UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 28, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from
Commission file number 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 01331-1915
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 978-249-3551
Former name, address and fiscal year, if changed since last report.
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 filings requirements for the past 90 days.
YES X NO
Common Shares outstanding as of September 28, 2002:
Class A Common Shares 5,199,105
Class B Common Shares 1,376,397
Page 1 of 14
THE L. S. STARRETT COMPANY
CONTENTS
Page No.
Part I. Financial Information:
Item 1. Financial Statements
Consolidated Statements of Operations and
Cash Flows - thirteen weeks ended
September 28, 2002 and September 29, 2001
(unaudited) 3
Consolidated Balance Sheets - September 28,
2002 (unaudited) and June 29, 2002 4
Consolidated Statements of Stockholders'
Equity - thirteen weeks ended September 28,
2002 and September 29, 2001 (unaudited) 5
Notes to Consolidated Financial Statements 6-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7-11
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 11
Item 4. Controls and Procedures 11
Part II. Other information:
Item 1. Legal Proceedings 11
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 6. Exhibits and reports on Form 8-K 12
SIGNATURES 12
CERTIFICATIONS 13-14
Page 2 of 14
Item 1. Financial Statements
THE L. S. STARRETT COMPANY
Consolidated Statements of Operations and Cash Flows
(in thousands of dollars except per share data)(unaudited)
13 Weeks Ended
OPERATIONS 9/28/02 9/29/01
Net sales 45,335 46,522
Cost of goods sold (36,599) (33,898)
Selling and general (12,552) (11,886)
Other expense (680) (392)
Earnings (loss) before income taxes and cumulative
effect of change in accounting principle (4,496) 346
Provision (benefit) for income taxes (1,961) 84
Earnings (loss) before cumulative effect of change in
accounting principle (2,535) 262
Cumulative effect of change in accounting principle
for goodwill (6,086) _______
Net earnings (loss) (8,621) 262
Basic earnings (loss) per share before cumulative effect
of change in accounting principle (.39) .04
Cumulative effect of change in accounting principle (.93)
Basic earnings (loss) per share (1.32) .04
Average outstanding shares used 6,551 6,472
Diluted earnings (loss) per share before cumulative effect
of change in accounting principle (.39) .04
Cumulative effect of change in accounting principle (.93)
Diluted earnings (loss) per share (1.32) .04
Average outstanding shares used 6,551 6,484
Dividends per share .20 .20
CASH FLOWS
Cash flows from operating activities:
Net earnings (loss) (8,621) 262
Noncash expenses (income):
Cumulative effect of change in accounting principle 6,086
Depreciation and amortization 2,786 2,977
Deferred taxes (227) 144
Unrealized exchange losses 725 312
Retirement benefits (228) (611)
Working capital changes:
Receivables (1,126) 2,305
Inventories 5,929 (1,957)
Other assets and liabilities 70 473
Prepaid pension cost and other (158) (17)
Net cash from operations 5,236 3,888
Cash flows from investing activities:
Additions to plant and equipment (736) (2,511)
Short-term investments, net (3,426) 302
Net cash used in investing (4,162) (2,209)
Cash flows from financing activities:
Short-term borrowing, net (558) (895)
Common stock issued 540 740
Treasury shares purchased (93)
Dividends (1,310) (1,279)
Net cash used in financing (1,328) (1,527)
Effect of exchange rate changes on cash (85) (82)
Net increase (decrease) in cash (339) 70
Cash, beginning of period 1,672 1,945
Cash, end of period 1,333 2,015
See notes to consolidated financial statements
Page 3 of 14
THE L. S. STARRETT COMPANY
Consolidated Balance Sheets
(in thousands of dollars)
Sep. 28 June 29
2002 2002
ASSETS (unaudited)
Current assets:
Cash 1,333 1,672
Investments 13,672 10,479
Accounts receivable (less allowance for doubtful
accounts of $1,810,000 and $1,790,000) 35,581 34,832
Inventories:
Raw materials and supplies 16,196 17,228
Goods in process and finished parts 21,724 24,632
Finished goods 31,575 34,762
69,495 76,622
Prepaid expenses, taxes and other current assets 5,547 5,903
Total current assets 125,628 129,508
Property, plant and equipment, at cost (less
accumulated depreciation of $80,517,000
and $79,005,000) 69,208 71,430
Cost in excess of net assets acquired (less
accumulated amortization of $4,216,000
as of June 29, 2002) 6,086
Prepaid pension cost 33,985 33,651
Other assets 843 863
229,664 241,538
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current maturities 2,480 3,437
Accounts payable and accrued expenses 13,163 13,472
Accrued salaries and wages 4,068 4,163
Other 469 402
Total current liabilities 20,180 21,474
Deferred income taxes 16,075 16,012
Long-term debt 7,000 7,000
Accumulated postretirement medical benefit obligation 16,773 16,711
Stockholders' equity:
Class A Common $1 par (20,000,000 shrs. auth.;
5,199,105 outstanding at 9/28/02, excluding
1,366,838 held in treasury; 5,147,201 outstanding
at 6/29/02, excluding 1,397,659 held in treasury) 5,199 5,147
Class B Common $1 par (10,000,000 shrs. auth.;
1,376,397 outstanding at 9/28/02, excluding
332,019 held in treasury; 1,397,480 outstanding
at 6/29/02, excluding 332,019 held in treasury) 1,376 1,397
Additional paid-in capital 48,367 47,858
Retained earnings reinvested and employed in
the business 140,098 150,029
Accumulated other comprehensive income (loss) (25,404) (24,090)
Total stockholders' equity 169,636 180,341
229,664 241,538
See notes to consolidated financial statements
Page 4 of 14
THE L. S. STARRETT COMPANY
Consolidated Statements of Stockholders' equity
For the Thirteen Weeks Ended September 28, 2002 and September 29, 2001
(in thousands of dollars)
(unaudited)
Common Addi- Accumulated
Stock Out- tional Other
standing Paid-in Retained Comprehensive
($1 Par) Capital Earnings Income(Loss) Total
Balance June 30, 2001 6,458 45,112 156,626 (23,375) 184,821
Comprehensive income:
Net earnings 262 262
Unrealized net loss
on investments (145) (145)
Translation loss, net (841) (841)
Total comprehensive loss (724)
Dividends ($.20 per share) (1,279) (1,279)
Treasury shares:
Purchased (5) (36) (52) (93)
Issued 37 703 740
Balance September 29, 2001 6,490 45,779 155,557 (24,361) 183,465
Balance June 29, 2002 6,544 47,858 150,029 (24,090) 180,341
Comprehensive income:
Net loss (8,621) (8,621)
Unrealized net gain
on investments 42 42
Translation loss, net (1,356) (1,356)
Total comprehensive loss (9,935)
Dividends ($.20 per share) (1,310) (1,310)
Treasury shares:
Purchased
Issued 31 509 540
Balance September 28, 2002 6,575 48,367 140,098 (25,404) 169,636
See notes to consolidated financial statements
Page 5 of 14
THE L. S. STARRETT COMPANY
Condensed Notes to Consolidated Financial Statements
In the opinion of management, the accompanying financial statements contain
all adjustments, consisting only of normal recurring adjustments, necessary
to present fairly the financial position of the Company as of September 28,
2002 and June 29, 2002; the results of operations and cash flows for the
thirteen weeks ended September 28, 2002 and September 29, 2001; and changes
in stockholders' equity for the thirteen weeks ended September 28, 2002 and
September 29, 2001.
The Company follows the same accounting policies in the preparation of
interim statements as described in the Company's annual report filed on Form
10-K for the year ended June 29, 2002, except for the treatment of goodwill
as discussed below, and these financial statements should be read in
conjunction with said annual report. Certain reclassifications have been
made to prior period data to conform with current year presentation.
In the quarter ended September 28, 2002, shares used to compute basic and
diluted loss per share are the same since the inclusion of common stock
equivalents (10,569 shares) would be antidilutive.
As discussed under Management's Discussion and Analysis of Financial
Condition and Results of Operations, the Company has taken reserves and
charged pretax operations with $3.1 million ($.30 per share after tax) in
the September 2002 quarter in connection with an investigation of its
Coordinate Measuring Machine division in Mt. Airy, N.C. No assurances can be
made that these reserves reflect the actual costs that will ultimately be
incurred by the Company or that the Company will not need to take additional
reserves.
The Company adopted SFAS 142, Goodwill and Other Intangible Assets, as of
June 30, 2002, the first day of fiscal 2003, and performed a transitional
fair value based impairment test as of that date. As a result, a onetime,
non-cash, non-operational impairment charge of $6,086,000 ($.93 per share
after taxes), relating primarily to the acquisition of the Company's Evans
Rule division in 1986, was recorded as of the first day of the September
2002 quarter and related amortization of $67,000 per quarter was
discontinued. The charge is reflected as the cumulative effect of a change
in accounting principle in the accompanying Statement of Operations and Cash
Flows. There were no income taxes associated with the charge. Had the
provisions of SFAS 142 been applied for the prior year's quarter ended
September 29, 2001, net earning and net earnings per share would have been
as follows (in thousands):
Thirteen Weeks
Ended 9/29/01
Net earnings as reported 262
Add back goodwill amortization 67
Proforma net earnings 329
Basic and diluted earnings per share
as reported .04
Effect of SFAS 142 .01
Proforma basic and diluted earnings per share .05
Included in investments at September 28, 2002 is $2.3 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
are used as part of the Company's overall cash management and liquidity
program and, under SFAS 115, are considered "available for sale." The
investments themselves are liquid and carry no early redemption penalties and
are, therefore, classified as current assets.
Page 6 of 14
Other income (expense) is comprised of the following (in thousands):
Thirteen Weeks
Ended September
2002 2001
Interest income 175 157
Interest expense and commitment fees (94) (162)
Realized and unrealized exchange losses (720) (428)
Other (41) 41
(680) (392)
Approximately 70% of all inventories are valued on the LIFO method. At
September 28, 2002 and June 29, 2002, total inventories are $23,959,000 and
$23,835,000 less, respectively, than if determined on a FIFO basis.
Long-term debt is comprised of the following (in thousands):
September June
2002 2002
Note payable due 12/03, 3.8% 4,000 4,000
Revolving credit agreement, 2.3% 3,000 3,000
7,000 7,000
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
OVERVIEW OF QUARTERLY RESULTS
As more fully discussed below, results for the quarter ended September 28,
2002 show the Company incurred a net loss of $8.6 million, or $1.32 per
share, compared to net income of $.3 million, or $.04 per share, in the
comparable quarter. A significant portion of this loss was caused by two
unusual charges: the write off of $6.1 million, or $.93 per share after tax,
of goodwill and a $3.1 million pretax, or $.30 per share after tax,
provision in connection with a government investigation at the Company's Mt.
Airy, North Carolina facility. Excluding these charges, the Company incurred
a net loss for the quarter of $.6 million, or $.09 per share, compared to
net income of $.3 million, or $.04 per share, in the comparable quarter of
the prior year.
Sales
Sales for the September quarter are down 3% compared to the corresponding
quarter of a year ago. Excluding intercompany sales, domestic sales are down
6% and foreign sales are up 8%. In local currency foreign sales are up 18%
quarter to quarter. The decrease in domestic sales reflects the continued
weak U.S. industrial manufacturing sector and lower shipments to a major
consumer products customer as they rebalance their inventories.
Earnings (loss) before taxes and cumulative effect of change in accounting
principle
Pretax earnings (loss) in the quarter, before the cumulative effect of the
change in accounting principle for goodwill (adoption of SFAS 142) as
previously discussed are down $4.8 million from last year's September
quarter. $3.1 million pretax ($.30 per share after tax) of this decrease
relates to charges taken at our Coordinate Measuring Machine (CMM) division
in Mt. Airy, N.C. as further described below.
Page 7 of 14
Excluding the goodwill writeoff and CMM division charges, pretax earnings
are down $1.7 million. In addition to the decrease in sales, the major items
causing the remaining decrease in pretax earnings are increased domestic
fringe benefit costs ($.3 million), unrealized exchange losses in Brazil
($.5 million), and the effect ($1.5 million), both domestic and foreign, of
production levels being well below sales as the Company continues to reduce
inventories. These cost increases were partially offset by a reduction in
selling and general expense, before the CMM charges discussed below, of $.8
million as well as the elimination of goodwill amortization ($.1 million).
Coordinate Measuring Machine (CMM) division
The Company's CMM division is presently the subject of a federal government
investigation being coordinated through the Department of Justice. The
division, which is located in the Company's Mt. Airy, North Carolina
facility, accounted for less than 3% of the Company's net sales during
fiscal 2002. The CMM division manufactures and sells coordinate measuring
machines, including the Rapid Check 2 and Rapid Check 3 machines. The
Company's CMMs operate with computer measurement software sold by the
Company, including software sold under the "Apogee" brand name. The Company
became aware of the investigation on September 5, 2002, when federal agents
conducted a search of the CMM division. The government's investigation
appears to be focused on the division's Rapid Check coordinate measuring
machine product line and other Starrett CMMs using the Apogee software. On
September 12, 2002, the Wall Street Journal published an article in which
allegations that the Company had defrauded its customers and the government
were attributed to Richard Parks, a former independent contractor to the
Company. The article indicated that the investigation apparently was
prompted by a qui tam action filed under seal in federal court in Boston,
Massachusetts by Mr. Parks. The Company has not been served with a
complaint in connection with any qui tam action. In response to that
article, the Company denied that it defrauded its customers or the
government. The Company is fully cooperating with the government in its
investigation.
Beginning late in calendar 2001, the Company, on its own initiative and as
part of its review of its Rapid Check product line, made certain
improvements to the Rapid Check machines and incorporated these improvements
in new Rapid Check machines. Beginning in March 2002, the Company informed
its customers of these improvements and initiated a program to replace the
affected Rapid Check machines at no cost to its customers. This replacement
program continues to the present time.
As a result of the investigation and ongoing replacement program outlined
above, the Company has taken reserves and charged pretax operations with
$3.1 ($.30 per share after tax) million in the September 2002 quarter. Of
this, $1.5 million has been charged to selling and general expense in the
Statement of Operations and relates to professional fees, including legal.
The remaining $1.6 million relates to the Rapid Check replacement program
and other CMM inventory valuation expenses and appears as part of cost of
goods sold in the Statement of Operations. No assurances can be made that
these reserves reflect the actual costs that will ultimately be incurred by
the Company or that the Company will not need to take additional reserves.
Total CMM division inventories were approximately $6.5 million as of
September 28, 2002.
Income Taxes
The effective income tax rate was 44% in the September quarter of 2002 and
24% in the prior year's corresponding quarter. The change results from a
higher tax rate in Brazil this year, lower tollgate taxes in Puerto Rico,
and, because pretax earnings were so close to breakeven in 2001.
Page 8 of 14
Earnings (loss) per share before change in accounting principle
As a result of the above factors and before the change in accounting
principle (adoption of SFAS 142), the Company incurred a loss per share for
the quarter of $.39 compared to income of $.04 per share a year ago.
Approximately $.30 of the current quarter's after tax loss relates to the
CMM division charges as discussed above.
Net earnings (loss) per share after change in accounting principle
Net loss per share was $1.32 in the current quarter compared to net income
per share of $.04 a year ago. The additional $.93 per share loss over and
above the $.39 loss referred to in the previous section is the result of
adopting SFAS 142 and writing off $6.1 million in goodwill as discussed in
more detail in the notes to the financial statements above.
LIQUIDITY AND CAPITAL RESOURCES
13 Weeks Ended
9/28/02 9/29/01
Cash provided by operations 5,236 3,888
Cash used in investing activities (4,162) (2,209)
Cash used in financing activities (1,328) (1,527)
Despite a $2.8 million reduction in earnings (before the noncash change in
accounting principle) and a $1.1 million increase in receivables (vs $2.3
decrease last year), cash provided by operations increased due to the nearly
$6 million reduction in inventories during this year's quarter compared to a
$2 million increase in the prior year's quarter. "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 million of noncash
income in the current year's quarter and $.6 million in the prior year's
quarter ($(.2) and $.1 million 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.
Increased short-term investments offset by approximately $1.8 million less
in capital expenditures accounts for the increase in investing activities.
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.
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. The
Company has a working capital ratio of 6.2 to 1 as of September 28, 2002 and
6.0 to 1 as of June 29, 2002.
CRITICAL ACCOUNTING POLICIES
The preparation of financial statements and related disclosures in
conformity with accounting principles generally accepted in the United
Page 9 of 14
States of America requires management to make judgments, assumptions and
estimates that affect the amounts reported in the consolidated financial
statements and accompanying notes. The first footnote to the consolidated
financial statements in the Annual Report on Form 10-K for the fiscal year
ended June 29, 2002 describes the significant accounting policies and
methods used in the preparation of the consolidated financial statements.
Judgements, assumptions, and estimates are used for, but not limited to, the
allowance for doubtful accounts receivable; inventory allowances; warranty
and returned goods reserves; turnover, discount, and return rates used to
calculate pension obligations; normal expense accruals for such things as
workers compensation and employee medical expenses; and of particular
importance this quarter the previously discussed charges connected with the
government investigation of our CMM division. Actual results could differ
from these estimates.
SAFE HARBOR STATEMENT
UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1996
This Quarterly Report on Form 10-Q as well as the 2002 Annual Report,
including the President's letter to stockholders, and the quarterly
shareholder earnings announcement 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, other operating and capital requirements, and the pending
government investigation. 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 Government Investigation: As discussed above, the
Government is currently investigating the Company's CMM division. There can
be no assurance as to how long this investigation will last and what the
outcome of the investigation will be and what effect, if any, the outcome of
the investigation will have on the Company, its sales of CMMs and other
products or its stock price.
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.
Page 10 of 14
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 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT 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 September
2002 and June 2002, 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 $4 million as of September 28, 2002.
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 $12.5 million and debt of
$7.3 million at September 28, 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 $2.3
million by approximately $50,000.
Item 4. Controls and Procedures
Within the 90 days prior to the date of this Form 10-Q, the Company carried
out an evaluation, under the supervision and with the participation of the
Company's management, including the Company's Chief Executive Officer along
with the Company's Chief Financial Officer, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures
pursuant to Exchange Act Rule 13a-14. Based upon that evaluation, the
Company's Chief Executive Officer along with the Company's Chief Financial
Officer concluded that the Company's disclosure controls and procedures are
effective in timely alerting them to material information relating to the
Company (including its consolidated subsidiaries) required to be included in
the Company's periodic Securities and Exchange Commission filings. There
have been no significant changes in the Company's internal controls or in
other factors which could significantly affect internal controls subsequent
to the date the Company carried out its evaluation.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The information under the caption "Coordinate Measuring Machine Division" in
Item 2 of Part I of this Form 10-Q is hereby incorporated by reference.
Page 11 of 14
Item 4. Submission of Matters to a Vote of Security Holders.
(a) A regular meeting of shareholders was held on September 18, 2002.
(c) 1. The following directors were elected:
Abstentions
Votes Votes and Broker
For Withheld Non-votes
A and B shares voting together:
Roger U. Wellington, Jr. 16,430,422 303,747 N/A
Antony McLaughlin 16,524,224 209,945 N/A
2. As more fully described in the registrant's Notice of Annual
Meeting of Stockholders and Proxy Statement for said meeting,
it was voted to adopt the Company's 2002 Employees' Stock
Purchase Plan. There were 14,102,517 votes in favor, 1,546,579
against and 371,140 abstentions.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
10e 2002 Employees' Stock Purchase Plan.
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.
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.
(b) Reports on form 8-K
On September 6, 2002, the Company filed a Report on Form 8-K
concerning the September 5, 2002 search by federal agents of the
Company's Coordinate Measuring Machine Division at its Mt. Airy,
North Carolina facility.
SIGNATURES
Pursuant to the requirements 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)
Date November 12, 2002 S/R.U.WELLINGTON, JR.
R. U. Wellington, Jr. (Vice President,
Treasurer and Chief Financial Officer)
Date November 12, 2002 S/S.G.THOMSON
S. G. Thomson (Chief Accounting Officer)
Page 12 of 14
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Douglas A. Starrett, certify that:
1. I have reviewed this quarterly report on Form 10-Q of The L.S.Starrett
Company;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: November 12, 2002 S/DOUGLAS A. STARRETT
Douglas A. Starrett
President and Chief Executive
Officer
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CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Roger U. Wellington, Jr., certify that:
1. I have reviewed this quarterly report on Form 10-Q of The L.S.Starrett
Company;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: November 12, 2002 S/ROGER U. WELLINGTON, JR.
Roger U. Wellington, Jr.
Vice President, Treasurer
and Chief Financial Officer
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