UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended JUNE 29, 2002 Commission File No. 1-367
THE L.S. STARRETT COMPANY
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-1866480
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
121 CRESCENT STREET, ATHOL, MASSACHUSETTS 01331
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 978-249-3551
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Class A Common - $1.00 Per Share Par Value New York Stock Exchange
Class B Common - $1.00 Per Share Par Value Not applicable
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.
Yes No X
The Registrant had 5,154,160 and 1,390,621 shares, respectively, of its $1.00
par value Class A and B common stock outstanding on July 26, 2002. On that
date, the aggregate market value of the common stock held by nonaffiliates was
approximately $155,000,000.
The exhibit index is located on page 22.
Documents incorporated by reference
Definitive Proxy Statement dated August 16, 2002 - Part III
PART I
Item I - Business
The Company was founded in 1880 and incorporated in 1929 and is engaged in the
business of manufacturing industrial, professional, and consumer products. The
total number of different items made and sold by the Company exceeds 5,000.
Among the items produced are precision tools, tape measures, levels,
electronic gages, dial indicators, gage blocks, digital readout measuring
tools, granite surface plates, optical measuring projectors, coordinate
measuring machines, vises, M1 lubricant, hacksaw blades, hole saws, band saw
blades, jig saw blades, reciprocating saw blades, and precision ground flat
stock. Much of the Company's production is concentrated in hand measuring
tools (such as micrometers, steel rules, combination squares and many other
items for the individual craftsman) and precision instruments (such as vernier
calipers, height gages, depth gages and measuring instruments that
manufacturing companies buy for the use of their employees).
These tools and instruments are sold throughout the United States and Canada
and over 100 foreign countries, primarily to distributors. By far the largest
consumer of these products is the metalworking industry, but other important
consumers are automotive, aviation, marine and farm equipment shops,
do-it-your-selfers and tradesmen such as builders, carpenters, plumbers and
electricians. One retailer, Sears, accounted for approximately 14% of the
Company's sales in fiscal 2002.
Most of the Company's products are made from steel purchased from steel mills.
Forgings, castings, and a few small finished parts are purchased from other
manufacturers. Raw materials have always been readily available to the Company
and, in most cases, the Company does not rely on sole sources. In the event of
unavailability of purchased materials, the Company would be adversely
affected, as would its competitors. Similarly, the ability of the Company to
pass along raw material price increases is dependent on the competitive
situation and cannot be assured.
At June 29, 2002, the Company had 2,309 employees, approximately 70% of whom
were domestic. None of the Company's operations are subject to collective
bargaining agreements. In general, the Company considers its relations with
its employees to be excellent. Because of various stock ownership plans,
Company domestic personnel hold a large share of Company stock and this dual
role of owner-employee has been good for morale over the years.
The Company is one of the largest producers of mechanics' hand measuring tools
and precision instruments. In the United States, there are three other major
companies and numerous small competitors in the field, including direct
foreign competitors. As a result, the industry is highly competitive. During
the fiscal year ended June 29, 2002, there were no material changes in the
Company's competitive position. During recent years, changes in the volume of
sales of the Company have, in general, corresponded with changes throughout
the industry. In saws and precision ground flat stock, the Company in the
United States competes with many manufacturers. The Company competes
principally through the high quality of its products and the service it
provides its customers.
The operations of the Company's foreign subsidiaries are consolidated in its
financial statements. The subsidiaries located in Brazil, Scotland, and China
are actively engaged in the manufacture of hacksaw and band saw blades and a
limited line of precision tools and measuring tapes. A subsidiary in Australia
and a subsidiary in Germany are engaged in distribution of the Company's
products. The Company expects its foreign subsidiaries to continue to play a
significant role in its overall operations. A summary of the Company's foreign
operations is contained in the footnotes to the Company's fiscal 2002
financial statements under the caption "OPERATING DATA" found in item 8 of
this Form 10-K and is hereby incorporated by reference.
The Company generally fills orders from finished goods inventories on hand.
Sales order backlog of the Company at any point in time is negligible. Total
inventories amounted to $76,622,000 at June 29, 2002, and $84,834,000 at June
30, 2001. The Company uses the last-in, first-out (LIFO) method of valuing
most inventories, which results in more realistic operating costs and profits.
Inventory amounts are $23,835,000 and $22,685,000 lower, respectively, than if
determined on a first-in, first-out (FIFO) basis.
The Company does apply for patent protection on new inventions and presently
owns a number of patents. Its patents are considered important in the
operation of the business, but no single patent is of material importance when
viewed from the standpoint of its overall business. The Company relies on its
continuing product research and development efforts, with less dependence on
its present patent position. It has for many years maintained engineers and
supporting personnel engaged in research, product development, and related
activities. The expenditures for these activities during fiscal years 2002,
2001 and 2000 were approximately $2,727,000, $2,663,000 and $3,111,000,
respectively, all of which was expensed in the Company's financial statements.
The Company uses trademarks with respect to its products. All of its
important trademarks are registered.
Compliance with federal, state and local provisions that have been enacted or
adopted regulating the discharge of materials into the environment or
otherwise relating to protection of the environment is not expected to have a
material effect on the capital expenditures, earnings and competitive position
of the Company. Specifically, the Company has taken steps to reduce and
control water discharges and air emissions.
The Company's business is to a small extent seasonal, with sales and earnings
generally at the lowest level during the first and third quarters of the
fiscal year.
Item 2 - Properties
The Company's principal plant is located in Athol, Massachusetts on about 15
acres of Company-owned land. The plant consists of 25 buildings, mostly of
brick construction of varying dates, with approximately 535,000 square feet of
production and storage area. An additional 9,000 square feet of leased space
in Gardner, Massachusetts is considered part of this plant.
The Webber Gage Division, Cleveland, Ohio, owns and occupies two buildings
totaling approximately 50,000 square feet.
The Company-owned facility in Mt. Airy, North Carolina consists of two
buildings totaling approximately 356,000 square feet. It is occupied by the
Company's Saw Division, Granite Surface Plate Division, Coordinate Measuring
Machine/Optical Comparator Division, and Ground Flat Stock Division.
The Company's Evans Rule Division, located in North Charleston, South
Carolina, owns and occupies a 173,000 square foot building. In addition, this
division leases 35,000 square feet of manufacturing space in Mayaguez, Puerto
Rico.
The Company's Exact Level Division is located in Alum Bank, Pennsylvania and
owns and occupies a 50,000 square foot building.
The Company's subsidiary in Itu, Brazil owns and occupies several buildings
totaling 209,000 square feet. The Company's subsidiary in Jedburgh, Scotland
owns and occupies a 187,000 square foot building and also a 33,000 square foot
building in Skipton, England, where its wholly owned subsidiary manufactures
optical measuring projectors. Two wholly owned subsidiaries in the Shanghai
area of the People's Republic of China lease approximately 40,000 square feet
and 2,000 square feet.
In addition, the Company operates warehouses/sales-support offices in
Glendale, Arizona; Elmhurst, Illinois; Atlanta, Georgia; Mississauga, Canada;
Sydney, Australia; and Schmitten, Germany.
In the Company's opinion, all of its property, plant and equipment is in good
operating condition, well maintained and adequate for its needs.
Item 3 - Legal Proceedings
The Company is not involved in any material pending legal proceedings.
Item 4 - Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year ended June 29, 2002.
PART II
Item 5 - Market for the Registrant's Common Equity and Related
Stockholder Matters
The Company's Class A common stock is traded on the New York Stock Exchange.
Quarterly dividend and high/low closing market price information is presented
in the table below. The Company's Class B common stock is generally
nontransferable, except to lineal descendants, and thus has no established
trading market, but it can be converted into Class A common stock at any time.
The Class B common stock was issued on October 5, 1988, and the Company has
paid the same dividends thereon as have been paid on the Class A common stock
since that date. At July 26, 2002, there were 1,997 registered holders of
Class A common stock and 1,682 registered holders of Class B common stock.
Quarter ended Dividends High Low
September 2000 $ 0.20 $ 19.44 $ 16.88
December 2000 0.20 22.94 16.69
March 2001 0.20 23.85 19.75
June 2001 0.20 22.74 17.45
September 2001 0.20 20.85 18.00
December 2001 0.20 21.15 18.95
March 2002 0.20 21.82 19.00
June 2002 0.20 25.25 21.20
Item 6 - Selected Financial Data
Years ended in June ($000 except per share data)
2002 2001 2000 1999 1998
Net sales $184,346 $225,857 $235,169 $232,385 $262,340
Net earnings(loss) (380) 8,097 11,489 16,696 23,009
Basic earnings(loss)per share (0.06) 1.26 1.73 2.44 3.34
Diluted earnings(loss)per shr. (0.06) 1.25 1.73 2.44 3.33
Long-term debt 7,000 7,000 3,000 3,300 3,900
Total assets 239,097 248,532 250,418 245,728 250,263
Dividends per share 0.80 0.80 0.80 0.80 0.77
Items 7 and 7A- Management's Discussion and Analysis of Financial Condition
and Results of Operations and Quantitative and Qualitative
Disclosure about Market Risk
RESULTS OF OPERATIONS
SALES
Sales decreased 18% in fiscal 2002 following a 4% decrease in fiscal 2001.
The 2002 decrease is both domestic and foreign, 18% and 20%, respectively,
although foreign sales were only down 10% in fiscal 2002 when measured in
local currencies. In fiscal 2001, the 4% decrease was made up of a 5%
decrease on the domestic side and a 1% decrease on the foreign side (7%
increase in local currencies). Worldwide economic conditions continue to
adversely affect business, although fourth quarter 2002 sales were not down
as much (15%) as year to date. For the past three years, sales of our
Scotland subsidiary have been adversely affected by the weak euro as
compared to the British pound, which hurts business in terms of export
pricing and import price competition. The devaluation of Brazil's currency
accounts for about 1/4 of the current year's overall sales decrease of 18%.
The current year decrease in domestic sales reflects the weak U.S.
industrial manufacturing sector.
EARNINGS (LOSS) BEFORE TAXES
Primarily because of sales volume, pretax earnings dropped $12.7 million in
2002 to a loss of $(1.2) million. 2001 sales were 34% below 2000. Cost of
sales was 75.6% in 2002, 71.1% in 2001, and 71.7% in 2000. Changes in these
rates are mainly impacted by the manufacturing efficiencies that are gained
or lost as a result of increased or decreased production levels, but also by
pricing, product mix, and overhead spending. The cost of sales percent was
adversely affected in 2002 by production levels about 5% lower than sales
levels. Production levels were about 5% higher than sales in 2001. Selling
and general expenses were reduced 12% in 2002 but as a percent of sales
increased slightly from 23.1% to 24.9% because sales dropped more. In 2001,
selling and general expenses actually increased despite the slight drop in
sales due to increased expenditures on advertising, information technology,
and employee benefits. Although fringe benefit costs were favorably affected
in 2002 ($800,000) due to our overfunded pension plan, this was offset by
nonrecurring employee severence costs ($600,000), warranty expenses
($700,000), and bad debts ($400,000).
INCOME TAXES
The effective income tax rate was 69% in 2002 compared to 29% in 2001 and 33%
in 2000. Puerto Rico tax incentives, and somewhat lower foreign income tax
rates all contribute to an overall effective tax rate that is normally
slightly lower than the combined U.S. state and federal rate of approximately
39%. The current year's rate is not easily compared to the prior years because
pretax earnings are so close to breakeven that permanent book/tax differences
get exaggerated when converted to percentages. Nonrecurring permanent
differences between book and taxable income for dividends paid from Brazil to
the U.S. in 2001 and 2000 reduced Brazil's effective tax rate substantially
when reported in U.S. dollars. We were unable to utilize and record the U.S.
tax benefit of the foreign tax credits generated by the 2002 Brazil dividend
and this caused our overall tax provision to be $700,000 higher when compared
to 2001 and 2000. On the other hand, this is offset by the mix of income in
2002, with the more profitable divisions being in the jurisdictions with the
lowest tax rates. Higher than usual foreign tax credits and a refund of prior
year state taxes caused the 2001 overall rate to be lower than in 2000.
EARNINGS (LOSS) PER SHARE
As a result of the above, earnings (loss) per share were $(0.06) in fiscal
2002, $1.26 in 2001, and $1.73 in 2000.
MARKET RISK
Market risk is the potential change in a financial instrument's value caused
by fluctuations in interest and currency exchange rates, and equity and
commodity prices. The Company's operating activities expose it to risks that
are continually monitored, evaluated, and managed. Proper management of
these risks helps reduce the likelihood of earnings volatility. At June 2002
and 2001, the Company was not a party to any derivative arrangement and the
Company does not engage in trading, market-making or other speculative
activities in the derivatives markets. The Company does not enter into long-
term supply contracts with either fixed prices or quantities. The Company
does not engage in regular hedging activities to minimize the impact of
foreign currency fluctuations. Net foreign monetary assets total approximately
$5 million.
A 10% change in interest rates would not have a significant impact on the
aggregate net fair value of the Company's interest rate sensitive financial
instruments (primarily variable rate investments of $8,600,000 and debt of
$8,000,000 at June 29, 2002) or the cash flows or future earnings associated
with those financial instruments. A 10% change in interest rates would impact
the fair value of the Company's fixed rate investments of approximately
$3,500,000 by $25,000.
LIQUIDITY AND CAPITAL RESOURCES
Years ended In June ($000)
2002 2001 2000
Cash provided by operations $17,700 $12,499 $18,822
Cash used in investing activities (10,451) (9,496) (9,267)
Cash used in financing activities (7,435) (3,138) (7,892)
Cash flows from operating activities increased $5 million from 2001, and in
2001 decreased $6 million from 2000. In 2002, decreasing inventories offset
the drop in earnings. Increasing inventories was the main reason for the
reduced cash flow from operations in 2001. "Retirement benefits" under
noncash expenses in the detailed cash flow statement shows the effect on
operating cash flow of the Company's pension and retiree medical plans.
Primarily because the Company's domestic defined benefit plan is overfunded,
retirement benefits in total generated approximately $2.2, $1.4, and $2.9
million of noncash income in 2002, 2001, and 2000 ($.4, ($.9), and $.5
million, respectively, of accrual basis income (expense)).
The Company's investing activities consist of expenditures for plant and
equipment and the investment of cash not immediately needed for operations.
Plant expenditures of $8 million in 2002 were well below the $13 million and
$14 million expended in 2001 and 2000 because of the need to conserve cash
and because our multi-year information technology improvement project was
essentially completed at the end of 2001.
Cash flows from financing activities are primarily the payment of dividends,
which tend to be quite steady from year to year. The Company requires little
debt to finance day to day operations and the proceeds from the sale of stock
under the various stock plans tend to be used to purchase treasury shares.
Treasury share purchases were $1.8 million in 2002 compared to $3.8 million in
2001 and $9.0 million in 2000. Borrowings decreased $4.1 million in 2002 while
increasing $2.4 million in 2001 and $2.8 million in 2000.
The Company maintains sufficient liquidity and has the resources to fund its
operations in the near term. If economic conditions do not improve and the
Company continues to sustain losses, additional steps will have to be taken in
order to maintain liquidity, including further workforce reductions and/or
reducing or eliminating dividends. The Company maintains a $25 million line of
credit but has not made significant borrowings under it during the past three
years. The Company has a working capital ratio of 6.7 to 1 as of June 29, 2002
versus 5.4 to 1 as of June 30, 2001. Cash not immediately required for working
capital is invested in high grade debt instruments as explained in the
accounting policies footnote. Certain cash and investment balances of foreign
subsidiaries may not be repatriated without adverse tax consequences and in
certain cases may be subject to regulatory restriction.
SAFE HARBOR STATEMENT
UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This Annual Report on Form 10-K and the 2002 Annual Report, including the
President's letter to stockholders, include forward-looking statements about
the Company's business, sales, expenditures, environmental regulatory
compliance, foreign operations, interest rate sensitivity, debt service,
liquidity and capital resources, and other operating and capital requirements.
In addition, forward-looking statements may be included in future Company
documents and in oral statements by Company representatives to security
analysts and investors. The Company is subject to risks that could cause
actual events to vary materially from such forward-looking statements,
including the following risk factors:
Risks Related to Technology: Although the Company's strategy includes
investment in research and development of new and innovative products to meet
technology advances, there can be no assurance that the Company will be
successful in competing against new technologies developed by competitors.
Risks Related to the Euro: The United Kingdom has not adopted the euro and the
Company's Scottish subsidiary transacts a significant amount of business with
euro countries. There can be no assurance that this situation will not result
in unforseen economic conditions that affect the Company's business. Indeed,
the weakness of the euro as compared to the British pound has had an adverse
impact on the Company's sales and margins on business done with euro
countries.
Risks Related to Foreign Operations: Approximately a third of the Company's
sales and net assets relate to foreign operations. Foreign operations are
subject to special risks that can materially affect the sales, profits, cash
flows, and financial position of the Company, including taxes and other
restrictions on distributions and payments, currency exchange rate
fluctuations, political and economic instability, inflation, minimum capital
requirements, and exchange controls. In particular, the Company's Brazilian
operations, which constitute over half of the Company's revenues from foreign
operations, can be very volatile, changing from year to year due to the
political situation and economy. As a result, the future performance of the
Brazilian operations is inherently unpredictable.
Risks Related to Cyclical Nature of the Industry: The market for most of the
Company's products is subject to economic conditions affecting the industrial
manufacturing sector, including the level of capital spending by industrial
companies. Accordingly, economic weakness in the industrial manufacturing
sector will result in decreased demand for the Company's products and will
adversely affect performance. Economic weakness in the consumer market also
impacts the Company's performance.
Risks Related to Competition: The Company's business is subject to direct and
indirect competition from both domestic and foreign firms. In particular,
low-wage foreign sources have created severe competitive pricing pressures.
Under certain circumstances, including significant changes in U.S. and foreign
currency relationships, such pricing pressures might reduce unit sales and/or
adversely affect the Company's margins.
Item 8 - Financial Statements and Supplementary Data
Contents: Page
Report of Independent Auditors 9
Consolidated Statements of Operations and Cash Flows 10
Consolidated Balance Sheets 11
Consolidated Statements of Stockholders' Equity 12
Notes to Consolidated Financial Statements 13-19
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Directors of
The L.S. Starrett Company
We have audited the accompanying consolidated balance sheets of The L.S.
Starrett Company and subsidiaries as of June 29, 2002 and June 30, 2001, and
the related consolidated statements of operations, cash flows and changes in
stockholders' equity for each of the three years in the period ended June 29,
2002. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company and subsidiaries as
of June 29, 2002 and June 30 2001, and the results of their operations and
their cash flows for each of the three fiscal years in the period ended June
29, 2002, in conformity with accounting principles generally accepted in the
United States of America.
S/DELOITTE & TOUCHE LLP
Boston, Massachusetts
August 2, 2002
THE L.S. STARRETT COMPANY
Consolidated Statements of Operations and Cash Flows
For the years ended in June (in thousands of dollars except per share data)
2002 2001 2000
OPERATIONS
Net sales $184,346 $225,857 $235,169
Cost of goods sold (139,413) (160,562) (168,648)
Selling, general and administrative expense (45,945) (52,223) (49,788)
Other income and expense (217) (1,640) 496
Earnings (loss) before income taxes (1,229) 11,432 17,229
Income taxes (benefit) (849) 3,335 5,740
Net earnings (loss) $ (380) $ 8,097 $ 11,489
Basic earnings (loss) per share, based on
average outstanding shares of
6,500,026, 6,446,457 and 6,645,019 $ (0.06) $ 1.26 $ 1.73
Diluted earnings (loss) per share, based on
average outstanding shares of
6,500,026, 6,457,554 and 6,652,796 $ (0.06) $ 1.25 $ 1.73
CASH FLOWS
Cash flows from operating activities:
Net earnings (loss) $ (380) $ 8,097 $ 11,489
Noncash expenses:
Depreciation and amortization 11,741 11,662 11,380
Deferred taxes 561 97 2,108
Unrealized translation losses 263 748
Retirement Benefits (2,170) (1,396) (2,916)
Working capital changes:
Receivables 1,664 707 (1,189)
Inventories 7,656 (9,261) (3,357)
Other current assets and liabilities (1,862) 1,665 1,293
Other 227 180 14
Net cash from operating activities 17,700 12,499 18,822
Cash flows from investing activities:
Additions to plant and equipment (8,028) (13,198) (13,974)
Decrease (increase) in investments (2,423) 3,702 4,707
Net cash used in investing activities (10,451) (9,496) (9,267)
Cash flows from financing activities:
Short-term borrowing, net (4,050) (1,645) 3,090
Long-term borrowings (repayments) 4,000 (300)
Common stock issued 3,598 3,444 3,665
Treasury shares purchased (1,796) (3,792) (9,045)
Dividends (5,187) (5,145) (5,302)
Net cash used in financing activities (7,435) (3,138) (7,892)
Effect of translation rate changes on cash (87) 72 74
Net increase (decrease) in cash (273) (63) 1,737
Cash beginning of year 1,945 2,008 271
Cash end of year $ 1,672 $ 1,945 $ 2,008
Supplemental cash flow information:
Interest paid $ 695 $ 950 $ 844
Taxes paid, net $ (725) $ 1,688 $ 4,190
See notes to consolidated financial statements
THE L.S. STARRETT COMPANY
Consolidated Balance Sheets
(in thousands of dollars)
June 29 June 30
ASSETS 2002 2001
Current assets:
Cash $ 1,672 $ 1,945
Investments 10,479 8,238
Accounts receivable (less allowance for doubtful
accounts of $1,790,000 and $1,976,000) 32,391 34,080
Inventories:
Raw materials and supplies 17,228 18,677
Goods in process and finished parts 24,632 27,811
Finished goods 34,762 38,346
Total inventories 76,622 84,834
Prepaid expenses, taxes and other current assets 5,903 5,830
Total current assets 127,067 134,927
Property, plant and equipment, at cost:
Land 1,893 1,902
Buildings (less accumulated depreciation of
$17,151,000 and $16,469,000) 22,698 23,272
Machinery and equipment (less accumulated
depreciation of $61,813,000 and $57,142,000) 46,839 50,031
Total property, plant and equipment 71,430 75,205
Cost in excess of net assets acquired (less accumu-
lated amortization of $4,216,000 and $3,947,000) 6,086 6,354
Prepaid pension cost 33,651 30,953
Other assets 863 1,093
$239,097 $248,532
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current maturities $ 996 $ 5,045
Accounts payable and accrued expenses 13,472 14,358
Accrued salaries and wages 4,163 4,827
Other 402 916
Total current liabilities 19,033 25,146
Deferred income taxes 16,012 15,218
Long-term debt 7,000 7,000
Accumulated postretirement benefit obligation 16,711 16,347
Stockholders' equity:
Class A common stock $1 par (20,000,000 shrs. auth.;
5,147,201 outstanding in 2002, excluding
1,397,659 held in treasury; 5,017,569 outstanding
in 2001, excluding 1,470,544 held in treasury) 5,147 5,018
Class B common stock $1 par (10,000,000 shrs. auth.;
1,397,480 outstanding in 2002, excluding
332,019 held in treasury; 1,440,006 outstanding
in 2001, excluding 325,688 held in treasury) 1,397 1,440
Additional paid-in capital 47,858 45,112
Retained earnings reinvested and employed in
the business 150,029 156,626
Accumulated other comprehensive income (loss) (24,090) (23,375)
Total stockholders' equity 180,341 184,821
$239,097 $248,532
See notes to consolidated financial statements
THE L.S. STARRETT COMPANY
Consolidated Statements of Stockholders' Equity
For the years ended in June, 2000 through 2002
(in thousands)
Common Addi- Accumulated
Stock Out- tional Other Com-
standing Paid-in Retained prehensive
($1 Par) Capital Earnings Income(loss) Total
Balance, June 26, 1999 $ 6,706 $ 42,730 $155,349 $ (14,749) $190,036
Comprehensive income:
Net earnings 11,489 11,489
Unrealized net loss
on investments (113) (113)
Translation loss, net (2,708) (2,708)
Total comprehensive income 8,668
Dividends ($0.80 per share) (5,302) (5,302)
Treasury shares:
Purchased (399) (2,956) (5,690) (9,045)
Issued 161 3,400 3,561
Options exercised 5 99 104
Balance, June 24, 2000 6,473 43,273 155,846 (17,570) 188,022
Comprehensive income:
Net earnings 8,097 8.097
Unrealized net loss
on investments (38) (38)
Translation loss, net (5,767) (5,767)
Total comprehensive income 2,292
Dividends ($0.80 per share) (5,145) (5,145)
Treasury shares:
Purchased (192) (1,428) (2,172) (3,792)
Issued 166 3,078 3,244
Options exercised 11 189 200
Balance, June 30, 2001 6,458 45,112 156,626 (23,375) 184,821
Comprehensive income:
Net earnings (380) (380)
Unrealized net loss
on investments (169) (169)
Translation loss, net ** (546) (546)
Total comprehensive income
(loss) (1,095)
Dividends ($0.80 per share) (5,187) (5,187)
Treasury shares:
Purchased (87) (679) (1,030) (1,796)
Issued 153 3,073 3,226
Options exercised 20 352 372
Balance, June 29, 2002 $ 6,544 $ 47,858 $150,029 $(24,090) $180,341
** Subsequent to May 31, 2002, the fiscal year of our subsidiary in Brazil,
the exchange rate for their currency declined approximately 12%. The effect of
this decline, which has not been reflected in these financial statements,
would be to increase Accumulated Other Comprehensive Income (Loss) by about
$2.5 million and therefore reduce Stockholders' equity by the same amount.
See notes to consolidated financial statements
THE L. S. STARRETT COMPANY
Notes to Consolidated Financial Statements
SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation: The consolidated financial statements include
the accounts of The L. S. Starrett Company and subsidiaries, manufacturers
of industrial, professional and consumer products. All subsidiaries are
wholly-owned and all significant intercompany items have been eliminated.
Since the Company's fiscal year ends on the last Saturday in June, the
2001 fiscal year contains 53 weeks compared to 52 weeks in 2002 and 2000.
The fiscal years of the Company's major foreign subsidiaries end in May.
Financial instruments and derivatives: The Company's financial instruments
consist primarily of current assets, except inventory, current
liabilities, and long-term debt. Current assets and liabilities, except
investments, are stated at cost, which approximates fair market value.
Long-term debts, which are at current market interest rates, also
approximate fair market value. The Company does not enter into derivative
contracts.
Investments: Investments consist primarily of marketable securities,
including treasury bills, certificates of deposit and municipal
securities. The Company considers all its investments "available for
sale." As such, these investments are carried at market, which
approximates cost, with unrealized temporary gains and losses recorded as
a component of stockholders' equity. Included in investments at June 29,
2002 is $3.5 million of AAA rated Puerto Rico debt obligations that have
maturities greater than one year but carry the benefit of possibly
reducing repatriation taxes. These investments represent "core cash" and
are part of the Company's overall cash management and liquidity program
and, under SFAS 115, are considered "available for sale." The investments
themselves are highly liquid, carry no early redemption penalties, and are
not designated for acquiring non-current assets. Most other investments
have maturities of less than one year.
Long-lived assets: Buildings and equipment are depreciated using straight-
line and accelerated methods over estimated useful lives as follows:
buildings 15 to 50 years, building improvements 10 to 40 years, machinery
and equipment 5 to 12 years, motor vehicles 3 to 5 years, computer
hardware and software 3 to 7 years. Costs in excess of net assets acquired
are being amortized on a straight-line basis over 25 to 40 years.
Inventories: Inventories are stated at the lower of cost or market. For
approximately 70% of all inventories, cost is determined on a last-in,
first-out (LIFO) basis. For all other inventories, cost is determined on
a first-in, first-out (FIFO) basis. LIFO inventories are $47,859,000 and
$52,799,000 at the end of 2002 and 2001, respectively, such amounts being
$23,835,000 and $22,685,000 less than if determined on a FIFO basis.
Revenue is generally recognized when inventory is shipped to the customer
or installed if installation is necessary.
Income taxes: Deferred tax expense results from differences in the timing of
certain transactions for financial reporting and tax purposes. Deferred
taxes have not been recorded on undistributed earnings of foreign
subsidiaries (approximately $40,000,000 at June 2002) or the related
unrealized translation adjustments because such amounts are considered
permanently invested. Valuation allowances are provided where management
believes certain deferred tax benefits may not be realized.
Research and development: Research and development costs were expensed as
follows: $2,727,000 in 2002, $2,663,000 in 2001 and $3,111,000 in 2000.
Earnings per share (EPS): Basic EPS excludes dilution and is computed by
dividing earnings available to common shareholders by the weighted average
number of common shares outstanding for the period. Diluted EPS reflects
the potential dilution by securities that could share in the earnings. The
Company had 9,573, 11,097 and 7,777 of additional potential common shares
in 2002, 2001 and 2000 resulting from shares issuable under its stock
option plan. These additional shares are not used for the diluted EPS
calculation in loss years.
Translation of foreign currencies: Assets and liabilities are translated at
exchange rates in effect on reporting dates, and income and expense items
are translated at rates in effect on transaction dates. The resulting
differences due to changing exchange rates are charged or credited
directly to the "accumulated other comprehensive income" account included
as part of stockholders' equity.
Use of accounting estimates: The preparation of the financial statements in
conformity with accounting principles generally accepted in the U.S.
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of sales and expenses during the
reporting period. Amounts ultimately realized could differ from those
estimates.
ACCOUNTING PRONOUNCEMENTS
The Company will adopt SFAS 142 as of the first day of fiscal 2003. This
requires goodwill no longer be amortized, but instead tested for
impairment. Any goodwill impairment loss at transition is recognized as
the cumulative effect of a change in accounting principle. The Company has
net goodwill of $6.1 million that it expects to write off as a result of
adopting SFAS 142 and related annual amortization expense is $268,000.
OTHER INCOME AND EXPENSE
Other income and expense consists of the following (in thousands):
2002 2001 2000
Interest income, net $ 179 $ 131 $ 660
Realized and unrealized translation
gains (losses) (351) (1,859) (101)
Other (45) 88 (63)
$ (217) $(1,640) $ 496
INCOME TAXES
The provision for income taxes consists of the following (in thousands):
2002 2001 2000
Current:
Federal $(1,640) $ 1,600 $ 1,581
Foreign 266 1,271 1,582
State (36) 367 469
Deferred 561 97 2,108
$ (849) $ 3,335 $ 5,740
Pretax domestic income (loss) as reportable to the IRS was $(3,100,000),
$8,279,000 and $7,704,000 in 2002, 2001 and 2000, respectively.
A reconciliation of expected tax expense at the U.S. statutory rate to actual
tax expense is as follows (in thousands):
2002 2001 2000
Expected tax expense $ (430) $ 4,001 $ 6,030
Increase (decrease) from:
State and Puerto Rico taxes, net
of federal benefit (672) (588) (210)
Foreign taxes, net of federal credits 163 (17) (247)
Nontaxable investment income (10) (21) (43)
Other 100 (40) 210
Actual tax expense $ (849) $ 3,335 $ 5,740
Deferred income taxes at year end are attributable to the following (in
thousands):
2002 2001
Deferred assets:
Retiree medical benefits $(6,768) $(6,716)
Inventories (1,840) (1,335)
Foreign NOL carried forward indefinately (1,235) (915)
Foreign tax credit carryforward expiring 2012 (700)
Other (826) (1,155)
(11,369) (10,121)
Deferred liabilities:
Prepaid pension 13,550 12,625
Other employee benefits 680 459
Depreciation 7,296 8,252
Other 1,934 1,057
23,460 22,393
Valuation reserve for foreign tax credits 700 _______
Net deferred tax liability $12,791 $12,272
Long-term portion $16,012 $15,218
EMPLOYEE BENEFIT PLANS
The Company has several pension plans, both defined benefit and defined
contribution, covering all of its domestic and most of its nondomestic
employees. In addition, certain domestic employees participate in an Employee
Stock Ownership Plan (ESOP). Ninety percent of the actuarially determined
annuity value of their ESOP shares is used to offset benefits otherwise due
under the domestic defined benefit pension plan. The total cost (benefit) of
all such plans for 2002, 2001 and 2000, considering the combined projected
benefits and funds of the ESOP as well as the other plans, was $(1,783,000),
$(462,000) and $(1,608,000), respectively.
Under both domestic and foreign defined benefit plans, benefits are based on
years of service and final average earnings. Plan assets, including those of
the ESOP, consist primarily of investment grade debt obligations, marketable
equity securities and approximately 1,028,000 shares of the Company's common
stock. The status of these defined benefit plans, including the ESOP, is as
follows (in thousands):
2002 2001 2000
Change in benefit obligation:
Benefit obligation at beginning of year $ 83,203 $ 87,893 $ 88,088
Service cost 3,106 2,887 3,263
Interest cost 5,958 5,950 6,172
Participant contributions 226 242 247
Exchange rate changes 820 (1,942) (1,016)
Benefits paid (3,614) (3,393) (3,315)
Actuarial (gain) loss 3,650 (8,434) (5,546)
Benefit obligation at end of year $ 93,349 $ 83,203 $ 87,893
Change in plan assets:
Fair value of plan assets at beginning
of year $128,038 $120,861 $137,578
Actual return on plan assets 633 12,213 (12,557)
Employer contributions 92
Participant contributions 226 242 247
Benefits paid (3,614) (3,393) (3,315)
Exchange rate changes 779 (1,885) (1,092)
Fair value of plan assets at end of year $126,154 $128,038 $120,861
Reconciliation of funded status:
Funded status $ 32,805 $ 44,835 $ 32,968
Unrecognized actuarial gain (370) (14,555) (3,858)
Unrecognized transition asset (2,932) (3,869) (4,818)
Unrecognized prior service cost 4,148 4,542 4,946
Prepaid pension cost $ 33,651 $ 30,953 $ 29,238
Amounts recognized in statement of financial
Position:
Prepaid pension cost $ 35,069 $ 32,390 $ 30,513
Accrued benefit liability (4,301) (1,558) (1,397)
Intangible asset 1,133 121 122
Accumulated other comp. income 1,750
Prepaid pension cost $ 33,651 $ 30,953 $ 29,238
Components of net periodic benefit cost:
Service cost $ 3,106 $ 2,887 $ 3,263
Interest cost 5,958 5,950 6,172
Expected return on plan assets (10,863) (9,986) (11,432)
Amortization of prior service cost 394 404 409
Amortization of transition asset (937) (949) (956)
Recognized actuarial gain (264) (20) (352)
Net periodic benefit cost $ (2,606) $ (1,714) $ (2,896)
Weighted average assumptions:
Discount rate 7.00% 7.50% 7.75%
Expected long-term rate of return 8.00% 8.50% 8.50%
Rate of compensation increase 3.75% 4.00% 4.50%
The Company provides certain medical and life insurance benefits for most
retired employees in the United States. The status of these plans at year end
is as follows (in thousands):
2002 2001 2000
Change in benefit obligation:
Benefit obligation at beginning of year $ 15,197 $ 15,101 $ 13,668
Service cost 551 509 457
Interest cost 1,097 1,122 914
Benefits paid (1,014) (1,071) (1,170)
Actuarial (gain) loss (182) (464) 1,232
Benefit obligation at end of year $ 15,649 $ 15,197 $ 15,101
Reconciliation of funded status:
Funded status $(15,649) $(15,197) $(15,101)
Unrecognized actuarial gain 2,259 2,523 3,098
Unrecognized prior service cost (3,321) (3,673) (4,026)
Accrued benefit liability $(16,711) $(16,347) $(16,029)
Components of net periodic benefit cost:
Service cost $ 551 $ 509 $ 457
Interest cost 1,097 1,122 914
Amortization of prior service cost (353) (353) (353)
Recognized actuarial gain 81 111 30
Net periodic benefit cost $ 1,376 $ 1,389 $ 1,048
Weighted average assumptions:
Discount rate 7.00% 7.50% 7.75%
Rate of compensation increase 3.75% 4.00% 4.50%
For measurement purposes, a 12.0% annual rate of increase in the per capita
cost of covered health care benefits was assumed for 2003. The rate was
assumed to decrease gradually to 5.0% for 2014 and remain at that level
thereafter.
Assumed health care cost trend rates have a significant effect on the amounts
reported for the health care plans. A one percentage point change in assumed
health care cost trend rates would have the following effects (in thousands):
1% 1%
Increase Decrease
Effect on total of service and interest cost $ 43 $ (88)
Effect on postretirement benefit obligation 286 (627)
DEBT
At year end, long-term debt consists of the following (in thousands):
2002 2001
Note payable due 12/03, 8.3% $ 4,000 $ 4,000
Revolving credit agreement 3,000 3,000
$ 7,000 $ 7,000
All debt is due in fiscal 2004. The revolving credit agreement is for
$25,000,000 and expires June 13, 2004. The credit agreement requires
commitment fees of .25%. Interest rates vary, but approximate LIBOR plus
..50% (2.3% as of June 29, 2002). All debt agreements contain financial
covenants, the most restrictive of which is that at June 29, 2002 the
Company must have tangible net worth of $164,000,000 and an EBITDA to debt
service ratio of at least 1.5. Current notes payable carry interest at a
rate of LIBOR plus 1 - 4%. Interest expense, prior to capitalization of
interest on self-constructed assets was $641,000, $973,000 and $877,000 in
2002, 2001 and 2000.
COMMON STOCK
Class B common stock is identical to Class A except that it has 10 votes per
share, is generally nontransferable except to lineal descendants, cannot
receive more dividends than Class A, and can be converted to Class A at any
time. Class A common stock is entitled to elect 25% of the directors to be
elected at each meeting with the remaining 75% being elected by Class A and
Class B voting together. In addition, the Company has a stockholder rights
plan to protect stockholders from attempts to acquire the Company on
unfavorable terms not approved by the Board of Directors. Under certain
circumstances, the plan entitles each Class A or Class B share to additional
shares of the Company or an acquiring company, as defined, at a 50% discount
to market. Generally, the rights will be exercisable if a person or group
acquires 15% or more of the Company's outstanding shares. The rights trade
together with the underlying common stock. They can be redeemed by the
Company for $.01 per right and expire in 2010.
The Company accounts for stock based compensation under the provisions of
Accounting Principles Board Opinion No. 25. Under the Company's stock
purchase plans, the purchase price of the optioned stock is 85% of the lower
of the market price on the date the option is granted or the date it is
exercised. Options become exercisable exactly two years from the date of
grant and expire if not exercised. Therefore, no options are exercisable at
the end of 2002, 2001, or 2000. A summary of option activity is as follows:
Weighted
Average
Exercise Shares
Shares Price Available
On Option At Grant For Grant
Balance, June 26, 1999 51,803 $24.63 748,197
Options granted 69,122 19.56 (69,122)
Options exercised ($20.30 and $17.00) (5,315) 19.50
Options canceled (43,632) 43,632
Balance, June 24, 2000 71,978 20.26 722,707
Options granted 53,285 17.14 (53,285)
Options exercised ($15.52 and $18.96) (10,771) 18.55
Options canceled (41,156) 41,156
Balance, June 30, 2001 73,336 18.22 710,578
Options granted 28,191 18.06 (28,191)
Options exercised ($17.77 and $18.65) (20,552) 18.11
Options canceled (32,026) 32,026
Balance, June 29, 2002 48,949 $17.48 714,413
At June 29, 2002, a total of 763,362 shares of common stock are reserved for
issuance under the plan. The following information relates to outstanding
options as of June 29, 2002:
Weighted average remaining life 1.0 years
Weighted average fair value on grant date
of options granted in:
2000 $6.00
2001 5.50
2002 5.00
The fair value of each option grant was estimated on the date of grant using
the Black-Scholes options pricing model with the following weighted average
assumptions: volatility - 22% to 28%, interest - 3.5% to 6.5%, and expected
lives - 2 years. The pro forma, after tax effect of any compensation costs
related to use of SFAS No. 123, "Accounting for Stock Based Compensation,"
is as follows: 2002 $90,000, 2001 $170,000 and 2000 $200,000, or
approximately $.01, $.03, and $.03 per share.
In addition 99,045 shares of common stock are reserved for the Company's
401(k) plan at June 29, 2002.
OPERATING DATA
The Company believes it has no significant concentration of credit risk as
of June 29, 2002. Trade receivables are dispersed among a large number of
retailers, distributors and industrial accounts in many countries. One
customer accounted for approximately 14% of sales in 2002 and 13% in 2001
and 2000.
The Company is engaged in the single business segment of producing and
marketing industrial, professional and consumer products. It manufactures
over 5,000 items, including precision measuring tools, tape measures, gages
and saw blades. Operating segments are identified as components of an
enterprise about which separate discrete financial information is used by
the chief operating decision maker in determining how to allocate assets and
assess performance of the Company.
The Company's operations are primarily in North America, Brazil, and the
United Kingdom. Geographic information about the Company's sales and long-
lived assets are as follows:
2002 2001 2000
Sales:
North America $ 133,895 $ 164,572 $ 172,542
United Kingdom 26,331 30,520 33,064
Brazil 31,559 43,421 41,926
Eliminations and other (7,439) (12,656) (12,363)
Total $ 184,346 $ 225,857 $ 235,169
Long-lived assets:
North America $ 96,163 $ 97,656
United Kingdom 7,916 7,655
Brazil 5,857 6,037
Other 2,094 2,257
Total $ 112,030 $ 113,605
QUARTERLY FINANCIAL DATA (UNAUDITED)(in thousands except per share data)
Earnings(Loss) Basic
Before Net Earnings
Net Gross Income Earnings (Loss) Per
Quarter Ended Sales Profit Taxes (Loss) Share
September 2000 $58,842 $17,101 $ 4,234 $ 2,895 $ 0.45
December 2000 60,650 17,121 3,664 2,583 0.40
March 2001 50,637 14,201 1,622 950 0.15
June 2001 55,728 16,872 1,912 1,669 0.26
$225,857 $65,295 $11,432 $ 8,097 $ 1.26
September 2001 $46,522 $12,624 $ 345 $ 262 $ 0.04
December 2001 44,918 10,099 (1,417) (611) (0.09)
March 2002 45,419 10,039 (1,128) (462) (0.07)
June 2002 47,487 12,171 971 431 0.06
$184,346 $44,933 $(1,229) $ (380) $(0.06)
In the fourth quarter of fiscal 2001, the Company recorded a benefit related
primarily to prior year state taxes and foreign tax credits.
The Company's Class A common stock is traded on the New York Stock Exchange.
Item 9 - Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
The Company had no such changes in or disagreements with its independent
auditors.
PART III
Item 10 - Directors and Executive Officers of the Registrant
Directors
The information concerning the Directors of the Registrant is contained on
pages 1 through 5 in the Company's definitive Proxy Statement for the Annual
Meeting of Stockholders to be held on September 18, 2002, as filed with the
Securities and Exchange Commission ("SEC"), and is hereby incorporated by
reference.
Executive Officers of the Registrant
Held Present
Name Age Office Since Position
Douglas A. Starrett 50 2001 President and CEO and
Director
Roger U. Wellington, Jr. 61 1984 Vice President, Treasurer
and Chief Financial
Officer and Director
George B. Webber 81 1962 Vice President
Webber Gage Division
and Director
Anthony M. Aspin 49 2000 Vice President Sales
Stephen F. Walsh 56 2002 Vice President Operations
Steven A. Wilcox 47 1997 Clerk
Douglas A. Starrett has been President of the Company since 1995 and became
CEO in 2001. Roger U. Wellington, Jr. and George B. Webber have served in the
same capacities as listed above for at least the past five years. Anthony M.
Aspin was previously a divisional sales manager with the Company. Stephen F.
Walsh was previously president of the Silicon Carbide Division of Saint-Gobain
Industrial Ceramics. Except in the case of Steven Wilcox, the positions listed
above represent their principal occupations and employment during the last
five years. Steven Wilcox, elected clerk in 1997, has been a partner in Ropes
& Gray, counsel for the Company, throughout that period.
The President, Treasurer and Clerk hold office until the first meeting of the
directors following the next annual meeting of stockholders and until their
respective successors are chosen and qualified, and each other officer holds
office until the first meeting of directors following the next annual meeting
of stockholders, unless a shorter period shall have been specified by the
terms of his election or appointment or, in each case, until he sooner dies,
resigns, is removed or becomes disqualified.
There have been no events under any bankruptcy act, no criminal proceedings
and no judgments or injunctions material to the evaluation of the ability and
integrity of any director or executive officer during the past five years.
Item 11 - Executive Compensation
The information concerning management remuneration is contained on pages 8
through 12 in the Company's definitive Proxy Statement for the Annual Meeting
of Stockholders to be held on September 18, 2002, as filed with the SEC, and,
except for the information under the captions "Compensation Committee
Report," is hereby incorporated by reference.
Item 12 - Security Ownership of Certain Beneficial Owners and
Management
(a) Security ownership of certain beneficial owners:
The information concerning a more than 5% holder of any class of the
Company's voting shares is contained on pages 3 through 4 of the
Company's definitive Proxy Statement for the Annual Meeting of
Stockholders to be held on September 18, 2002, as filed with the SEC,
and is hereby incorporated by reference.
(b) Security ownership of management:
The information concerning the beneficial ownership of each class of
equity securities by all directors, and all directors and officers of
the Company as a group, is contained on pages 2 through 4 of the
Company's definitive Proxy Statement for the Annual Meeting of
Stockholders to be held on September 18, 2002, as filed with the SEC,
and is hereby incorporated by reference.
(c) The Company knows of no arrangements that may, at a subsequent date,
result in a change in control of the Company.
Item 13 - Certain Relationships and Related Transactions
(a) Transactions with management and others: None
(b) Certain business relationships: Not applicable
(c) Indebtedness of management: None
(d) Transactions with promoters: Not applicable
PART IV
Item 14 - Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
Accompanying this Form 10-K are the certificates of the Chief Executive
Officer and Chief Financial Officer required by Section 1350, Chapter 63 of
Title 18, United States Code, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, copies of which are furnished as exhibits to
this report.
(a) 1. Financial statements filed in item 8 of this annual report:
Consolidated Statements of Operations and Cash Flows for
each of the three years in the Period ended June 29, 2002
Consolidated Balance Sheets at June 29, 2002 and June 30, 2001
Consolidated Statements of Stockholders' Equity for each of
the three years in the Period Ended June 29, 2002
Notes to Consolidated Financial Statements
2. All other financial statements and schedules are omitted because
they are inapplicable, not required under the instructions, or the
information is reflected in the financial statements or notes
thereto.
3. See Exhibit Index below. Compensatory plans or arrangements are
identified by an "*."
(b) There were no reports on Form 8-K filed in the last quarter of the
period covered by this report.
(c) See Exhibit Index below.
(d) Not applicable.
THE L.S. STARRETT COMPANY AND SUBSIDIARIES - EXHIBIT INDEX
3a Restated Articles of Organization dated December 20, 1989, filed with Form
10-Q for the quarter ended December 23, 1989, are hereby incorporated by
reference.
3b Bylaws as amended September 16, 1999, filed with Form 10-Q for the
quarter ended September 24, 1999, are hereby incorporated by reference.
4 Second Amended and Restated Rights Agreement, dated as of March 13,
2002, between the Company and Mellon Investor Services, as Rights Agent,
including Form of Common Stock Purchase Rights Certificate, filed
herewith.
10a $25,000,000 Revolving Credit Agreement dated as of June 13, 2000, among
The L.S. Starrett Company and Fleet National Bank filed with Form 10-K
for the year ended June 24, 2000 is hereby incorporated by reference.
10b Form of indemnification agreement with directors and executive officers,
filed herewith.
10c*The L.S. Starrett Company Supplemental Executive Retirement Plan, filed
herewith.
10d*The L.S. Starrett Company 401(k) Stock Savings Plan (2001 Restatement),
filed herewith.
21 Subsidiaries of the Registrant, filed herewith.
23 Independent Auditors' Consent, filed herewith.
99a Certification of Douglas A. Starrett pursuant to 18 U.S.C. section
1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act
of 2002, filed herewith.
99b Certification of Roger U. Wellington, Jr. pursuant to 18 U.S.C.
section 1350, as adopted pursuant to section 906 of the Sarbanes-
Oxley Act of 2002, filed herewith.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
THE L.S. STARRETT COMPANY
(Registrant)
By S/ROGER U. WELLINGTON, JR.
Roger U. Wellington, Jr.,
Vice President, Treasurer and Chief
Financial Officer
Date: August 16, 2002
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated:
S/DOUGLAS A. STARRETT S/ANTONY MCLAUGHLIN
Douglas A. Starrett, Aug. 16, 2002 Antony McLaughlin, Aug. 16, 2002
President and CEO and Director President Starrett Industria e
Comercio, Ltda, Brazil
S/WILLIAM S. HURLEY
Thomas E. Mahoney, Aug. 16, 2002 William S. Hurley, Aug. 16, 2002
Director Director
S/RICHARD B. KENNEDY S/GEORGE B. WEBBER
Richard B. Kennedy, Aug. 16, 2002 George B. Webber, Aug. 16, 2002
Director Vice President Webber Gage Division
and Director
S/STEVEN G. THOMSON S/ROGER U. WELLINGTON, JR.
Steven G. Thomson, Aug. 16, 2002 Roger U. Wellington,Jr., Aug.16, 2002
Chief Accounting Officer Vice President, Treasurer and CFO
and Director
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