Net sales of the Electronics business unit totaling $11.5 million were flat when compared with the same period one year earlier.  Electronics experienced sales declines in the security, HVAC, automotive, and white goods markets related to the housing downturn, offset with sales growth in its aerospace and industrial businesses.  

Gross Margin

Our gross profit margin increased to 29.8% for the second quarter of fiscal 2008 from 27.6% in the same quarter of the prior year.  Gross profit for the three months ended December 31, 2007 increased $12.8 million to $51.3 million compared to $38.5 million for the three months ended December 31, 2006.  Acquisitions within the Food Service Equipment Group contributed $8.5 million of the increase in gross profit.  With the exception of ADP, gross profit margins increased in each segment.  The decline in ADP is primarily the result of pressure on margins due to volume declines and material cost increases.

Operating Expenses

The following table summarizes significant items included in our selling, general and administrative expenses along with the impact from acquisitions for the three months ended December 31, 2007 and 2006:

The $9.6 million increase in selling, general and administrative expense from last year was due primarily to the effect of the acquisitions made by the Food Service Equipment Group, which accounted for 71.6% of the increase.    

Executives and key members of management were issued performance based awards that were based upon three year financial performance targets. Given the downturn in several of the segments in fiscal 2007, a determination was made that the goals for the

performance periods ended June 30, 2007 would unlikely be achieved, resulting in the reversal during the three months ended December 31, 2006 of $1.5 million in expense associated with the awards to date.  The reversal accounted for most of the remainder of the increase.

As a percentage of net revenue, selling, general and administrative expense in the second quarter was 22.5%, net of acquisitions, compared to 21.8% last year.  Other selling, general and administrative expenses includes such expenses as repairs and maintenance fees, advertising and communication costs, travel and entertainment expense and other operating expenses.

Income from Operations

The following table presents segment income from operations in dollars and expressed as a percentage of net revenue for the respective segments for the three months ended December 31, 2007 and 2006.

Income from operations for the second quarter of fiscal 2008 was $11.3 million, or 42.6% higher than the $7.9 million reported for the same period a year ago.  Improvements in operating income were realized in all of our segments with the exception of ADP.  An explanation by segment follows.  

Food Service Equipment Group

Income from operations for the second quarter of fiscal 2008 increased $4.9 million, or 149.0%, when compared to the same period one year earlier.  Approximately $1.6 million of the increase was due to the acquisitions of AAI and AFS.  Excluding the effect of acquisitions, income from operations increased $3.3 million, or 100.5%, due to increased sales volume across the Group’s businesses as well as cost reductions and improved productivity.  

Air Distribution Products Group

Income from operations decreased $1.7 million, or 100.0%, from the same period one year earlier primarily due to a combination of higher material costs and volume decreases.  In response to the continued weak residential construction outlook and the inability to pass the material price increases fully through to its customers, ADP continues to focus efforts on actions to increase market share and reduce material costs, such as the cost of galvanized steel.

Management’s assessment of goodwill related to the ACME/Alco Manufacturing acquisition is that a triggering event has not occurred.  The company performs its annual assessment for goodwill impairment in the fourth quarter of each year.

Hydraulics Products Group

Income from operations increased $70,000, or 7.3%, as profitability improved on flat sales due to cost reductions and improved productivity.

Engraving Group

Income from operations increased by $749,000, or 39.9%, when compared to the same quarter in the prior year.  Increased sales to automotive OEM’s in both North America and the international operations were the primary contributor to the growth in operating income as the business benefited from higher margin programs and improved facility utilization.  The growth in income from

operations was offset partially by lower sales from the Roll, Plate, and Machinery division where market conditions and our customers lower capital spending have negatively impacted sales volume.  

Engineered Products Group

Income from operations increased $835,000, or 31.5%, when compared to the same period one year earlier.  This increase is primarily due to the new sales contract for NASA’s Orion rocket program  signed during the quarter.  The positive effect of the Chinese operation in our electronics business also helped to improve income from operations.

Corporate and Other

Corporate expenses of approximately $4.1 million in the second quarter of fiscal 2008 were $1.7 million more when compared to the same quarter in the prior year of $2.4 million.  The increase in expense was primarily due to a $1.5 million adjustment relating to the reversal of performance stock awards when management determined that the goals for the performance period ended June 30, 2007 were unlikely to be achieved.

Non-Operating Income and Expense

The following table presents interest expense incurred in connection with debt borrowings for the periods presented and other non-operating miscellaneous income or expense:

The increase in interest expense incurred in the three months ended December 31, 2007, as compared with the three months ended December 31, 2006, related to an increase in our overall debt in connection with our credit facility.  The debt level year over year increased to fund the acquisitions of AAI and AFS in January 2007.  

Income Taxes

The following table presents the income tax provision and effective tax rates for the three months ended December 31, 2007 and 2006:

The effective tax rate in the three months ended December 31, 2007 was higher than the effective tax rate in the three months ended December 31, 2006 primarily due to the benefit related to the retroactive extension of the R&D tax credit.  The annual estimated tax rate was re-measured during the second quarter of fiscal 2007 because the tax law was changed to reinstate the credit. The impact of $238,000 was recognized in the second quarter of fiscal 2007.  Our effective tax rate may vary from period to period based on changes in estimated taxable income or loss, changes to federal, foreign or state tax laws, future expansion into areas with varying foreign, state or local income tax rates, and the deductibility of certain costs and expenses by jurisdiction.

Six Months Ended December 31, 2007 Compared to Six Months Ended December 31, 2006

Net Revenues

The following table presents segment net revenues and segment net revenues expressed as a percentage of total net revenues for the six months ended December 31, 2007 and 2006:

Net sales for the six months ended December 31, 2007 increased $59.0 million, or 20.4%, to $347.8 million from $288.8 million for the six months ended December 31, 2006.  The increase in net sales is due to the sales from our acquisitions within the Food Service Equipment Group and good organic sales growth within the Food Service, offset by sales declines in the ADP and Hydraulics Products Groups.  The Food Service Equipment Group acquisitions of AAI and AFS completed in January 2007 contributed approximately $51.3 million in revenues.  Disregarding the effects of acquisitions and foreign exchange rate impact, net sales for the six months ended December 31, 2007 increased $3.3 million, or 1.1%, when compared to the six months ended December 31, 2006.  Sales were negatively impacted in the ADP and Hydraulics Products Groups due to continued recessionary conditions in new residential construction and the heavy construction vehicle market, respectively.  Net sales for the Engineered Products Group were above the same period in the prior year due to sales growth at the Spincraft business relating to the tooling and hardware for NASA’s Orion rocket program

Food Service Equipment Group

Net sales in the six months ended December 31, 2007 increased $66.7 million, or 53.2%, over the same period one year earlier.    Acquisitions accounted for $51.3 million of the increase year over year, while the effects of foreign exchange rates on sales added an additional $933,000.  When removing the effect of acquisitions and foreign exchange rate impact, organic sales increased for the six months ended December 31, 2007, $14.4 million, or 11.5%, when compared with the six months ended December 31, 2006.  An increase of $12.6 million was posted in our walk-in cooler and refrigerated cabinet businesses generally due to strong demand by key customers.  BKI also had recorded good sales growth with increased sales in the supermarket and grocery store markets within the United Kingdom totaling $2.5 million.  An increase in sales was also noted in the pump business totaling $768,000.    

Air Distribution Products Group

Net sales for the six months ended December 31, 2007, decreased $7.3 million, or 12.6%, when compared with the six months ended December 31, 2006.  The decrease is the result of an ongoing downward trend in the new residential home construction markets that we serve.  ADP is continuing to pursue opportunities to capture market share including sales growth in the big box retail locations and seeking further geographical penetration with several national wholesalers by leveraging its nationwide manufacturing capabilities.  

Hydraulics Products Group

Net sales decreased $1.4 million, or 7.8%, from $18.3 million for the six month period ending December 31, 2006, to $16.9 million for the six month period ending December 31, 2007.  The decrease was attributable to the continuing weak market conditions in the dump truck and dump trailer business.  

Engraving Group

Net sales increased by $886,000, or 2.1%, when compared to the same period one year ago.  When removing the effect of foreign exchange rate impact, sales decreased $1.5 million, or 3.5%.  The overall net decrease is attributed to delays of several new platform projects by the group’s OEM automotive customers in North America and weaker demand in the Roll, Plate and Machinery business unit.  During the second quarter of fiscal 2008 orders for the new platform projects came on line.  This improvement is expected to continue in the second half of the fiscal year.  The Group’s international operations increased sales at both automotive OEM’ and non-automotive customers.  

Engineered Products Group

Net sales increased $179,000, or 0.4%, when compared to the same period one year earlier.  Last year’s sales were positively affected by a non-recurring shipment of $1.2 million.  We continue to see robust demand across our energy, aviation and aerospace end-user markets.  In anticipation of the contracts we have been awarded during the past year, the Group initiated the installation of several major machine tools during the first half of fiscal 2008 to support the sales growth we are experiencing in this business.  The installation of this equipment continued during the second quarter and we expect that all of the equipment will be put into operation during the third fiscal quarter.

During the second quarter of fiscal 2008, Spincraft entered into a sales contract for tooling and hardware for NASA’s Orion rocket program for $8.2 million.   The first two deliverable milestones were completed during the six months ended December 31, 2007, and approximately $2.3 million of revenue was recognized.  The next deliverable milestone is expected to be completed during the beginning of the fourth quarter.

For the six months ended December 31, 2007, net sales for the Electronics business totaled $23.7 million were flat when compared with the six months ended December 31, 2006. Lower sales to the automotive, security, HVAC and white goods markets were offset by higher sales to aerospace and control businesses.   

Gross Margin

Gross margin as a percent of net sales for the six months ended December 31, 2007, increased 23.7% to $100.9 million from $81.5 million for the same period last year.  The $19.4 million increase in gross margin was due primarily to the increase in revenue in the Food Service Equipment Group.  Acquisitions within the Food Service Equipment Group accounted for $17.1 million of the increase.  The Engineered Products segment also increased their gross profit margin during the first half of fiscal 2008 when compared with the first half of fiscal 2007.  Gross profit margin decreased in the ADP, Engraving and Hydraulics Product segments.  Gross profit margin was 29.0% of net revenues for the six months ended December 31, 2007 compared with 28.2% of net revenues for the six months ended December 31, 2006.  

Operating Expenses

The following table summarizes significant items included in our selling, general and administrative expenses for the six months ended December 31, 2007 and 2006:

The $15.6 million increase in selling, general and administrative expense from last year related primarily to our acquisitions of AAI and AFS in January 2007.  The impact from those acquisitions to compensation and benefits was $7.4 million, or 47.5% of the total increase.  The reversal of expense for $1.5 million recorded in the first half of fiscal 2007 for performance-based awards for the period ended June 30, 2007, also impacted the change in selling, general and administrative expenses which relates to employee compensation and benefits.  

As a percentage of net revenue, selling, general and administrative expense in the first half of fiscal 2008 increased to 22.0%, net of acquisitions, from 21.9% for the same period in the prior year.  Other selling, general and administrative expenses include such expenses as repairs and maintenance fees, advertising and communication costs, travel and entertainment expense and other operating expenses.

Income from Operations

The following table presents segment income from operations in dollars and expressed as a percentage of net revenues for the respective segments for the six months ended December 31, 2007 and 2006:

Income from operations for the first half of fiscal 2008 was $22.1 million, or 22.3% higher than the $18.1 million reported for the same period a year ago.  Improvements in operating income were realized in the Food Service Equipment Group and the Engineered Products Groups, with decreases in the other segments.  An explanation by segment follows.  

Food Service Equipment Group

Income from operations for the first half of 2008 increased $9.6 million, or 116.3%, when compared to the same period one year earlier.  Approximately $3.5 million of the increase was due to the acquisitions of AAI and AFS.  Excluding the effect of acquisitions, income from operations increased $6.1 million, or 73.5%, due to increased sales demand across the group as well as cost reductions and improved productivity.  

Air Distribution Products Group

Income from operations decreased $3.5 million, or 89.7%, from the same period one year earlier primarily due to volume decreases and also due to higher material costs.  In response to the continued weak residential construction outlook and the inability to pass the material price increases fully through to its customers,  ADP continues to focus efforts on actions to increase market share and reduce material costs, such as the cost of galvanized steel.  

Management’s assessment of goodwill related to the ACME/Alco Manufacturing acquisition is that a triggering event has not occurred.  The company performs its annual assessment for goodwill impairment in the fourth quarter of each year.

Hydraulics Products Group

Income from operations decreased $459,000, or 17.0%, when compared to the same period one year earlier due to lower volume in the dump truck and dump trailer business which was due to weak market conditions coupled with the impact of the January 1, 2007 EPA emission regulations.

Engraving Group

Income from operations decreased by $785,000, or 16.8%, when compared to the first half of the prior fiscal year.  Delays in the commencement of programs by the North American automotive customers caused income from operations to be lower in the first half of fiscal 2008.  Those programs did commence in the second quarter.  Lower profitability in North America was partially offset by improved performance in our international business.  Improved sales volume and productivity improvements benefitted the profitability of the international engraving operations.

Engineered Products Group

Income from operations increased $1.7 million, or 37.6%, when compared to the same period one year earlier.  The increase can be attributed to the new sales contract for NASA’s Orion rocket program signed during the quarter and the completion of the first two deliverable milestones of a five milestone contract.  Profitability at the electronics business benefitted from price increases, cost reductions and the sourcing of products from our new Chinese facility.

Corporate and Other

Corporate expenses of approximately $8.7 million in the first half of fiscal 2008 were $2.9 million more when compared to the same six month period in the prior year of $5.8 million.  The increase was primarily due to the $1.5 million reversal of expense that occurred during the first half of fiscal 2007 as well as the gain of approximately $1.1 million associated with the sale of excess land from our corporate offices in the first half of fiscal 2007.  Excluding these two prior year gains, corporate expenses increased $298,000.

Non-Operating Income and Expense

The following table presents interest expense incurred in connection with debt borrowings for the periods presented and other non-operating miscellaneous income or expense:

The increase in interest expense incurred in the six months ended December 31, 2007, as compared with the six months ended December 31, 2006, related to an increase in our overall debt in connection with our credit facility.  The debt level year over year increased to fund the acquisitions of AAI and AFS during January 2007.  The effective annual interest rate on our debt was 6.3% in the six months ended December 31, 2007 and 6.1% in the six months ended December 31, 2006.

Income Taxes

The following table presents the income tax provision and effective tax rates for the six months ended December 31, 2007 and 2006:

The effective tax rate in the six months ended December 31, 2007, was higher than the effective tax rate in the six months ended December 31, 2006 primarily due to the benefit related to the retroactive extension of the R&D tax credit.  The annual estimated tax rate was re-measured during the second quarter of fiscal 2007 due to the tax law being changed to reinstate the credit.  The effective tax rate also increased due to the decrease in the statutory tax rate in Germany on deferred tax assets recorded in prior periods.  Our effective tax rate may vary from period to period based on changes in estimated taxable income or loss, changes to federal, foreign or state tax laws, future expansion into areas with varying foreign, state or local income tax rates, and the deductibility of certain costs and expenses by jurisdiction.

Results from Discontinued Operations:

As more fully discussed in our Annual Report on Form 10-K for the year ended June 30, 2007, we are accounting for three former businesses (USECO, Standard Publishing and Berean Christian Stores) as discontinued operations.

In the first half of fiscal 2008, we sold certain land, buildings and improvements related to the Standard Publishing business for $1.6 million and realized a gain on disposal of approximately $605,000 (net of taxes of $302,000).  The gain on disposal was reported in discontinued operations.

In March 2006, we entered into a plan to dispose of certain assets of our USECO product lines.  During the first half of fiscal 2007, we were able to complete the sale of the under-sink food disposals product line resulting in a gain on the sale of a portion of the USECO business of approximately $541,000 (net of taxes of $17,000) offset by losses from the USECO operations.  In the first half of fiscal 2007, we also recorded gains on the disposals of the Standard Publishing and Berean Christian Stores businesses totaling $6.9 million (net of taxes of $3.9 million).  Operating losses related to these discontinued businesses of $745,000 (net of taxes of $422,000) were also recorded.  Substantially all of the assets of the Standard Publishing and Berean Christian Stores businesses were sold in July 2006 and August 2006, respectively.  Accordingly, we reported income from discontinued operations of approximately $6.2 million (net of taxes) in the first half of fiscal 2007.  In connection with Berean, we were party under a number of operating leases for existing stores and one closed store.  The store leases in this transaction were assigned to the purchaser of the business for the remaining initial terms of the lease at the stated lease costs.

Backlog

The following table presents backlog aged by segment at December 31, 2007 and 2006:

Backlog at December 31, 2007, increased $24.8 million, or 27.6%, compared to December 31, 2006. Approximately $14.9 million of the increase relates to the businesses acquired in fiscal 2007.  The Engineered Products Groups reported higher backlog due to the new sales contract for NASA’s Orion rocket program.  Hydraulics Products Group also reported higher backlog while the Engraving Group reported much lower backlog. Backlog in ADP was approximately the same as the prior year.

Liquidity and Capital Resources

The following table summarizes our sources and uses of cash during the six months ended December 31, 2007 and 2006:

Our cash and cash equivalents balance decreased $5.5 million from $24.1 million as of June 30, 2007, to $18.6 million as of December 31, 2007 for the reasons discussed below.  The growth of our business is currently funded primarily through cash flow from operations and borrowings under our credit facility.  For the six months ended December 31, 2007, cash provided by operating activities was $16.6 million compared to $5.2 million in the prior year period.  In the six months ended December 31, 2007, we were able to repay $22.2 million of our credit facility borrowings as a result of the strong operating cash flows in the period.  The Company intends to use cash flows generated from operations to repay amounts outstanding under the credit facility, complete acquisitions, fund capital expenditures and pay dividends.

Contributing to the increase in operating cash flow was a 20.4% increase in net revenues from $288.8 million in the six months ended December 31, 2006, to $347.8 million in the six months ended December 31, 2007.  Net working capital levels for continuing operations (defined as accounts receivable plus inventories less accounts payable) were $135.0 million at December 31, 2007 compared to $131.4 million at June 30, 2007.  Days sales outstanding for the quarter were 52 days, a decrease of 2 days from 54 days as of June 30, 2007.  Inventory days on hand as of December 31, 2007 increased 5 days to 71 days compared with 66 days as of June 30, 2007, as a result of slower inventory movement during the second quarter of fiscal 2008.  

Net cash flows used for investing activities in the six months ended December 31, 2007 were $3.6 million, or a decrease of $24.6 million from the $28.1 million cash provided by investing activities in the prior year period.  Discontinued operations generated $23.9 million of net cash flow from operating and investing activities in the six months ended December 31, 2006, due to the sales of the Standard Publishing and the Berean Christian Stores businesses.  Compared to the prior year period, purchases of property, plant and equipment increased $1.6 million from $4.2 million in the six months ended December 31, 2006 to $5.8 million in the six months ended December 31, 2007.  We are investing in fixed assets that are beneficial to the growth of our individual segments and to the Company as a whole.  The sale and leaseback of certain land and improvements by Standex Air Distribution Products, Inc. (ADP), one of our subsidiaries, contributed $7.2 million in investing cash flow.  Investing activities from discontinued operations generated net cash of $1.6 million from the sale of certain land, buildings and improvements related to our former Standard Publishing business.  

Net cash used for financing activities in the six months ended December 31, 2007, was $26.3 million, an improvement of $8.9 million from the $35.1 million used for financing activities in the six months ended December 31, 2006.  We repaid $22.2 million in amounts of debt outstanding in the six months ended December 31, 2007 compared with $28.2 million repaid in the six months ended December 31, 2006.  We also borrowed $1.6 million against our line of credit to fund working capital requirements as of December 31, 2007.  Our short-term debt totaling $30.1 million is primarily from one of our private placement loans coming due in the second quarter of fiscal 2009.  As of December 31, 2007, we had $100.0 million outstanding under our revolving Credit Facility.  The available credit facility balance of $50.0 million will be available to fund acquisitions, capital expenditures, and for other general corporate purposes.  

The revolving credit facility provides us with the ability to borrow up to $150 million at competitive interest rates and the option to increase the facility up to $225 million.  The revolving credit facility contains customary affirmative and negative covenants.  Among other restrictions, they require that we meet specified financial tests, including minimum net worth levels and minimum coverage and leverage ratios.  The covenants also limit, but do not preclude, our ability to incur additional debt, merge with other entities, create or become subject to liens and sell major assets.  

Borrowings under the revolving credit facility accrue interest at a rate equal to the sum of a base rate or a Eurodollar rate plus an applicable margin, which is based on our consolidated total leverage ratio, as defined in the revolving Credit Facility.  The effective interest rates for all borrowings outstanding were 6.3% and 6.4%, respectively, at December 31, 2007 and June 30, 2007.  At December 31, 2007, the revolving credit facility carried a commitment fee of 0.2% per annum.

In September 2007, we executed an amendment to the revolving credit facility which (i) extended the maturity date to September 11, 2012 and (ii) modified the interest coverage and leverage ratio tests to reflect the recent acquisitions.  Accordingly, borrowings outstanding under this facility have been classified as long-term liabilities.  

In September 2007, we also executed an amendment of our outstanding note purchase agreements with institutional investors which conformed the interest coverage and leverage ratio tests to the revolving credit facility to reflect the recent acquisitions.

At December 31, 2007, we were in compliance with the financial covenants of our debt agreements, and based upon our current plans and outlook, believe that we will continue to be in compliance with these covenants during the coming twelve-month period.

The following table sets forth our capitalization at December 31, and June 30, 2007:

We sponsor a number of defined benefit and defined contribution retirement plans.  We have evaluated the current and long-term cash requirements of these plans.  Our operating cash flows from continuing operations are expected to be sufficient to cover required contributions under ERISA and other governing regulations.  Current benefits for the U.S. salaried employee plan and Standex Supplemental Retirement Plan (SERP) were frozen at December 31, 2007 and an enhanced 401K plan was introduced, including increased employer contributions for eligible employees.

We have an insurance program in place for certain retired executives.  Current executives and new hires are not eligible for this program.  The underlying policies have a cash surrender value of $23.4 million at December 31, 2007 and are reported net of loans of $11.2 million for which we have the legal right of offset.  These policies have been purchased to fund supplemental retirement income benefits for certain retired executives.  The aggregate present value of future obligations was approximately $1.9 million at December 31 and June 30, 2007.  

We are contractually obligated under various operating leases for real property.  As noted above, in connection with the sale of certain land and improvements on September 24, 2007, ADP entered into a lease for a major portion of those assets, including its manufacturing facility.  The lease includes an initial term of ten years and provides ADP with two five-year renewal options.

The Company is a guarantor of certain assigned leases to Berean Christian Bookstores, one of our discontinued operations.  The total guarantee approximated $9.0 million at December 31, 2007, compared to $9.9 million at June 30, 2007.  We do not expect to make any payments as a result of these guarantees.

We believe that our ending cash and cash equivalents balance as of December 31, 2007, of approximately $18.6 million coupled with cash flow generated by operations and available credit facility funds, will be sufficient to meet working capital, planned capital expenditure investments, future acquisitions for our segment growth, and other investing and financing needs, including the payment of dividends to shareholders.  We expect to spend between $11.0 million and $13.0 million on capital expenditures in fiscal 2008 and expect that depreciation and amortization expense in fiscal 2008 will approximate $17.0 million to $18.0 million.  We anticipate that any cash needed for future acquisition opportunities and payments of short-term debt would be obtained from borrowings under the revolving Credit Facility or other sources of liquidity available to us.  We believe that these resources, along with the cash flow generated from operations, will be sufficient to meet our anticipated funding needs for the foreseeable future.  

Other Matters

Inflation - Certain of our expenses, such as wages and benefits, occupancy costs and equipment repair and replacement, are subject to normal inflationary pressures.  Inflation for medical costs can impact both our reserves for self-insured medical plans as well as our reserves for workers' compensation claims.  We monitor the inflation rate and make adjustments to reserves whenever it is deemed necessary.  Our ability to manage medical cost inflation is dependent upon our ability to manage claims and purchase insurance coverage to limit our maximum exposure.

Foreign Currency Translation - The primary functional currencies used by our non-U.S. subsidiaries are the Canadian Dollar, Euro and the British Pound Sterling.  During the last twelve-month period, all of these currencies have appreciated relative to the U.S. Dollar.  

Environmental Matters - We are party to various claims and legal proceedings, generally incidental to our business.  We do not expect the ultimate disposition of these matters will have a material adverse effect on our financial statements.  Seasonality - Historically, the fourth quarter of the fiscal year has been the strongest quarter for our consolidated financial results.  The fourth quarter performance of the Food Service Equipment and ADP Groups have historically been enhanced by increased activity in the construction of food retail outlets and the home building industry, respectively.  However, ADP’s historical pattern is being impacted by the recessionary conditions in the residential construction market.

Critical Accounting Policies

The consolidated condensed financial statements include the accounts of Standex International Corporation and all of its subsidiaries.  The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying unaudited consolidated condensed financial statements, giving due consideration to materiality.  Although we believe that materially different amounts would not be reported due to the accounting policies adopted, the application of certain accounting policies involves the

exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates.  Our Annual Report on Form 10-K for the year ended June 30, 2007, lists a number of accounting policies which we believe to be the most critical.  

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

Risk Management

We are exposed to market risks from changes in interest rates, commodity prices and changes in non-U.S. currency exchange.  To reduce these risks, we selectively use, from time to time, financial instruments and other proactive management techniques.  We have

internal policies and procedures that place financial instruments under the direction of the Chief Financial Officer and restrict all derivative transactions to those intended for hedging purposes only.  The use of financial instruments for trading purposes (except for certain investments in connection with the KEYSOP plan) or speculation is strictly prohibited.  We have no majority-owned subsidiaries that are excluded from the consolidated financial statements.  Further, we have no interests in or relationships with any special purpose entities.

Exchange Rate Risk

We are exposed to both transactional risk and translation risk associated with exchange rates.  Regarding transactional risk, we mitigate certain of our foreign currency exchange rate risk by entering into forward foreign currency contracts from time to time.  The contracts are used as a hedge against anticipated foreign cash flows, such as dividend and loan payments, and are not used for trading or speculative purposes.  The fair value of the forward foreign currency exchange contracts is sensitive to changes in foreign currency exchange rates, as an adverse change in foreign currency exchange rates from market rates would decrease the fair value of the contracts.  However, any such losses or gains would generally be offset by corresponding gains and losses, respectively, on the related hedged asset or liability.  

Our primary translation risk is with the Euro and the British Pound Sterling.  We do not hedge our translation risk. As a result, fluctuations in currency exchange rates can affect our stockholders’ equity.

Interest Rate

Our interest rate exposure is limited primarily to interest rate changes on our variable rate borrowings.  From time to time, we use interest rate swap agreements to modify our exposure to interest rate movements.  At December 31, 2007, we had no outstanding interest rate swap agreements.  A hypothetical 100 basis point increase in interest rates would cost the Company approximately $1.0 million in additional interest expense on an annual basis at current debt levels.

We also had $42.9 million of long-term debt at fixed interest rates as of December 31, 2007.  There would be no immediate impact on our interest expense associated with the long-term debt due to fluctuations in market interest rates.

There has been no significant change in the exposure to interest rate fluctuations from June 30, 2007 to December 31, 2007.

Concentration of Credit Risk

We have a diversified customer base.  As such, the risk associated with concentration of credit risk is inherently minimized.  As of December 31, 2007, no one customer accounted for more than 5% of our consolidated outstanding receivables or of our sales.  

Commodity Prices

We are exposed to fluctuating market prices for commodities, primarily steel.  Each of our segments is subject to the effects of changing raw material costs caused by the underlying commodity price movements.  In general, we do not enter into purchase contracts that extend beyond one operating cycle.  We consider our relationship with our suppliers to be excellent and we have not been impacted by any allocations or shortages of materials that may have affected other companies.  There can be no assurances that we will not experience any supply shortage.

Our ADP, Engineered Products, Hydraulics Products and Food Service Equipment Groups have been experiencing price increases for steel products, other metal commodities and petroleum based products.  Among the items impacted were the prices of galvanized steel strip, stainless steel and carbon steel sheet material, copper wire, refrigeration components and foam insulation.  Those materials are key elements in the products manufactured in these segments.  Wherever possible, the affected divisions implement price increases to offset the increases to material costs.  The implemented price increases in the ADP and Food Service Equipment Groups did not fully offset the higher material costs.  ADP has been unable to implement additional price increases sufficient to cover current and expected increases in costs.  The ultimate acceptance of price increases is impacted by our affected divisions’ respective competitors and the timing of their price increases.  

Item 4.  Controls and Procedures

Our management, including Roger L. Fix as Chief Executive Officer and Sean Valashinas as Chief Accounting Officer, has evaluated the effectiveness of our disclosure controls and procedures.  Under the rules promulgated by the Securities and Exchange Commission, disclosure controls and procedures are defined as those “controls or other procedures of an issuer that are designed to ensure that information required to be disclosed by an issuer in the reports issued or submitted by it under the Exchange Act are recorded,

processed, summarized and reported within the time periods specified in the Commission's rules and forms.”  Based on the evaluation of our disclosure controls and procedures, it was determined that such controls and procedures were effective as of the end of the period covered by this report.

Further, there was no change in the internal controls over financial reporting during the quarterly period ended December 31, 2007, that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.

PART II.  OTHER INFORMATION

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

(e)

The following table provides information about purchases by the Company of equity securities that are registered by the Company pursuant to Section 12 of the Exchange Act:

Item 4.  Submission of Matters to a Vote of Security Holders

(a)

The Company held its Annual Meeting of Stockholders on October 30, 2007.  Three matters were voted upon at the meeting:  the election of three directors to hold office for three-year terms ending at the Annual Meeting to be held in 2010; the approval of an amendment to the Company’s Employee Stock Purchase Plan to increase the number of shares available for purchase by 200,000 and to ratify the appointment by the Audit Committee of the Board of Directors of Deloitte & Touche LLP as independent auditors of the Company for the fiscal year ending June 30, 2008.

The name of each director elected at the meeting and the number of votes cast as to each matter are as follows:

Proposal I (Election of Directors)

Nominee

For

Withheld

H Nicholas Muller III

9,169,665

1,026,074

William Fenoglio

9,843,166

   352,573

Deborah Rosen

8,757,421

1,438,318

Proposal II (Amendment to the Employee Stock Purchase Plan to increase the number of shares available for purchase by 200,000)

For

Against

Abstain

No Vote

8,962,278

 143,429

37,836

1,052,196

Proposal III (Ratification of Deloitte & Touche LLP as Independent Public Accountants)

For

Against

Abstain

No Vote

10,027,002

 149,720

19,017

  -0-

Item 6.  Exhibits

(a)

Exhibits

31.1

Principal Executive Officer’s Certification Pursuant to Rule 13a-14(a)/15d-14(a) and Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Principal Financial Officer’s Certification Pursuant to Rule 13a-14(a)/15d-14(a) and Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32

Principal Executive Officer and Principal Financial Officer Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

ALL OTHER ITEMS ARE INAPPLICABLE

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.