1.2%. Decreased sales volume and manufacturing inefficiencies in our Refrigeration Group locations were the primary cause of the decline in income fromoperations. Income from operations for fiscal year 2018 increased $4.5 million, or 19.0%, when compared to the prior year, and operating income margin increased from8.6% to 9.4%. The realignment of the Refrigeration plant operations was largely completed in 2018 and drove operating income improvements for the year. 25 Corporate, Restructuring and Other 2019 compared to 2018 2018 compared to 2017 (in thousands except % % percentages) 2019 2018 Change 2018 2017 Change Corporate $(24,729) $(26,430) 6.4% $(26,430) $(23,664) (11.7)%Restructuring (1,635) (6,964) 76.5% (6,964) (5,761) (20.9)%Other Operating Expenses (3,575) (3,749) 4.6% (3,749) (7,843) 52.2% Corporate expenses declined by 6.4% in fiscal 2019 primarily due to reduced incentive compensation expenses. Corporate expenses increased by 11.7% in fiscal 2018 due to increases in administrative compensation costs as a result of improved performance alongwith additional investments to support the Standex Value Creation System. The restructuring and acquisition-related costs have been discussed above in the Company Overview. Discontinued Operations In pursuing our business strategy, the Company continues to divest certain businesses and record activities of these businesses as discontinuedoperations. Results of the Cooking Solutions Group in current and prior periods have been classified as discontinued operations in the ConsolidatedFinancial Statements and excluded from the results from continuing operations. Activity related to the Cooking Solutions Group and other discontinuedoperations for twelve months ended June 30, 2019 and 2018 is as follows (in thousands): Results of the Cooking Solutions Group in current and prior periods have been classified as discontinued operations in the Consolidated FinancialStatements and excluded from the results from continuing operations. Activity related to the Cooking Solutions Group and other discontinued operationsfor twelve months ended June 30, 2019 and 2018 is as follows (in thousands): Year Ended June 30, 2019 2018 Net Sales $71,451 $97,930 Gain on Sale of Business $20,539 $- Transaction Fees (4,397) - Income from Discontinued Operations $18,900 $6,136 Non-operating Income (Expense) (364) 826 Profit Before Taxes $18,536 $6,962 Benefit (Provision) for Taxes 2,189 (1,701)Net income from Discontinued Operations $20,725 $5,261 Liquidity and Capital Resources At June 30, 2019, our total cash balance was $93.1 million, of which $86.2 million was held outside of the United States. Due to changes in the U.S. tax law,we began repatriating foreign earnings in fiscal year 2019. During the year, we returned $51.5 million of our cash previously held outside of the UnitedStates. During fiscal year 2020, we anticipate returning an additional $30 million of foreign cash however, the amount and timing of cash repatriationduring 2020 will be dependent upon each business unit’s operational needs including requirements to fund working capital, capital expenditure, andjurisdictional tax payments. The repatriation of cash balances from certain of our subsidiaries could have adverse tax consequences or be subject tocapital controls; however, those balances are generally available without legal restrictions to fund ordinary business operations. Cash Flow Net cash provided by continuing operating activities for the year ended June 30, 2019 was $73.2 million compared to net cash provided by continuingoperating activities of $60.4 million in the prior year. We generated $78.6 million from income statement activities and used $5.4 million of cash to fundworking capital increases. Cash flow used in investing activities for the year ended June 30, 2019 totaled $159.5 million. Uses of investing cash consistedprimarily of capital expenditures of $34.4 million along with $127.9 million for the acquisition of Tenibac, Agile Magnetics, and GS Engineering. Cash usedby financing activities for the year ended June 30, 2019 were $38.2 million and included cash paid for dividends of $9.8 million and stock repurchases of$33.4 million offset by net borrowings of $4.8 million. 26 Net cash provided by continuing operating activities for the year ended June 30, 2018 was $60.4 million. We generated $68.5 million from income statementactivities and used $8.0 million of cash to fund working capital increases. Cash flow used in investing activities for the year ended June 30, 2018 totaled$32.3 million. Uses of investing cash consisted primarily of capital expenditures of $25.3 million and $10.4 million for Piazza Rosa and other acquisitionactivities. These uses of investing cash were partially offset by $2.1 million from proceeds of life insurance and $2.9 million from the net proceeds of thesale of a building in Cincinnati, Ohio. We leased back the Cincinnati, Ohio building and, as a result of the transaction, recorded a $0.7 million deferred gainthat will be amortized over the initial operating lease term which expires in May 2019. Cash used by financing activities for the year ended June 30, 2018were $11.9 million and included net borrowings of $1.3 million, cash paid for dividends of $8.9 million and stock repurchases of $2.7 million. We sponsor a number of defined benefit and defined contribution retirement plans. The U.S. pension plan is frozen for all participants. We haveevaluated the current and long-term cash requirements of these plans, and our existing sources of liquidity are expected to be sufficient to cover requiredcontributions under ERISA and other governing regulations. The fair value of the Company's U.S. defined benefit pension plan assets was $186.2 million at June 30, 2019, as compared to $191.0 million as of June 30,2018. We participate in two multi-employer pension plans and sponsor six defined benefit plans including two in the U.S. and one in the U.K., Germany,Ireland, and Japan. The Company’s pension plan is frozen for U.S. employees and participants in the plan ceased accruing future benefits. Our primaryU.S. defined benefit plan is not expected to be 100% funded under ERISA rules at June 30, 2019, and we expect to make mandatory contributions of $4.3million to the U.S. defined benefit plan in the coming year. Additionally, we expect to pay $1.1 million to our other defined benefit plans in the U.S. andEurope during fiscal year 2020. We have evaluated the current and long-term cash requirements of our defined benefit and defined contribution plans as of June 30, 2019 and determinedour operating cash flows from continuing operations and available liquidity are expected to be sufficient to cover the required contributions under ERISAand other governing regulations. We have an insurance program in place to fund supplemental retirement income benefits for five retired executives. Current executives and new hires arenot eligible for this program. At June 30, 2019, the underlying policies had a cash surrender value of $18.0 million and are reported net of loans of $8.7million for which we have the legal right of offset. These amounts are reported net on our balance sheet. Capital Structure During the second quarter of fiscal year 2019, the Company entered into a five-year Amended and Restated Credit Agreement (“credit agreement”, or“facility”). The facility has a borrowing limit of $500 million which is an increase of $100 million from the prior facility’s $400 million limit and can beincreased by an amount of up to $250 million, in accordance with specified conditions contained in the agreement. The facility also includes a $10 millionsublimit for swing line loans and a $35 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 as well as a commitment fee onunused amounts under the facility. The amount of the commitment fee will depend upon both the undrawn amount remaining available under the facilityand the Company’s funded debt to EBITDA (as defined in the agreement) ratio at the last day of each quarter. As our funded debt to EBITDA ratioincreases, the commitment fee will increase. Funds borrowed under the facility may be used for the repayment of debt, working capital, capital expenditures, acquisitions (so long as certainconditions, including a specified funded debt to EBITDA leverage ratio is maintained), and other general corporate purposes. As of June 30, 2019, theCompany has used $7.6 million against the letter of credit sub-facility and had the ability to borrow $253.4 million under the facility based on our currenttrailing twelve-month EBITDA. The facility contains customary representations, warranties and restrictive covenants, as well as specific financialcovenants. The Company’s current financial covenants under the facility are as follows: Interest Coverage Ratio - The Company is required to maintain a ratio of Earnings Before Interest and Taxes, as Adjusted (“Adjusted EBIT per the CreditFacility”), to interest expense for the trailing twelve months of at least 2.75:1, an improvement over the interest coverage ratio of 3.0:1 permitted under theprevious agreement. Adjusted EBIT per the Credit Facility specifically excludes extraordinary and certain other defined items such as cash restructuringand acquisition-related charges up to the lower of $20.0 million or 10% of EBITDA, an increase from the prior agreement’s $7.5 million cap on restructuringand acquisition expenses. The new facility continues to allow unlimited non-cash charges including purchase accounting and goodwill adjustments. AtJune 30, 2019, the Company’s Interest Coverage Ratio was 7.73:1. 27 Leverage Ratio- The Company’s ratio of funded debt to trailing twelve month Adjusted EBITDA per the Credit Facility, calculated as Adjusted EBIT perthe Credit Facility plus depreciation and amortization, may not exceed 3.5:1. Under certain circumstances in connection with a Material Acquisition (asdefined in the Facility), the Facility allows for the leverage ratio to go as high as 4.0:1 for a four-fiscal quarter period. At June 30, 2019, the Company’sLeverage Ratio was 1.28:1. As of June 30, 2019, we had borrowings under our facility of $198.8 million. In order to manage our interest rate exposure on these borrowings, we areparty to $85.0 million of active floating to fixed rate swaps. These swaps convert our interest payments from LIBOR to a weighted average rate of 2.11%. The effective rate of interest for our outstanding borrowings, including the impact of the interest rate swaps, was 3.88%. Our primary cash requirementsin addition to day-to-day operating needs include interest payments, capital expenditures, acquisitions, share repurchases, and dividends. Our primary sources of cash for these requirements are cash flows from continuing operations and borrowings under the facility. We expect that fiscalyear 2020 depreciation and amortization expense will be between $25.0 and $26.0 million and $11.0 and $12.0 million, respectively. The following table sets forth our capitalization at June 30: 2019 2018 Long-term debt $197,610 $193,772 Less cash and cash equivalents 93,145 109,602 Net debt 104,465 84,170 Stockholders' equity 464,313 450,795 Total capitalization $568,778 $534,965 Stockholders’ equity increased year over year by $13.5 million, primarily as a result of current year net income of $67.9 million offset by $43.3 million ofcash returned to shareholders in the form of dividends and stock repurchases and $12.2 million in unrealized pension losses. The Company's net debt tocapital percentage changed to 18.4% for as of June 30, 2019 from 15.7% in the prior year. Contractual obligations of the Company as of June 30,2019 are as follows (in thousands): Payments Due by Period Less More than 1 1-3 3-5 than 5 Contractual Obligations Total Year Years Years Years Long-term debt obligations $198,800 $- $- $198,800 $- Operating lease obligations $48,712 9,357 13,365 7,697 18,293 Estimated interest payments (1) $35,158 7,820 15,642 11,696 - Post-retirement benefit payments (2) $42,546 5,360 17,556 16,687 2,943 Total $325,216 $22,537 $46,563 $234,880 $21,236 (1)Estimated interest payments are based upon effective interest rates as of June 30, 2019, and exclude those interest rate swapswhich are assets to us. See Item 7A for further discussions surrounding interest rate exposure on our variable rate borrowings. (2)Post-retirement benefits and pension plan contribution payments represents’ future pension payments to comply with localfunding requirements. Our policy is to fund domestic pension liabilities in accordance with the minimum and maximum limitsimposed by the Employee Retirement Income Security Act of 1974 (“ERISA”), federal income tax laws and the fundingrequirements of the Pension Protection Act of 2006. At June 30, 2019, we had $10.6 million of non-current liabilities for uncertain tax positions. We are not able to provide a reasonable estimate of the timingof future payments related to these obligations. Off Balance Sheet Items At June 30, 2019, and 2018, the Company had standby letters of credit outstanding, primarily for insurance and trade financing purposes, of $7.6 millionand $7.9 million, respectively. We had no other material off balance sheet items at June 30, 2019, other than the operating leases summarized above in the “Contractual obligations”table. 28 Other Matters Inflation – Certain of our expenses, such as wages and benefits, occupancy costs and equipment repair and replacement, are subject to normalinflationary pressures. Inflation for medical costs can impact both our employee benefit costs as well as our reserves for workers' compensation claims.We monitor the inflationary rate and make adjustments to reserves whenever it is deemed necessary. Our ability to control worker compensationinsurance medical cost inflation is dependent upon our ability to manage claims and purchase insurance coverage to limit the maximum exposure for us.Each of our segments is subject to the effects of changing raw material costs caused by the underlying commodity price movements. In general, we donot enter into purchase contracts that extend beyond one operating cycle. While Standex considers our relationship with our suppliers to be good, therecan 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, British Pound Sterling (Pound),Japanese (Yen), and Chinese (Yuan). Defined Benefit Pension Plans – We record expenses related to these plans based upon various actuarial assumptions such as discount rates andassumed rates of returns. The Company’s pension plan was frozen for substantially all remaining eligible U.S. employees in 2015 and participants in theplan ceased accruing future benefits. Environmental Matters – To the best of our knowledge, we believe that we are presently in substantial compliance with all existing applicableenvironmental laws and regulations and do not anticipate any instances of non-compliance that will have a material effect on our future capitalexpenditures, earnings or competitive position. Seasonality – We are a diversified business with generally low levels of seasonality, however our fiscal third quarter is typically the period with thelowest level of activity. Employee Relations – The Company has labor agreements with several union locals in the United States and several European employees belong toEuropean trade unions. Critical Accounting Policies The Consolidated Financial Statements include accounts of the Company and all of our subsidiaries. The preparation of financial statements inconformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions in certaincircumstances that affect amounts reported in the accompanying Consolidated Financial Statements. Although, we believe that materially differentamounts would not be reported due to the accounting policies described below, the application of these accounting policies involves the exercise ofjudgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. We have listed a number ofaccounting policies which we believe to be the most critical. Revenue Recognition – Effective July 1, 2018, the Company adopted accounting standard ASU No. 2014-09, “Revenue from Contracts with Customers"(ASC 606) using the modified retrospective method to contracts that were not completed as of June 30, 2018. We recognized the cumulative effect ofinitially applying the new revenue standard as an adjustment to the opening balance of retained earnings, whereby the cumulative impact of all priorperiods is recorded in retained earnings or other impacted balance sheet line items upon adoption. The comparative information has not been adjustedand continues to be reported under ASC 605. The impact on the Company’s consolidated income statements, balance sheets, equity or cash flows as ofthe adoption date as a result of applying ASC 606 have been reflected within those respective financial statements. The Company’s accounting policyhas been updated to align with ASC 606. The adoption of ASC 606 represents a change in accounting principle that provides enhanced revenue recognition disclosures. Revenue is recognizedwhen the control of the promised goods or services are transferred to our customers, in an amount that reflects the consideration that we expect toreceive in exchange for those goods or services. The Company recognizes all revenues on a gross basis based on consideration of the criteria set forth inASC Topic 606-10-55, Principal versus Agent Considerations. Most of the Company’s contracts have a single performance obligation which represents, the product or service being sold to the customer. Somecontracts include multiple performance obligations such as a product and the related installation and/or extended warranty. Additionally, most of theCompany’s contracts offer assurance type warranties in connection with the sale of a product to customers. Assurance type warranties provide acustomer with assurance that the product complies with agreed-upon specifications. Assurance type warranties do not represent a separate performanceobligation. 29 In general, the Company recognizes revenue at the point in time control transfers to their customer based on predetermined shipping terms. Revenuerecognized under long-term contracts within the Engineering Technologies group for highly customized customer products that have no alternativeuse and in which the contract specifies the Company has a right to payment for its costs, plus a reasonable margin are recognized over time. Forproducts recognized over time, the transfer of control is measured pro rata, based upon current estimates of costs to complete such contracts. Losseson contracts are fully recognized in the period in which the losses become determinable. Revisions in profit estimates are reflected on a cumulativebasis in the period in which the basis for such revision becomes known. Collectability of Accounts Receivable – Accounts Receivable are reduced by an allowance for amounts that may become uncollectible in the future. Our estimate for the allowance for doubtful accounts related to trade receivables includes evaluation of specific accounts where we have informationthat the customer may have an inability to meet its financial obligation together with a general provision for unknown but existing doubtful accounts. Realizability of Inventories – Inventories are valued at the lower of cost or market. The Company regularly reviews inventory values on hand usingspecific aging categories, and records a provision for obsolete and excess inventory based on historical usage and estimated future usage. As actualfuture demand or market conditions may vary from those projected by management, adjustments to inventory valuations may be required. Realization of Goodwill – Goodwill and certain indefinite-lived intangible assets are not amortized, but instead are tested for impairment at leastannually and more frequently whenever events or changes in circumstances indicate that the fair value of the asset may be less than its carryingamount of the asset. The Company’s annual test for impairment is performed using a May 31st measurement date. We have identified our reporting units for impairment testing as our nine operating segments, which are aggregated into our five reporting segmentsas disclosed in Note 17 – Industry Segment Information. The test for impairment is currently a two-step process. The first step compares the carrying amount of the reporting unit to its estimated fair value(Step 1). To the extent that the carrying value of the reporting unit exceeds its estimated fair value, a second step is performed, wherein the reportingunit’s carrying value is compared to the implied fair value (Step 2). To the extent that the carrying value exceeds the implied fair value, impairmentexists and must be recognized. During fiscal year 2020, the company will adopt ASU 2017-04, Simplifying the Test for Goodwill Impairment, whichsimplifies the accounting for goodwill impairments by, among other things, eliminating step two from the goodwill impairment test. Instead, if thecarrying amount of a reporting unit exceeds its fair value, an impairment loss will be recognized in an amount equal to that excess, limited to the totalamount of goodwill allocated to that reporting unit. As quoted market prices are not available for the Company’s reporting units, the fair value of the reporting units is determined using a discountedcash flow model (income approach). This method uses various assumptions that are specific to each individual reporting unit in order to determinethe fair value. In addition, the Company compares the estimated aggregate fair value of its reporting units to its overall market capitalization. Our annual impairment testing at each reporting unit relied on assumptions surrounding general market conditions, short-term growth rates, a terminalgrowth rate of 2.5%, and detailed management forecasts of future cash flows prepared by the relevant reporting unit. Fair values were determinedprimarily by discounting estimated future cash flows at a weighted average cost of capital of 9.66%. During our annual impairment testing, weevaluated the sensitivity of our most critical assumption, the discount rate, and determined that a 200 basis point change in the discount rate selectedwould not have impacted the test results. Additionally, the Company could reduce the terminal growth rate from its current 2.5% to 1.0% and the fairvalue of all 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 our valuations and result inimpairments in the future. The most significant assumption involved in the Company’s determination of fair value is the cash flow projections of eachreporting unit. As a result of our annual assessment, the Company determined that the fair value of the reporting units substantially exceeded their respectivecarrying values. Therefore, no impairment charges were recorded in connection with our annual assessment during 2019. 30 Cost of Employee Benefit Plans – We provide a range of benefits to certain retirees, including pensions and some postretirement benefits. We recordexpenses relating to these plans based upon various actuarial assumptions such as discount rates, assumed rates of return, compensation increasesand turnover rates. The expected return on plan assets assumption of 7.0% in the U.S. is based on our expectation of the long-term average rate ofreturn on assets in the pension funds and is reflective of the current and projected asset mix of the funds and considers the historical returns earnedon the funds. We have analyzed the rates of return on assets used and determined that these rates are reasonable based on the plans’ historicalperformance relative to the overall markets as well as our current expectations for long-term rates of returns for our pension assets. The U.S. discountrate of 3.7% reflects the current rate at which pension liabilities could be effectively settled at the end of the year. The discount rate is determined bymatching our expected benefit payments from a stream of AA- or higher bonds available in the marketplace, adjusted to eliminate the effects of callprovisions. We review our actuarial assumptions, including discount rate and expected long-term rate of return on plan assets, on at least an annualbasis and make modifications to the assumptions based on current rates and trends when appropriate. Based on information provided by ouractuaries and other relevant sources, we believe that our assumptions are reasonable. The cost of employee benefit plans includes the selection of assumptions noted above. A twenty-five basis point change in the U.S. expected returnon plan assets assumptions, holding our discount rate and other assumptions constant, would increase or decrease pension expense byapproximately $0.5 million per year. A twenty-five basis point change in our discount rate, holding all other assumptions constant, would have noimpact on 2019 pension expense as changes to amortization of net losses would be offset by changes to interest cost. In future years, the impact ofdiscount rate changes could yield different sensitivities. See the Notes to the Consolidated Financial Statements for further information regardingpension plans. Business Combinations - The accounting for business combinations requires estimates and judgments as to expectations for future cash flows of theacquired business and the allocation of those cash flows to identifiable intangible assets in determining the estimated fair values for assets acquiredand liabilities assumed. The fair values assigned to tangible and intangible assets acquired and liabilities assumed, are based on management’sestimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation proceduresand techniques. If the 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 the amortization expense offinite-lived intangible assets. Allocations of the purchase price for acquisitions are based on estimates of the fair value of the net assets acquired and are subject to adjustmentupon finalization of the purchase price allocation. During this measurement period, the Company will adjust assets or liabilities if new information isobtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in the recognition of those assetsand liabilities as of that date. All changes that do not qualify as measurement period adjustments are included in current period earnings. Recently Issued Accounting Pronouncements See "Item 8. Financial Statements and Supplementary Data, Note 1. Summary of Accounting Policies” for information regarding the effect of recentlyissued accounting pronouncements on our consolidated statements of operations, comprehensive income, stockholders’ equity, cash flows, andnotes for the year ended June 30, 2019. Item 7A. Quantitative and Qualitative Disclosures About Market Risk Risk Management We are exposed to market risks from changes in interest rates, commodity prices and changes in foreign currency exchange. To reduce these risks, weselectively use, from time to time, financial instruments and other proactive management techniques. We have internal policies and procedures thatplace financial instruments under the direction of the Treasurer and restrict all derivative transactions to those intended for hedging purposes only. The use of financial instruments for trading purposes (except for certain investments in connection with the non-qualified defined contribution plan)or speculation is strictly prohibited. The Company has no majority-owned subsidiaries that are excluded from the consolidated financial statements. Further, we have no interests in or relationships with any special purpose entities. 31 Exchange Risk We are exposed to both transactional risk and translation risk associated with exchange rates. The transactional risk is mitigated, in large part, bynatural hedges developed with locally denominated debt service on intercompany accounts. We also mitigate certain of our foreign currencyexchange rate risks by entering into forward foreign currency contracts from time to time. The contracts are used as a hedge against anticipatedforeign cash flows, such as loan payments, customer remittances, and materials purchases, and are not used for trading or speculative purposes. Thefair values of the forward foreign currency exchange contracts are sensitive to changes in foreign currency exchange rates, as an adverse change inforeign currency exchange rates from market rates would decrease the fair value of the contracts. However, any such losses or gains would generallybe offset by corresponding gains and losses, respectively, on the related hedged asset or liability. At June 30, 2019 and 2018, the fair value, in theaggregate, of the Company’s open foreign exchange contracts was a liability of $3.1 million and $2.8 million respectively. Our primary translation risk is with the Euro, British Pound Sterling, Peso, Japanese Yen and Chinese Yuan. A hypothetical 10% appreciation ordepreciation of the value of any these foreign currencies to the U.S. Dollar at June 30, 2019, would not result in a material change in our operations,financial position, or cash flows. We hedge our most significant foreign currency translation risks primarily through cross currency swaps and otherinstruments, as appropriate. Interest Rate The Company’s effective rate on variable-rate borrowings under the revolving credit agreement was 3.88% and 3.29% at June 30, 2019 and 2018,respectively. Our interest rate exposure is limited primarily to interest rate changes on our variable rate borrowings. From time to time, we will useinterest rate swap agreements to modify our exposure to interest rate movements. At June 30, 2019, we have $85.0 million of active floating to fixedrate swaps with terms ranging from one to four years. These swaps convert our interest payments from LIBOR to a weighted average rate of 2.11%. At June 30, 2019 and 2018, the fair value, in the aggregate, of the Company’s interest rate swaps was a liability of $1.4 million and an asset of $1.3million respectively. A 25 basis point increase in interest rates would increase our annual interest expense by $0.3 million. Concentration of Credit Risk We have a diversified customer base. As such, the risk associated with concentration of credit risk is inherently minimized. As of June 30, 2019, noone customer accounted for more than 5% of our consolidated outstanding receivables or of our sales. Commodity Prices The Company is exposed to fluctuating market prices for all commodities used in its manufacturing processes. Each of our segments is subject to theeffects of changing raw material costs caused by the underlying commodity price movements. In general, we do not enter into purchase contractsthat extend beyond one operating cycle. While Standex considers our relationship with our suppliers to be good, there can be no assurances that wewill not experience any supply shortage. The Engineering Technologies, Food Service Equipment, Electronics, and Hydraulics segments are all sensitive to price increases for steel products,other metal commodities and petroleum based products. In the past year, we have experienced price fluctuations for a number of materials includingsteel, copper wire, other metal commodities, refrigeration components and foam insulation. These materials are some of the key elements in theproducts manufactured in these segments. Wherever possible, we will implement price increases to offset the impact of changing prices. The ultimateacceptance of these price increases, if implemented, will be impacted by our affected divisions’ respective competitors and the timing of their priceincreases. 32 Item 8. Financial Statements and Supplementary Data As of June 30 (in thousands, except share data) 2019 2018 ASSETS Current assets: Cash and cash equivalents $93,145 $109,602 Accounts receivable, net 119,589 119,783 Inventories 88,645 104,300 Prepaid expenses and other current assets 30,872 10,255 Income taxes receivable 1,622 2,348 Current assets-Discontinued Operations - 37,671 Total current assets 333,873 383,959 Property, plant and equipment, net 148,024 136,934 Intangible assets, net 118,660 84,938 Goodwill 281,503 211,751 Deferred tax asset 14,140 7,447 Other non-current assets 25,689 29,749 Long-term assets-Discontinued Operations - 62,159 Total non-current assets 588,016 532,978 Total assets $921,889 $916,937 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $72,603 $78,947 Accrued liabilities 62,648 57,679 Income taxes payable 5,744 6,050 Current liabilities-Discontinued Operations 620 18,665 Total current liabilities 141,615 161,341 Long-term debt 197,610 193,772 Deferred income taxes 22,824 26,816 Pension obligations 75,148 57,826 Other non-current liabilities 20,379 26,337 Non-current liabilities-Discontinued Operations - 50 Total non-current liabilities 315,961 304,801 Commitments and Contingencies (Notes 12 and 13) Stockholders' equity: Common stock, par value $1.50 per share - 60,000,000 shares authorized, 27,984,278 issued, 12,334,607 and12,705,562 shares outstanding in 2019 and 2018 41,976 41,976 Additional paid-in capital 65,515 61,328 Retained earnings 818,282 761,430 Accumulated other comprehensive loss (137,278) (121,859)Treasury shares (15,649,671 shares in 2019 and 15,278,716 shares in 2018) (324,182) (292,080)Total stockholders' equity 464,313 450,795 Total liabilities and stockholders' equity $921,889 $916,937 See notes to consolidated financial statements. 33 Consolidated Statements of Operations Standex International Corporation and SubsidiariesFor the Years Ended June 30 (in thousands, except per share data) 2019 2018 2017 Net sales $791,579 $770,452 $647,885 Cost of sales (523,519) (500,850) (432,332)Gross profit 268,060 269,602 215,553 Selling, general and administrative 184,733 178,878 145,030 Restructuring costs 1,635 6,964 5,761 Acquisition related expenses 3,075 3,749 7,843 Other operating (income) expense, net 500 - - Income from operations 78,117 80,011 56,919 Interest expense 10,760 8,029 4,043 Other non-operating (income) expense, net 1,744 1,735 1,917 Total 12,504 9,764 5,960 Income from continuing operations before income taxes 65,613 70,247 50,959 Provision for income taxes (18,424) (38,904) (11,822)Income from continuing operations 47,189 31,343 39,137 Income (loss) from discontinued operations, net of tax 20,725 5,261 7,408 Net income $67,914 $36,604 $46,545 Basic earnings per share: Income (loss) from continuing operations $3.75 $2.47 $3.09 Income (loss) from discontinued operations 1.65 0.41 0.59 Total $5.40 $2.88 $3.68 Diluted earnings per share: Income (loss) from continuing operations $3.74 $2.45 $3.07 Income (loss) from discontinued operations 1.64 0.41 0.58 Total $5.38 $2.86 $3.65 See notes to consolidated financial statements. 34 Consolidated Statements of Comprehensive Income Standex International Corporation and Subsidiaries For the Years Ended June 30 (in thousands) 2019 2018 2017 Net income (loss) $67,914 $36,604 $46,545 Other comprehensive income (loss): Defined benefit pension plans: Actuarial gains (losses) and other changes in unrecognized costs $(20,382) $6,159 $3,689 Amortization of unrecognized costs 4,461 5,485 5,729 Derivative instruments: Change in unrealized gains and (losses) (1,576) 2,541 (2,896)Amortization of unrealized gains and (losses) into interest expense 1,410 292 (462)Amortization of unrealized gains and (losses) into cost of goods sold - - 75 Foreign currency translation gains (losses) (2,645) 93 (472)Other comprehensive income (loss) before tax $(18,732) $14,570 $5,663 Income tax (provision) benefit: Defined benefit pension plans: Actuarial gains (losses) and other changes in unrecognized costs $4,742 $(1,436) $(1,354)Amortization of unrecognized costs (1,089) (1,460) (2,012)Derivative instruments: Change in unrealized gains and (losses) (419) (339) (80)Amortization of unrealized gains and (losses) into interest expense 79 (43) (152)Amortization of unrealized gains and (losses) into cost of goods sold - - (28)Income tax (provision) benefit to other comprehensive income (loss) $3,313 $(3,278) $(3,626) Other comprehensive income (loss), net of tax (15,419) 11,292 2,037 Comprehensive income (loss) $52,495 $47,896 $48,582 See notes to consolidated financial statements. 35 Consolidated Statements of Stockholders' Equity Standex International Corporation andSubsidiaries Accumulated Other Additional Comprehensive Total For the Years Ended June 30 Common Paid-in Retained Income Treasury Stock Stockholders’ (in thousands, except as specified) Stock Capital Earnings (Loss) Shares Amount Equity Balance, June 30, 2016 $41,976 $52,374 $678,002 $(117,975) 15,310 $(284,418) $369,959 Stock issued for employee stock option andpurchase plans, including related income taxbenefit and other (614) (78) 1,462 848 Stock-based compensation 5,023 5,023 Treasury stock acquired 90 (7,806) (7,806)Comprehensive income: Net Income 46,545 46,545 Foreign currency translation adjustment (472) (472)Pension and OPEB adjustments, net of tax of $3.4million 6,052 6,052 Change in fair value of derivatives, net of tax of$0.3 million (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 Stock issued for employee stock option andpurchase plans and other (417) (70) 1,334 917 Stock-based compensation 4,962 4,962 Treasury stock acquired 27 (2,652) (2,652)Adoption of ASU 2018-02 17,215 (17,215) - Comprehensive income: Net Income 36,604 36,604 Foreign currency translation adjustment 94 94 Pension and OPEB adjustments, net of tax of $2.9million 8,748 8,748 Change in fair value of derivatives, net of tax of$0.4 million 2,452 2,452 Dividends declared ($0.70 per share) (8,994) (8,994)Balance, June 30, 2018 $41,976 $61,328 $761,430 $(121,859) 15,279 $(292,080) $450,795 Stock issued for employee stock option andpurchase plans and other (163) (67) 1,292 1,129 Stock-based compensation 4,350 4,350 Treasury stock acquired 438 (33,394) (33,394)Adoption of ASC 606 (1,107) (1,107)Comprehensive income: Net Income 67,914 67,914 Foreign currency translation adjustment (2,645) (2,645)Pension and OPEB adjustments, net of tax of $3.7million (12,268) (12,268)Change in fair value of derivatives, net of tax of$0.7 million (506) (506)Dividends declared ($0.78 per share) (9,955) (9,955)Balance, June 30, 2019 $41,976 $65,515 $818,282 $(137,278) 15,650 $(324,182) $464,313 See notes to consolidated financial statements. 36 Consolidated Statements of Cash Flows For the Years Ended June 30 (in thousands) 2019 2018 2017 Cash Flows from Operating Activities Net income $67,914 $36,604 $46,545 Income (loss) from discontinued operations 20,725 5,261 7,408 Income (loss) from continuing operations 47,189 31,343 39,137 Adjustments to reconcile net income (loss) to net cash provided by operatingactivities: Depreciation and amortization 30,881 26,696 17,813 Stock-based compensation 4,350 4,962 5,023 Deferred income taxes (3,509) 7,391 (121)Non-cash portion of restructuring charge (329) (1,264) 1,414 (Gain) loss on disposal of real estate and equipment - (655) - Increase/(decrease) in cash from changes in assets and liabilities, net of effects fromdiscontinued operations and business acquisitions: Accounts receivables, net 7,647 (1,815) (8,277)Inventories 18,223 (7,207) (4,480)Contributions to defined benefit plans (1,359) (6,966) (1,443)Prepaid expenses and other (22,203) 598 (2,461)Accounts payable (6,803) (7,175) 5,556 Accrued payroll, employee benefits and other liabilities 7,004 13,128 3,923 Income taxes payable (7,923) 1,396 (5,561)Net cash provided by operating activities from continuing operations 73,168 60,432 50,523 Net cash used for operating activities from discontinued operations 178 4,493 12,916 Net cash provided by operating activities 73,346 64,925 63,439 Cash Flows from Investing Activities Expenditures for capital assets (34,367) (25,275) (25,457)Expenditures for acquisitions, net of cash acquired (127,924) (10,397) (153,814)Expenditures for executive life insurance policies (377) (310) (377)Proceeds from sale of real estate and equipment 3,208 2,852 1,106 Other investing activity - 2,130 482 Net cash (used for) investing activities from continuing operations (159,460) (31,000) (178,060)Net cash provided by investing activities from discontinued operations 109,789 (1,265) (991)Net cash provided by (used for) investing activities (49,671) (32,265) (179,051) Cash Flows from Financing Activities Proceeds from borrowings 241,950 163,500 263,700 Payments of debt (237,150) (164,788) (164,200)Contingent consideration payment (910) - - Stock issued under employee stock option and purchase plans 1,129 915 849 Purchase of treasury stock (33,394) (2,652) (7,807)Cash dividends paid (9,826) (8,888) (7,852)Net cash provided by (used for) financing activities (38,201) (11,913) 84,690 Effect of exchange rate changes on cash (1,931) 289 (2,500)Net change in cash and cash equivalents (16,457) 21,036 (33,422)Cash and cash equivalents at beginning of year 109,602 88,566 121,988 Cash and cash equivalents at end of year $93,145 $109,602 $88,566 Supplemental Disclosure of Cash Flow Information: Cash paid during the year for: Interest $9,471 $6,178 $3,258 Income taxes, net of refunds $23,969 $22,145 $20,413 See notes to consolidated financial statements. 37 STANDEX INTERNATIONAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SUMMARY OF ACCOUNTING POLICIES Basis of Presentation and Consolidation Standex International Corporation (“Standex” or the “Company”) is a diversified manufacturing company with operations in the United States, Europe,Asia, Africa, and Latin America. The accompanying consolidated financial statements include the accounts of Standex International Corporation and itssubsidiaries and are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All intercompanyaccounts and transactions have been eliminated in consolidation. The Company considers events or transactions that occur after the balance sheet date, but before the financial statements are issued to provideadditional evidence relative to certain estimates or to identify matters that require additional disclosure. We evaluated subsequent events through thedate and time our consolidated financial statements were issued. Accounting Estimates The preparation of consolidated financial statements in conformity with GAAP requires the use of estimates, judgments and assumptions that affect thereported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of the financialstatements and for the period then ended. Estimates are based on historical experience, actuarial estimates, current conditions and various otherassumptions that are believed to be reasonable under the circumstances. These estimates form the basis for making judgments about the carrying valuesof assets and liabilities when they are not readily apparent from other sources. These estimates assist in the identification and assessment of theaccounting treatment necessary with respect to commitments and contingencies. Actual results may differ from these estimates under differentassumptions or conditions. Cash and Cash Equivalents Cash and cash equivalents include highly liquid investments purchased with a maturity of three months or less. These investments are carried at cost,which approximates fair value. At June 30, 2019 and 2018 the Company’s cash was comprised solely of cash on deposit. Trading Securities The Company purchases investments for its non-qualified defined contribution plan for employees who exceed certain thresholds under our traditional401(k) plan. These investments are classified as trading and reported at fair value. The investments generally consist of mutual funds, are included inother non-current assets and amounted to $2.4 million at June 30, 2019 and $2.4 million at June 30, 2018 gains and losses on these investments arerecorded as other non-operating income (expense), net in the Consolidated Statements of Operations. Accounts Receivable Allowances The Company has provided an allowance for doubtful accounts reserve which represents the best estimate of probable loss inherent in the Company’saccount receivables portfolio. This estimate is derived from the Company’s knowledge of its end markets, customer base, products, and historicalexperience. The changes in the allowances for uncollectible accounts during 2019, 2018, and 2017 were as follows (in thousands): 2019 2018 2017 Balance at beginning of year $2,184 $1,571 $1,363 Acquisitions and other 66 (169) 52 Provision charged to expense (267) 783 316 Write-offs, net of recoveries (532) (1) (160)Balance at end of year $1,451 $2,184 $1,571 38 Inventories Inventories are stated at the lower of (first-in, first-out) cost or market. Inventory quantities on hand are reviewed regularly, and provisions are made forobsolete, slow moving, and non-saleable inventory, based primarily on management’s forecast of customer demand for those products in inventory. Long-Lived Assets Long-lived assets that are used in operations, excluding goodwill and identifiable intangible assets, are tested for recoverability whenever events orchanges in circumstances indicate that its carrying amount may not be recoverable. Recognition and measurement of a potential impairment loss isperformed on assets grouped with other assets and liabilities at the lowest level where identifiable cash flows are largely independent of the cash flows ofother assets and liabilities. An impairment 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 Equipment Property, plant and equipment are reported at cost less accumulated depreciation. Depreciation is recorded on assets over their estimated useful lives,generally using the straight-line method. Lives for property, plant and equipment are as follows: Buildings (years) 40to50 Leasehold improvements Lesser of useful life or term,unless renewals are deemed tobe reasonably assured Machinery and equipment (years) 8to15 Furniture and Fixtures (years) 3to10 Computer hardware and software (years) 3to7 Routine maintenance costs are expensed as incurred. Major improvements, including those made to leased facilities, are capitalized. Amortization of computer hardware and software of $1.4 million, $1.2 million, and $0.5 million is included as a component of depreciation expense for theyears ended June 30, 2019, 2018, and 2017, respectively. Goodwill and Identifiable Intangible Assets All business combinations are accounted for using the acquisition method. Goodwill and identifiable intangible assets with indefinite lives, are notamortized, but are reviewed annually for impairment or more frequently if impairment indicators arise. Identifiable intangible assets that are not deemed tohave indefinite lives are amortized over the following useful lives: Customer relationships (years) 5to15 Patents (years) 12 Non-compete agreements (years) 5 Other (years) 10 Developed technology (years) 10to20 Trade names Indefinite life See discussion of the Company’s assessment of impairment in Note 6 – Goodwill and Note 7 – Intangible Assets. Fair Value of Financial Instruments The financial instruments, shown below, are presented at fair value. Fair value is defined as the price that would be received to sell an asset or paid totransfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observablemarket prices or parameters or derived from such prices or parameters. When observable prices or inputs are not available, valuation models may beapplied. 39 Assets and liabilities recorded at fair value in the consolidated balance sheet are categorized based upon the level of judgment associated with the inputsused to measure their fair values. Hierarchical levels directly related to the amount of subjectivity associated with the inputs to fair valuation of theseassets and liabilities and the methodologies used in valuation are as follows: Level 1 – Quoted prices in active markets for identical assets and liabilities. The Company’s deferred compensation plan assets consist of sharesin various mutual funds (for the deferred compensation plan, investments are participant-directed) which invest in a broad portfolio of debt andequity securities. These assets are valued based on publicly quoted market prices for the funds’ shares as of the balance sheet dates. Forpension assets (see Note 16 – Employee Benefit Plans), securities are valued based on quoted market prices for securities held directly by thetrust. Level 2 – Inputs, other than quoted prices in an active market, that are observable either directly or indirectly through correlation with marketdata. For foreign exchange forward contracts and interest rate swaps, the Company values the instruments based on the market price ofinstruments with similar terms, which are based on spot and forward rates as of the balance sheet dates. For pension assets held in commingledfunds (see Note 16 – Employee Benefit Plans), the Company values investments based on the net asset value of the funds, which are derivedfrom the quoted market prices of the underlying fund holdings. The Company has considered the creditworthiness of counterparties in valuingall assets and liabilities. Level 3 – Unobservable inputs based upon the Company’s best estimate of what market participants would use in pricing the asset or liability. We did not have any transfers of assets and liabilities among levels of the fair value measurement hierarchy during the years ended June 30, 2019 or 2018. 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, 2019 and 2018 were (in thousands): 2019 Total Level 1 Level 2 Level 3 Financial Assets Marketable securities - deferred compensation plan $2,354 $2,354 $- $- Interest rate swaps 52 - 52 - Financial Liabilities Foreign exchange contracts $3,052 $- $3,052 $- Interest rate swaps 1,432 - 1,432 - Contingent acquisition payments (a) 6,418 - - 6,418 2018 Total Level 1 Level 2 Level 3 Financial Assets Marketable securities - deferred compensation plan $2,362 $2,362 $- $- Foreign exchange contracts 1,357 - 1,357 - Interest rate swaps 1,325 - 1,325 - Financial Liabilities Foreign exchange contracts $4,204 $- $4,204 $- Interest rate swaps - - - - Contingent acquisition payments(a) 7,535 - - 7,535 (a) The fair value of our contingent consideration arrangement is determined based on our evaluation as to the probability and amount of any deferredcompensation that has been earned to date. Our financial liabilities based upon Level 3 inputs include contingent consideration arrangements relating to our acquisition of Horizon Scientific or PiazzaRosa. We are contractually obligated to pay contingent consideration payments to the Sellers of these businesses based on the achievement of certaincriteria. 40 Contingent consideration payable to the Horizon seller is based on continued employment of the seller on the second and third anniversary of the closingdate of the acquisition. Contingent acquisition payment liabilities are scheduled to be paid in periods through fiscal year 2020. As of June 30, 2019 wecould be required to pay up to $5.6 million for contingent consideration arrangements if specific criteria are achieved. Contingent consideration payable to the Piazza Rosa sellers is based on the achievement of certain revenue targets of each of the first three yearsfollowing the acquisition. Contingent acquisition payments are payable in euros and can be paid in periods through fiscal year 2021. As of June 30, 2019we could be required to pay up to $1.7 million for contingent consideration arrangements if the revenue targets are met. We have determined the fair value of the liabilities for the contingent consideration based on a probability-weighted discounted cash flow analysis. Thisfair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement within the fair valuehierarchy. The fair value of the contingent consideration liability associated with future payments was based on several factors, the most significant ofwhich are continued employment of the seller and the risk-adjusted discount rate for the fair value measurement. As of June 30, 2019 the range ofoutcomes nor the assumptions used to develop the estimates had changed. Concentration of Credit Risk The Company is subject to credit risk through trade receivables. Concentration of risk with respect to trade receivables is minimized because of thediversification of our operations, as well as our large customer base and our geographical dispersion. No individual customer accounts for more than 5%of revenues or accounts receivable in the periods presented. Revenue Recognition In general, the Company recognizes revenue at the point in time control transfers to their customer based on predetermined shipping terms. Revenuerecognized under long-term contracts within the Engineering Technologies group for highly customized customer products that have no alternative useand in which the contract specifies the Company has a right to payment for its costs, plus a reasonable margin are recognized over time. For productsrecognized over time, the transfer of control is measured pro rata, based upon current estimates of costs to complete such contracts. Losses on contractsare fully recognized in the period in which the losses become determinable. Revisions in profit estimates are reflected on a cumulative basis in the periodin which the basis for such revision becomes known. Cost of Goods Sold and Selling, General and Administrative Expenses The Company includes expenses in either cost of goods sold or selling, general and administrative categories based upon the natural classification of theexpenses. Cost of goods sold includes expenses associated with the acquisition, inspection, manufacturing and receiving of materials for use in themanufacturing process. These costs include inbound freight charges, purchasing and receiving costs, inspection costs, internal transfer costs as well asdepreciation, amortization, wages, benefits and other costs that are incurred directly or indirectly to support the manufacturing process. Selling, generaland administrative includes expenses associated with the distribution of our products, sales effort, administration costs and other costs that are notincurred to support the manufacturing process. The Company records distribution costs associated with the sale of inventory as a component of selling,general and administrative expenses in the Consolidated Statements of Operations. These expenses include warehousing costs, outbound freight chargesand costs associated with salaried distribution personnel. Our gross profit margins may not be comparable to those of other entities due to differentclassifications of costs and expenses. Our total advertising expenses, which are classified under selling, general, and administrative expenses are primarily related to trade shows, and totaled$3.6 million, $3.4 million, and $3.8 million for the years ended June 30, 2019, 2018, and 2017, respectively. 41 Research and Development Research and development expenditures are expensed as incurred. Total research and development costs, which are classified under selling, general, andadministrative expenses, were $6.6 million, $4.5 million, and $4.0 million for the years ended June 30, 2019, 2018, and 2017, respectively. Warranties The expected cost associated with warranty obligations on our products is recorded when the revenue is recognized. The Company’s estimate ofwarranty cost is based on contract terms and historical warranty loss experience that is periodically adjusted for recent actual experience. Since warrantyestimates are forecasts based on the best available information, claims costs may differ from amounts provided. Adjustments to initial obligations forwarranties are made as changes in the obligations become reasonably estimable. The changes in continuing operations warranty reserve, which are recorded as accrued liabilities, during 2019, 2018, and 2017 were as follows (inthousands): 2019 2018 2017 Balance at beginning of year $4,966 $4,667 $4,335 Acquisitions and other charges (85) (138) 302 Warranty expense 5,016 6,248 5,052 Warranty claims (4,619) (5,811) (5,022)Balance at end of year $5,278 $4,966 $4,667 The decrease in warranty expense during 2019 compared to 2018 is primarily due to better warranty claim experience in the Standex Refrigeration Group. Stock-Based Compensation Plans Restricted stock awards, including performance based awards, generally vest over a three-year period. Compensation expense associated with theseawards is recorded based on their grant-date fair value and is generally recognized on a straight-line basis over the vesting period. Compensation cost foran award with a performance condition is based on the probable outcome of that performance condition. The stated vesting period is considered non-substantive for retirement eligible participants. Accordingly, the Company recognizes any remaining unrecognized compensation expense uponparticipant reaching retirement eligibility. Foreign Currency Translation The functional currency of our non-U.S. operations is the local currency. Assets and liabilities of non-U.S. operations are translated into U.S. Dollars on amonthly basis using period-end exchange rates. Revenues and expenses of these operations are translated using monthly average exchange rates. Theresulting translation adjustment is reported as a component of comprehensive income (loss) in the consolidated statements of stockholders’ equity andcomprehensive income. Gains and losses from foreign currency transactions are included in results of operations and were not material for any periodpresented. Derivative Instruments and Hedging Activities The Company recognizes all derivatives on its balance sheet at fair value. Forward foreign currency exchange contracts are periodically used to limit the impact of currency fluctuations on certain anticipated foreign cash flows,such as foreign purchases of materials and loan payments from subsidiaries. The Company enters into such contracts for hedging purposes only. TheCompany has designated certain of these currency contracts as hedges, and changes in the fair value of these contracts are recognized in othercomprehensive income until the hedged items are recognized in earnings. Hedge ineffectiveness, if any, associated with these contracts will be reported innet income. The Company also uses interest rate swaps to manage exposure to interest rates on the Company’s variable rate indebtedness. The Company values theswaps based on contract prices in the derivatives market for similar instruments. The Company has designated its interest rate swap agreements,including any that may be forward-dated, as cash flow hedges, and changes in the fair value of the swaps are recognized in other comprehensive incomeuntil the hedged items are recognized in earnings. Hedge ineffectiveness, if any, associated with the swaps will be reported by the Company in interestexpense. The Company does not hold or issue derivative instruments for trading purposes. 42 Income Taxes On December 22, 2017, the Tax Cuts and Jobs Act (the “Act” or “TCJA”) was passed which, among other things, reduces the federal corporate tax rate to21.0% effective for taxable years starting on or after January 1, 2018. For transition year ending June 30, 2018, the Company recorded federal taxes using ablended federal rate of 28.0%. For the year ending June 30, 2019, the Company recorded federal taxes using a federal rate of 21.0%. The provision for fiscal year ending June 30, 2019 was impacted by several law changes implemented by the Act such as the repeal of the Section 199manufacturing deduction, changes to the calculation for Section 162(m) executive compensation deduction, interest deduction limitation and GlobalIntangible Low Taxed Income (GILTI). As allowed under US GAAP, the Company has elected to treat any taxes due on future U.S. inclusions in taxableincome under the GILTI provision as a current-period expense when incurred. The Company will continue to monitor guidance regarding these changesand their impact on the financial statements in later periods. Earnings Per Share (share amounts in thousands) 2019 2018 2017 Basic – Average Shares Outstanding 12,574 12,698 12,666 Effect of Dilutive Securities – Stock Options and RestrictedStock Awards 59 90 102 Diluted – Average Shares Outstanding 12,633 12,788 12,768 Both basic and diluted income is the same for computing earnings per share. There were no outstanding instruments that had an anti-dilutive effect atJune 30, 2019, 2018 and 2017. Recently Issued Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires lessees to recognize most lease assets and lease liabilities onthe balance sheet and requires expanded disclosures about leasing arrangements. In July 2018, the FASB issued ASU 2018-11, “Leases (Topic 842)Targeted Improvements.” The guidance requires a modified retrospective adoption and this update provides for an optional transition method, whichallows for the application of the standard as of the adoption date with no restatement of prior periods. We plan to use this option in utilizing the effectivedate as our date of initial application. Consequently, financial information will not be updated, and the disclosures required under the new standard willnot be provided for dates and periods prior to July 1, 2019. The new standard provides a number of optional practical expedients in transition. The Company has elected to apply the ‘package of practicalexpedients’ which allow us to not reassess i) whether existing or expired arrangements contain a lease, ii) the lease classification of existing or expiredleases, or iii) whether previous initial direct costs would qualify for capitalization under the new lease standard. In preparation for adoption of thestandard, the Company is implementing a software solution and enhancing internal controls to enable the preparation of financial information includingthe assessment of the impact of the standard. While we are still assessing the impacts of the new standard, we currently expect the adoption to result inthe recognition of additional lease liabilities of approximately $40 million to $45 million, and right-of-use assets of approximately $40 million to $45 millionas of July 1, 2019 on the Consolidated Balance Sheet as it relates to the Company’s operating leases. The Company does not currently expect that the newstandard will have a material impact to the Company’s consolidated statement of operations or cash flows. In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, which simplifies the accounting for goodwill impairmentsby eliminating step two from the goodwill impairment test. Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment lossshall 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 clarifiesthe requirements for excluding and allocating foreign currency translation adjustments to reporting units related to an entity's testing of reporting unitsfor goodwill impairment. It further clarifies that an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount ofthe reporting unit when measuring the goodwill impairment loss, if applicable. ASU 2017-04 is effective for annual or any interim goodwill impairmenttests in fiscal years beginning after December 15, 2019. The Company is currently assessing the potential impact of the adoption of ASU 2017-04 on ourgoodwill impairment testing procedures and our consolidated financial statements. 43 In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815), Targeting Improvements to Accounting for Hedging Activities,which improves the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in itsfinancial statements and to make certain targeted improvements to simplify the application of hedge accounting guidance. The new guidance requiresadditional disclosures including cumulative basis adjustments for fair value hedges and the effect of hedging on individual income statement line itemsalong with providing new alternatives for applying hedge accounting to additional hedging strategies and measuring the hedged item in fair value hedgesof interest rate risk. This guidance is effective for fiscal years beginning after December 15, 2018 (fiscal 2020 for the Company), and interim periods withinthose fiscal years. The amendment is to be applied prospectively. Given the improvements made to the application of hedge accounting under theguidance, the Company decided to early adopt the ASU during the second quarter of fiscal year 2019. In June 2018, the FASB issued ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting. The amendments in ASU-08 simplifyseveral aspects of the accounting for nonemployee share-based payment transactions resulting from expanding the scope of Topic 718, Compensation—Stock Compensation, to include share-based payment transactions for acquiring goods and services from nonemployees. This ASU is effective forannual reporting periods, and interim periods with those reporting periods, beginning after December 15, 2018 with early adoption permitted. Thecompany does not expect the adoption of this ASU to have a material impact on its Consolidated Financial Statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the DisclosureRequirements for Fair Value Measurement. The amendments in ASU-13 remove, modify and add various disclosure requirements around the topic inorder to clarify and improve the cost-benefit nature of disclosures. This ASU is effective for annual reporting periods, and interim periods with thosereporting periods, beginning after December 15, 2019 with early adoption permitted. The company does not expect the adoption of this ASU to have amaterial impact on its Consolidated Financial Statements. In August 2018, the FASB issued ASU No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20). Theamendments in ASU-14 remove, modify and add various disclosure requirements around the topic in order to clarify and improve the cost-benefit natureof disclosures. This ASU is effective for annual reporting periods, and interim periods with those reporting periods, beginning after December 15, 2020with early adoption permitted. The amendments must be applied on a retrospective basis for all periods presented. The company is currently evaluatingthe impacts the adoption of this ASU will have on its Consolidated Financial Statements. In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40). The amendments inASU-15 align the requirements for capitalizing implementation costs in a service contract hosting arrangement with those of developing or obtaininginternal-use software. This ASU is effective for annual reporting periods, and interim periods with those reporting periods, beginning after December 15,2019 with early adoption permitted. The company does not expect the adoption of this ASU to have a material impact on its Consolidated FinancialStatements. 2. ACQUISITIONS The Company’s recent acquisitions are strategically significant to the future growth prospects of the Company. At the time of the acquisition andJune 30, 2019, the Company evaluated the significance of each acquisition on a standalone basis and in aggregate, considering both qualitative andquantitative factors. GS Engineering During the fourth quarter of fiscal year 2019, the Company acquired Ohio-based Genius Solutions Engineering Company (d/b/a GS Engineering). Theprivately held company is a provider of specialized “soft surface” skin texturized tooling. GS Engineering primarily serves the automotive end market andits' operating results are included in the Company’s Engraving segment. The Company paid $30.5 million in cash for all of the issued and outstanding equity interests of GS Engineering. The preliminary purchase price wasallocated to the net tangible and identifiable intangible assets acquired and liabilities assumed based on a preliminary estimate of their fair values on theclosing date. The Company has commenced a formal valuation of the acquired assets and liabilities and has updated the preliminary intangible assetbased on the preliminary valuation results. Goodwill from the transaction is attributable to the combined organization utilizing the GS technology acrossits global production footprint to enable customers worldwide to benefit from a combined offering for harmonized designs across a variety of surfacesand materials. Intangible assets of $8.9 million are preliminarily recorded, consisting of $5.6 million for developed technology to be amortized over a period of 15 years,$0.9 million for indefinite lived trademarks, and $2.4 million of customer relationships to be amortized over 13 years. The Company’s assigned fair valuesare preliminary as of June 30, 2019 until reviewed closing financial statements, including U.S. 338(h)10 elections, can be prepared by an independentaccountant and agreed to by both parties as required by the stock purchase agreement. The goodwill of $18.0 million created by the transaction isdeductible for income tax purposes. 44 The components of the fair value of the GS Engineering acquisition, including the preliminary allocation of the purchase price at June 30, 2019, are asfollows (in thousands): PreliminaryAllocation At June 30, 2019 Fair value of business combination: Cash payments $30,502 Less, cash acquired (622)Total $29,880 Identifiable assets acquired and liabilities assumed: Other acquired assets $2,197 Inventories 228 Customer Backlog 180 Property, plant, and equipment 1,391 Identifiable intangible assets 8,910 Goodwill 17,976 Liabilities assumed (1,002)Total $29,880 Agile Magnetics On the last business day of the first quarter of fiscal year 2019, the Company acquired Regional Mfg. Specialists, Inc. (now named Agile Magnetics). TheNew Hampshire based, privately held company is a provider of high-reliability magnetics to customers in the semiconductor, military, aerospace,healthcare, and general industrial industries. The Company has included the results of Agile in its Electronics segment in the consolidated financialstatements. The Company paid $39.2 million in cash for all of the issued and outstanding equity interests of Agile. The preliminary purchase price was allocated tothe net tangible and identifiable intangible assets acquired and liabilities assumed based on a preliminary estimate of their fair values on the closingdate. The Company has commenced a formal valuation of the acquired assets and liabilities and has updated the preliminary intangible asset based on thepreliminary valuation results. The Company is still in the process of reviewing the valuation of intangible assets and expects to record an adjustment of$0.5 million to $1.0 million in the first quarter of fiscal year 2020. Goodwill recorded from this transaction is attributable to expanded capabilities of thecombined organization which will allow for improved responsiveness to customer demands via a larger pool of engineering resources and localmanufacturing. Intangible assets of $18.2 million are preliminarily recorded, consisting of $14.3 million of customer relationships to be amortized over a period of 13 years,$3.8 million for indefinite lived trademarks, and $0.1 million for a non-compete arrangement to be amortized over 5 years. The goodwill of $15.6 millionpreliminarily recorded in connection with the transaction is deductible for income tax purposes. The Company’s assigned fair values are preliminary as ofJune 30, 2019 until such time as the valuation can be finalized. The components of the fair value of the Agile acquisition, including the preliminary allocation of the purchase price at June 30, 2019, are as follows (inthousands): PreliminaryAllocationSeptember 30,2018 Adjustments AdjustedPreliminaryAllocation June 30,2019 Fair value of business combination: Cash payments $39,194 $- $39,194 Less, cash acquired (1) - (1)Total $39,193 $- $39,193 45 PreliminaryAllocationSeptember 30,2018 Adjustments AdjustedPreliminaryAllocation June 30,2019 Identifiable assets acquired and liabilities assumed: Other acquired assets $1,928 $(35) $1,893 Inventories 2,506 268 2,774 Customer Backlog - 220 220 Property, plant, & equipment 1,318 (348) 970 Identifiable intangible assets 13,718 4,432 18,150 Goodwill 20,142 (4,528) 15,614 Liabilities assumed (419) (9) (428)Total $39,193 $- $39,193 Tenibac-Graphion Inc. During August of fiscal year 2019, the Company acquired Tenibac-Graphion Inc. (“Tenibac”). The Michigan based privately held company is a providerof chemical and laser texturing services for the automotive, medical, packaging, and consumer products markets. The Company has included the resultsof Tenibac in its Engraving segment in the condensed consolidated financial statements. The Company paid $57.3 million in cash for all of the issued and outstanding equity interests of Tenibac. The purchase price was allocated to the nettangible and identifiable intangible assets acquired and liabilities assumed based on their fair values on the closing date. Goodwill recorded from thistransaction is attributable to the complimentary services that the combined business can now offer to customers, through increased responsiveness tocustomer demands, and providing innovative approaches to solving customer needs by offering a full line of mold and tool services to customers. Intangible assets of $16.9 million are recorded, consisting of $11.3 million of customer relationships to be amortized over a period of 15 years, $4.2 millionfor indefinite lived trademarks, and $1.4 million of other intangibles assets to be amortized over 5 years. The Company’s assigned fair values are final asof June 30, 2019. The goodwill of $34.4 million created by the transaction is deductible for income tax purposes. The components of the fair value of the Tenibac acquisition, including the final allocation of the purchase price at June 30, 2019, are as follows (inthousands): PreliminaryAllocationSeptember 30,2018 Adjustments Final AllocationJune 30, 2019 Fair value of business combination: Cash payments $57,284 $- $57,284 Less cash acquired (558) - (558)Total $56,726 $- $56,726 PreliminaryAllocationSeptember 30,2018 Adjustments Final AllocationJune 30, 2019 Identifiable assets acquired and liabilities assumed: Other acquired assets $5,023 $(1,253) $3,770 Inventories 324 - 324 Customer backlog 1,000 (800) 200 Property, plant, & equipment 2,490 (19) 2,471 Identifiable intangible assets 15,960 900 16,860 Goodwill 32,949 1,411 34,360 Liabilities assumed (1,020) (239) (1,259)Total $56,726 $- $56,726 46 Piazza Rosa Group During the first quarter of fiscal year 2018, the Company acquired the Piazza Rosa Group. The Italy-based privately held company is a leading provider ofmold and tool treatment and finishing services for the automotive and consumer products markets. We have included the results of the Piazza RosaGroup in our Engraving segment. The Company paid $10.1 million in cash for all of the issued and outstanding equity interests of the Piazza Rosa Group and also paid $2.8 millionsubsequent to closing in order to satisfy assumed debt of the entity at the time of acquisition. The Company has estimated that total cash considerationwill be adjusted by $2.6 million based upon achievement of certain revenue metrics over the three years following acquisition. The Company made thefirst payment of $0.9 million during the first quarter of 2019 based on achievement of the revenue metrics during the first year. The purchase price was allocated to the net tangible and identifiable intangible assets acquired and liabilities assumed based on their fair values on theclosing date. Goodwill recorded from this transaction is attributable to potential revenue increases from the combined competencies with StandexEngraving’s worldwide presence and Piazza Rosa Group’s texturizing capabilities. The combined companies create a global tool finishing service leaderand open additional opportunities in the broader surface engineering market. Intangible assets of $4.1 million were preliminarily recorded, consisting of $2.3 million of customer relationships to be amortized over a period of eightyears, $1.6 million for trademarks, and $0.2 million of other intangibles assets. The Company finalized its purchase accounting for this acquisition in thefirst quarter of fiscal year 2019 and reduced the identifiable intangible asset estimate by $0.6 million at that time. The goodwill of $7.1 million created bythe transaction is not deductible for income tax purposes. The components of the fair value of the Piazza Rosa Group acquisition, including the final allocation of the purchase price are as follows (in thousands): PreliminaryAllocationSeptember 30,2017 Adjustments FinalAllocation Fair value of business combination: Total cash consideration $10,056 $- $10,056 Fair value of contingent consideration - 2,617 2,617 Total $10,056 $2,617 $12,673 PreliminaryAllocationSeptember 30,2017 Adjustments FinalAllocation Identifiable assets acquired and liabilities assumed: Other acquired assets $2,678 $1,664 $4,342 Inventories 637 (2) 635 Property, plant, and equipment 5,005 558 5,563 Identifiable intangible assets 4,087 (615) 3,472 Goodwill 6,218 858 7,076 Liabilities assumed (7,387) - (7,387)Deferred taxes (1,182) 154 (1,028)Total $10,056 $2,617 $12,673 Acquisition-Related Costs Acquisition-related costs include costs related to acquired businesses and other pending acquisitions. These costs consist of (i) deferred compensationand (ii) acquisition-related professional service fees and expenses, including financial advisory, legal, accounting, and other outside services incurred inconnection with acquisition activities, and regulatory matters related to acquired entities. These costs do not include purchase accounting expenses,which we define as acquired backlog and the step-up of inventory to fair value, or the amortization of the acquired intangible assets. Deferred compensation costs relate to payments due to the Horizon Scientific seller of $2.8 million on the second anniversary and $5.6 million on the thirdanniversary of the closing date of the purchase. For each of the fiscal years ended June 30, 2019 and 2018, we recorded deferred compensation costs of$2.8 million related to estimated deferred compensation earned by the Horizon Scientific seller to date. The payments are contingent on the sellerremaining an employee of the Company, with limited exceptions, at each anniversary date. 47 Acquisition related costs consist of miscellaneous professional service fees and expenses for our recent acquisitions. The components of acquisition-related costs are as follows (in thousands): June 30, June 30, 2019 2018 Deferred compensation arrangements $2,810 $2,810 Acquisition-related costs 265 939 Total $3,075 $3,749 3. REVENUE FROM CONTRACTS WITH CUSTOMERS Effective July 1, 2018, the Company adopted the new accounting standard, ASU No. 2014-09, “Revenue from Contracts with Customers” (ASC 606) usingthe modified retrospective method to contracts that were not completed as of June 30, 2018. We recognized the cumulative effect of initially applying thenew revenue standard as an adjustment to the opening balance of retained earnings, whereby the cumulative impact of all prior periods is recorded inretained earnings or other impacted balance sheet line items upon adoption. The comparative information has not been adjusted and continues to bereported under ASC 605. The impact on the Company’s consolidated income statements, balance sheets, equity or cash flows as of the adoption date as aresult of applying ASC 606 have been reflected within those respective financial statements. Under the Company’s historical accounting policies, non-developmental long-term contracts were recognized when the goods were transferred to thecustomer. Upon adoption, contracts for highly customized customer products that have no alternative use and in which the contract specifies theCompany has a right to payment for its costs, plus a reasonable margin met the requirements for recognition over time under ASC 606. Additionally,under the Company’s historical accounting policies, the Food Service Equipment segment estimated the rebate accrual based on a volume-related methodfor rebates. Under ASC 606, the Company now calculates the rebate accrual on anticipated sales for the rebate period, rather than measurement of actualachievement of specific tiers. Upon adoption, we recognized a reduction to retained earnings of $1.0 million which is comprised of (i) a net change for Engineering Technologies of $0.7million in revenues offset by cost of sales increase of $0.6 million; and (ii) a $1.5 million adjustment for accrued rebates in the Food Service Equipmentsegment. The details of the adjustments to retained earnings upon adoption on June 30, 2018 as well as the effects on the consolidated balance sheet asof June 30, 2018, as if ASC 606 had been adopted in our 2018 fiscal year are as follows:(in thousands) Cumulative Effect Net sales $(799)Cost of Sales (574)Income tax expense 340 Net Loss (1,033) Reported ASC 606 As Adjusted Effective Date June 30, 2018 Adjustments July 1, 2018 Inventories $127,223 $(574) $126,649 Accounts receivable 134,228 703 134,931 Accrued liabilities 65,575 1,502 67,077 Deferred income taxes 26,816 (340) 26,476 Retained earnings 761,430 (1,033) 760,397 Note that above amounts as of June 30 are before any restatement of balances to discontinued operations. The following tables reconcile the balances as presented as of and for the fiscal year ended June 30, 2019 exclusive of the cumulative effect adjustmentpresented above to the balances prior to the adjustments made to implement the new revenue recognition standard for the same period (in thousands): 48 Year Ended June 30, 2019 As Presented Impact of ASC 606 Balances Withoutadoption of ASC606 Net sales $791,579 $(8,624) $782,955 Cost of sales 523,519 (5,979) $517,540 Gross profit 268,060 (2,645) $265,415 Provision for income taxes 18,424 (650) $17,774 Income from continuing operations 47,189 (1,995) $45,194 Income (loss) from discontinued operations, net of income taxes 20,725 195 $20,920 Net income (loss) $67,914 $(1,800) $66,114 As of June 30, 2019 As Presented Impact of ASC 606 Balances Withoutadoption of ASC606 ASSETS Prepaid Expenses $30,872 $(8,624) $22,248 Inventories 88,645 5,979 94,624 LIABILITIES Income taxes payable 5,744 (650) 5,094 Retained earnings 818,282 (1,800) 816,482 Disaggregation of Revenue from Contracts with Customers The following table presents revenue disaggregated by product line and segment (in thousands): Year Ended Revenue by Product Line June 30, 2019 June 30, 2018 Refrigeration $210,407 $227,367 Merchandising & Display 34,532 34,932 Pumps 33,661 36,637 Total Food Service Equipment 278,600 298,936 Engraving Services 139,769 123,822 Engraving Products 9,924 12,453 Total Engraving 149,693 136,275 Engineering Technologies Components 105,270 90,781 Electronics 204,073 196,291 Hydraulics Cylinders and System 53,943 48,169 Total Revenue by Product Line $791,579 $770,452 49 The following table presents revenue from continuing operations disaggregated by geography based on company’s locations (in thousands): Year Ended Net sales June 30, 2019 United States $520,908 Asia Pacific 108,667 EMEA (1) 144,636 Other Americas 17,368 Total $791,579 (1) EMEA consists primarily of Europe, Middle East and S. Africa.The following table presents revenue from continuing operations disaggregated by timing of recognition (in thousands): Year Ended Timing of Revenue Recognition June 30, 2019 June 30, 2018 Products and services transferred at a point in time $759,628 $755,067 Products transferred over time 31,951 15,385 Net Sales $791,579 $770,452 Contract Balances Contract assets represent sales recognized in excess of billings related to work completed but not yet shipped for which revenue is recognized over time.Contract assets are recorded as accounts receivable.Contract liabilities are customer deposits for which revenue has not been recognized. Current contract liabilities are recorded as accrued expenses. The following table provides information about contract assets and liability balances as of June 30, 2019 (in thousands): Balance atBeginning ofPeriod Additions Deductions Balance at Endof Period Year ended June 30, 2019 Contract assets: Prepaid and other current assets 5,904 24,380 21,866 8,418 Contract liabilities: Customer deposits 2,552 6,336 7,530 1,358 During the year ended June 30, 2019, we recognized the following revenue as a result of changes in the contract liability balances (in thousands): Year ended Revenue recognized in the period from: June 30, 2019 Amounts included in the contract liability balance at the beginning of the period $2,552 The timing of revenue recognition, invoicing and cash collections results in billed receivables, contract assets and contract liabilities on the consolidatedbalance sheets. When consideration is received from a customer prior to transferring goods or services to the customer under the terms of a contract, a contract liability isrecorded. Contract liabilities are recognized as revenue after control of the goods and services are transferred to the customer and all revenue recognitioncriteria have been met. 50 4. INVENTORIES Inventories are comprised of (in thousands): June 30 2019 2018 Raw materials $43,117 $46,859 Work in process 28,120 30,527 Finished goods 17,408 26,914 Total $88,645 $104,300 Distribution costs associated with the sale of inventory are recorded as a component of selling, general and administrative expenses and were $ 18.8million, $19.4 million, and $14.0 million in 2019, 2018, and 2017, respectively. 5. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consist of the following (in thousands): June 30 2019 2018 Land, buildings and leasehold improvements $79,322 $77,744 Machinery, equipment and other 226,952 202,181 Total 306,274 279,925 Less accumulated depreciation (158,250) (142,991)Property, plant and equipment - net $148,024 $136,934 Depreciation expense for the years ended June 30, 2019, 2018, and 2017 totaled $19.0 million, $17.4 million, and $13.4 million, respectively. 6. GOODWILL Goodwill and certain indefinite-lived intangible assets are not amortized, but instead are tested for impairment at least annually and more frequentlywhenever events or changes in circumstances indicate that the fair value of the asset may be less than its carrying amount. The Company’s annual testfor impairment is performed using a May 31st measurement date. The Company has identified our reporting units for impairment testing as its nine operating segments, which are aggregated into five reporting segmentsas disclosed in Note 18 – Industry Segment Information. As quoted market prices are not available for the Company’s reporting units, the fair value of the reporting units is determined using a discounted cashflow model (income approach). This method uses various assumptions that are specific to each individual reporting unit in order to determine the fairvalue. In addition, the Company compares the estimated aggregate fair value of its reporting units to its overall market capitalization. While the Company believes that estimates of future cash flows are reasonable, changes in assumptions could significantly affect valuations and result inimpairments in the future. The most significant assumption involved in the Company’s determination of fair value is the cash flow projections of eachreporting unit. If the estimates of future cash flows for each reporting unit may be insufficient to support the carrying value of the reporting units, theCompany will reassess its conclusions related to fair value and the recoverability of goodwill. Consistent with business practices and our strategicalignment we realigned our Nor-lake and Scientific reporting units during April of 2019. As a result, we re-allocated goodwill from the Nor-lake reportingunit to the Scientific reporting unit and performed an impairment test as of April 30, 2019 on both the old reporting unit structure as well as under the newreporting unit structure, no impairment was indicated in either test. We completed our annual impairment testing as of May 31, 2019, and determined that the fair value of each of its reporting units substantially exceededeach unit’s respective carrying value, therefore, no impairment charges were recorded in connection with our testing and assessment during 2019 and2018. 51 Changes to goodwill during the years ended June 30, 2019 and 2018 are as follows (in thousands): 2019 2018 Balance at beginning of year, net $211,751 $202,679 Acquisitions 68,392 7,655 Foreign currency translation 1,360 1,417 Balance at end of year $281,503 $211,751 7. INTANGIBLE ASSETS Intangible assets consist of the following (in thousands): Tradenames Customer (Indefinite- Developed Relationships lived) Technology Other Total June 30, 2019 Cost $75,018 $19,977 $55,164 $5,492 $155,651 Accumulated amortization (24,476) - (8,765) (3,750) (36,991)Balance, June 30, 2019 $50,542 $19,977 $46,399 $1,742 $118,660 June 30, 2018 Cost $48,285 $11,102 $48,281 $4,025 $111,693 Accumulated amortization (19,134) - (4,709) (2,912) (26,755)Balance, June 30, 2018 $29,151 $11,102 $43,572 $1,113 $84,938 Amortization expense from continuing operations for the years ended June 30, 2019, 2018, and 2017 totaled $10.5 million, $8.1 million, and $4.0 million,respectively. At June 30, 2019, aggregate amortization expense is estimated to be $11.7 million in fiscal 2020, $11.1 million in fiscal 2021, $10.4 million infiscal 2022, $9.7 million in fiscal 2023, $8.7 million in fiscal 2024, and $47.1 million thereafter. 8. DEBT Long-term debt is comprised of the following at June 30 (in thousands): 2019 2018 Bank credit agreements $198,800 $194,000 Other - - Total funded debt 198,800 194,000 Issuance Cost (1,190) (228)Total long-term debt $197,610 $193,772 Long-term debt is due as follows (in thousands): 2020 $- 2021 - 2022 - 2023 - 2024 (matures December 2023) 198,800 Thereafter - Funded Debt 198,800 Issuance costs (1,190)Debt, net issuance cost $197,610 52 Bank Credit Agreements During the second quarter of fiscal year 2019, the Company entered into an Amended and Restated Credit Agreement (“Credit Facility”, or “facility”). This five-year Credit Facility expires in December 2023 and has a borrowing limit of $500 million, which can be increased by an amount of up to $250million, in accordance with specified conditions contained in the agreement. The facility also includes a $10 million sublimit for swing line loans and a $35million sublimit for letters of credit. The facility amends and restates a previously existing $400 million revolving credit agreement, which was scheduledto expire in December 2019. Under the terms of the Credit Agreement, we pay a variable rate of interest and a commitment fee on borrowed amounts as well as a commitment fee onunused amounts under the facility. The amount of the commitment fee depends upon both the undrawn amount remaining available under the facility andthe Company’s funded debt to EBITDA (as defined in the agreement) ratio at the last day of each quarter. As our funded debt to EBITDA ratio increases,the commitment fee increases. Funds borrowed under the facility may be used for the repayment of debt, working capital, capital expenditures, acquisitions (so long as certainconditions, including a specified funded debt to EBITDA leverage ratio is maintained), and other general corporate purposes. As of June 30, 2019, theCompany had the ability to borrow $253.4 million under the facility based on our current EBITDA. The facility contains customary representations,warranties and restrictive covenants, as well as specific financial covenants which the Company was compliant with as of June 30, 2019. The Company’scurrent financial covenants under the facility are as follows: Interest Coverage Ratio - The Company is required to maintain a ratio of Earnings Before Interest and Taxes, as Adjusted (“Adjusted EBIT per the CreditAgreement”), to interest expense for the trailing twelve months of at least 2.75:1. Adjusted EBIT per the Credit Agreement specifically excludesextraordinary and certain other defined items such as cash restructuring and acquisition-related charges up to the lower of $20 million or 10% of EBITDA,an increase from the prior agreement’s $7.5 million cap on restructuring expenses. The new facility continues to allow unlimited non-cash chargesincluding purchase accounting and goodwill adjustments. At June 30, 2019, the Company’s Interest Coverage Ratio was 7.73:1. Leverage Ratio - The Company’s ratio of funded debt to trailing twelve month Adjusted EBITDA per the credit agreement, calculated as Adjusted EBITper the Credit Agreement plus depreciation and amortization, may not exceed 3.5:1. Under certain circumstances in connection with a MaterialAcquisitions (as defined in the Facility), the Facility allows for the leverage ratio to go as high as 4.0:1 for a four-fiscal quarter period. At June 30, 2019 theCompany’s Leverage Ratio was 1.28:1. As of June 30, 2019, we had borrowings under our facility of $198.8 million and the effective rate of interest for outstanding borrowings under the facilitywas 3.88%. During the fourth quarter of fiscal 2019, we collected $106.9 million in connection with the sale of our Cooking Solutions Group andsubstantially all of these proceeds were used to repay borrowings under our facility. Our primary cash requirements in addition to day-to-day operatingneeds include interest payments, capital expenditures, and dividends. Our primary sources of cash for these requirements are cash flows from continuingoperations and borrowings under the facility. In order to manage our interest rate exposure, we are party to $85.0 million of active floating to fixed rate swaps. These swaps convert our interestpayments from LIBOR to a weighted average rate of 2.11%. Other Long-Term Borrowings At June 30, 2019, and 2018, the Company had standby letter of credit sub-facility outstanding, primarily for insurance and trade financing purposes of $7.6million and $7.9 million, respectively 9. ACCRUED LIABILITIES Accrued expenses from continuing operations recorded in our Consolidated Balance Sheets at June 30, 2019 and 2018 consist of the following (inthousands): 2019 2018 Payroll and employee benefits $32,624 $31,109 Workers' compensation 2,858 2,715 Warranty 5,278 4,966 Fair value of derivatives 4,484 2,853 Other 17,404 16,036 Total $62,648 $57,679 53 10. DERIVATIVE FINANCIAL INSTRUMENTS Interest Rate Swaps In order to manage our interest rate exposure, we are party to $85.0 million of active floating to fixed rate swaps. These swaps convert our interestpayments from LIBOR to a weighted average rate of 2.11% at June 30, 2019. The fair value of the swaps recognized in accrued liabilities and in other comprehensive income (loss) at June 30, 2019 and 2018 is as follows (inthousands): Effective DateNotional Fixed Maturity Fair Value at June 30, Amount Interest Rate 2019 2018 December 18, 2015 15,000 1.46% December 19, 2018 $- $55 December 19, 2015 10,000 2.01% December 19, 2019 3 74 May 24, 2017 25,000 1.88% April 24, 2022 (190) 764 May 24, 2017 25,000 1.67% May 24, 2020 49 432 August 6, 2018 25,000 2.83% August 6, 2023 (1,242) - $(1,380) $1,325 The Company reported no losses for the years ended June 30, 2019, 2018, and 2017, as a result of hedge ineffectiveness. Future changes in these swaparrangements, including termination of the agreements, may result in a reclassification of any gain or loss reported in accumulated other comprehensiveincome (loss) into earnings as an adjustment to interest expense. Accumulated other comprehensive income (loss) related to these instruments is beingamortized into interest expense concurrent with the hedged exposure. Foreign Exchange Contracts Forward foreign currency exchange contracts are used to limit the impact of currency fluctuations on certain anticipated foreign cash flows, such asforeign purchases of materials and loan payments between subsidiaries. The Company enters into such contracts for hedging purposes only. TheCompany has designated certain of these currency contracts as hedges, and changes in the fair value of these contracts are recognized in othercomprehensive income until the hedged items are recognized in earnings. Hedge ineffectiveness, if any, associated with these contracts will be reportedin net income. At June 30, 2019 and 2018, the Company had outstanding forward contracts related to hedges of intercompany loans with net unrealizedgain / (losses) of $3.1 million and $2.9 million, respectively, which approximate the unrealized gains or losses on the related loans. The contracts havematurity dates ranging from 2019-2023, which correspond to the related intercompany loans. The notional amounts of these instruments, by currency inthousands, are as follows: Currency 2019 2018 USD 55,015 64,558 Euro 5,750 21,300 Pound Sterling - 6,826 Peso - 54,000 Canadian 20,600 20,600 The table below presents the fair value of derivative financial instruments as well as their classification on the balance sheet at June 30, (in thousands): Asset Derivatives 2019 2018 Derivative designated asBalance Balance hedging instrumentsSheet Sheet Line Item Fair Value Line Item Fair Value Interest rate swapsOther Assets $52 Other Assets $1,325 Foreign exchange contractsOther Assets - Other Assets 1,357 $52 $2,682 54 Liability Derivatives 2019 2018 Derivative designated asBalance Balance hedging instrumentsSheet Sheet Line Item Fair Value Line Item Fair Value Interest rate swapsAccrued Liabilities $1,432 Accrued Liabilities $- Foreign exchange contractsAccrued Liabilities 3,052 Accrued Liabilities 4,204 $4,484 $4,204 The table below presents the amount of gain (loss) recognized in comprehensive income on our derivative financial instruments (effective portion)designated as hedging instruments and their classification within comprehensive income for the periods ended (in thousands): 2019 2018 2017 Interest rate swaps $1,703 $1,367 $282 Foreign exchange contracts (3,279) 1,174 (3,178) $(1,576) $2,541 $(2,896) The table below presents the amount reclassified from accumulated other comprehensive income (loss) to net income for the periods ended (inthousands): Details about Accumulated Affected line itemOther Comprehensive in the StatementsIncome (Loss) Components 2019 2018 2017 of OperationsInterest rate swaps $(321) $171 $399 Interest expenseForeign exchange contracts - - 75 Cost of goods soldForeign exchange contracts 1,730 121 (861)Interest expenseNet investment hedge (285) - - Other Non-Operating Income $1,124 $292 $(387) 55 11. INCOME TAXES On December 22, 2017, the Tax Cuts and Jobs Act (the “Act” or “TCJA”) was passed which, among other things, reduces the federal corporate tax rate to21.0% effective for taxable years starting on or after January 1, 2018. For transition year ending June 30, 2018, the Company recorded federal taxes using afederal rate of 28.0%. For the year ending June 30, 2019, the Company recorded federal taxes using a blended federal rate of 21.0%. During the quarter ended December 31, 2018, the Company recorded a tax benefit of approximately $0.8 million to its provision for income taxes related to amandatory deemed repatriation of foreign earnings and considered the toll tax calculation to be complete. The provision for fiscal year ending June 30, 2019 was impacted by several law changes implemented by the Act such as the repeal of the Section 199manufacturing deduction, changes to the calculation for Section 162(m) executive compensation deduction, interest deduction limitation and GlobalIntangible Low Taxed Income (GILTI). As allowed under US GAAP, the Company has elected to treat any taxes due on future U.S. inclusions in taxableincome under the GILTI provision as a current-period expense when incurred. The Company will continue to monitor guidance regarding these changesand their impact on the financial statements in later periods. U.S. tax law allows a one-hundred percent dividend received deduction for foreign dividends and the Company has begun to bring back cash from foreignsubsidiaries. However, the permanent reinvestment assertion must still be assessed and made regarding potential liabilities for foreign withholding taxes. As of June 30, 2019, the Company maintained the assessment that previously undistributed earnings of certain foreign subsidiaries no longer meet therequirements for indefinite reinvestment under applicable accounting guidance. Therefore, the Company recognized deferred tax liabilities ofapproximately $2.1 million that relate to withholding taxes on the current earnings of certain foreign subsidiaries. It is expected deferred tax liabilities willcontinue to be recorded on current earnings in future periods from these subsidiaries. The Company maintains the permanent reinvestment assertion onearnings in certain foreign jurisdictions. If repatriated, these earnings would generate a tax liability of approximately $1.8 million The components of income from continuing operations before income taxes are as follows (in thousands): 2019 2018 2017 U.S. Operations $5,434 $937 $5,641 Non-U.S. Operations 60,179 69,310 45,318 Total $65,613 $70,247 $50,959 The Company utilizes the asset and liability method of accounting for income taxes. Deferred income taxes are determined based on the estimated futuretax effects of differences between the financial and tax bases of assets and liabilities given the provisions of the enacted tax laws. The components of theprovision for income taxes on continuing operations (in thousands) were as shown below: 2019 2018 2017 Current: Federal $432 $9,505 $(1,058)State 191 333 (18)Non-U.S. 21,310 21,675 13,019 Total Current $21,933 $31,513 $11,943 Deferred: Federal $206 $2,012 $2,141 State 207 1,091 (290)Non-U.S. (3,922) 4,288 (1,972)Total Deferred (3,509) 7,391 (121)Total $18,424 $38,904 $11,822 56 A reconciliation from the U.S. Federal income tax rate on continuing operations to the total tax provision is as follows: 2019 2018 2017 Provision at statutory tax rate 21.0% 28.0% 35.0%State taxes 0.5% 1.5% (0.4%)Impact of foreign operations 5.0% (0.6%) (9.8%)Federal tax credits (1.5%) (1.4%) (1.6%)Tax Reform (1.3%) 18.3% 0.0%Cash repatriation 3.3% 10.5% 0.0%SubF/GILTI 0.4% 0.0% 0.0%Other 0.7% (0.9%) (0.1%)Effective income tax provision 28.1% 55.4% 23.1% Changes in the effective tax rates from period to period may be significant as they depend on many factors including, but not limited to, size of theCompany’s income or loss and any one-time activities occurring during the period. Due to the effective date of the Act’s rate reduction on our fiscal year, the Company recorded a blended statutory rate for the year ended June 30, 2018and used a 21% rate for the year ended June 30, 2019. The Company's income tax provision from continuing operations for the fiscal year ended June 30, 2019 was impacted by the following items: (i) $2.1million of expenses related to expected foreign withholding taxes on cash repatriation (ii) a tax expense of $0.3 million related to the elimination of theperformance based compensation exception for executive compensation under Sec. 162(m) of the Internal Revenue Code, offset by (iii) a tax benefit of $0.8million related to the impact of the Sec. 965 toll tax. The Company's income tax provision from continuing operations for the fiscal year ended June 30, 2018 was impacted by the following items: (i) a taxprovision related to the impact of the Sec. 965 toll tax of $11.7 million, (ii) a tax provision related to a revaluation of deferred taxes due to the federal ratereduction of $1.3 million, and (iii) a tax provision related to expected foreign withholding taxes on cash repatriation of $7.8 million. The Company's income tax provision from continuing operations for the fiscal year ended June 30, 2017 was impacted by the following items: (i) a benefitof $0.6 million related to the R&D tax credit, and (ii) a benefit of $5.3 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): 2019 2018 Deferred tax liabilities: Depreciation and amortization $(35,420) $(39,775)Withholding Taxes (5,606) (7,833)Total deferred tax liability $(41,026) $(47,608) Deferred tax assets: Accrued compensation $2,280 $2,657 Accrued expenses and reserves 3,967 4,808 Pension 18,228 13,522 Inventory 927 1,613 Other 355 452 Net operating loss and credit carry forwards 17,939 8,668 Total deferred tax asset $43,696 $31,720 Less: Valuation allowance (11,354) (3,482)Net deferred tax asset (liability) $(8,684) $(19,370) The Company estimates the degree to which deferred tax assets, including net operating loss and credit carry forwards will result in a benefit based onexpected profitability by tax jurisdiction and provides a valuation allowance for tax assets and loss carry forwards that it believes will more likely than notgo unrealized. The valuation allowance at June 30, 2019 applies to state and foreign loss carry forwards, which management has concluded that it is morelikely than not that these tax benefits will not be realized. The increase (decrease) in the valuation allowance from the prior year was due to the currentyear activity in those same state and foreign loss jurisdictions. 57 In addition, the sale of the Cooking Solutions Group in the fiscal year generated a significant capital loss for tax purposes due to a higher tax basis in thestock than book basis. As of June 30, 2019, the Company expects that it is more likely than not that the majority of this loss will not be realizable in futureyears. As such, the valuation allowance increased by $6.3 million. As of June 30, 2019, the Company had gross state net operating loss ("NOL") and credit carry forwards of approximately $68.5 million and $2.7 million,respectively, which may be available to offset future state income tax liabilities and expire at various dates from 2019 through 2038. In addition, theCompany had foreign NOL carry forwards of approximately $3.8 million, $2.8 million of which carry forward indefinitely and $1.0 million that carry forwardfor 10 years. Under ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, all excess tax benefits and tax deficiencies are recognized as incometax expense or benefit in the income statement. Accordingly, the we recorded discrete income tax benefits in the consolidated statements of income of$0.2 million during the fiscal year ended June 30, 2019, for excess tax benefits related to equity compensation. The total provision (benefit) for income taxes included in the consolidated financial statements was as follows (in thousands): 2019 2018 2017 Continuing operations $18,424 $38,904 $11,822 Discontinued operations (2,189) 1,701 3,506 Total Provision $16,235 $40,605 $15,328 The tax benefit for discontinued operations relates mostly to the write-off of deferred tax liabilities from the sale of the Cooking Solutions Group. The changes in the amount of gross unrecognized tax benefits during 2019, 2018 and 2017 were as follows (in thousands): 2019 2018 2017 Beginning Balance $3,003 $2,991 $2,978 Additions based on tax positions related to the current year 4 12 12 Additions for tax positions of prior years 8,281 - 1 Reductions for tax positions of prior years (37) - - Ending Balance $11,251 $3,003 $2,991 The Company increased its uncertain tax position in the third quarter due to a technical position taken on the 2018 tax return filed in April concerning theimpact of the mandatory repatriation. The expense related to this position was recorded in the prior year and resulted in a balance sheet reclassificationonly. If the unrecognized tax benefits in the table above were recognized in a future period, $10.4 million of the unrecognized tax benefit would impact theCompany’s effective tax rate. Within the next twelve months, the statute of limitations will close in various U.S., state and non-U.S. jurisdictions. As a result, it is reasonably expectedthat net unrecognized tax benefits from these various jurisdictions would be recognized within the next twelve months. The recognition of these taxbenefits is not expected to have a material impact to the Company's financial statements. The Company does not reasonably expect any other significantchanges in the next twelve months. The following tax years, in the major tax jurisdictions noted, are open for assessment or refund: Country Years Ending June30, United States 2016 to 2019 Canada 2015 to 2019 Germany 2016 to 2019 Ireland 2019 Portugal 2018 to 2019 United Kingdom 2016 to 2019 The Company’s policy is to include interest expense and penalties related to unrecognized tax benefits within the provision for income taxes on theconsolidated statements of operations. At both June 30, 2019 and June 30, 2018, the company had less than $0.1 million for accrued interest expense onunrecognized tax benefits. 58 12. COMMITMENTS The Company leases certain property and equipment under agreements with initial terms ranging from one to sixty years. Rental expense related tocontinuing operations for the years ended June 30, 2019, 2018, and 2017 was approximately $10.5 million, $9.2 million and $7.5 million, respectively. The gross minimum annual rental commitments under non-cancelable operating leases, principally real-estate at June 30, 2019`: (in thousands) Lease Sublease Net obligation 2020 9,357 335 9,022 2021 7,416 342 7,074 2022 5,949 349 5,600 2023 4,147 356 3,791 2024 3,550 363 3,187 Thereafter 18,292 1,725 16,567 13. CONTINGENCIES From time to time, the Company is subject to various claims and legal proceedings, including claims related to environmental remediation, either assertedor unasserted, that arise in the ordinary course of business. While the outcome of these proceedings and claims cannot be predicted with certainty, theCompany’s management does not believe that the outcome of any of the currently existing legal matters will have a material impact on the Company’sconsolidated 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. 14. STOCK-BASED COMPENSATION AND PURCHASE PLANS Stock-Based Compensation Plans Under incentive compensation plans, the Company is authorized to make grants of stock options, restricted stock and performance share units to provideequity incentive compensation to key employees and directors. The stock award program offers employees and directors the opportunity to earn sharesof our stock over time, rather than options that give the employees and directors the right to purchase stock at a set price. The Company has stock plansfor directors, officers and certain key employees. Total compensation cost recognized in income for equity based compensation awards was $4.4 million, $4.9 million, and $5.0 million for the years endedJune 30, 2019, 2018, and 2017, respectively, primarily within Selling, General, and Administrative Expenses. The total income tax benefit recognized in theconsolidated statement of operations for equity-based compensation plans was $1.1 million, $1.2 million, and $1.9 million for the years ended June 30,2019, 2018 and 2017, respectively. There were 578,433 shares of common stock reserved for issuance under various compensation plans at June 30, 2019. Restricted Stock Awards The Company may award shares of restricted stock to eligible employees and non-employee directors of the Company at no cost, giving them, in mostinstances, all of the rights of stockholders, except that they may not sell, assign, pledge or otherwise encumber such shares and rights during therestriction period. Such shares and rights are subject to forfeiture if certain employment conditions are not met. During the restriction period, recipientsof the shares are entitled to dividend equivalents on such shares, providing that such shares are not forfeited. Dividends are accumulated and paid out atthe end of the restriction period. During 2019, 2018, and 2017, the Company granted 70,085, 51,792, and 51,563 shares respectively of restricted stock toeligible participants. Restrictions on the stock awards generally lapse between fiscal 2020 and fiscal 2022. For the years ended June 30, 2019, 2018, and2017, $ 3.7 million, $3.7 million, and $3.6 million, respectively, was recognized as compensation expense related to restricted stock awards. Substantially allawards are expected to vest. 59 A summary of restricted stock awards activity during the year ended June 30, 2019 is as follows: Restricted Stock Awards Number Aggregate of Intrinsic Shares Value Outstanding, June 30, 2018 120,010 $12,258,515 Granted 70,085 Exercised / vested (43,959) $(885,810)Canceled (18,094) Outstanding, June 30, 2019 128,042 $9,365,632 Restricted stock awards granted during 2019, 2018 and 2017 had a weighted average grant date fair value of $102.74, $93.73, and $85.07, respectively. Thegrant date fair value of restricted stock awards is determined based on the closing price of the Company’s common stock on the date of grant. The totalintrinsic value of awards exercised during the years ended June 30, 2019, 2018, and 2017 was $0.9 million, $0.8 million, and $1.1 million, respectively. As of June 30, 2019, there was $5.8 million of unrecognized compensation costs related to awards expected to be recognized over a weighted-averageperiod of 1.52 years. Executive Compensation Program The Company operates a compensation program for key employees. The plan contains both an annual component as well as a long-term component. Under the annual component, participants may elect to defer up to 50% of their annual incentive compensation in restricted stock which is purchased at adiscount to the market. Additionally, non-employee directors of the Company may defer a portion of their director’s fees in restricted stock units which ispurchased at a discount to the market. During the restriction period, recipients of the shares are entitled to dividend equivalents on such units, providingthat such shares are not forfeited. Dividend equivalents are accumulated and paid out at the end of the restriction period. The restrictions on the units expire after three years. At June 30,2019 and 2018, respectively, 34,950 and 31,760 shares of restricted stock units are outstanding and subject to restrictions that lapse between fiscal2020 and fiscal 2022. The compensation expense associated with this incentive program is charged to income over the restriction period. The Companyrecorded compensation expense related to this program of $0.3 million, $0.3 million, and $0.4 million for the years ended June 30, 2019, 2018 and 2017,respectively. As of June 30, 2019, there was $0.3 million of unrecognized compensation costs related to awards expected to be recognized over a weighted-averageperiod of 1.2 years. The fair value of the awards under the annual component of this incentive program is measured using the Black-Scholes option-pricing model. Keyassumptions used to apply this pricing model are as follows: 2019 2018 2017 Risk-free interest rates 2.63% 1.55% 0.71%Expected life of option grants (in years) 3 3 3 Expected volatility of underlying stock 25.1% 25.6% 25.7%Expected quarterly dividends (per share) $0.18 $0.16 $0.14 Under the long-term component, grants of performance share units (“PSUs”) are made annually to key employees and the share units are earned based onthe achievement of certain overall corporate financial performance targets over the performance period. At the end of the performance period, the numberof shares of common stock issued will be determined by adjusting upward or downward from the target in a range between 50% and 200%. No shares willbe issued if the minimum performance 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 of Directors. 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 anyaward for a reason other than death, disability, retirement, or following a change in control, will forfeit the shares represented by that award. In certaincircumstances, such as death, disability, or retirement, PSUs are paid on a pro-rata basis. In the event of a change in control, vesting of the awardsgranted is accelerated. 60 A summary of the awards activity under the executive compensation program during the year ended June 30, 2019 is as follows: Annual Component Performance Stock Units Weighted Number Average Aggregate Number Aggregate of Exercise Intrinsic of Intrinsic Shares Price Value Shares Value Non-vested, June 30, 2018 31,760 $62.71 $442,850 58,028 $5,013,531 Granted 13,625 $76.65 28,803 Vested (8,677) $58.35 $440,358 (6,639) $508,614 Forfeited (1,758) $65.84 (11,140) Non-vested, June 30, 2019 34,950 $69.07 $(496,674) 69,052 $6,529,012 Restricted stock awards granted under the annual component of this program in fiscal 2019, 2018, and 2017 had a grant date fair value of $110.22, $96.56,and $87.05, respectively. The PSUs granted in fiscal 2019, 2018 and 2017 had a grant date fair value of $106.65, $91.75, and $83.92, respectively. The totalintrinsic value of awards vested under the executive compensation program during the years ended June 30, 2019 ,2018, and 2017 was $0.9 million, $1.6million, and $2.3 million respectively. The Company recognized compensation expense related to the PSUs of $0.3 million, $0.9 million, and $1.0 million for the years ended June 30, 2019, 2018and 2017 respectively based on the probability of the performance targets being met. The total unrecognized compensation costs related to non-vestedperformance share units was $1.4 million at June 30, 2019, which is expected to be recognized over a weighted average period of 1.02 years. Employee Stock Purchase Plan The Company has an Employee Stock Purchase Plan that allows employees to purchase shares of common stock of the Company at a discount from themarket each quarter. The ESPP plan, which was effective as of July 1, 2005, provided employees the option to purchase Standex stock at a discount of 5%.The Plan was modified, effective as of April 1, 2017, to increase the stock purchase discount to 15% and is considered a compensatory Plan. Under thisnew Plan, shares of our stock may be purchased by employees quarterly at 85% of the fair market value on the last day of each quarter. The 15% discountis recorded as a component of SG&A in the Company’s Consolidated Statements of Operations. Shares of stock reserved for the plan were 73,617 at June30, 2019. Shares purchased under this plan aggregated to 7,698, 5,622, and 3,742 in 2019, 2018 and 2017, respectively, at an average price of $65.63, $86.01,and $84.17, respectively. 15. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The components of the Company’s accumulated other comprehensive income (loss) at June 30, 2019 and 2018 are as follows (in thousands): 2019 2018 Foreign currency translation adjustment $(27,658) $(25,013)Unrealized pension losses, net of tax (107,380) (95,112)Unrealized losses on derivative instruments, net of tax (2,240) (1,734)Total $(137,278) $(121,859) 61 16. RESTRUCTURING The Company has undertaken a number of initiatives that have resulted in severance, restructuring, and related charges. A summary of charges byinitiative is as follows (in thousands): InvoluntaryEmployee Severance and Year Ended June 30, Benefit Costs Other Total 2019 Restructuring Initiatives $1,167 $84 $1,251 Prior Year Initiatives 252 132 384 Total expense $1,419 $216 $1,635 2018 Restructuring Initiatives $2,387 $3,476 $5,863 Prior Year Initiatives 224 877 1,101 Total expense $2,611 $4,353 $6,964 2017 Restructuring Initiatives $1,862 $3,527 $5,389 Prior Year Initiatives - 372 372 Total expense $1,862 $3,899 $5,761 2019 Restructuring Initiatives The Company continues to focus our efforts to reduce cost and improve productivity across our businesses, particularly through headcount reductions,facility closures, and consolidations. During fiscal year 2019, we also incurred restructuring expenses related to third party assistance with analysis andimplementation of these activities. Involuntary EmployeeSeverance and Benefit Costs Other Total Restructuring liabilities at June 30, 2018 $- $- $- Additions and adjustments 1,167 84 1,251 Payments (1,020) (79) (1,099)Restructuring liabilities at June 30, 2019 $147 $5 $152 2018 Restructuring Initiatives During the fiscal year ended June 30, 2018, we incurred restructuring expenses from 2018 initiatives related to three restructuring programs that areintended to improve profitability, streamline production and enhance capacity to support future growth: (1) the realignment of management functions atthe Food Service Equipment Group level; (2) headcount reduction and plant realignment with regard to the standard products businesses within FoodService Equipment; and (3) the exit of an unprofitable Engraving business in Brazil. The Company anticipates further restructuring charges in 2020 based upon market conditions and cost reduction activities to improve our competitiveadvantage. 62 Activity in the reserves related to 2018 restructuring initiatives is as follows (in thousands): InvoluntaryEmployee Severance and Benefit Costs Other Total Restructuring liabilities at June 30, 2018 $147 $334 $481 Additions and adjustments 252 132 384 Payments (399) (466) (865)Restructuring liabilities at June 30, 2019 $- $- $- Activity in the reserves related to 2017 restructuring initiatives is as follows (in thousands): InvoluntaryEmployee Severance and Benefit Costs Other Total Restructuring liabilities at June 30, 2017 $490 $1,189 $1,679 Additions and adjustments 2,780 3,715 6,495 Payments (3,123) (4,570) (7,693)Restructuring liabilities at June 30, 2018 $147 $334 $481 The Company’s total restructuring expenses by segment are as follows (in thousands): InvoluntaryEmployee Severance and Year Ended June 30, Benefit Costs Other Total Fiscal Year 2019 Engraving $662 $- $662 Electronics 327 27 354 Engineering Technologies 17 99 116 Food Service Equipment 277 90 367 Corporate and Other 136 - 136 Total expense $1,419 $216 $1,635 Fiscal Year 2018 Engraving $1,199 $488 $1,687 Electronics 215 84 299 Engineering Technologies 224 874 1,098 Food Service Equipment 681 2,855 3,536 Corporate and Other 292 52 344 Total expense $2,611 $4,353 $6,964 Fiscal Year 2017 Engraving $6 $- $6 Electronics 11 488 499 Engineering Technologies 809 3,070 3,879 Food Service Equipment 1,100 22 1,122 Corporate and Other (64) 319 255 Total expense $1,862 $3,899 $5,761 63 17. EMPLOYEE BENEFIT PLANS Retirement Plans The Company has defined benefit pension plans covering certain current and former employees both inside and outside of the U.S. The Company’spension plan for U.S. salaried employees was frozen as of December 31, 2007, and participants in the plan ceased accruing future benefits. TheCompany’s pension plan for U.S. hourly employees was frozen for substantially all participants as of July 31, 2013, and replaced with a definedcontribution benefit plan. 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, 2019 2018 2017 2019 2018 2017 Service Cost $3 $3 $3 $189 $187 $37 Interest Cost 10,342 10,079 10,451 1,013 1,050 1,022 Expected return on plan assets (13,541) (13,484) (13,761) (908) (947) (1,152)Recognized net actuarial loss 4,121 4,579 4,760 340 941 1,016 Amortization of prior service cost (benefit) - - - (3) (37) (48)Net periodic benefit cost (benefit) $925 $1,177 $1,453 $631 $1,194 $875 The following table sets forth the funded status and amounts recognized as of June 30, 2019 and 2018 for our U.S. and foreign defined benefit pensionplans (in thousands): U.S. Plans Foreign Plans Year Ended June 30, Year Ended June 30, 2019 2018 2019 2018 Change in benefit obligation Benefit obligation at beginning of year $243,096 $259,963 $41,194 $42,141 Service cost 3 3 189 187 Interest cost 10,342 10,079 1,013 1,050 Actuarial loss (gain) 16,268 (10,761) 4,580 (2,701)Benefits paid (16,169) (16,188) (1,545) (1,639)Foreign currency exchange rate & other changes - - (1,448) 2,156 Projected benefit obligation at end of year $253,540 $243,096 $43,983 $41,194 Change in plan assets Fair value of plan assets at beginning of year $190,960 $195,328 $38,117 $36,921 Actual return on plan assets 11,190 6,070 3,464 1,113 Employer contribution 244 5,750 1,115 1,196 Benefits paid (16,189) (16,188) (1,545) (1,638)Foreign currency exchange rate - - (1,486) 525 Fair value of plan assets at end of year $186,205 $190,960 $39,665 $38,117 Funded Status $(67,335) $(52,136) $(4,318) $(3,077)Amounts recognized in the consolidated balance sheets consist of: Prepaid Benefit Cost $- $- $3,919 $4,759 Current liabilities (211) (219) (213) (1,926)Non-current liabilities (67,124) (51,917) (8,024) (5,910)Net amount recognized $(67,335) $(52,136) $(4,318) $(3,077) Unrecognized net actuarial loss $135,779 $121,281 $6,405 $4,778 Unrecognized prior service cost - - (42) (45)Accumulated other comprehensive income, pre-tax $135,779 $121,281 $6,363 $4,733 64 The accumulated benefit obligation for all defined benefit pension plans was $297.4 million and $283.9 million at June 30, 2019 and 2018, respectively. The estimated actuarial net loss for the defined benefit pension plans that will be amortized from accumulated other comprehensive income into netperiodic benefit cost over the next fiscal year is $5.8 million. Plan Assets and Assumptions The fair values of the Company’s pension plan assets at June 30, 2019 and 2018 by asset category, as classified in the three levels of inputs described inNote 1 under the caption Fair Value of Financial Instruments, are as follows (in thousands): June 30, 2019 Total Level 1 Level 2 Level 3 Cash and cash equivalents $7,696 $439 $7,257 $- Common and preferred stocks 86,415 1,866 84,549 - U.S. Government securities 9,161 - 9,161 - Corporate bonds and other fixed income securities 97,627 7,163 90,464 - Other 24,971 - 24,971 - $225,870 $9,468 $216,402 - June 30, 2018 Total Level 1 Level 2 Level 3 Cash and cash equivalents $4,482 $325 $4,157 - Common and preferred stocks 89,934 16,353 73,581 - U.S. Government securities 14,461 - 14,461 - Corporate bonds and other fixed income securities 102,105 6,711 95,394 - Other 18,095 - 18,095 - $229,077 $23,389 $205,688 - Asset allocation at June 30, 2019 and 2018 and target asset allocations for 2019 are as follows: U.S. Plans Foreign Plans Year Ended June 30, Year Ended June 30, Asset Category 2019 2018 2019 2018 Equity securities 31% 33% 20% 20%Debt securities 35% 33% 41% 44%Global balanced securities 24% 24% 37% 35%Other 10% 10% 2% 1%Total 100% 100% 100% 100% 2019 Asset Category – Target U.S. U.K. Equity securities 32% 17%Debt and market neutral securities 33% 42%Global balanced securities 25% 40%Other 10% 1%Total 100% 100% Our investment policy for the U.S. pension plans targets a range of exposure to the various asset classes. Standex rebalances the portfolio periodicallywhen the allocation is not within the desired range of exposure. The plan seeks to provide returns in excess of the various benchmarks. The benchmarksinclude the following indices: S&P 500; Citigroup PMI EPAC; Citigroup World Government Bond and Barclays Aggregate Bond. A third-party investmentconsultant tracks the plan’s portfolio relative to the benchmarks and provides quarterly investment reviews which consist of a performance and riskassessment on all investment managers and on the portfolio. 65 Certain managers within the plan use, or have authorization to use, derivative financial instruments for hedging purposes, the creation of marketexposures and management of country and asset allocation exposure. Currency speculation derivatives are strictly prohibited. Year Ended June 30201920182017 Plan assumptions - obligations Discount rate 0.24 - 3.70% 0.38 - 4.40% 1.90 - 4.00% Rate of compensation increase 3.20% 3.60% 3.70% Plan assumption - cost Discount rate 0.38 - 4.40% 0.43 - 4.00% 1.50 - 4.00% Expected return on assets 2.45 - 7.00% 2.55 - 7.00% 3.75 - 7.10% Rate of compensation increase 3.60% 3.70% 3.30% Included in the above are the following assumptions relating to the obligations for defined benefit pension plans in the United States at June 30, 2019; adiscount rate of 3.7% and expected return on assets of 7.0%. The U.S. defined benefit pension plans represent the majority of our pension obligations.The expected return on plan assets assumption is based on our expectation of the long-term average rate of return on assets in the pension funds and isreflective of the current and projected asset mix of the funds. The discount rate reflects the current rate at which pension liabilities could be effectivelysettled at the end of the year. The discount rate is determined by matching our expected benefit payments from a stream of AA- or higher bonds availablein the marketplace, adjusted to eliminate the effects of call provisions. Expected benefit payments for all plans during the next five years are as follows: 2020, $17.8 million; 2021, $17.4 million; 2022, $17.9 million; 2023, $17.8million; 2024, $17.8 million and five years thereafter, $87.5 million. The Company expects to make $5.4 million of contributions to its pension plans in 2020. The Company operates defined benefit plans in Germany and Japan which are unfunded. Multi-Employer Pension Plans We contribute to two multiemployer defined benefit plans under the terms of collective bargaining agreements that cover our union-representedemployees. These plans generally provide for retirement, death and/or termination benefits for eligible employees within the applicable collectivebargaining units, based on specific eligibility/participation requirements, vesting periods and benefit formulas. The risks of participating in thesemultiemployer plans are different from single-employer plans in the following aspects: ●Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers. ●If a participating employer stops contributing to the multiemployer plan, the unfunded obligations of the plan may be borne by the remainingparticipating employers. ●If we choose to stop participating in some of our multiemployer plans, we may be required to pay those plans an amount based on theunderfunded status of the plan, referred to as a withdrawal liability. However, cessation of participation in a multiemployer plan andsubsequent payment of any withdrawal liability is subject to the collective bargaining process. The following table outlines the Company’s participation in multiemployer pension plans for the periods ended June 30, 2019, 2018, and 2017 , and setsforth the yearly contributions into each plan. The “EIN/Pension Plan Number” column provides the Employer Identification Number (“EIN”) and thethree-digit plan number. The most recent Pension Protection Act zone status available in 2019 amd 2018 relates to the plans’ two most recent fiscal year-ends. The zone status is based on information that we received from the plans’ administrators and is certified by each plan’s actuary. Among otherfactors, plans certified in the red zone are generally less than 65% funded, plans certified in the orange zone are both less than 80% funded and have anaccumulated funding deficiency or are expected to have a deficiency in any of the next six plan years, plans certified in the yellow zone are less than 80%funded, and plans certified in the green zone are at least 80% funded. The “FIP/RP Status Pending/Implemented” column indicates whether a financialimprovement plan (“FIP”) for yellow/orange zone plans, or a rehabilitation plan (“RP”) for red zone plans, is either pending or has been implemented. Forall plans, the Company’s contributions do not exceed 5% of the total contributions to the plan in the most recent year. 66 Pension Protection Act Expiration Zone Status Contributions Date of Collective EIN/Plan FIP/RP SurchargeBargainingPension Fund Number 20192018 Status 2019 2018 2017 Imposed?AgreementNew England Teamsters andTrucking Industry PensionFund 04-6372430-001 RedRed Yes/Implemented $461 482 $530 NoApr-21 IAM National PensionFund, National Pension Plan 51-6031295-002 GreenGreen N/A 644 638 633 NoOct. 2019 -May 2021 $1,105 1,120 $1,163 Retirement Savings Plans The Company has two primary employee savings plans, one for salaried employees and one for hourly employees. Substantially all of our full-timedomestic employees are covered by these savings plans. Under the provisions of the plans, employees may contribute a portion of their compensationwithin certain limitations. The Company, at the discretion of the Board of Directors, may make contributions on behalf of our employees under the plans.Company contributions were $4.0 million, $3.7 million, and $4.0 million for the years ended June 30, 2019, 2018, and 2017, respectively. At June 30, 2019, thesalaried plan holds approximately 59,000 shares of Company common stock, representing approximately 3.86% of the holdings of the plan. 18. INDUSTRY SEGMENT INFORMATION The Company has determined that it has five reportable segments organized around the types of product sold: • Engraving – provides mold texturizing, slush molding tools, project management and design services, roll engraving, hygiene product tooling,low observation vents for stealth aircraft, and process machinery for a number of industries;• Electronics – manufacturing and selling of electronic components for applications throughout the end-user market spectrum; and• Engineering Technologies – provides net and near net formed single-source customized solutions in the manufacture of engineeredcomponents for the aviation, aerospace, defense, energy, industrial, medical, marine, oil and gas, and manned and unmanned space markets.• Hydraulics – manufacturing and selling of single and double-acting telescopic and piston rod hydraulic cylinders.• Food Service Equipment – an aggregation of five operating segments that manufacture and sell commercial food service equipment; Net sales include only transactions with unaffiliated customers and include no significant intersegment or export sales. Operating income by segmentand geographic area excludes general corporate and interest expenses. Assets of the Corporate segment consist primarily of cash, office equipment,and other non-current assets. Given the nature of our corporate expenses, management concluded that it would not presently be appropriate to allocate the expenses associatedwith corporate activities to our operating segments. These corporate expenses include the costs for the corporate headquarters, salaries and wagesfor the personnel in corporate, professional fees related to corporate matters and compliance efforts, stock-based compensation and post-retirementbenefits related to our corporate executives, officers and directors, and other compliance related costs. The Company has a process to allocate andrecharge certain direct costs to the operating segments when such direct costs are administered and paid at corporate. Such direct expenses that arerecharged on an intercompany basis each month include such costs as insurance, workers’ compensation programs, audit fees and pension expense. The accounting policies applied by the reportable segments are the same as those described in the Summary of Accounting Policies footnote to theconsolidated financial statements. There are no differences in accounting policies which would be necessary for an understanding of the reportedsegment information. 67 Industry Segments (in thousands) Net Sales Depreciation and Amortization 2019 2018 2017 2019 2018 2017 Engraving $149,693 $136,275 $105,943 $8,232 $5,483 $3,100 Electronics 204,073 196,291 136,689 11,751 10,564 4,960 Engineering Technologies 105,270 90,781 90,506 5,963 6,006 5,976 Hydraulics 53,943 48,169 41,150 708 750 730 Food Service Equipment 278,600 298,936 273,597 3,825 3,493 2,704 Corporate and Other - - - 402 400 343 Total $791,579 $770,452 $647,885 $30,881 $26,696 $17,813 Income (Loss) From Operations Capital Expenditures(1) 2019 2018 2017 2019 2018 2017 Engraving $23,996 $29,618 $26,139 $13,868 $9,339 $7,807 Electronics 41,227 45,501 27,855 12,646 8,487 4,000 Engineering Technologies 11,169 6,506 9,758 3,857 3,581 6,510 Hydraulics 8,891 7,398 6,802 935 1,394 1,058 Food Service Equipment 22,773 28,131 23,633 3,143 2,544 4,097 Restructuring charge (1,635) (6,964) (5,761) - - - Acquisition-related costs (3,075) (3,749) (7,843) - - - Other operating income (expense), net (500) - - - - - Corporate (24,729) (26,430) (23,664) 57 258 418 Total $78,117 $80,011 $56,919 $34,506 $25,603 $23,890 Interest expense (10,760) (8,029) (4,043) Other, net (1,744) (1,735) (1,917) Income from continuing operations beforeincome taxes $65,613 $70,247 $50,959 (1)Includes capital expenditures in accounts payable of $3.8 million, $0.4 million, and $0.4 million at June 30, 2019, 2018, and 2017 respectively. Goodwill Identifiable Assets 2019 2018 2019 2018 Engraving $79,392 $26,697 $233,569 $149,973 Electronics 131,317 113,798 332,326 318,564 Engineering Technologies 43,890 44,247 149,628 150,150 Hydraulics 3,059 3,059 28,132 25,646 Food Service Equipment 23,360 23,453 159,656 149,743 Corporate & Other 485 497 18,578 23,031 Discontinued Operations - 99,830 Total $281,503 $211,751 $921,889 $916,937 Net sales (2) 2019 2018 2017 United States $520,908 $495,211 $415,893 Asia Pacific 108,667 108,569 86,480 EMEA (3) 144,636 149,249 124,990 Other Americas 17,368 17,423 20,522 Total $791,579 $770,452 $647,885 (2)Net sales were identified based on geographic location where our products and services were initiated. (3)EMEA consists primarily of Europe, Middle East and S. Africa. 68 Long-lived assets 2019 2018 2017 United States $81,122 $77,250 $76,317 Asia Pacific 35,033 30,911 30,268 EMEA (4) 27,160 25,709 15,816 Other Americas 4,709 3,064 2,711 Total $148,024 $136,934 $125,112 (4)EMEA consists primarily of Europe, Middle East and S. Africa. 19. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) The unaudited quarterly results of operations for the years ended June 30, 2019 and 2018 are as follows (in thousands, except for per share data): 2019 First Second Third Fourth Net sales $193,080 $195,522 $193,771 $209,206 Gross profit 69,252 66,936 61,790 70,082 Net income 15,857 13,398 26,269 12,390 EARNINGS PER SHARE (1) Basic $1.25 $1.06 $2.09 $1.00 Diluted $1.24 $1.05 $2.09 $0.99 2018 First Second Third Fourth Net sales $189,142 $185,694 $192,147 $203,469 Gross profit 65,671 63,317 66,112 74,502 Net income 13,998 (2,806) 12,800 12,612 EARNINGS PER SHARE (1) Basic $1.10 $(0.22) $1.01 $0.99 Diluted $1.09 $(0.22) $1.00 $0.99 (1)Basic and diluted earnings per share are computed independently for each reporting period. Accordingly, the sum of the quarterly earnings pershare amounts may not agree to the year-to-date amounts. 20. DISCONTINUED OPERATIONS In pursuing our business strategy, the Company continues to divest certain businesses and record activities of these businesses as discontinuedoperations. During the first quarter of 2019, in order to focus its financial assets and managerial resources on its remaining portfolio of businesses, the Companydecided to divest its Cooking Solutions Group, which consisted of three operating segments and a minority interest investment. In connection with thedivestiture, during the second quarter of 2019, the Company sold its minority interest investment to the majority shareholders. During the third quarter offiscal 2019, the Company entered into a definitive agreement to sell the three operating segments to the Middleby Corporation for a cash purchase priceof $105 million, subject to post-closing adjustments and various transaction fees. The transaction closed on March 31, 2019 and resulted in a pre-tax gain of $20.5 million less related transaction expenses of $4.4 million. The Companyreported a tax benefit related to the sale due to the write-off of deferred tax liabilities related to the Cooking Solutions Group. A cash payment of $106.9million was received on April 1, 2019. The proceeds received were subsequently used to pay down borrowings on our revolving credit facility. 69 Results of the Cooking Solutions Group in current and prior periods have been classified as discontinued operations in the Condensed ConsolidatedFinancial Statements and excluded from the results from continuing operations. Activity related to the Cooking Solutions Group and other discontinuedoperations for the year ended June 30, 2019 and 2018 is as follows (in thousands): Year Ended June 30, 2019 2018 Net Sales $71,451 $97,930 Gain on Sale of Business $20,539 $- Transaction Fees (4,397) - Income from Discontinued Operations $18,900 $6,136 Non-operating Income (Expense) (364) 826 Profit Before Taxes $18,536 $6,962 Benefit (Provision) for Taxes 2,189 (1,701)Net income from Discontinued Operations $20,725 $5,261 Assets and liabilities related to our discontinued operations appear in the condensed consolidated balance sheets are as follows (in thousands): June 30, 2019 June 30, 2018 Accounts receivable $- $14,445 Inventories - 22,923 Prepaid Expenses - 303 Due from Buyer - - Total current assets - 37,671 Property, plant, equipment, net - 7,637 Intangible assets, net - 13,137 Goodwill - 40,011 Other non-current assets - 1,374 Total non-current assets - 62,159 Total Assets - 99,830 Accounts Payable - 10,759 Accrued Liabilities 620 7,897 Income Tax Payable - 9 Total current liabilities 620 18,665 Non-current Liabilities - 50 Total Liabilities 620 18,715 Net Assets $(620) $81,115 21. PROPERTY INSURANCE CLAIM On June 26, 2019, the New Albany, Mississippi warehouse serving the Refrigerated Solutions Group’s Master-Bilt brand experienced a fire thatsubstantially destroyed all contents therein. The warehouse, which was leased, comprises approximately 155,000 square feet. While the adjacentmanufacturing facilities did not suffer any damage, there was approximately $7 million of damage to the Company’s finished goods and approximately $1million related to ancillary handling equipment. The Company has insurance coverage associated with the lost inventory and equipment and hasrecorded an insurance recovery asset, net of an insurance deductible of $0.5 million, as a component of Prepaid Expenses and Other Current Assets onthe Consolidated Balance Sheet. In addition, the Company expects to work with its insurer to recover lost profits associated with business interruption itanticipates experiencing in fiscal year 2020. 70 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and ShareholdersStandex International Corporation Opinion on the financial statements We have audited the accompanying consolidated balance sheets of Standex International Corporation (a Delaware corporation) and subsidiaries (the“Company”) as of June 30, 2019 and 2018, the related consolidated statements of comprehensive income, changes in stockholders’ equity, and cash flowsfor each of the three years in the period ended June 30, 2019, and the related notes (collectively referred to as the “financial statements”). In our opinion,the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2019 and 2018, and the results of itsoperations and its cash flows for each of the three years in the period ended June 30, 2019, in conformity with accounting principles generally accepted inthe United States of America. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’sinternal control over financial reporting as of June 30, 2019, based on criteria established in the 2013 Internal Control—Integrated Framework issued bythe Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated August 27, 2019 expressed an unqualifiedopinion. Basis for opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financialstatements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to theCompany in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and thePCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits includedperforming procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing proceduresthat respond to those risks. Such procedures included examining, on a test basis, evidence supporting the amounts and disclosures in the financialstatements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating theoverall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical audit matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated orrequired to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2)involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinionon the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on thecritical audit matters or on the accounts or disclosures to which they relate. Revenue recognition – Revenue Recognized Over Time As described in Notes 1 and 3 to the consolidated financial statements, the Company’s revenue that is recognized over time was $32.0 million for the yearended June 30, 2019. For these transactions, revenue is recognized over time based on cost incurred to date as a percentage of total estimated cost. Weidentified revenue recognized over time as a critical audit matter. The principal considerations for our determination that this matter is a critical audit matter are as follows. Accounting for these transactions requires theCompany to monitor customer contracts to determine the expected costs to be incurred to satisfy the related performance obligation. Management’sdetermination of these expected costs involves estimation and subjectivity, which, in turn, involved complexity and auditor subjectivity in evaluatingmanagement’s estimates and obtaining sufficient appropriate audit evidence related to such estimates. 71 Our audit procedures related to revenue recognized over time included the following, among others. ●We tested the operating effectiveness of controls relating to management’s development and ongoing evaluation of each contract’sexpected cost. ●For a sample of transactions, we inspected the customer contract and evaluated assumptions used by management in determining thecontract’s estimated expected cost in order to fulfill the performance obligation under the contract. This included comparing plannedcosts to actual costs incurred to date based on management’s original assumptions and corroborating management’s assumptionswith company engineers assigned to the contract. ●For a sample of transactions, we evaluated whether the assumptions surrounding the expected costs to be incurred were reasonableby testing management’s historical ability to estimate. This included comparing actual costs incurred on completed contracts tomanagement’s original assumptions and assumptions throughout the contract’s life related to expected costs to be incurred. Goodwill Impairment Assessment As described in Notes 1 and 6 to the consolidated financial statements, the Company’s consolidated goodwill balance was $282 million at June 30, 2019,which is allocated to the Company’s nine reporting units. Goodwill is tested for impairment at least annually at the reporting unit level. We identified theCompany’s goodwill impairment assessment of certain reporting units as a critical audit matter. The principal considerations for our determination that this matter is a critical audit matter are as follows. The determination of the fair value of reportingunits requires management to make significant estimates and assumptions related to forecasts of future cash flows and discount rates. This requiresmanagement to evaluate historical results and expectations of future operating performance based on relevant information available to them regardingexpectations of industry performance as well as expectations for entity-specific performance. In addition, determining the discount rate requiresmanagement to evaluate the appropriate risk premium based on their judgment of industry and entity-specific risks. As disclosed by management,changes in these assumptions could have a significant impact on either the fair value of the reporting units, the amount of any goodwill impairmentcharge, or both. In turn, auditing management’s judgments regarding forecasts of future cash flows and the discount rate to be applied involved a highdegree of auditor subjectivity. Our audit procedures related to the Company’s goodwill impairment assessment of certain reporting units included the following, among others. ●We tested the design and operating effectiveness of controls relating to management’s goodwill impairment tests, including controlsover the determination of key inputs such as the forecasting of future cash flows and determination of the discount rate. ●We compared management’s forecasts of future revenue and operating margin to third -party industry projections, historical operatingresults, and past projections. ●We evaluated management’s historical ability to achieve forecasted revenue and operating margins. ●We performed sensitivity analysis on the Company’s future revenue and operating margins to evaluate the reasonableness ofmanagement’s forecasts. ●We utilized a valuation specialist to assist in recalculating the Company’s discounted cash flow model and in evaluating thereasonableness of significant assumptions to the model, including the discount rate. /s/ GRANT THORNTON LLP We have served as the Company’s auditor since 2015. Boston, Massachusetts August 27, 2019 72 Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure Not Applicable Item 9A. Controls and Procedures The management of the Company including its Chief Executive Officer, and Chief Financial Officer, have conducted an evaluation of the effectiveness ofthe Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15(d)-15(e) under the Securities Exchange Act of 1934,as amended, (the “Exchange Act”) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and ChiefFinancial Officer concluded as of June 30, 2019, 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, summarized and reported within the timeperiods specified in the Commission's rules and forms and (ii) that such information is accumulated and communicated to the Company’s management,including its Chief Executive Officer and Chief Financial Officer as appropriate to allow timely decisions regarding required disclosure. SEC guidance permits the exclusion of an evaluation of the effectiveness of a registrant's disclosure controls and procedures as they relate to the internalcontrol over financial reporting for an acquired business during the first year following such acquisition. As discussed in Note 2 to the consolidatedfinancial statements contained in this Report, the Company acquired all of the outstanding stock of Tenibac-Graphion Inc., Agile Magnetics Inc., andGenius Solutions Engineering Company. The acquisitions represent approximately 3.5% of the Company's consolidated continuing operations revenuefor the year ended June 30, 2019, and approximately 6.2% of the Company's consolidated assets at June 30, 2019. Management's evaluation andconclusion as to the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of June 30, 2019 excludes anyevaluation of the internal control over financial reporting of Tenibac-Graphion Inc. Agile Magnetics Inc. and the Genius Solutions Engineering Company. There were no changes in the Company’s internal control over financial reporting identified in connection with management’s evaluation that occurredduring the fourth quarter of our fiscal year (ended June 30, 2019) that has materially affected, or is reasonably likely to materially affect our internal controlover financial reporting. Management's Report on Internal Control over Financial Reporting The management of Standex is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Section240.13a-15(f) of the Exchange Act). The Company’s internal control over financial reporting is designed to provide reasonable assurance as to thereliability of the Company’s financial reporting and the preparation of financial statements for external purposes in accordance with generally acceptedaccounting principles. Management, including the Chief Executive Officer and the Chief Financial Officer, assessed the effectiveness of our internalcontrol over financial reporting as of the end of the fiscal year covered by this report on Form 10-K. In making this assessment, management used thecriteria established by the Committee of Sponsoring Organizations of the Treadway Commission in “Internal Control-Integrated Framework (2013).” Thesecriteria are in the areas of control environment, risk assessment, control activities, information and communication and monitoring. Management’sassessment included documenting, evaluating and testing the design and operating effectiveness of our internal control over financial reporting. Based on the Company’s processes, as described above, management, including the Chief Executive Officer and the Chief Financial Officer, hasconcluded that our internal control over financial reporting was effective as of June 30, 2019 to provide reasonable assurance of achieving its objectives.These results were reviewed with the Audit Committee of the Board of Directors. Grant Thornton, LLP, the independent registered public accounting firmthat audited our consolidated financial statements included in this Annual Report on Form 10-K, has issued an unqualified attestation report on theCompany’s internal control over financial reporting, which is included below. Inherent Limitation on Effectiveness of Controls No matter how well designed, internal control over financial reporting has inherent limitations. Internal control over financial reporting determined to beeffective can provide only reasonable, not absolute, assurance with respect to financial statement preparation and may not prevent or detect allmisstatements that might be due to error or fraud. In addition, a design of a control system must reflect the fact that there are resource constraints, andthe benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls canprovide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. 73 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and ShareholdersStandex International Corporation Opinion on internal control over financial reportingWe have audited the internal control over financial reporting of Standex International Corporation (a Delaware corporation) and subsidiaries (the“Company”) as of June 30, 2019, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee ofSponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained, in all material respects, effective internalcontrol over financial reporting as of June 30, 2019, 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) (“PCAOB”), theconsolidated financial statements of the Company as of and for the year ended June 30, 2019, and our report dated August 27, 2019 expressed anunqualified opinion on those financial statements. Basis for opinionThe Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectivenessof internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting(“Management’s Report”). Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. Weare a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit includedobtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating thedesign and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary inthe circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit of, and opinion on, the Company’s internal control over financial reporting does not include the internal control over financial reporting ofGenius Solutions Engineering Company (“GS Engineering”), Regional Mfg. Specialists, Inc. (“Agile Magnetics”), and Tenibac-Graphion, Inc. (“Tenibac”),three wholly-owned subsidiaries, whose financial statements reflect total assets and revenues constituting 6.2 percent and 3.5 percent, respectively, ofthe related consolidated financial statement amounts as of and for the year ended June 30, 2019. As indicated in Management’s Report, GS Engineering,Agile Magnetics, and Tenibac were acquired during 2019. Management’s assertion on the effectiveness of the Company’s internal control over financialreporting excluded internal control over financial reporting of GS Engineering, Agile Magnetics, and Tenibac. Definition and limitations of internal control over financial reportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internalcontrol over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accuratelyand fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expendituresof the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a materialeffect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluationof effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree ofcompliance with the policies or procedures may deteriorate. /s/ GRANT THORNTON LLP Boston, Massachusetts August 27, 2019 74 Item 9B. Other Information None PART III Item 10. Directors, Executive Officers and Corporate Governance The Company will file with the Securities and Exchange Commission (“SEC”) a definitive Proxy Statement no later than 120 days after the close of thefiscal year ended June 30, 2019 (the “Proxy Statement”). The information required by this item and not provided in Part 1 of this report under Item 1“Executive Officers of Standex” is incorporated by reference from the Proxy Statement under the captions “Election of Directors,” “Stock Ownership inthe Company,” “Other Information Concerning the Company, Board of Directors and its Committees” and “Section 16(a) Beneficial Ownership ReportingCompliance.” There have been no material changes to the procedures by which security holders may recommend nominees to our Board of Directors. Informationregarding the process for identifying and evaluating candidates for director are set forth and incorporated in reference to the information in the ProxyStatement under the caption “Corporate Governance/Nominating Committee Report.” Information regarding the Audit Committee Financial Expert and the identification of the Audit Committee is incorporated by reference to the informationin the Proxy Statement under the caption “Other Information Concerning the Company, Board of Directors and its Committee, Audit Committee.” TheAudit Committee is established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act. We maintain a corporate governance section on our website, which includes our code of ethics for senior financial management that applies to our chiefexecutive officer, principal financial officer, principal accounting officer, controller or persons performing similar functions. Our corporate governancesection also includes our code of business conduct and ethics for all employees. In addition, we will promptly post any amendments to or waivers of thecode of ethics for senior financial management on our website. You can find this and other corporate governance information at www.standex.com. Item 11. Executive Compensation Information regarding executive compensation is incorporated by reference from the Proxy Statement under the captions and sub-captions: “ExecutiveCompensation,” “Compensation Discussion and Analysis,” “Compensation Committee Report,” “2019 Summary Compensation Table,” “OtherInformation Concerning the Company, Board of Directors and Its Committees,” and “Directors Compensation.” Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The stock ownership of each person known to Standex to be the beneficial owner of more than 5% of its Common Stock is incorporated by reference inthe Proxy Statement under the caption “Stock Ownership of Certain Beneficial Owners.” The beneficial ownership of Standex Common Stock of alldirectors and executive officers of the Company is incorporated by reference in the Proxy Statement under the caption and sub-caption “StockOwnership in the Company” and “Stock Ownership by Directors, Nominees for Director and Executive Officers,” respectively. 75 The Equity Compensation Plan table below represents information regarding the Company’s equity based compensation plan at June 30, 2019. (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(Excluding Plan Category Warrants And Rights Warrants And Rights Securities reflected in Column (A)) 2008 Equity compensation plan approved bystockholders 218,852 $9.93 92,717 2018 Omnibus Equity compensation planapprove by stockholders 14,284 $- 485,716 Equity compensation plans not approved bystockholders - $- - Total 233,136 $9.93 578,433 The Company has one equity compensation plan, approved by stockholders, under which equity securities of the Company have been authorized forissuance to employees and non-employee directors. This plan is further described in the “Notes to Consolidated Financial Statements” under theheading “Stock-Based Compensation and Purchase Plans.” Item 13. Certain Relationships and Related Transactions and Director Independence Information regarding certain relationships and related transactions is incorporated by reference in the Proxy Statement under the caption and sub-caption “Certain Relationships and Related Transactions” And “Stock Ownership by Directors, Nominees for Director and Executive Officers,”respectively. Information regarding director independence is incorporated by reference in the Proxy Statement under the caption “Election of Directors - Determinationof Independence.” Item 14. Principal Accountant Fees and Services This Information in addition to information regarding aggregate fees billed for each of the last two fiscal years for professional services rendered by theprofessional accountant for audit of the Company’s annual financial statements and review of financial statements included in the Company’s Form 10-Kas well as others are incorporated by reference in the Proxy Statement under the caption “Independent Auditors’ Fees.” PART IV Item 15. Exhibits and Financial Statement Schedules (a)1.Financial Statements Financial Statements covered by the Reports of Independent Registered Public Accounting Firm (A)Consolidated Statements of Operations for the fiscal years ended June 30, 2019, 2018 and 2017 (B)Consolidated Balance Sheets as of June 30, 2019 and 2018 (C)Comprehensive Income for the fiscal years ended June 30, 2019, 2018 and 2017 (D)Consolidated Statements of Stockholders’ Equity for the fiscal years ended June 30, 2019, 2018 and 2017 (E)Consolidated Statements of Cash Flows for the fiscal years ended June 30, 2019, 2018 and 2017 (F)Notes to Consolidated Financial Statements 2.Financial Statements Schedule The following financial statement schedule is included as required by Item 8 to this report on Form 10-K Schedule II – Valuation and Qualifying Accounts is included in the Notes to Consolidated Financial Statements All other schedules are not required and have been omitted 76 3.Exhibits Incorporated Exhibit by ReferenceFiledNumber Exhibit Description FormDateHerewith (b)3.(i)Restated Certificate of Incorporation of Standex, dated October 27, 1998 filed as Exhibit3(i). 10-Q12/31/1998 (ii)By-Laws of Standex, as amended, and restated effective January 30, 2015 filed as Item 5.03,Exhibit 3.1 8-K2/4/2015 10.(a)Employment Agreement dated January, 20, 2014 between the Company and David Dunbar* 10-K6/30/2016 (b)Amended and Restated Employment Agreement dated August 25, 2010 between theCompany and Thomas D. DeByle* 10-K6/30/2010 (c)Employment Agreement dated April 4, 2016 between the Company and Alan J. Glass* 10-K6/30/2016 (d)Employment Agreement dated August 26, 2019 between the Company and AnnemarieBell* X (e)Employment Agreement dated July 27, 2015 between the Company and Paul Burns* 10-K6/30/2016 (f)Standex International Corporation Amended and And Restated 2008 Long Term IncentivePlan, effective October 28, 2008. Filed as Exhibit 10.* 10-K6/30/2012 (g)Standex International Corporation Executive Life Insurance Plan effective April 27, 1994and as Amended and restated on April 25, 2001 filed as Exhibit 10(k).* 10-K6/30/2001 (h)Standex International Corporation Supplemental Retirement Plan adopted April 26, 1995and Amended on July 26, 1995 filed as Exhibit 10(n).* 10-K6/30/1995 (i)Form of Indemnification Agreement for directors and executive officers of the Companyfiled as Item 1.01, Exhibit 10.* 8-K5/5/2008 (j)2018 Omnibus Incentive Plan 8-K10/29/2018 (k)Standex Deferred Compensation Plan for highly compensated employees filed as Item5.02.* 8-K1/31/2008 (l)Code of Ethics for Chief Executive Officer and Senior Financial Officers is incorporated byreference as Exhibit 14. 10-K6/30/2004 (m)Amended and Restated Credit Agreement Dated December 19, 2014 by and amongStandex International Corporation, Citizens Bank, N.A.; Bank of America, N.A.; TD Bank,N.A.; JPMorgan Chase Bank, N.A.; Branch Banking & Trust Company and SantanderBank, N.A. Filed as Item 1.01, Exhibit 10 8-K12/19/2014 77 (n)Stock Purchase Agreement dated as of October 17, 2016 by and among StandexInternationalCorporation, as buyer, and Gregory J. Deutschmann, as sellers, of Horizon Scientific, Inc.,filed as Exhibit 10 10-Q9/30/2016 (o)Share Purchase Agreement dated as of February 2, 2017 by Mold-Tech Singapore Pte. Ltd.a subsidiary of Standex International Corporation, as buyer and Oki Electric Industry Co.,Ltd. as sellers, of all Outstanding stock of Oki Sensor Device Corporation (Englishtranslation of Japanese original document) 10-Q3/31/2017 (p)Standex International Long-Term Incentive Plan Award X 21. Subsidiaries of Standex International Corporation X 23.1 Consent of Independent Registered Public Accounting Firm Grant Thornton LLP X 24. Powers of Attorney of Charles H. Cannon, Thomas E. Chorman, Jeffrey S. Edwards, B.Joanne Edwards, Thomas J. Hansen, Michael A. Hickey and Daniel B. Hogan X 31.1 Rule 13a-14(a) Certification of President and Chief Executive Officer X 31.2 Rule 13a-14(a) Certification of Vice President and Chief Financial Officer X 32. Section 1350 Certification X 101.INSXBRL Instance Document101.SCHXBRL Taxonomy Extension Schema Document101.CALXBRL Taxonomy Extension Calculation Linkbase Document101.DEFXBRL Taxonomy Extension Definition Linkbase Document101.LABXBRL Taxonomy Extension Label Linkbase Document101.PREXBRL Taxonomy Extension Presentation Linkbase Document * Management contract or compensatory plan or arrangement. 78 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Standex International Corporation has duly caused thisAnnual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, on August 27, 2019. STANDEX INTERNATIONAL CORPORATION(Registrant) /s/ DAVID DUNBAR David Dunbar President/Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of StandexInternational Corporation and in the capacities indicated on August 27, 2019: Signature Title /s/ DAVID DUNBAR President/Chief Executive OfficerDavid Dunbar /s/ THOMAS D. DEBYLE Vice President/Chief Financial OfficerThomas D. DeByle /s/ SEAN VALASHINAS Chief Accounting Officer / Assistant TreasurerSean Valashinas David Dunbar, pursuant to powers of attorney which are being filed with this Annual Report on Form 10-K, has signed below on August 27, 2019 asattorney-in-fact for the following directors of the Registrant: Charles H. CannonThomas J. HansenThomas E. ChormanMichael A. HickeyB. Joanne EdwardsDaniel B. HoganJeffrey S. Edwards /s/ DAVID DUNBAR David Dunbar Supplemental Information to be furnished with reports filed pursuant to Section 15(d) of the Act by Registrants which have not registered securitiespursuant 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 the annual report on this Form.Copies of such material shall be furnished to the Commission when they are sent to security holders. 79 INDEX TO EXHIBITS 21Subsidiaries of Standex 23Consent of Independent Registered Public Accounting Firm Grant Thornton LLP 24Powers of Attorney of Charles H. Cannon, Thomas E. Chorman, B. Joanne Edwards, Jeffrey S.Edwards, Thomas J. Hansen, Michael A. Hickey and Daniel B. Hogan. 31.1Rule 13a-14(a) Certification of President and Chief Executive Officer 31.2Rule 13a-14(a) Certification of Vice President and Chief Financial Officer 32Section 1350 Certification END OF FORM 10-K SUPPLEMENTAL INFORMATION FOLLOWS Board of DirectorsTitle Charles H. Cannon, Jr., 1, 2, 4Retired Chairman and CEO, JBT Corporation Thomas E. Chorman 1, 2, 3, 4CEO, Foam Partners LLC David Dunbar 4President and Chief Executive Officer; Chairman of the Board Jeffrey S Edwards 2, 3Chairman and Chief Executive Officer, Cooper Standard Holdings, Inc. B. Joanne Edwards 1,3Retired Senior Vice President & General Manager, Residential & Wiring Device Business,Eaton Corporation Thomas J. Hansen 1Former Vice Chairman of Illinois Tool Works, Inc. Michael A. Hickey2,4Executive Vice President and President of the Global Institutional Business, Ecolab Inc. Daniel B. Hogan, Ph. D. 3Executive Director, Passim Folk Music and Cultural Center ________________________1 Member of Audit Committee2 Member of Compensation Committee3 Member of Corporate Governance/Nominating Committee4 Member of Executive Committee Corporate Officers David DunbarPresident and Chief Executive OfficerThomas D. DeByleVice President, Chief Financial Officer and TreasurerAlan J. GlassVice President, Chief Legal Officer and SecretaryStacey S. ConstasCorporate Governance Officer and Assistant SecretarySean ValashinasChief Accounting Officer and Assistant TreasurerChristopher J. SeilerTax DirectorAnnemarie BellVice President, Human ResourcesPaul BurnsVice President of Strategy and Business Development 80 Shareholder Information Corporate HeadquartersStandex International Corporation 11 Keewaydin Drive, Suite 300 Salem, NH 03079 (603) 893-9701 Facsimile: (603) 893-7324 www.standex.com Common StockListed on the New York Stock Exchange (Ticker symbol: SXI) Transfer Agent and RegistrarComputershare 250 Royall Street Canton, MA 07021 (800) 368-5948 www.Computershare.com Independent AuditorsGrant Thornton LLP 75 State Street, 13th Floor Boston, MA 02109-1827 Shareholder ServicesStockholders 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. Stockholders’ MeetingThe Annual Meeting of Stockholders will be held at 9:00 a.m. on Tuesday, October 22, 2019at Standex International Corporation’s Corporate Headquarters, 11 Keewaydin Drive 3rdFloor, Salem, NH 03079 81

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