-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GYv3Odu+DSP4nHOXN7t/nniWX1BzfgF+pgPSIHerwwrNzwhYbUt5S1YYbWiBO3ow PVivi3NV7l8mckfZt6y+7A== 0000950131-02-002735.txt : 20020719 0000950131-02-002735.hdr.sgml : 20020719 20020717153948 ACCESSION NUMBER: 0000950131-02-002735 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20020430 FILED AS OF DATE: 20020717 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KEWAUNEE SCIENTIFIC CORP /DE/ CENTRAL INDEX KEY: 0000055529 STANDARD INDUSTRIAL CLASSIFICATION: LABORATORY APPARATUS & FURNITURE [3821] IRS NUMBER: 380715562 STATE OF INCORPORATION: DE FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-05286 FILM NUMBER: 02704786 BUSINESS ADDRESS: STREET 1: 2700 W FRONT ST CITY: STATESVILLE STATE: NC ZIP: 28677 BUSINESS PHONE: 7048737202 MAIL ADDRESS: STREET 1: P O BOX 1842 CITY: STATESVILLE STATE: NC ZIP: 28687-1842 FORMER COMPANY: FORMER CONFORMED NAME: KEWAUNEE MANUFACTURING CO DATE OF NAME CHANGE: 19680108 FORMER COMPANY: FORMER CONFORMED NAME: KEWAUNEE SCIENTIFIC EQUIPMENT CORP /DE/ DATE OF NAME CHANGE: 19861216 10-K 1 d10k.txt FORM 10-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended April 30, 2002 or -------------- [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to _____________ Commission file number 0-5286 ------ KEWAUNEE SCIENTIFIC CORPORATION ------------------------------- (Exact name of registrant as specified in its charter) Delaware 38-0715562 - --------------------------------- ---------------------------------- (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 2700 West Front Street Statesville, North Carolina 28677-2927 - --------------------------------- ---------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (704) 873-7202 Securities registered pursuant to Section 12(b) of the Act: None ------ Securities registered pursuant to Section 12(g) of the Act: Common Stock $2.50 par value ---------------------------- (Title of Class) 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. [X] The aggregate market value of 1,779,542 shares of voting stock held by non-affiliates of the Registrant was approximately $18,756,373 based on the last reported sale price of the Registrant's Common Stock on July 2, 2002. (Only shares beneficially owned by directors of the Registrant (excluding shares subject to options) were excluded as shares held by affiliates. By including or excluding shares owned by anyone, the Registrant does not admit for any other purpose that any person is or is not an affiliate of the Registrant.) As of July 5, 2002, the Registrant had outstanding 2,469,996 shares of Common Stock. DOCUMENTS INCORPORATED BY REFERENCE: Those portions of Kewaunee Scientific Corporation's annual report to stockholders for the fiscal year ended April 30, 2002, and of the proxy statement for use in connection with Kewaunee Scientific Corporation's annual meeting of stockholders to be held on August 28, 2002, indicated in this report are incorporated by reference into Parts I, II and III hereof. 1
Table of Contents Page or Reference ----------------- ----------------- PART I Item 1. Business 3 Item 2. Properties 4 Item 3. Legal Proceedings 5 Item 4. Submission of Matters to a Vote of Security Holders 5 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters 6 Item 6. Selected Financial Data 6 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 6 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 6 Item 8. Financial Statements and Supplementary Data 6 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 6 PART III Item 10. Directors and Executive Officers of the Registrant 7 Item 11. Executive Compensation 8 Item 12. Security Ownership of Certain Beneficial Owners and Management 8 Item 13. Certain Relationships and Related Transactions 8 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 9 SIGNATURES 12 EXHIBIT INDEX 13
2 PART I ITEM 1. BUSINESS General The principal business of the Registrant is the design, manufacture and installation of scientific and technical furniture. These products are primarily sold through purchase orders and contracts submitted by customers, through the Registrant's dealers and commissioned agents, a national distributor, and through competitive bids submitted by the Registrant. The Company's operations are classified into two business segments: laboratory products and technical products. The laboratory products segment principally designs, manufactures, and installs steel and wood laboratory furniture, worksurfaces, and fume hoods. Laboratory products are sold principally to pharmaceutical, biotechnology, industrial, chemical and commercial research laboratories, educational institutions, health care institutions, and governmental entities. The technical products segment principally manufactures and sells technical furniture including network storage systems, workstations, workbenches, computer enclosures, and related accessories. Technical products are sold principally to manufacturing facilities and users of computer and networking furniture. Financial information pertaining to each of the Registrant's business segments is presented in Note 9, "Segment Information," at page 25 of the Registrant's annual report to stockholders for the year ended April 30, 2002, which Note is incorporated herein by reference. It is common in the laboratory furniture industry for customer orders to require delivery at extended future dates, because the products are frequently to be installed in buildings yet to be constructed. Changes or delays in building construction may cause delays in delivery of the orders. Since prices are normally quoted on a firm basis in the industry, the Registrant bears the burden of possible increases in labor and material costs between receipt of an order and delivery of the product. The need for working capital and the credit practices of the Registrant are comparable to those of other companies selling similar products in similar markets. Payments for the Registrant's laboratory products are received over longer periods of time than payments for many other types of manufactured products, thus requiring increased working capital. In addition, payment terms associated with certain projects provide for a retention amount until completion of the project, thus also increasing required working capital. The principal raw materials and products manufactured by others used by the Registrant in its products are cold-rolled carbon and stainless steel, hardwood lumber and plywood, paint, chemicals, resins, hardware, plumbing and electrical fittings. Such materials and products are purchased from multiple suppliers and are readily available. The Registrant holds various patents and patent rights but does not consider that its success or growth is dependent upon its patents or patent rights. The Registrant's business is not dependent upon licenses, franchises or concessions. The Registrant's business is not cyclical, although sales are sometimes lower during the Registrant's third quarter because of slower construction activity in certain areas of the country during the winter months. The Registrant's business is not dependent on any one or a few customers; however, sales to VWR International represented 12 percent, 13 percent, and 11 percent of the Registrant's total sales in fiscal years 2002, 2001 and 2000, respectively. The Registrant's sales order backlog at April 30, 2002 was $34.2 million, down from $35.5 million at April 30, 2001 and up from $31.5 million at April 30, 2000. All but $1.5 million of the backlog at April 30, 2002 was scheduled for shipment during fiscal year 2003; however, it may reasonably be expected that delays in shipments will occur because of customer rescheduling or delay in completion 3 of projects which involve the installation of the Registrant's products. Based on past experience, the Registrant expects that more than 90 percent of its backlog scheduled for shipment in fiscal year 2003 will be shipped during that year. Competition The Registrant considers the industries in which it competes to be highly competitive and believes that the principal competitive factors are price, product performance, and customer service. A significant portion of the business of the Registrant is based upon competitive public bidding. Research and Development The amount spent during the fiscal year ended April 30, 2002 on company-sponsored research and development activities related to new products or services or improvement of existing products or services was $618,273. The amounts spent for similar purposes in the fiscal years ended April 30, 2001 and 2000 were $742,860 and $783,046, respectively. Environmental Compliance In the last three fiscal years, compliance with federal, state or local provisions enacted or adopted regulating the discharge of materials into the environment has had no material effect on the Registrant. There are no material capital expenditures anticipated for such purposes, and no material effect therefrom is anticipated on the earnings or competitive position of the Registrant. Employees The number of persons employed by the Registrant at April 30, 2002 was 609. Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 Certain statements included and referenced in this report, including the Letter to Stockholders, narrative text, captions and Management's Discussion and Analysis of Financial Condition and Results of Operations, constitute "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). Such forward-looking statements involve known and unknown risks, uncertainties and other factors that could significantly impact results or achievements expressed or implied by such forward-looking statements. These factors include, but are not limited to, economic, competitive, governmental, and technological factors affecting the Company's operations, markets, products, services, and prices. The cautionary statements made pursuant to the Reform Act herein and elsewhere by the Company should not be construed as exhaustive. The Company cannot always predict what factors would cause actual results to differ materially from those indicated by the forward-looking statements. In addition, readers are urged to consider statements that include the terms "believes," "belief," "expects," "plans," "objectives," "anticipates," "intends" or the like to be uncertain and forward-looking. ITEM 2. PROPERTIES The Registrant owns and operates three plants in Statesville, North Carolina and one in Lockhart, Texas. The plants are involved in the production of the Registrant's products. The plants in Statesville, North Carolina are located in three separate adjacent buildings, which contain manufacturing facilities and warehouse space. Sales and marketing, administration, engineering and drafting personnel and facilities are also located in each of the three buildings. The Registrant's corporate offices are located in the largest building. The plant buildings together comprise approximately 382,000 square feet and are located on approximately 20 acres of land. In addition, at April 30, 2002, the Registrant leased multiple warehouse facilities totaling 62,000 square feet in 4 Statesville, North Carolina. The Registrant has entered into an agreement to lease a 100,000 square foot warehouse facility in Statesville once construction of such facility is completed. The new facility is expected to be completed in late calendar year 2002 and will replace the warehouse facilities leased by the Registrant at April 30, 2002. The plant in Lockhart, Texas is housed in a building of approximately 129,000 square feet located on approximately 30 acres. In addition, a separate 10,000 square foot office building on this site houses certain administrative personnel. All of the facilities which the Registrant owns are held free and clear of any encumbrances. The Registrant believes its facilities are suitable for their respective uses and are adequate for its current needs. ITEM 3. LEGAL PROCEEDINGS The Company is involved in a legal dispute with Bernards Bros. Inc., a former customer of the Company. The dispute is the subject of lengthy arbitration proceedings completed in December 2000. The arbitration was the result of a claim for unpaid contract amounts owed to the Registrant by Bernards Bros. Inc. and a counter-claim by Bernards Bros. Inc. against the Registrant for breach of contract, claiming that the Company unreasonably delayed Bernards Bros. Inc.'s project. In fiscal year 2001, the Company recorded a charge of $391,000, including an estimated liability of $134,000 for final settlement of the matter, based on its interpretation of the Arbitrator's award. In fiscal year 2002, pursuant to a Petition to Confirm Arbitration Award in Los Angeles Superior Court, a judgment was issued against the Company in this matter for approximately $1.3 million. The Company believes that the judgment entered by the trial court is inconsistent with the Arbitrator's award, and the Company intends to vigorously contest such judgment. The Company has filed an appeal with the Court of Appeals of the State of California (Bernards Bros. v. Kewaunee Scientific, et. al. Appellate Case No. B 152623) regarding this judgment. If appeal efforts are unsuccessful, the Company could be liable up to the amount of the judgment. From time to time, the Registrant is involved in certain other disputes and litigation relating to claims arising out of its operations in the ordinary course of business. Further, the Registrant periodically is subject to government audits and inspections. The Registrant believes that any such matters presently pending will not, individually or in the aggregate, have a material adverse effect on the Registrant's results of operations or financial condition. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not Applicable. 5 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Incorporated by reference from the Registrant's annual report to stockholders for the fiscal year ended April 30, 2002, page 28, sections entitled "Range of Market Prices" and "Quarterly Financial Data". As of July 5, 2002, the Registrant estimates there were approximately 1,020 stockholders of the Registrant's common shares, of which 289 were stockholders of record. ITEM 6. SELECTED FINANCIAL DATA Incorporated by reference from the Registrant's annual report to stockholders for the fiscal year ended April 30, 2002, page 27, section entitled "Summary of Selected Financial Data." ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Incorporated by reference from the Registrant's annual report to stockholders for the fiscal year ended April 30, 2002, pages 10-13, section entitled "Management's Discussion and Analysis." ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Registrant is exposed to market risk in the area of interest rates. This exposure is associated with amounts outstanding under a bank note, certain lease obligations for production machinery, and any future advances under the revolving credit loan, all of which are priced on a floating rate basis. The Registrant believes that this exposure to market risk is not material. The Registrant entered into an interest swap agreement in fiscal year 2002, whereby $1.5 million of the outstanding principal amount of the bank note effectively converts to a fixed rate of 6.37%, beginning May 1, 2002. The notional amount of this interest rate hedge is reduced in the same proportion as the principal balance of the bank note over the remaining term of the bank note. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Incorporated by reference from the Registrant's annual report to stockholders for the fiscal year ended April 30, 2002, pages 14-26. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not Applicable. 6 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (a) Incorporated by reference from the Registrant's proxy statement for use in connection with its annual meeting of stockholders to be held on August 28, 2002, pages 1-4, section entitled "Election of Directors". (b) The names and ages of the Registrant's executive officers and their business experience during the past five years are set forth below: Executive Officers of the Registrant
Name Age Position ---- --- -------- William A. Shumaker 54 President and Chief Executive Officer D. Michael Parker 50 Senior Vice President, Finance, Chief Financial Officer, Treasurer and Secretary Roger L. Eggena 61 Vice President, Manufacturing James J. Rossi 60 Vice President, Human Resources Kurt P. Rindoks 44 Vice President, Engineering and Product Development Kenneth E. Sparks 39 Vice President, General Manager Technical Furniture Group
William A. Shumaker has served as President of the Registrant since August 1999 and Chief Executive Officer since September 2000. He was elected a director of the Registrant in February 2000. He served as the Chief Operating Officer from August 1998, when he was also elected as Executive Vice President, until September 2000. Mr. Shumaker served as Vice President and General Manager of the Laboratory Products Group from February 1998 to August 1998. He joined the Registrant in December 1993 as Vice President of Sales and Marketing. D. Michael Parker joined the Registrant in November 1990 as Director of Financial Reporting and Accounting and was promoted to Corporate Controller in November 1991. Mr. Parker has served as Chief Financial Officer, Treasurer and Secretary since August 1995. He was elected Vice President of Finance in August 1995 and Senior Vice President of Finance in August 2000. Roger L. Eggena joined the Registrant in August 1997 as a plant manager and was promoted to Director of Manufacturing in January 1998. He was elected a Vice President of the Registrant in August 2000. Prior to joining the Registrant, Mr. Eggena was Vice President of Manufacturing with MDT Corporation from 1992 to 1996 and a consultant with Phillips Resource Group from 1996 to 1997. James J. Rossi joined the Registrant in March 1984 as Corporate Director of Human Resources and has served as Vice President of Human Resources since January 1996. 7 Kurt P. Rindoks joined the Registrant in July 1985 as an engineer and was promoted to Director of Engineering in July 1999 and to Director of Product Development in May 1992. He has served as Vice President of Engineering and Product Development since September 1996. Additionally, from May 1998 through October 2001, he served as General Manager of the Company's Resin Materials Division. Kenneth E. Sparks joined the Registrant in December 1997 as Director of Sales and Marketing of the Technical Furniture Group and was named General Manager of the Technical Furniture Group in August 1999. He was elected a Vice President in February 2001. Prior to joining the Registrant, Mr. Sparks was Vice President of Customer Satisfaction with AllSteel, Inc. from 1996 to 1997 and held various leadership positions in sales and marketing with The HON Company from 1986 to 1996. ITEM 11. EXECUTIVE COMPENSATION Incorporated by reference from the Registrant's proxy statement for use in connection with its annual meeting of stockholders to be held on August 28, 2002, pages 5-7, section entitled "Executive Compensation," pages 8-9, section entitled "Compensation Committee Report on Executive Compensation," and page 12, section entitled "Agreements with Certain Executives." ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Information regarding the security ownership of certain beneficial owners and management is incorporated by reference from the Registrant's proxy statement for use in connection with its annual meeting of stockholders to be held on August 28, 2002, pages 13-14, sections entitled "Security Ownership of Directors and Executive Officers" and "Security Ownership of Certain Beneficial Owners." The following table sets forth certain information as of April 30, 2002 with respect to compensation plans under which our equity securities are authorized for issuance:
Number of Weighted average Number of securities securities to be exercise price of remaining available for issued upon outstanding options, future issuance under exercise of warrants and rights equity compensation outstanding plans (excluding options, warrants securities reflected in and rights column (a)) Plan Category (a) (b) (c) --------------------------- ----------------- -------------------- ------------------------- Equity Compensation Plans approved by Security Holders: 1991 Key Employee Stock 141,074 $9.37 -0- Option Plan 1993 Stock Option Plan for 5,000 $9.95 -0- Directors 2000 Key Employee Stock 40,750 $9.55 59,250 Option Plan Equity Compensation Plans not approved by Security Holders: --- --- ---
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Incorporated by reference from the Registrant's proxy statement for use in connection with its annual meeting of stockholders to be held on August 28, 2002, pages 1-4, section entitled "Election of Directors" and page 12, section entitled "Agreements with Certain Executives." 8 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K The following documents are filed or incorporated by reference as part of this report:
Page or (a)(1) Financial Statements Reference -------------------- --------- Consolidated Statements of Operations Years ended April 30, 2002, 2001 and 2000 14* Consolidated Statements of Stockholders' Equity Years ended April 30, 2002, 2001 and 2000 14* Consolidated Balance Sheets - April 30, 2002 and 2001 15* Consolidated Statements of Cash Flows - Years ended April 30, 2002, 2001 and 2000 16* Notes to Financial Statements 17-25* Report of Independent Accountants 26* (a)(2) Financial Statement Schedule ---------------------------- Report of Independent Accountants on Financial Statement Schedules 10 Schedule I - Valuation and Qualifying Accounts 11 All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and, therefore, have been omitted. (a)(3) Exhibits -------- Exhibits required by Item 601 of Regulation S-K are listed in the Exhibit Index, which is attached hereto at pages 13 through 17 and which is incorporated herein by reference. (b) Reports on Form 8-K ------------------- No reports on Form 8-K were filed during the Registrant's fiscal year ended April 30, 2002.
__________________________ * Matters incorporated by reference to the page numbers shown in the Registrant's annual report to stockholders for the year ended April 30, 2002. 9 REPORT OF INDEPENDENT ACCOUNTANTS ON CONSOLIDATED FINANCIAL STATEMENT SCHEDULES To the Stockholders and Board of Directors of Kewaunee Scientific Corporation Our audits of the financial statements referred to in our report dated June 3, 2002 appearing in the 2002 Annual Report to Shareholders of Kewaunee Scientific Corporation (which report and financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the Financial Statement Schedule listed in Item 14(a)(2) of this Form 10-K. In our opinion, Page 1 of this Financial Statement Schedule related to fiscal years ended April 30, 2002, 2001, and 2000 presents fairly, in all material respects, the information set forth therein when read in conjunction with the related financial statements. PRICEWATERHOUSECOOPERS LLP Charlotte, North Carolina June 3, 2002 10 Schedule I, Page 1 Kewaunee Scientific Corporation Valuation and Qualifying Accounts ($ in thousands)
Balance at Beginning Bad Debt Balance at Description of Period Expense Deductions* End of Period ----------- --------- ------- ---------- ------------- Year ended April 30, 2002 Allowance for doubtful accounts $389 $155 $ 53 $597 ==== ==== ===== ==== Year ended April 30, 2001 Allowance for doubtful accounts $490 $144 $(245) $389 ==== ==== ===== ==== Year ended April 30, 2000 Allowance for doubtful accounts $387 $123 $ (20) $490 ==== ==== ===== ====
* Uncollectible accounts written off, net of recoveries. 11 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. KEWAUNEE SCIENTIFIC CORPORATION By: /s/ William A. Shumaker --------------------------------------- William A. Shumaker President and Chief Executive Officer Date: July 17, 2002 Pursuant to the requirements of the Securities Exchange Act of 1934, the following persons on behalf of the Registrant and in the capacities and on the dates indicated have signed this report below. (i) Principal Executive Officer ) ) /s/ William A. Shumaker ) ------------------------------- William A. Shumaker ) President and Chief Executive Officer ) ) (ii) Principal Financial and Accounting Officer ) ) /s/ D. Michael Parker ) ---------------------------- D. Michael Parker ) Senior Vice President-Finance ) Chief Financial Officer ) Treasurer and Secretary ) ) (iii) A majority of the Board of Directors: ) July 17, 2002 ) ) /s/ Margaret Barr Bruemmer /s/ Silas Keehn ) - --------------------------- ---------------- Margaret Barr Bruemmer Silas Keehn ) ) ) /s/ John C. Campbell, Jr. /s/ Eli Manchester, Jr. ) - -------------------------- ------------------------ John C. Campbell, Jr. Eli Manchester, Jr. ) ) ) /s/ William A. Shumaker /s/ James T. Rhind ) - ------------------------ ------------------- William A. Shumaker James T. Rhind ) 12 KEWAUNEE SCIENTIFIC CORPORATION Exhibit Index -------------
Page Number (or Reference) -------------- 3 Articles of incorporation and by-laws 3.1 Restated Certificate of incorporation (as amended) (3) 3.2 By-Laws (as amended as of May 22, 2002) (1) 10 Material Contracts 10.9 Kewaunee Scientific Corporation Supplemental Retirement Plan (4) 10.13 Kewaunee Scientific Corporation 1985 Re-Established Retirement Plan for Salaried Employees (2) 10.13A First Amendment dated June 4, 1996 to the Kewaunee Scientific Corporation 1985 Re-Established Retirement Plan for Salaried Employees (10) 10.13B Second Amendment dated November 19, 1996 to the Kewaunee Scientific Corporation 1985 Re-Established Retirement Plan for Salaried Employees (10) 10.14 Kewaunee Scientific Corporation 1985 Re-Established Retirement Plan for Hourly Employees (2) 10.14A First Amendment dated August 27, 1996 to the Kewaunee Scientific Corporation 1985 Re-Established Retirement Plan for Hourly Employees (10) 10.14B Second Amendment dated November 19, 1996 to the Kewaunee Scientific Corporation 1985 Re-Established Retirement Plan for Hourly Employees (10)
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Page Number (or Reference) -------------- 10.19 Kewaunee Scientific Corporation 1991 Key Employee Stock Option Plan (5) 10.19A First Amendment dated August 28, 1996 to the Kewaunee Scientific Corporation Key Employee Stock Option Plan (9) 10.19B Second Amendment dated August 26, 1998 to the Kewaunee Scientific Corporation Key Employee Stock Option Plan (12) 10.21 Kewaunee Scientific Corporation Executive Deferred Compensation Plan (6) 10.21A Second Amendment dated June 17, 1997 to the Kewaunee Scientific Corporation Executive Deferred Compensation Plan (11) 10.21B Third Amendment dated June 17, 1997 to the Kewaunee Scientific Corporation Executive Deferred Compensation Plan (11) 10.21C Fourth Amendment dated December 1, 1998 to the Kewaunee Scientific Corporation Executive Deferred Compensation Plan (12) 10.21D Fifth Amendment dated December 5, 2001 to the Kewaunee Scientific Corporation Executive Deferred Compensation Plan (1) 10.26 Kewaunee Scientific Corporation Stock Option Plan for Directors (7) 10.34 401(K) Incentive Savings Plan for Salaried and Hourly Employees of Kewaunee Scientific Corporation (8) 10.34A Amendments (2) dated June 17, 1997 to the 401(K) Incentive Savings plan for Salaried and Hourly Employees of Kewaunee Scientific Corporation (11)
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Page Number (or Reference) -------------- 10.38 Change of Control agreement dated as of November 12, 1999 between William A. Shumaker and the Registrant. (13) 10.38A Change of Control agreement extension dated as of June 27, 2002 between William A. Shumaker and the Registrant. (1) 10.39 Change of Control agreement dated as of November 12, 1999 between D. Michael Parker and the Registrant. (13) 10.39A Change of Control agreement extension dated as of June 25, 2002 between D. Michael Parker and the Registrant. (1) 10.40 Change of Control agreement dated as of November 12, 1999 between James J. Rossi and the Registrant. (13) 10.40A Change of Control agreement extension dated as of June 25, 2002 between James J. Rossi and the Registrant. (1) 10.41 Change of Control agreement dated as of January 20, 2000 between Kurt P. Rindoks and the Registrant. (13) 10.41A Change of Control agreement extension dated as of June 25, 2002 between Kurt P. Rindoks and the Registrant. (1) 10.42 Kewaunee Scientific Corporation Pension Equalization Plan (14) 10.42A First Amendment dated May 27, 1999 to the Kewaunee Scientific Corporation Pension Equalization Plan (14) 10.43 Letter Agreement dated as of July 18, 1997 between Roger L. Eggena and the Registrant (16) 10.44 Letter Agreement dated as of November 10, 1997 between Kenneth E. Sparks and the Registrant (16) 10.45 Kewaunee Scientific Corporation 2000 Key Employee Stock Option Plan (15) 10.46 Fiscal Year 2003 Incentive Bonus Plan (1) 13 Annual Reports to Stockholders for the fiscal year ended April 30, 2002 (Such Report, except to the extent incorporated herein by reference, is being furnished for the information of the Securities and Exchange Commission only and is not deemed filed as a part of this annual report on Form 10-K) (1) 23 Consent of PricewaterhouseCoopers LLP (1)
(All other exhibits are either inapplicable or not required.) 15 Footnotes (1) Filed with this Form 10-K with the Securities and Exchange Commission. (2) Filed as an exhibit to the Kewaunee Scientific Corporation Annual Report to the Securities and Exchange Commission on Form 10-K (Commission File No. 0-5286) for the fiscal year ended April 30, 1987, and incorporated herein by reference. (3) Filed as an exhibit to the Kewaunee Scientific Corporation Annual Report to the Securities and Exchange Commission on Form 10-K (Commission File No. 0-5286) for the fiscal year ended April 30, 1985, and incorporated herein by reference. (4) Filed as an exhibit to the Kewaunee Scientific Corporation Annual Report to the Securities and Exchange Commission on Form 10-K (Commission File No. 0-5286) for the fiscal year ended April 30, 1985, and incorporated herein by reference. (5) Filed as an exhibit to the Kewaunee Scientific Corporation Proxy Statement dated July 26, 1991, and incorporated herein by reference. (6) Filed as an exhibit to the Kewaunee Scientific Corporation Annual Report to the Securities and Exchange Commission on Form 10-K (Commission File No. 0-5286) for the fiscal year ended April 30, 1992, and incorporated herein by reference. (7) Filed as an exhibit to the Kewaunee Scientific Corporation Proxy Statement dated July 23, 1993, and incorporated herein by reference. (8) Filed as an exhibit to the Kewaunee Scientific Corporation Annual Report to the Securities and Exchange Commission on Form 10-K (Commission File No. 0-5286) for the fiscal year ended April 30, 1996, and incorporated herein by reference. (9) Filed as an exhibit to the Kewaunee Scientific Corporation Proxy Statement dated July 31, 1996, and incorporated herein by reference. (10) Filed as an exhibit to the Kewaunee Scientific Corporation Annual Report to the Securities and Exchange Commission on Form 10-K (Commission File No. 0-5286) for the fiscal year ended April 30, 1997, and incorporated herein by reference. (11) Filed as an exhibit to the Kewaunee Scientific Corporation Annual Report to the Securities and Exchange Commission on Form 10-K (Commission File No. 0-5286) for the fiscal year ended April 30, 1998, and incorporated herein by reference. (12) Filed as an exhibit to the Kewaunee Scientific Corporation Annual Report to the Securities and Exchange Commission on Form 10-K (Commission File No. 0-5286) for the fiscal year ended April 30, 1999, and incorporated herein by reference. (13) Filed as an exhibit to the Kewaunee Scientific Corporation Quarterly Report to the Securities and Exchange Commission on Form 10-Q (Commission File No. 0-5286) for the quarterly period ended January 31, 2000, and incorporated herein by reference. (14) Filed as an exhibit to the Kewaunee Scientific Corporation Annual Report to the Securities and Exchange Commission on Form 10-K (Commission File No. 0-5286) for the fiscal year ended April 30, 2000, and incorporated herein by reference. (15) Filed as an exhibit to the Kewaunee Scientific Corporation Proxy Statement dated July 20, 2000 and incorporated herein by reference. 16 (16) Filed as an exhibit to the Kewaunee Scientific Corporation Annual Report to the Securities and Exchange Commission on Form 10-K (Commission File No. 0-5286) for the fiscal year ended April 30, 2001, and incorporated herein by reference. 17 EX-3.2 3 dex32.txt BY-LAWS (AMENDED 5/22/2002) Exhibit 3.2 KEWAUNEE SCIENTIFIC CORPORATION (a Delaware corporation) ByLaws (as amended through May 22, 2002) OFFICES 1.01 The corporation shall have and maintain a registered office in the State of Delaware and may have offices in such other places within or outside the State of Delaware as the Board of Directors may from time to time select or the business of the corporation requires. SEAL 2.01 The corporation shall have a seal which shall have inscribed thereon the name of the corporation, the state of incorporation and the words "Corporate Seal". The seal may be used by causing it or a facsimile to be imprinted, affixed, reproduced or otherwise. STOCK 3.01 Shares of stock may be issued for such consideration, not less than the par value thereof, as is determined from time to time by the Board of Directors (hereinafter called the "Board"). The Board shall determine what part of the consideration received by the corporation for its shares (not less than the aggregate par value thereof) shall be capital. 3.02 Every holder of stock in the corporation shall be entitled to have a certificate, signed by, or in the name of the corporation by, the Chairman of the Board, the President or a Vice President and the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the corporation, certifying the number of shares owned by him in the corporation. Any or all of the signatures on the certificate may be facsimile. In case any officer, transfer agent, or registrar who has signed, or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar, whether because of death, resignation or otherwise, before such certificate has been issued or delivered by the corporation, such certificate may nevertheless be issued and delivered by the corporation as though the person who signed such certificate or whose facsimile signature has been used thereon had not ceased to be such officer, transfer agent or registrar. 1 3.03 In the event of loss, theft or destruction of any certificate of stock, another may be issued in its place pursuant to such regulations as the Board may establish concerning proof of such loss, theft or destruction and concerning the giving of a satisfactory bond or bonds of indemnity. 3.04 The Board may appoint one or more transfer agents and one or more registrars. Transfers of stock shall be made only upon the transfer books of the corporation. Except where a certificate is issued in accordance with Section 3.03 of these bylaws, an outstanding certificate for the number of shares involved shall be surrendered for cancellation before a new certificate is issued therefor. 3.05 The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. STOCKHOLDERS AND MEETINGS OF STOCKHOLDERS 4.01 The annual meeting of the stockholders of the corporation for the election of directors and for the transaction of any other business as may properly come before the meeting shall be held at such place within or outside the State of Delaware as the Board shall fix. 4.02 The annual meeting of stockholders shall be held on the last Wednesday in August in each year at such time as the Board shall fix. If the date fixed for the annual meeting shall be a legal holiday, the meeting shall be held on the next business day. 4.03 Special meetings of the stockholders for any purpose or purposes described in the notice of the meeting may be called at any time by the Chairman of the Board, the President or a majority of the Board and shall be held at such place, on such date and at such time as shall be designated in the notice thereof. 4.04 Each stockholder of record shall be given written notice of each meeting of stockholders, which notice shall state the place, date and time of the meeting, and in the case of a special meeting, the purpose or purposes for which the meeting is called. Except as otherwise provided by law, the written notice of any meeting shall be given not less than ten nor more than sixty days before the date of the meeting to each stockholder entitled to vote at such meeting. 4.05 When a meeting of stockholders is adjourned to another place, date or time, written notice need not be given of the adjourned meeting if the place, date and time thereof are announced at the meeting at which the adjournment is taken; provided, however, that if the date of any adjourned meeting is more than thirty days after the date for which the meeting was originally noticed, or if a new record date is fixed for the adjourned meeting, written notice of the place, date and time of the adjourned meeting shall be given in conformity herewith. At any adjourned meeting, any business may be transacted which might have been transacted at the original meeting. 2 4.06 The Board shall have power to close the stock transfer books of the corporation for a period not more than sixty nor less than ten days preceding the date of any meeting of stockholders, or the date for payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital sock shall go into effect; provided, however, that in lieu of closing the stock transfer books as aforesaid, the Board may fix in advance a date not more than sixty nor less than ten days preceding the date of any meeting of stockholders, or the date for any payment of dividends, or the date for allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, as the record date for the determination of stockholders entitled to vote at any such meeting or entitled to receive payment of any such dividend or to any such allotment of rights, or to exercise the rights in respect of any such change, conversion or exchange of capital stock, and in such case only such stockholders as shall be stockholders of record on the date so fixed shall be entitled to vote at such meeting, or to receive payment of such dividend, or to receive such allotment of rights, or to exercise such rights, as the case may be, notwithstanding any transfer of any stock on the books of the corporation after any such record date fixed as aforesaid. This bylaw shall in no way affect the rights of a stockholder and his transferee or transferor as between themselves. 4.07 The officer who has charge of the stock ledger of the corporation shall prepare and make, or cause to be made, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, showing the address of and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either in a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall be produced and kept at the place of the meeting during the whole time thereof, and be subject to the inspection of any stockholder who may be present. The list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them. 4.08 The holders of a majority of all of the shares of stock entitled to vote at the meeting, present in person or represented by proxy, shall constitute a quorum for all purposes at all meetings of the stockholders for the transaction of business unless the presence of a larger number is required by law. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the chairman of the meeting or the holders of a majority of the shares of the stock entitled to vote who are present in person or represented by proxy, shall have power to adjourn the meeting to another place, date or time. 4.09 The Chairman of the Board or, in his absence, the President shall call to order any meeting of the stockholders and act as chairman of the meeting. In the absence of the Secretary of the corporation, the secretary of the meeting shall be such person as the chairman appoints. 3 4.10 The vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before a meeting of stockholders, except as otherwise required by law or the corporation's restated certificate of incorporation. Each stockholder shall be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. BOARD OF DIRECTORS 5.01 The business and affairs of the corporation shall be managed by or under the direction of the Board. 5.02 The number of directors constituting the whole Board shall be seven. The number of directors may be changed from time to time by amendment to these bylaws, subject to the provisions of Article Seventh of the corporation's restated certificate of incorporation. Directorships with terms expiring in any year shall be filled at the annual meeting of stockholders in that year. Each director shall hold office until his successor is elected and qualified or until his earlier resignation, removal or death. 5.03 Any director may resign at any time by giving written notice of his resignation to the Board, the Chairman of the Board, the President or the Secretary of the corporation. Any such resignation shall take effect at the time specified therein or, if the time when it is to become effective shall not be specified therein, then it shall take effect when accepted by action of the Board. Except as aforesaid, the acceptance of such resignation shall not be necessary to make it effective. 5.04 A director may be removed only by the holders of at least 75% of the shares entitled to vote at an election of directors, with or without cause. 5.05 Any vacancy on the Board or any newly-created directorship may be filled by the vote of a majority of the directors of the corporation then in office even though less than a quorum, or by a sole remaining director, and any director so chosen shall hold office until the next election of the class for which he was chosen and until his successor is elected and qualified or until his earlier resignation, removal or death. 5.06 A regular meeting of the Board shall be held immediately following each annual meeting of stockholders and no notice to the directors of such meeting shall be necessary in order legally to constitute the meeting, provided a quorum shall be present. In the event such meeting is not held immediately following the annual meeting of stockholders, the meeting may be held at such time and place as shall be stated in a notice as hereinafter provided for such meetings of the Board, or as shall be specified in a written waiver signed by all the directors. 5.07 Other regular meetings of the Board shall be held at such place or places, on such date or dates and at such time or times as shall have been established by the Board. A notice of each regular meeting shall not be required. 4 5.08 Special meetings of the Board may be called by the Chairman of the Board, the President or a majority of the members of the Board then in office, and shall be held at such place on such date and at such time as he or they shall fix. Notice of the place, date and time of each special meeting shall be given as provided in Section 6.01 to each director not less than three days before the meeting. Unless otherwise indicated in the notice thereof, any and all business may be transacted at a special meeting. 5.09 A majority of the directors then in office shall constitute a quorum for the transaction of business by the Board. If a quorum is present, the act of a majority of the directors present at any meeting shall be the act of the Board, except as may be otherwise provided by these bylaws or required by law. If a quorum shall not be present at any meeting of the Board, the directors present may adjourn the meeting from time to time without notice other than announcement at the meeting until a quorum shall be present. 5.10 At each meeting of the Board, the Chairman of the Board or, in his absence, the President, shall preside. The Secretary or, in his absence, any person designated by the chairman of the meeting, shall act as secretary of such meeting and keep the minutes thereof. 5.11 Any action required or permitted to be taken at any meeting of the Board or of any committee thereof, may be taken without a meeting if a written consent thereto is signed by all members of the Board or of such committee as the case may be, and such written consent is filed with the minutes of proceedings of the Board or committee. 5.12 The Board may by resolution passed by a majority of the whole Board, designate one or more committees including an executive committee, each committee to consist of two or more of the directors of the corporation, which to the extent provided in the resolution shall have and may exercise all of the delegable powers of the Board in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board. 5.13 Each committee may determine the procedural rules for meeting and conducting its business, and shall act in accordance therewith except as otherwise required by law. 5.14 The directors may be paid their expenses, if any, of attendance at each meeting of the Board, and may be paid a fixed sum for attendance at each meeting of the Board and/or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of committees of the Board may be allowed compensation as fixed by the Board from time to time. 5.15 Any member of the Board or of any committee thereof may participate in a meeting of such board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in such meeting shall constitute presence in person at such meeting. 5 NOTICES 6.01 Whenever notice is required to be given to any stockholder, director, officer, or agent, such notice may be, but need not be, personal notice. Such notice may be effectively given by depositing a writing in a post office or letter box, in a postpaid, sealed wrapper, or by dispatching a prepaid telegram or cable, addressed to such stockholder, director, officer or agent at his or her address as the same appears on the books of the corporation. The time when such notice is dispatched shall be the time of the giving of the notice. 6.02 A written waiver of any notice, signed by a stockholder, director, officer, or agent, whether before or after the time of the event for which such notice is to be given, shall be deemed equivalent to the notice required to be given to such stockholder, director, officer, or agent. Neither the business nor the purpose of any meeting need be specified in such a waiver. OFFICERS 7.01 The officers of the corporation shall be a Chairman of the Board, a President, such number of Vice Presidents as the Board shall determine, a Treasurer, a Secretary, a Controller, and such Assistant Treasurers and Assistant Secretaries and other officers as shall be elected by the Board. One person may hold more than one office. 7.02 Officers of the corporation, and agents appointed by the Board, shall hold their offices and positions for such terms as shall be determined by the Board, and may be removed at any time by the Board. Vacancies occurring in any office or position at any time may be filled by the Board. 7.03 All officers and agents elected or appointed by the Board shall have such authority and perform such duties in the conduct and management of the corporation as may be delegated by the Board or provided in these bylaws. 7.04 Officers and agents appointed by the Board shall receive such compensation as may be determined by the Board. 7.05 The Chairman of the Board shall preside at all meetings of the stockholders and of the Board, and shall have and perform such other duties as may be assigned to him from time to time by the Board. In the event of the absence or disability of the President, the Chairman of the Board shall perform the duties and exercise the power of the President until otherwise directed by the Board. 7.06 The President shall be the chief executive officer of the corporation and shall have general authority over its business and affairs, subject to the direction of the Board. He may sign, with the Secretary or any other proper officer of the corporation thereunto authorized by the Board, certificates for shares of the corporation, and any deeds, mortgages, bonds, contracts, or other instruments which the Board has authorized to be executed, except in cases where the signing and execution thereof shall be expressly delegated by the Board or by these bylaws to some other officer or agent of the corporation, or shall be required by law to be otherwise signed 6 or executed, and in general he shall perform such other duties as are incident to his office or as from time to time may be prescribed by the Board. In the event of the absence or disability of the Chairman of the Board, the President shall perform the duties and exercise the powers of the Chairman of the Board. 7.07 Each Vice President shall perform the duties and exercise the powers in the management and operations of the corporation as are customary and incident to the office held or as may be assigned from time to time by the President or Board. 7.08 The Secretary shall attend all sessions of the Board and all meetings of the stockholders and record all votes and the minutes of all proceedings in a book to be kept for that purpose. He shall give or cause to be given notice of all meetings of the stockholders and of the Board and shall perform such other duties as maybe prescribed by the President or Board. He shall keep in safe custody the seal of the corporation and affix the same to any instrument requiring it, and when so affixed it may be attested by his signature or by the signature of an Assistant Secretary. The Secretary may delegate any of his duties, powers, and authorities to one or more Assistant Secretaries, unless such delegation be disapproved by the Board. 7.09 The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation, and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the Board. He shall render to the President and directors, whenever they may require it, an account of his transactions as Treasurer. The Treasurer may delegate any of his duties, powers, and authorities to one or more Assistant Treasurers, unless such delegations be disapproved by the Board. 7.10 The Controller shall receive and give or cause to be given receipts and acquittances for moneys paid to the corporation and shall pay out of the funds on hand all just debts of the corporation of whatever nature. He shall enter or cause to be entered in the books of the corporation to be kept for that purpose full and accurate accounts of all moneys received and paid on account of the corporation. He shall prepare monthly statements of profit and loss and a monthly balance sheet reflecting the conditions of the business for the President and the Board. Whenever required by the President or directors he shall render a statement of the corporation's cash accounts. He shall keep or cause to be kept such other books as will show a true record of the expenses, losses, gains, assets and liabilities of the corporation. He shall be responsible for the preparation of any and all local, city, county, state or federal tax returns including real estate and personal property taxes, income taxes, sales and/or use taxes, which may be required by local ordinance or by the laws of the several states, or by the federal government. He shall, in general, do all things necessary to carry out the accounting procedures established for the corporation by the President or the Board or as may be required by law. 7.11 The Assistant Secretaries shall perform the duties and exercise the powers and authorities of the Secretary in case of his absence or disability. The Assistant Treasurers may perform the duties and exercise the powers and authorities of the Treasurer in case of his absence or disability. The Assistant Secretaries and Assistant Treasurers shall also perform such duties as may be delegated to them by the Secretary and Treasurer, respectively, and also such duties as the Chairman of the Board or the Board shall prescribe. 7 7.12 The Board may require any officer, employee or agent to give bond for the faithful discharge of his duty and for the protection of the corporation, in such sum and with such surety or sureties as the Board may deem advisable. CHECKS AND OTHER INSTRUMENTS 8.01 The Board shall designate the officers, employees and agents of the corporation who shall have power to execute and deliver deeds, contracts, mortgages, bonds, debentures, checks, drafts and other orders for the payment of money and other documents for and in the name of the corporation, and may authorize such officers, employees and agents to delegate such power (including authority to redelegate) by written instrument to other officers, employees or agents of the corporation. Such designation may be by resolution or otherwise, and the authority granted may be general or confined to specific instances, all as the Board may determine. 8.02 The Board shall designate the officers of the corporation who shall have authority to appoint from time to time an agent or agents of the corporation to exercise in the name and on behalf of the corporation the powers and rights which the corporation may have as the holder of the stock or other securities or interests in any other corporation or business entity and to vote or consent in respect of such stock, securities or interests. Such designated officers may instruct the person or persons so appointed as to the manner of exercising such powers and rights; and such designated officers may execute or cause to be executed in the name and on behalf of the corporation and under its corporate seal, or otherwise, such written proxies, powers of attorney or other instruments as they may deem necessary or proper in order that the corporation may exercise such powers and rights. FISCAL YEAR 9.01 The fiscal year of the corporation shall begin on the 1st day of May and end on the 30th day of April in each year. BOOKS AND RECORDS 10.01 The proper officers, employees and agents of the corporation shall keep and maintain such books, records and accounts of the business and affairs of the corporation as the Board shall deem advisable and as shall be required by the laws of the State of Delaware. 10.02 Each director, each member of any committee designated by the Board, and each officer of the corporation shall, in the performance of his duties, be fully protected in relying in good faith upon the books of account or other records of the corporation including reports made to the corporation by any of its officers, by an independent certified public accountant, or by an appraiser selected with reasonable care. 8 10.03 The directors and officers of the corporation shall prepare and distribute or cause to be prepared and distributed to the stockholders of the corporation such annual and other statements of the accounts, operations and properties of the corporation as they shall deem advisable and as shall be required by law. INDEMNIFICATION 11.01 Each person who is or was a director or officer of the corporation, and each person who serves or served at the request of the corporation as a director or officer of another enterprise, shall be indemnified by the corporation in accordance with, and to the fullest extent authorized by, the provisions of the General Corporation Law of Delaware, as it may be in effect from time to time. CONTRACTS WITH DIRECTORS 12.01 In the absence of fraud, no contract or other transaction between the corporation and any other corporation shall be affected or invalidated by the fact that any one or more of the directors of this corporation is or are interested in or is a director or officer, or are directors or officers of such other corporation, and any director or directors individually, or jointly, may be a party or parties, or may be interested in any contracts or transaction of this corporation or in which this corporation is interested; and in the absence of fraud, no contract, act or transaction of this corporation with any person or persons, firm or corporation, shall be affected or invalidated by the fact that any director or directors of this corporation is a party or are parties to or interested in such contract, act or transaction, or in any way connected with such person or persons, firm or corporation, and, in the absence of fraud, each and every person who may become a director of this corporation is hereby relieved from any liability that might otherwise exist from thus contracting with the corporation for the benefit of himself or any firm, association or corporation in which he may be in anywise interested. AMENDMENT 13.01 These bylaws may be altered, amended or repealed at any meeting of the Board provided notice of the proposed action shall have been contained in the notice of meeting, or by unanimous consent, subject to the power of the stockholders to alter or repeal any bylaw made by the Board. 9 EX-10.21(D) 4 dex1021d.txt 5TH AMEND - EXECUTIVE DEFERRED COMP PLAN Exhibit 10.21D EXHIBIT A FIFTH AMENDMENT TO THE KEWAUNEE SCIENTIFIC CORPORATION 401+ EXECUTIVE DEFERRED COMPENSATION PLAN (CONFORMED COPY INCLUDING FIRST THROUGH FOURTH AMENDMENTS) 1. The third sentence of Section 3.1 is amended to read as follows: "Such amount or rate of compensation deferred shall not exceed the excess of (i) fifteen percent of the Participant's compensation on a combined basis with (ii) the maximum amount of Deferral Contributions that the Participant is authorized to elect for the Plan Year under the Incentive Savings Plan." 2. The amendment made herein shall take effect on January 1, 2002. 3. In all other respects, the Plan shall remain in full force and effect. IN WITNESS WHEREOF, the Company has caused this Amendment to be executed this 5th day of December, 2001. KEWAUNEE SCIENTIFIC CORPORATION By: /s/ D. Michael Parker ---------------------------------------- Its: Senior Vice President, Finance/CFO --------------------------------------- EX-10.38(A) 5 dex1038a.txt CHANGE OF CONTROL - WILLIAM A. SHUMAKER Exhibit 10.38(A) EXTENSION OF CHANGE OF CONTROL EMPLOYMENT AGREEMENT Pursuant to Section 1(b) of your Change of Control Employment Agreement (the "Agreement"), dated as of November 12, 1999, the term of the Agreement, as stated in Section 1(b) thereof, is hereby extended by three (3) years, so that the Agreement, as extended, will end on the sixth anniversary of its effective date (specifically on November 12, 2005) rather than on the third anniversary date. In all other respects, the Agreement is reaffirmed and remains unchanged. IN WITNESS WHEREOF, this Extension Agreement, pursuant to authorization from the Board of Directors of the Company, is executed in the Company's name and on its behalf as of the day and year shown herein. Date: June 27, 2002 /s/ William A. Shumaker ----------------------------------------- William A. Shumaker KEWAUNEE SCIENTIFIC CORPORATION By: /s/ Eli Manchester, Jr. ------------------------------------- Eli Manchester, Jr. Its: Chairman of the Board EX-10.39(A) 6 dex1039a.txt CHANGE OF CONTROL - D. MICHAEL PARKER Exhibit 10.39(A) EXTENSION OF CHANGE OF CONTROL EMPLOYMENT AGREEMENT Pursuant to Section 1(b) of your Change of Control Employment Agreement (the "Agreement"), dated as of November 12, 1999, the term of the Agreement, as stated in Section 1(b) thereof, is hereby extended by three (3) years, so that the Agreement, as extended, will end on the sixth anniversary of its effective date (specifically on November 12, 2005) rather than on the third anniversary date. In all other respects, the Agreement is reaffirmed and remains unchanged. IN WITNESS WHEREOF, this Extension Agreement, pursuant to authorization from the Board of Directors of the Company, is executed in the Company's name and on its behalf as of the day and year shown herein. Date: June 25, 2002 /s/ D. Michael Parker --------------------------------- D. Michael Parker KEWAUNEE SCIENTIFIC CORPORATION By: /s/ William A. Shumaker ----------------------------- William A. Shumaker Its: President and Chief Executive Officer EX-10.40(A) 7 dex1040a.txt CHANGE OF CONTROL - JAMES J. ROSSI Exhibit 10.40(A) EXTENSION OF CHANGE OF CONTROL EMPLOYMENT AGREEMENT Pursuant to Section 1(b) of your Change of Control Employment Agreement (the "Agreement"), dated as of November 12, 1999, the term of the Agreement, as stated in Section 1(b) thereof, is hereby extended by three (3) years, so that the Agreement, as extended, will end on the sixth anniversary of its effective date (specifically on November 12, 2005) rather than on the third anniversary date. In all other respects, the Agreement is reaffirmed and remains unchanged. IN WITNESS WHEREOF, this Extension Agreement, pursuant to authorization from the Board of Directors of the Company, is executed in the Company's name and on its behalf as of the day and year shown herein. Date: June 25, 2002 /s/ James J. Rossi --------------------------------- James J. Rossi KEWAUNEE SCIENTIFIC CORPORATION By: /s/ William A. Shumaker ----------------------------- William A. Shumaker Its: President and Chief Executive Officer EX-10.41(A) 8 dex1041a.txt CHANGE OF CONTROL - KURT P. RINDOKS Exhibit 10.41(A) EXTENSION OF CHANGE OF CONTROL EMPLOYMENT AGREEMENT Pursuant to Section 1(b) of your Change of Control Employment Agreement (the "Agreement"), dated as of January20, 2000, the term of the Agreement, as stated in Section 1(b) thereof, is hereby extended by three (3) years, so that the Agreement, as extended, will end on the sixth anniversary of its effective date (specifically on January 20, 2006) rather than on the third anniversary date. In all other respects, the Agreement is reaffirmed and remains unchanged. IN WITNESS WHEREOF, this Extension Agreement, pursuant to authorization from the Board of Directors of the Company, is executed in the Company's name and on its behalf as of the day and year shown herein. Date: June 25, 2002 /s/ Kurt P. Rindoks --------------------------------- Kurt P. Rindoks KEWAUNEE SCIENTIFIC CORPORATION By: /s/ William A. Shumaker ------------------------------------------ William A. Shumaker Its: President and Chief Executive Officer EX-10.46 9 dex1046.txt FISCAL YEAR 2003 INCENTIVE BONUS PLAN Exhibit 10.46 KEWAUNEE SCIENTIFIC CORPORATION FISCAL YEAR 2003 INCENTIVE BONUS PLAN The Fiscal Year 2003 Incentive Bonus Plan (the Plan) will provide for a bonus pool and bonus payouts based upon achievement of various levels of pre-tax earnings (after bonus accruals) for the year and other conditions described herein, as approved by the Company's Board of Directors. The Plan is proposed as a one year plan for Fiscal Year 2003. The provisions of the Plan are: 1. Eligibility of Participants to Share in the Bonus Pool a. Eligible participants of the Plan will be nominated by the President and approved by the Board of Directors, upon recommendation by the Compensation Committee. The bonus potential percentages for each participant in the Plan will also be approved by the Board of Directors, upon recommendation by the Compensation Committee. b. Each participant will be eligible to share in the pool up to the specified percentage of his or her May 1, 2002 base salary. c. In addition to individuals reporting directly to the President, managers fulfilling the following criteria are eligible to participate in the Plan: 1. Salary Grade 14 or above; 2. Seniority of one year or more; 3. Is not currently in another incentive plan (e.g., sales plan); 4. Is a direct report to a direct report to the President; or 5. Is a manager recommended by the President. d. Participants in the Plan and their applicable bonus potential amounts are shown on Exhibits I through III to the Company's Fiscal year 2003 Bonus Schedules (all exhibits referred to on this Plan are exhibits to such schedules). 2. Building of a Bonus Pool a. Division Pools . The divisions (the Laboratory Products Group and the Technical Furniture Group) will start to accrue pools for potential bonus payouts once pre-tax operating earnings of each division reach the amounts shown as Goal 1 on Exhibits I and II, and maximum incentive bonus payouts will be accrued and available for payout based upon the guidelines shown on those exhibits. 1 b. Non-divisional Corporate Pool . A pool will start accumulating once pre-tax earnings reach the amounts shown on Exhibit III, and maximum bonus payouts will be accrued and available for payout based upon the guidelines shown on that exhibit. 3. Bonus Payout Conditions . If the Company achieves pre-tax earnings less than the amounts shown on Exhibit III, no awards will be paid to any non-divisional corporate employee with that goal, except at the discretion of the Board of Directors, upon recommendation by the Compensation Committee. . If a division achieves pre-tax earnings less than the amounts shown for it as Goal 1 on Exhibits I and II, no awards will be paid to its employees except at the discretion of the Board of Directors, upon recommendation by the Compensation Committee. . All division participants will earn their awards dependent on their division's performance and their individual MBO performance. . Beginning with the achievement of Goal 1, the bonus potential percentage for each participant is linear between each goal with the corresponding increase in pre-tax earnings, up to the individual's maximum bonus potential percentage. . Positive or negative financial adjustments outside the control of management (such as, but not limited to, proceeds from insurance claims, gains or losses from the sale of capital assets, adoption of new generally accepted accounting pronouncements, etc.) will be assessed by the Board of Directors and the pre-tax earnings under the Plan may be adjusted for these items. . Any portion of the bonus pool not awarded to participants will be retained by the Company. . If a participant transfers between performance entities during the year, his or her incentive compensation will be based on the performance of the respective entities on a pro rata basis from his or her transfer date as determined by the President. . A participant must be an employee of the Company on the last day of the plan year (April 30) to be eligible to receive a bonus. In unusual circumstances, however, the Board of Directors, upon recommendation by the Compensation Committee, may grant a discretionary bonus. 2 . The Board of Directors, upon recommendation by the Compensation Committee, may approve the pro rata participation of a participant who joins the Company or who is appointed to a key position within the Company after the outset of the Plan year, with a pro rata increase in the bonus pool. 4. Participant's Bonus Potential Each participant's bonus potential will be comprised of the following: . A Fixed Bonus equal to 75% of each participant's bonus potential will be based on achievement of corporate or divisional pre-tax earnings goals, as set forth in the Plan, and . A Discretionary Bonus up to the remaining 25% of each participant's bonus potential will be calculated, taking into account the participant's MBO achievements and other relevant factors during the year. The discretionary portion of each participant's bonus will take into account the participant's achievement of management goals established, and weighted, in July 2002, and approved by the President. The degree of achievement of these goals will be recommended by each participant's manager immediately subsequent to April 30, 2003, and the discretionary bonus, if any, will then be determined and awarded at the discretion of the Board of Directors, upon recommendation by the President and the Compensation Committee. 5. The Plan may be amended at any time by the Board of Directors. 3 EX-13 10 dex13.txt ANNUAL REPORTS TO STOCKHOLDERS - 4/30/2002 Exhibit 13 [PHOTO DEPICTING LABORATORY] FUME HOODS STEEL CABINETRY LABORATORY FURNITURE MOBILE CARTS MODULAR FURNITURE WOOD CABINETRY COMPUTER ENCLOSURES WORKSURFACES LAN WORKSTATIONS [LOGO]KEWAUNEE Scientific Corporation 2002 ANNUAL REPORT Exhibit 13 CORPORATE PROFILE Kewaunee Scientific Corporation is a recognized leader in the design, manufacture, and installation of scientific and technical furniture. The Company's Corporate headquarters are located in Statesville, North Carolina. The manufacturing facilities located in Statesville, produce steel and wood laboratory furniture, fume hoods, network storage systems, and worksurfaces. The manufacturing facility located in Lockhart, Texas, produces technical furniture, including workstations, workbenches, computer enclosures, and related accessories, all to support local area computer networks and for the storage and assembly of computers and light electronics. [PHOTO DEPICTING LABORATORY] [PHOTO DEPICTING WORKSTATION] [PHOTO DEPICTING WORKSTATION] 2 TABLE OF CONTENTS 4 Letter to Stockholders 6 Company Products 10 Forward-Looking Statement Disclosure 10 Management's Discussion and Analysis 14 Consolidated Financial Statements and Notes 26 Reports of Independent Accountants and Management 27 Summary of Selected Financial Data 28 Quarterly Financial Data 29 Corporate Information
FINANCIAL HIGHLIGHTS KEWAUNEE SCIENTIFIC CORPORATION $ in thousands, except per share data 2002 2001 Percent Change - -------------------------------------------------------------------------------- OPERATING DATA: Net sales $84,849 $77,059 +10.1 - -------------------------------------------------------------------------------- Gross profit $14,706 $14,516 +1.3 - -------------------------------------------------------------------------------- Operating expenses $11,801 $12,156 -2.9 - -------------------------------------------------------------------------------- Operating earnings $ 2,905 $ 2,360 +23.1 - -------------------------------------------------------------------------------- Net earnings $ 1,900 $ 1,277 +48.8 - -------------------------------------------------------------------------------- Net earnings per share Basic $ 0.77 $ 0.52 +48.1 Diluted $ 0.77 $ 0.51 +51.0 - -------------------------------------------------------------------------------- Return on average equity 7.2% 5.0% -- - -------------------------------------------------------------------------------- Cash dividends per share $ 0.28 $ 0.28 -- ================================================================================ YEAR-END DATA: Cash and cash equivalents $ 1,747 $ 488 +258.0 - -------------------------------------------------------------------------------- Net working capital $14,817 $14,685 +0.9 - -------------------------------------------------------------------------------- Total borrowings/long-term debt $ 2,611 $ 2,997 -12.9 - -------------------------------------------------------------------------------- Stockholders' equity $26,912 $25,761 +4.5 - -------------------------------------------------------------------------------- Book value per share $ 10.90 $ 10.42 +4.6 - -------------------------------------------------------------------------------- Closing market price per share $ 10.60 $ 8.65 +22.5 ================================================================================ 3 LETTER TO STOCKHOLDERS Fiscal year 2002 was a year of progress for Kewaunee Scientific in a number of important areas, despite an extremely challenging economy and business environment. We experienced improved earnings, healthy volume growth, and improved financial strength. Net earnings increased 49% to $1,900,000, or $.77 per diluted share, while sales increased 10% to $84,849,000. We were pleased with the improved financial results of our laboratory products business. This business rebounded strongly from the prior year, with earnings more than tripling, while sales increased 27% to $78.7 million. Continuing cost improvement activities and improved manufacturing efficiencies allowed us to improve gross profit margins and earnings on these products. Sales for the year benefited from strong demand from our industrial research customers, as they continued to fund new research and development projects, and from our educational customers, as spending for new school construction continued at a healthy pace. Our technical products business, after making significant contributions to sales and earnings in the two previous years, had a very disappointing year. Sales for the year declined 59% from the prior year, resulting in an operating loss, as a recovery of capital spending by customers in the high-tech electronics industry failed to materialize. The loss for this business was in sharp contrast to operating earnings of $1.6 million and $1.5 million in the two previous years, respectively. During the year, we continued to position this business for a recovery of the high-tech marketplace. We strengthened our relationships with a number of key customers and initiated several changes in our sales organization to better provide representation in key market areas. Following the continuing success of our joint-venture sales company in Singapore, during the year, we began operation of a joint-venture sales company in Bangalore, India. Sales and profits of this new business have both exceeded our expectations, and we are excited about future growth opportunities in this market. To address the demand in this market, current and projected, we recently established Kewaunee Scientific Corporation India Pvt Ltd, a wholly-owned subsidiary of Kewaunee Scientific Corporation. This operation will allow us to provide locally-made Kewaunee products at a more competitive price. We continue to emphasize the development of new products. Several new and innovative products for the laboratory market were introduced at our industry conference in New Orleans in March 2002. These included a full line of mobile adjustable workstations with modular utility manifolds. This increased flexibility concept is rapidly gaining global acceptance in research and development designs. We also introduced our new SturdiKwik bench system during the year. This product is designed to allow easy installation by the customer's maintenance group, therefore avoiding professional installation costs. The Company's financial position continues to strengthen. Cash on hand increased to $1.7 million at year-end, while total debt was reduced to $2.6 million. We finished the year with no borrowings outstanding under our $6 million credit facility. Stockholders' equity increased to $26.9 million, resulting in a book value per share of $10.90. Cash flow provided by operating activities increased to $4.5 million for the year, assisted by reduced inventory levels and improved collections of receivables. OUTLOOK We are very optimistic about Kewaunee's future. The long-term market for our laboratory products looks bright, as capital spending by industrial customers for new research and development projects is projected to continue. In addition, federal funding for research and development is also expected to increase beginning in late calendar year 2002. Spending for new school construction is also projected to continue at a healthy pace for many years. Our successes to-date through joint ventures in Singapore and India, have made us aware of potential significant growth opportunities for our products and services in countries outside the United States. We are currently implementing several strategies and actions to pursue these opportunities. 4 [PHOTO OF CORPORATE OFFICERS] Corporate Officers (left to right): (Front Row) Roger L. Eggena, Eli Manchester, Jr., William A. Shumaker, James J. Rossi (Back Row) D. Michael Parker, Kurt P. Rindoks, Kenneth E. Sparks The high-tech industry has been the driving force behind the huge productivity gains experienced in the United States, and we expect this trend to continue. As a result, we continue to consider the long-term opportunities in the technical furniture market excellent. However, our short-term outlook is for a gradual recovery of the business beginning in late calendar year 2002. We regret to report the resignation of Kingman Douglass as a director of the Company due to health reasons, effective April 30, 2002. His association with Kewaunee dates back to 1968, when he participated as an underwriter in Kewaunee's initial public offering. He was elected a director in 1986 and has been a stalwart, steady, and knowledgeable member of the Board for the past 15 years. His thoughtful counsel and advice on financial and business matters has been of great value. We wish him good health and happiness in the years ahead. We are very pleased to report that Silas Keehn has accepted the position of Chairman of the Company's Audit Committee, left vacant as a result of Mr. Douglass' retirement. Mr. Keehn's extensive financial background, including his experience as President of the Federal Reserve Bank of Chicago, makes him an excellent choice for this position. Our success during the year would not have been possible without the continued support of our stockholders; our associates; our network of agencies and representatives; our national stocking distributor, VWR International; and our customers. To each and all of these groups, we are especially grateful. Sincerely, /s/ Eli Manchester, Jr. /s/ William A. Shumaker Eli Manchester, Jr. William A. Shumaker Chairman of the Board President, Chief Executive Officer July 2002 5 LABORATORY PRODUCTS [PHOTO DEPICTING LABORATORY] 6 THE LABORATORY "...a workplace...in which containers used for reactions, transfers, and other handling of substances are designed to be easily and safely manipulated...and protective laboratory practices and equipment are available and in common use to minimize the potential for employee exposure to hazardous chemicals." (OSHA Laboratory Standard 1910.1450) Kewaunee Scientific Corporation's Laboratory Products Group provides products designed to allow lab personnel to pursue discovery safely in the modern laboratory, including: .. Furniture systems that go beyond mere cabinetry and storage. .. Fume hoods designed to contain both the slightest odors from a counter top analyzer, and contaminates from a two-story distillation apparatus. .. Worksurfaces that are equally at home in the wet laboratory or the support area. .. Plumbing and electrical service distribution systems that provide accessibility and flexibility. Kewaunee engineers solutions for all aspects of the laboratory. ENGINEERING SOLUTIONS The sophistication of today's laboratory construction market requires a different approach than simply selecting part numbers from a catalog. Kewaunee and our distribution network become intimately involved in all aspects of laboratory planning, design, fabrication, and installation. Active participation with architects, designers, engineers, and contractors, in conjunction with the lab users, defines the process used today. DOMESTIC Our largest sales volume comes from a national group of dealers/agents with an average of over 15 years experience representing Kewaunee Scientific Corporation. This dedicated group provides full laboratory planning services, budgeting and estimating, project management, and installation. With offices located in all major US markets, the Kewaunee dealer organization is the finest in the industry. [PHOTO OF LABORATORY PRODUCTS] VWR International is our national stocking distributor. They stock thousands of Kewaunee units to provide the market with readily available product. Their 400+ sales people and 17 lab furniture specialists work closely with end users to configure products into workable laboratories. While the quick turn marketplace is VWR's forte, they also utilize their in-house designers and project managers to solve the design requirements of larger projects. [PHOTO OF LABORATORY PRODUCTS] In addition to independent sales representation, Kewaunee has an in-house team to manage large complex lab projects directly. The sales management group, designers, engineers, estimators, and project managers excel at the challenges presented by our most sophisticated customers. Our product engineers and manufacturing capabilities are second to none. Industry-wide recognition of these capabilities places us at the top of full service laboratory product and construction providers. [PHOTO OF LABORATORY PRODUCTS] INTERNATIONAL In 1998, Kewaunee formed a joint-venture sales company in Singapore, Kewaunee Labway Asia Pte Ltd. The company was established to better serve the international marketplace, with an emphasis on Asia. This strategy has now expanded to India, with the formation of a new joint-venture company in Bangalore. These two locations have first class capabilities in all aspects of lab design and construction. Their expertise with specialty gas and plumbing systems, and full service installation capabilities, make them unique in the international marketplace, providing a growth market opportunity for Kewaunee. 7 TECHNICAL FURNITURE [PHOTO DEPICTING WORKSTATION] 8 THE HIGH-TECH WORK ENVIRONMENT These workplaces have a need for unusually configured or unique attributes, such as electrostatic dissipative (ESD) qualities and/or the ability to facilitate the use of a variety of tools, components or equipment. Typical environments include engineering workstations or laboratories for development and testing of sensitive mechanical or electrical componentry and equipment, production and assembly of high-tech electronics such as computers or electronic equipment, and environments commonly known as network operation centers or data centers where large quantities of computers, networking, and telecommunications equipment are housed and maintained for today's business infrastructure. Kewaunee Scientific Corporation's Technical Furniture Group provides products designed to meet the rapid and continually evolving high-tech electronics industry. From storage intensive R&D labs, to the high-tech electronic production floor, to network and computer operations centers, the Technical Furniture Group excels in creating highly productive work environments that expertly meet each customer's unique needs. INGENUITY @ WORK Today's business climate requires continual improvements in productivity to keep a company competitive, and this has never been truer in the high-tech electronics industry. Simple assembly operations have moved to increasingly higher levels of sophistication, requiring their work areas to maximize storage, reduce square footage, interface with automation, and, at the same time, improve ergonomics. The Technical Furniture Group uses two different distribution networks to meet the needs of our varied customer base. TECHNICAL FURNITURE Kewaunee's Technical Furniture customers have vast and often complex requirements that are defined by industrial and process engineers, safety managers, ergonomics consultants, contractors, and the workers themselves. Kewaunee's sales representatives and nationwide dealer network respond to customer needs through collaboration with the Technical Furniture Group product development engineers. Dealers have in-house design, account management, project management, and installation services that provide customers a turn-key solution using the Sturdilite, Evolution, SturdiKwik, or Adjustabench product lines. [PHOTO DEPICTING WORKSTATIONS] NETWORK STORAGE Kewaunee's relatively new product lines of Enclosures and TekRak, along with the well established Evolution for LANs furniture line, are supported by the efforts of a specialized group of sales representatives who work with a nationwide network of value added resellers, regional distributors and dealers. This distribution network focuses on the unique equipment storage needs of public and private sector network managers and administrators who grapple with rapidly changing technology and the inevitable overload of wires and cables associated with those networks. [PHOTO DEPICTING WORKSTATIONS] Kewaunee's ability to handle complex requirements and provide ingenious solutions was demonstrated during the year with Dell Computer Corporation. Kewaunee worked closely with Dell engineers, automation experts, and conveyor and controls suppliers in the design of the factory at Dell's Topfer Manufacturing Center, which includes technical furniture throughout manufactured and installed by Kewaunee. This facility was awarded Industry Week magazine's coveted Best Plant Award in 2001 (see opposite page photo). [PHOTO DEPICTING WORKSTATIONS] 9 SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain statements in this annual report, including the Letter to Stockholders, narrative text, captions, and Management's Discussion and Analysis of Financial Condition and Results of Operations, constitute "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that could significantly impact results or achievements expressed or implied by such forward-looking statements. These factors include, but are not limited to, economic, competitive, governmental, and technological factors, affecting the Company's operations, markets, products, services, and prices. The cautionary statements made pursuant to the Reform Act herein and elsewhere by the Company should not be construed as exhaustive. The Company cannot always predict what factors would cause actual results to differ materially from those indicated by the forward-looking statements. In addition, readers are urged to consider statements that include the terms "believes," "belief," "expects," "plans," "objectives," "anticipates," "intends," or the like to be uncertain and forward-looking. MANAGEMENT'S DISCUSSION AND ANALYSIS CRITICAL ACCOUNTING POLICIES In the ordinary course of business, the Company has made a number of estimates and assumptions relating to the reporting of results of operations and financial position in the preparation of its financial statements in conformity with generally accepted accounting principles. Actual results could differ significantly from those estimates under different assumptions and conditions. The Company believes that the following discussion addresses the Company's most critical accounting policies, which are those that are most important to the portrayal of the Company's financial condition and results of operations and require management's most difficult, subjective and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. PRINCIPLES OF CONSOLIDATION In fiscal 2002, the Company increased its ownership to 51% in Kewaunee Labway Asia Pte Ltd, a joint-venture company serving as a dealer for the Company's laboratory products in Southeast Asia region. The consolidated financial statements for fiscal year 2002 include the results of this joint venture. All intercompany balances and transactions have been eliminated in consolidation. In fiscal years 2001 and 2000, the operating results of the joint venture were not material to the financial statements and were reported in accordance with the equity method of accounting. The Company's investment in the joint venture was reported in other assets with related net earnings reported in other income for the percentage of the joint venture owned by the Company at the end of each fiscal year. REVENUE RECOGNITION The Company generally recognizes product sales at the date of the shipment of its products, or when customers have purchased and accepted title goods, but requested the Company to store the finished goods on the customer's behalf. Product sales for fixed-price construction contracts are recognized under the percentage-of-completion method of accounting, with product sales revenue allocated based on costs incurred for products completed and shipped to the customer. A provision for losses expected to be incurred on a fixed-price contract is made in the period such loss becomes known. A high degree of management judgment is required with respect to periodic estimates of profit and product costs on these contracts. Revenue for installation services is generally recognized as the service is performed. 10 MANAGEMENT'S DISCUSSION AND ANALYSIS continued ALLOWANCE FOR DOUBTFUL ACCOUNTS The Company evaluates the collectibility of its trade accounts receivable based on a number of factors. In circumstances where management is aware of a customer's inability to meets its financial obligations to the Company, a specific reserve for bad debts is estimated and recorded which reduces the recognized receivable to the estimated amount the Company believes will ultimately be collected. In addition to specific customer identification of potential bad debts, a general reserve for bad debts is estimated and recorded based on the Company's recent past loss history and an overall assessment of past due trade accounts receivable amounts outstanding. PENSION BENEFITS The Company sponsors pension plans covering all employees who meet eligibility requirements. Several statistical and other factors, which attempt to anticipate future events, are used in calculating the expense and liability related to these plans. These factors include assumptions about the discount rate, expected return on plan assets, and rate of future compensation increases as determined by the Company, within certain guidelines. The actuarial assumptions used by the Company may differ materially from actual results due to changing market and economic conditions, higher or lower withdrawal rates, or longer or shorter life spans of participants. These differences may significantly affect the amount of pension expense recorded by the Company in future periods. RESULTS OF OPERATIONS Sales for fiscal year 2002 were $84.8 million, up 10.1% from fiscal year 2001 sales of $77.1 million. Sales of laboratory products increased 27.0% to $78.7 million, as spending for industrial research and new school construction remained robust during the year. Sales of technical products were adversely affected by the significant slowdown in capital spending by customers in the high-tech industry, declining 59.1% from the prior year. Sales for fiscal year 2001 increased 3.0% from fiscal year 2000 sales of $74.8 million. The sales increase for the 2001 fiscal year resulted from record sales of technical furniture products. Sales of laboratory products were relatively unchanged from the prior year. The Company's unfilled sales order backlog was $34.2 million at April 30, 2002, as compared to $35.5 million at April 30, 2001, and $31.5 million at April 30, 2000. Gross profit represented 17.3%, 18.8%, and 22.8% of sales in fiscal years 2002, 2001, and 2000, respectively. The decline in gross profit margin in fiscal year 2002 was due to an unfavorable sales mix resulting from the significant decline in sales of higher margin technical products during the year. As compared to fiscal year 2000, the gross profit margin in fiscal year 2001 was adversely affected by lower selling process of laboratory products and an unfavorable sales mix between higher margin industrial research projects and lower margin educational projects. Margins for fiscal year 2001 were also impacted by higher energy and healthcare costs. Operating expenses were $11.8 million, $12.2 million, and $12.4 million in fiscal years 2002, 2001, and 2000, respectively, and 13.9%, 15.8%, and 16.6% of sales, respectively. In fiscal year 2002, the decrease in operating expenses as a percentage of sales resulted primarily from lower sales commission expenses due to changes in product sales mix and the continuation of cost reduction activities, which assisted in maintaining marketing and administrative expenses at relatively flat levels with the prior year. The decrease in operating expenses as a percentage of sales in fiscal year 2001 was primarily attributable to the impact of cost reduction activities implemented during the year. 11 MANAGEMENT'S DISCUSSION AND ANALYSIS continued Net other expense was $6,000 and $276,000 in fiscal years 2002 and 2001, respectively, compared to net other income of $326,000 in fiscal year 2000. Other expense for fiscal year 2001 included a charge of $391,000 associated with the estimated settlement of an old dispute between the Company and a general contractor. Interest expense was $206,000, $246,000, and $169,000 in fiscal years 2002, 2001, and 2000, respectively. The change in interest expense for fiscal year 2002 resulted primarily from changes in the levels of borrowing and lower interest rates. The change in interest expense for fiscal years 2001 and 2000 resulted primarily from changes in the levels of borrowings during each year. The Company recorded income tax expense of $793,000, $561,000, and $1.3 million in fiscal years 2002, 2001, and 2000, respectively. The effective rates were 29.4%, 30.5%, and 26.0% of pretax earnings in fiscal years 2002, 2001, and 2000, respectively. The effective rates for each year were reduced by state income tax credits available from investments in certain qualifying machinery and equipment, and, to a lesser degree, income tax credits for research and development activities. Net earnings increased to $1.9 million, or $0.77 per diluted share, in fiscal year 2002, from $1.3 million, or $.51 per diluted share, in fiscal year 2001. Net earnings were $3.6 million, or $1.44 per diluted share, in fiscal year 2000. LIQUIDITY AND CAPITAL RESOURCES The Company's principal sources of liquidity have been funds generated from operating activities, supplemented as needed by the Company's credit facility. The Company believes that these sources will be sufficient to support ongoing business levels, including capital expenditures. At April 30, 2002, the Company had no advances outstanding under its $6 million revolving credit loan. The Company has entered into a bank note collateralized by certain machinery and equipment. The loan is repayable in equal monthly installments plus interest. The note includes certain financial covenants as to tangible net worth, funds flow coverage, current ratio, and ratio of liabilities to tangible net worth. The Company has entered into an interest rate swap agreement whereby a substantial portion of the outstanding principal amount of the bank note effectively converts to a fixed rate on May 1, 2002. The notional amount of this cash flow hedge is reduced in the same proportion as the principal balance of the bank note over the remaining term of the bank note. The Company also has entered into various operating lease agreements for machinery and equipment. Most leases provide the Company with certain early cancellation rights, as well as renewal and purchase options. The following table summarizes the obligated cash payments for these commitments: PAYMENTS DUE BY PERIOD
Contractual Obligations Total 1 Year 2-3 Years 4-5 Years After 5 Years - -------------------------------------------------------------------------------------------------- Long-term Debt (principal only) $2,611,000 $ 681,000 $1,362,000 $ 568,000 $ -- - -------------------------------------------------------------------------------------------------- Operating Leases 1,947,000 506,000 844,000 511,000 86,000 - -------------------------------------------------------------------------------------------------- Total Contractual Cash Obligations $4,558,000 $1,187,000 $2,206,000 $1,079,000 $86,000
12 MANAGEMENT'S DISCUSSION AND ANALYSIS continued Operating activities provided cash of $4.5 million, $2.4 million, and $2.2 million in fiscal years 2002, 2001, and 2000, respectively, primarily from earnings in each of these years. Working capital increased to $14.8 million at April 30, 2002, from $14.7 million at April 30, 2001, and the ratio of current assets to current liabilities decreased to 2.4-to-1 at April 30, 2002, from 2.5-to-1 at April 30, 2001. Capital expenditures of $2.1 million, $1.7 million, and $3.4 million in fiscal years 2002, 2001, and 2000, respectively, were funded by cash primarily from operating activities and $3.1 million borrowed in fiscal year 2001 under a five-year bank note. Fiscal year 2003 capital expenditures are anticipated to be approximately $3 million and are expected to be funded primarily by operating activities. The Company paid cash dividends of $.28 per share, $.28 per share, and $.26 per share in fiscal years 2002, 2001, and 2000, respectively. The Company expects to pay dividends in the future in line with the Company's actual and anticipated future operating results. RECENT ACCOUNTING STANDARDS In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 141, "Business Combinations" ("SFAS 141") and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS 141 requires the purchase method of accounting for business combinations initiated after June 30, 2001 and eliminated the pooling-of-interests method for business combinations. SFAS 142 requires that goodwill and certain intangibles will not be amortized, but instead be reviewed for impairment and written down to fair value. SFAS 142 is effective for fiscal years beginning after December 15, 2001. The Company does not expect the adoption of SFAS 141 and SFAS 142 to have a material effect on its financial condition or results of operations. In August 2001, the FASB issued SFAS No. 143, "Accounting for Obligations Associated with the Retirement of Long-Lived Assets" and SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS 143 establishes accounting standards for the recognition and measurement of an asset retirement obligation and its associated retirement cost. SFAS 143 is effective for fiscal years beginning after June 15, 2002, with early adoption permitted. The Company plans to adopt SFAS 143 effective May 1, 2003. SFAS 144 establishes a single accounting model for the impairment of long-lived assets. SFAS 144 supersedes SFAS 121, but retains the fundamental provisions for (a) measurement of impairment of long-lived assets to be held and used and (b) measurement of long-lived assets to be disposed of by sales. SFAS 144 is effective for fiscal years beginning after December 15, 2001. The Company does not expect the adoption of SFAS 143 and SFAS 144 to have a material effect on its financial condition or results of operations. 13 CONSOLIDATED STATEMENTS OF OPERATION
YEARS ENDED APRIL 30 KEWAUNEE SCIENTIFIC CORPORATION $ and shares in thousands, except per share amounts 2002 2001 2000 -------------------------------------------------------------------------------------------------------------------- Net sales $84,849 $77,059 $74,798 Cost of products sold 70,143 62,543 57,715 -------------------------------------------------------------------------------------------------------------------- Gross profit 14,706 14,516 17,083 Operating expenses 11,801 12,156 12,429 -------------------------------------------------------------------------------------------------------------------- Operating earnings 2,905 2,360 4,654 Other (expense) income (6) (276) 326 Interest expense (206) (246) (169) -------------------------------------------------------------------------------------------------------------------- Earnings before income taxes 2,693 1,838 4,811 Income tax expense 793 561 1,250 -------------------------------------------------------------------------------------------------------------------- Net earnings $ 1,900 $ 1,277 $ 3,561 ==================================================================================================================== Net earnings per share Basic $ 0.77 $ 0.52 $ 1.45 Diluted $ 0.77 $ 0.51 $ 1.44 ==================================================================================================================== Weighted average number of common shares outstanding Basic 2,468 2,467 2,456 Diluted 2,481 2,490 2,478 --------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY YEAR ENDED APRIL 30 KEWAUNEE SCIENTIFIC CORPORATION $ in thousands, Common Additional Retained Treasury Total Stockholders' except per share amounts Stock Paid-in-Capital Earnings Stock Equity -------------------------------------------------------------------------------------------------------------------- Balance at April 30, 1999 $ 6,550 $148 $16,429 $(1,095) $22,032 Net earnings -- -- 3,561 -- 3,561 Cash dividends declared, $.26 per share -- -- (639) -- (639) Stock options exercised, 29,875 shares -- 6 -- 178 184 Purchase of treasury stock, 300 shares -- -- -- (3) (3) -------------------------------------------------------------------------------------------------------------------- Balance at April 30, 2000 6,550 154 19,351 (920) 25,135 ==================================================================================================================== Net earnings -- -- 1,277 -- 1,277 Cash dividends declared,$.28 per share -- -- (690) -- (690) Stock options exercised, 7,501 shares -- (4) -- 44 40 Purchase of treasury stock, 130 shares -- -- -- (1) (1) -------------------------------------------------------------------------------------------------------------------- Balance at April 30, 2001 6,550 150 19,938 (877) 25,761 ==================================================================================================================== Net earnings -- -- 1,900 -- 1,900 Cash dividends declared, $.28 per share -- -- (692) -- (692) Stock options exercised, 8,750 shares -- (4) -- 54 50 Purchase of treasury stock, 12,966 shares -- -- -- (107) (107) -------------------------------------------------------------------------------------------------------------------- Balance at April 30, 2002 $6,550 $146 $21,146 $ (930) $26,912 ====================================================================================================================
The accompanying Notes are an integral part of these Consolidated Financial Statements 14 CONSOLIDATED BALANCE SHEETS
APRIL 30 KEWAUNEE SCIENTIFIC CORPORATION $ and shares in thousands, except per share amounts 2002 2001 - -------------------------------------------------------------------------------------------------------- ASSETS Current Assets Cash and cash equivalents $ 1,747 $ 488 Receivables, less allowance: $597 (2002); $389 (2001) 18,979 17,629 Inventories 3,309 4,370 Deferred income taxes 581 915 Prepaid income taxes 296 758 Prepaid expenses and other current assets 514 498 - -------------------------------------------------------------------------------------------------------- Total Current Assets 25,426 24,658 - -------------------------------------------------------------------------------------------------------- Property, Plant Equipment Land 454 98 Buildings and improvements 14,197 13,857 Machinery and equipment 22,040 20,789 - -------------------------------------------------------------------------------------------------------- Property, plant and equipment 36,691 34,744 Accumulated depreciation (23,880) (21,825) - -------------------------------------------------------------------------------------------------------- Net Property, Plant and Equipment 12,811 12,919 - -------------------------------------------------------------------------------------------------------- Other Assets 3,953 3,292 - -------------------------------------------------------------------------------------------------------- Total Assets $ 42,190 $ 40,869 ======================================================================================================== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Current portion of long-term debt $ 681 $ 620 Accounts payable 6,648 5,334 Employee compensation and amounts withheld 1,932 1,446 Deferred revenue 481 1,024 Other accrued expenses 867 1,549 - -------------------------------------------------------------------------------------------------------- Total Current Liabilities 10,609 9,973 - -------------------------------------------------------------------------------------------------------- Long-term Debt 1,930 2,377 Deferred Income Taxes 925 1,063 Accrued Employee Benefit Plan Costs 1,583 1,695 Other Long-term Liabilities 231 -- - -------------------------------------------------------------------------------------------------------- Total Liabilities 15,278 15,108 - -------------------------------------------------------------------------------------------------------- Commitments and Contingencies (Note 7) Stockholders' Equity Common stock, $2.50 par value Authorized-5,000 shares; Issued-2,620 shares 6,550 6,550 Additional paid-in-capital 146 150 Retained earnings 21,146 19,938 Common stock in treasury, at cost: 151 shares (2002); 147 (2001) (930) (877) - -------------------------------------------------------------------------------------------------------- Total Stockholders' Equity 26,912 25,761 - -------------------------------------------------------------------------------------------------------- Total Liabilities and Stockholders' Equity $ 42,190 $ 40,869 ========================================================================================================
The accompanying Notes are an integral part of these Consolidated Financial Statements 15 CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED APRIL 30 KEWAUNEE SCIENTIFIC CORPORATION
$ in thousands 2002 2001 2000 - ------------------------------------------------------------------------------------------------ Cash Flows from Operating Activities Net earnings $ 1,900 $ 1,277 $ 3,561 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation 2,173 2,168 1,968 Bad debt provision 155 144 123 Deferred income tax expense (benefit) 196 355 (255) Decrease (increase) in prepaid income taxes 462 (758) -- (Increase) decrease in receivables (1,505) 220 (885) Decrease (increase) in inventories 1,061 (871) (559) (Increase) decrease in prepaid pension cost (896) (387) 162 Increase (decrease) in accounts payables and accrued expenses 1,118 (168) (1,728) (Decrease) increase in deferred revenue (543) 516 (62) Other, net 338 (130) (130) - ------------------------------------------------------------------------------------------------ Net cash provided by operating activities 4,459 2,366 2,195 - ------------------------------------------------------------------------------------------------ Cash Flows from Investing Activities Capital expenditures (2,065) (1,678) (3,352) - ------------------------------------------------------------------------------------------------ Net cash used in investing activities (2,065) (1,678) (3,352) - ------------------------------------------------------------------------------------------------ Cash Flows from Financing Activities Dividends paid (692) (690) (639) Net (decrease) increase in short-term borrowings -- (2,555) 1,616 Proceeds from long-term debt 250 3,100 -- Payments on long-term debt (636) (103) -- Proceeds from exercise of stock options (including tax benefit) 50 40 184 Purchase of treasury stock (107) (1) (3) - ------------------------------------------------------------------------------------------------ Net cash (used in) provided by financing activities (1,135) (209) 1,158 - ------------------------------------------------------------------------------------------------ Increase in Cash and Cash Equivalents 1,259 479 1 Cash and Cash Equivalents at Beginning of Year 488 9 8 - ------------------------------------------------------------------------------------------------ Cash and Cash Equivalents at End of Year $ 1,747 $ 488 $ 9 ================================================================================================ Supplemental Disclosure of Cash Flow Information Interest paid $ 205 $ 266 $ 159 Income taxes paid $ 115 $ 1,196 $ 1,080 ================================================================================================
The accompanying Notes are an integral part of these Consolidated Financial Statements 16 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Kewaunee Scientific Corporation (the "Company") is a manufacturer of scientific and technical furniture, including steel and wood laboratory furniture, fume hoods, network storage systems, worksurfaces, workstations, workbenches, computer enclosures, and other related accessories. Sales are made through purchase orders and contracts submitted by customers, the Company's dealers and agents, a national stocking distributor, and competitive bids submitted by the Company. The majority of the Company's products are sold to customers located in North America, primarily within the United States. The Company's laboratory products are used in chemistry, physics, biology, and other general science laboratories in the pharmaceutical, biotechnology, industrial, chemical, commercial, educational, government, and health care markets. Technical products are used in manufacturing facilities of computers and light electronics, and by users of computer and networking furniture. Cash and Cash Equivalents Cash and cash equivalents consist of cash on hand and highly liquid investments with original maturities of three months or less. Inventories Inventories are valued at the lower of cost or market. Cost has been determined using the last-in, first-out (LIFO) method for all inventories. Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is determined for financial reporting purposes, principally on the straight-line method over the estimated useful lives of the individual assets or, for leaseholds, over the terms of the related leases, if shorter. Straight-line and accelerated methods of depreciation have been used for income tax purposes. The lives, by category, generally are as follows: buildings and improvements, 10-40 years; leasehold improvements, 10 years; furniture, fixtures, and office equipment, 3-5 years; computer equipment, 3-5 years; factory machinery and vehicles, 5-10 years. Management reviews the carrying value of property, plant and equipment for impairment whenever changes in circumstances or events indicate that such carrying value may not be recoverable. Use of Estimates The presentation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. Significant estimates impacting the accompanying financial statements include the allowance for uncollectible accounts receivable, inventory valuation, and pension liabilities. Fair Value of Financial Instruments The Company's financial instruments include cash and cash equivalents, cash surrender value of life insurance policies, long-term debt, and short-term borrowings. Management believes the carrying value of these assets and liabilities approximate fair value. Sales Recognition Product sales are generally recognized at the date of shipment, or when customers have purchased and accepted title of the goods, but requested the Company to store the finished goods on the customer's behalf. Product sales for fixed-price construction contracts are recognized under the percentage-of-completion method of accounting, with sales revenue allocated based on costs incurred for products completed and shipped to the customer. Service revenue for installation of product sold is recognized as the work is performed. Accounts receivable includes retainage in the amounts of $2,411,000 and $1,796,000 at April 30, 2002 and April 30, 2001, respectively, on certain sales made under contractual agreements. Warranty costs are expensed as incurred. Credit Concentration The Company's credit risk is generally not concentrated with any one customer or industry, although the Company does enter into large contracts with individual customers from time to time. The Company performs credit evaluations of its customers. 17 Income Taxes Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Advertising Costs The Company expenses advertising costs as incurred, including trade shows, training materials, sales samples, catalogs, and other related expenses. Advertising costs for the years ended April 30, 2002, 2001, and 2000 were $410,000, $705,000, and $714,000, respectively. Earnings Per Share Basic earnings per share is based on the weighted average number of common shares outstanding during the year. Diluted earnings per share reflects the assumed exercise and conversion of outstanding options under the Company's stock option plans, except when options have an antidilutive effect. Reclassifications Certain prior year accounts have been reclassified to conform with current year presentation. Derivative Financial Instruments The Company adopted SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," effective January 1, 2001. SFAS No. 133 requires that the Company record derivatives on the balance sheet at fair value and establishes criteria for designation and effectiveness of hedging relationships. The nature of the Company's business activities involves the management of various financial and market risks, including those related to changes in interest rates. The Company employs derivative financial instruments, such as interest rate swap contracts, to mitigate certain of those risks. The Company does not enter into derivative instruments for speculative purposes. Recent Accounting Standards In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 141, "Business Combinations" ("SFAS 141") and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS 141 requires the purchase method of accounting for business combinations initiated after June 30, 2001 and eliminated the pooling-of-interests method for business combinations. SFAS 142 requires that goodwill and certain intangibles will not be amortized, but instead be reviewed for impairment and written down to fair value. SFAS 142 is effective for fiscal years beginning after December 15, 2001. The Company does not expect the adoption of SFAS 141 and SFAS 142 to have a material effect on its financial condition or results of operations. In August 2001, the FASB issued SFAS No. 143, "Accounting for Obligations Associated with the Retirement of Long-Lived Assets" and SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS 143 establishes accounting standards for the recognition and measurement of an asset retirement obligation and its associated retirement cost. SFAS 143 is effective for fiscal years beginning after June 15, 2002, with early adoption permitted. The Company plans to adopt SFAS 143 effective May 1, 2003. SFAS 144 establishes a single accounting model for the impairment of long-lived assets. SFAS 144 supersedes SFAS 121, but retains the fundamental provisions for (a) measurement of impairment of long-lived assets to be held and used and (b) measurement of long-lived assets to be disposed of by sales. SFAS 144 is effective for fiscal years beginning after December 15, 2001. The Company does not expect the adoption of SFAS 143 and SFAS 144 to have a material effect on its financial condition or results of operations. NOTE 2--BUSINESS COMBINATIONS In the first quarter of fiscal year 2002, the Company increased its ownership to 51% in Kewaunee Labway Asia Pte Ltd, a joint-venture company serving as a dealer for the Company's laboratory products in the Southeast Asia region. The consolidated financial statements for fiscal year 2002 include the operating results for this joint venture. All intercompany balances and transactions have been eliminated in consolidation. In fiscal years 2001 and 2000, the operating results of the joint venture are reported in the consolidated financial statements in accordance with the equity method of accounting. Proforma results for fiscal years 2001 and 2000 have not been presented because the operating results for this business were not material to the consolidated financial statements on either an individual or an aggregate basis. 18 NOTE 3--INVENTORIES The Company's inventories at April 30 consisted of: $ in thousands 2002 2001 ------------------------------------------------------------- Finished goods $ 671 $1,023 Work-in-process 1,007 1,455 Materials and components 1,631 1,892 ------------------------------------------------------------- Total inventories $ 3,309 $4,370 ============================================================= If inventories had been determined using the first-in, first-out (FIFO) method at April 30, 2002 and 2001, reported inventories would have been $2.2 million and $2.3 million greater, respectively. NOTE 4--LONG-TERM DEBT AND OTHER CREDIT ARRANGEMENTS Long-term debt consisted of the following at April 30: $ in thousands 2002 2001 ------------------------------------------------------------- Notes payable, bank $ 2,611 $2,997 ------------------------------------------------------------- Less - payable within 1 year 681 620 ------------------------------------------------------------- Long-term portion $ 1,930 $2,377 ============================================================= In February 2001, the Company borrowed $3.1 million under a bank note collateralized by certain machinery and equipment. The loan is repayable in 60 equal monthly installments plus interest. In February 2002, the Company added $250,000 to the bank note repayable in equal monthly installments over the remainder of the original term of the bank note. The note includes certain financial covenants as to tangible net worth, funds flow coverage, current ratio, and ratio of liabilities to tangible net worth. The Company entered into an interest rate swap agreement in fiscal year 2002, whereby $1.5 million of the outstanding principal amount of the bank note effectively converts to a fixed rate of 6.37%, beginning May 1, 2002. The notional amount of this interest rate hedge is reduced in the same proportion as the principal balance of the bank note over the remaining term of the bank note. The fair value of this cash flow hedge was not significant to the Company's consolidated financial statements as of April 30, 2002. The Company entered into this interest rate swap to mitigate future increases in interest rates. The Company does not enter into derivative instruments for speculative purposes. Monthly interest payments are payable under the bank note and revolving credit loan calculated at the lower of (1) the LIBOR Market Index Rate plus 1.75%, or (2) the lender's Prime Rate minus .75%. The borrowing rate was 3.59% at April 30, 2002. The Company has an unsecured revolving credit facility for borrowings of up to $6 million that matures in December 2002. There were no advances outstanding under this facility as of April 30, 2002. 19 NOTES 5--INCOME TAXES The income tax expense consisted of the following:
$ in thousands 2002 2001 2000 ------------------------------------------------------------------------------- Current tax expense: Federal $ 585 $ 188 $ 1,320 State and local 54 18 185 Foreign tax credit (42) -- -- ------------------------------------------------------------------------------- Total current tax expense 597 206 1,505 ------------------------------------------------------------------------------- Deferred tax expense (benefit): Federal 173 310 42 State and Local 23 45 (297) ------------------------------------------------------------------------------- Total deferred tax expense (benefit) 196 355 (255) ------------------------------------------------------------------------------- Net income tax expense $ 793 $ 561 $ 1,250 ===============================================================================
The reasons for the differences between the above net income tax expense and the amounts computed by applying the statutory federal income tax rates to earnings before income taxes are as follows:
$ in thousands 2002 2001 2000 ------------------------------------------------------------------------------- Income tax expense at statutory rate $ 923 $ 625 $ 1,636 State and local taxes, net of federal income tax benefit 125 85 221 Tax credits (301) (232) (654) Other items, net 46 83 47 ------------------------------------------------------------------------------- Net income tax expense $ 793 $ 561 $ 1,250 -------------------------------------------------------------------------------
Significant items comprising the Company's deferred tax assets and liabilities as of April 30 were as follows:
$ in thousands 2002 2001 ------------------------------------------------------------------------------- Deferred tax assets: Accrued employee benefit expenses $ 192 $ 658 Allowance for doubtful accounts 203 160 Inventory reserves and capitalized costs 117 70 Other 69 27 ------------------------------------------------------------------------------- Total deferred tax assets 581 915 ------------------------------------------------------------------------------- Deferred tax liabilities: Book basis in excess of tax basis of property, plant and equipment (918) (1,063) Other (7) -- ------------------------------------------------------------------------------- Total deferred tax liabilities (925) (1,063) -------------------------------------------------------------------------------- Net deferred tax liabilities $(344) $ (148) --------------------------------------------------------------------------------
20 NOTE 6 -- STOCK OPTIONS During fiscal year 1992, stockholders approved the 1991 Key Employee Stock Option Plan, and the plan was subsequently amended to increase the number of shares available for options under the plan to 230,000. Options were granted at not less than the fair market value at the date of grant. Options are exercisable in such installments, for such terms (up to 10 years), and at such times, as the Board of Directors may determine at the time of the grant. At April 30, 2002, no shares were available for future grants under the plan. During fiscal year 1994, the stockholders approved the 1993 Stock Option Plan for Directors. This plan allowed the Company to grant options on on 40,000 shares of the Company's common stock. Each non-employee director of the Company received an option to purchase 5,000 shares of the Compnay's common stock on the effective date of the plan or on the date of commencement of service as a director. Options are exercisable in four equal, annual installments and expire five years from the date of grant. Options were granted at the fiar market value of the date of grant. At April 30, 2002, no shares were available for future grants under the plan. During fiscal year 2001, stockholders approved the 2000 Key Employee Stock Option Plan. This plan allows the Company to grant options on 100,000 shares of the Company's common stock. Options are granted at not less than the fair market value at the date of grant. Options are exercisable in such installments, for such terms (up to 10 years), and at such times, as the Board of Directors may determine at the time of the grant. At April 30, 2002, there were 59,250 shares available for future grants under the plan. The Company utilized treasury stock to satisfy the stock options exercised during fiscal years 2002, 2001, and 2000. Stock option activity and weighted average exercise price is summarized as follows:
2002 2001 2001 ------------------------------------------------------------------ Options Price Options Price Options Price - --------------------------------------------------------------------------------------------------------- Outstanding at beginning of year 152,024 $ 9.04 115,775 $ 8.28 124,500 $ 6.85 Granted 45,750 9.59 43,750 10.13 28,150 10.38 Canceled (2,200) 10.16 -- -- (7,000) 10.34 Exercised (8,750) 3.48 (7,501) 3.50 (29,875) 3.82 - --------------------------------------------------------------------------------------------------------- Outstanding at end of year 186,824 $ 9.43 152,024 $ 9.04 115,775 $ 8.28 ========================================================================================================= Exercisable at end of year 88,385 $ 8.71 66,420 $ 7.27 47,568 $ 5.80 =========================================================================================================
The optins outstanding and weighted average exercise price within the following price ranges at April 30, 2002 are as follows:
Exercise price range $2.75-$3.87 $4.25-$4.62 $8.13-$12.00 - ------------------------------------------------------------------------------------------------------ Options outstanding 13,625 8,999 164,200 Weighted average exercise price $ 3.70 $ 4.42 $ 10.17 Weighted average remaining contractual life (years) 4.1 1.5 7.6 ======================================================================================================
The options exercisable and weighted average exercise price within the following price ranges at April 30, 2002 are as follows:
Exercise price range $2.75-$3.87 $4.25-$4.62 $8.13-$12.00 - ------------------------------------------------------------------------------------------------------ Options exercisable 13,625 8,999 65,761 Weighted average exercise price $ 3.70 $ 4.42 $ 10.34 ======================================================================================================
21 Fair Value Disclosures The Company applies APB Opinion No. 25 and its related interpretations in accounting for its stock option plans. Accordingly, no compensation cost has been recognized for these plans. Had compensation cost for these plans been determined based on the fair value at the grant dates for awards under the plans consistent with the method of SFAS No. 123, the Company's net earnings and net earnings per share for fiscal years 2002, 2001, and 2000 would have been reduced to the pro forma amounts indicated as follows: 2002 2001 2000 -------------------------------------------------------------------- Net earnings (in thousands) As reported $1,900 $1,277 $3,561 Pro forma 1,789 1,212 3,488 ==================================================================== Net earnings per share - Basic As reported $ .77 $ .52 $ 1.45 Pro forma .72 .49 1.42 ==================================================================== Net earnings per share - Diluted As reported $ .77 $ .51 $ 1.44 Pro forma .72 .49 1.41 ==================================================================== The estimated weighted average fair value of options granted under the Company's stock option plans was $3.91 in 2002, $4.70 in 2001, and $4.74 in 2000. The options were valued using the Black-Scholes option-pricing model with the following assumptions used for 2002, 2001, and 2000: dividend yield of 3.0%, 2.5%, and 2.5%; expected volatility of 48%, 50%, and 49%; risk-free interest of 4.95%, 5.80%, and 5.81%; and an expected life of 7.25 years. NOTE 7--COMMITMENTS AND CONTINGENCIES The Company has entered into various operating lease agreements for machinery and equipment. Most leases provide the Company with certain early cancellation rights, as well as renewal and purchase options. Rent expense for these leases was $459,000, $561,000, and $578,000 in fiscal years 2002, 2001, and 2000, respectively. Under the terms of these agreements, future minimum lease payments for the years ended April 30 are as follows: $ in thousands Amount ------------------------------------------------------ 2003 $ 506 2004 490 2005 354 2006 322 2007 189 Thereafter 86 ------------------------------------------------------ Total minimum lease payments $ 1,947 ====================================================== The Company is involved in a legal dispute with Bernards Bros. Inc., a former customer of the Company. The dispute is the subject of lengthy arbitration proceedings completed in December 2000. In fiscal year 2001, the Company recorded a charge of $391,000, including an estimated liability of $134,000 for final settlement of the matter, based on its interpretation of the Arbitrator's award. In fiscal year 2002, pursuant to a Petition to Confirm Arbitration Award in Los Angeles Superior Court, a judgment was issued against the Company in this matter for approximately $1.3 million. The Company believes that the judgment entered by the trial court is inconsistent with the Arbitrator's award, and the Company intends to vigorously contest such judgment. The Company has filed an appeal with the Court of Appeals of the State of California (Bernards Bros. v. Kewaunee Scientific, et. al. Appellate Case No. B 152623) regarding this judgment. If appeal efforts are unsuccessful, the Company could be contingently liable up to the amount of the judgment issued. 22 The Company is involved in certain other claims and legal proceedings in the normal course of business which management believes will not have a material adverse effect on the financial condition or results of operations of the Company. NOTE 8--RETIREMENT BENEFITS The Company has non-contributory defined benefit pension plans covering substantially all salaried and hourly employees. The defined benefit plan for salaried employees provides pension benefits that are based on each employee's years of service and average annual compensation during the last 10 consecutive calendar years of employment. The benefit plan for hourly employees provides benefits at stated amounts based on years of service. The Company's funding policy is to make regular contributions to fund the plans during the participant's working lifetime, which have met ERISA's funding requirements. Plan assets consist primarily of mutual funds. The change in projected benefit obligations and the change in fair value of plan assets for the non-contributory defined pension plans for each of the years ended April 30 are summarized as follows:
$ in thousands 2002 2001 ------------------------------------------------------------------------------------ Accumulated Benefit Obligation, April 30 $ 7,868 $ 7,070 ==================================================================================== Change in Projected Benefit Obligations Projected benefit obligations, beginning of year $ 8,593 $ 7,585 Service cost 378 324 Interest cost 641 581 Actuarial loss 480 439 Actual benefits paid (377) (336) ------------------------------------------------------------------------------------ Projected Benefit obligations, end of year $ 9,715 $ 8,593 ==================================================================================== Change in Plan Assets Fair value of plan assets, beginning of year $ 7,176 $ 7,084 Actual loss on plan assets (122) (259) Actual company contributions 1,353 687 Actual benefits paid (376) (336) ------------------------------------------------------------------------------------ Fair value of plan assets, end of year $ 8,031 $ 7,176 ==================================================================================== Funded Status and Prepaid (Accrued) Funded status of plans $(1,684) $(1,417) Unrecognized net transition obligation -- -- Unrecognized prior service cost 62 73 Unrecognized net loss 2,955 1,781 ------------------------------------------------------------------------------------ Prepaid pension cost $ 1,333 $ 437 ==================================================================================== Amounts Recognized in the Statement of Financial Position Prepaid pension cost $ 1,333 $ 437 ------------------------------------------------------------------------------------ Weighted-Average Assumptions Discount rate, end of year 7.25% 7.50% Expected return on plan assets 9.00% 9.00% Rate of compensation increase 5.00% 5.00% ====================================================================================
23 The components of the net periodic pension costs for each of the three years ended April 30 are as follows:
$ in thousands 2002 2001 2000 ---------------------------------------------------------------------------------------- Service cost $ 378 $ 324 $ 349 Interest cost 641 581 558 Expected return on plan assets (642) (640) (623) Amortization of transition asset -- -- (32) Amortization of prior service cost 11 11 11 Recognition of net loss 69 23 24 ---------------------------------------------------------------------------------------- Net periodic pension cost $ 457 $ 299 $ 287 ----------------------------------------------------------------------------------------
The Company has a defined contribution plan covering substantially all salaried and hourly employees. The plan provides benefits to all employees who have attained age 21, completed six months of service, and who elect to participate. The Company makes matching contributions equal to 50% of the qualifying employee contribution, up to a maximum employer contribution of 2% of the participant's compensation. Contributions by the Company in fiscal years 2002, 2001 and 2000 were $277,000, $267,000, and $239,000, respectively. 24 NOTE 9-- SEGMENT INFORMATION The Company's operations are classified into two business segments: laboratory products and technical products. The laboratory products segment principally designs, manufactures, and installs steel and wood laboratory furniture, worksurfaces, and fume hoods. The technical products segment principally manufactures and sells technical furniture including network storage systems, workstations, workbenches, computer enclosures, and related accessories. Sales to individual foreign countries did not exceed 2.6% of any segment sales. Profits by business segment represent net revenues, less costs associated with goods sold and operating expenses. Intersegment transactions are recorded at normal profit margins with appropriate eliminations of intercompany profits. Portions of corporate expenses are included in each in segment. Unallocated corporate expenses are included in the corporate column below. Corporate assets include LIFO inventory reserve, fixed assets, prepaid and deferred tax assets, prepaid expenses, and cash surrender value of life insurance policies. The following table shows net sales, profits, and other financial information by business segment for the fiscal years ended April 30, 2002, 2001, and 2000:
Laboratory Technical $ in thousands Products Products Corporate Total - -------------------------------------------------------------------------------------------------------- Fiscal Year Ended April 30, 2002: Revenues from external customers $78,676 $ 6,173 $ -- $84,849 Intersegment revenues 809 -- (809) -- Depreciation 1,917 254 2 2,173 Segment profit 3,959 (613) (653) 2,693 Segment assets 34,011 3,295 4,884 42,190 Expenditures for segment fixed assets 1,397 304 364 2,065 Net sales to customers in foreign countries 3,324 362 -- 3,686 ======================================================================================================== Fiscal Year Ended April 30, 2001: Revenues from external customers $61,964 $15,095 $ -- $77,059 Intersegment revenues -- 262 (262) -- Depreciation 1,896 268 4 2,168 Segment profit 1,160 1,598 (920) 1,838 Segment assets 32,695 4,756 3,418 40,869 Expenditures for segment fixed assets 1,608 68 2 1,678 Net sales to customers in foreign countries 1,790 498 -- 2,288 ======================================================================================================== Fiscal Year Ended April 30, 2000: Revenues from external customers $61,678 $13,120 $ -- $74,798 Intersegment revenues -- 319 (319) -- Depreciation 1,699 263 6 1,968 Segment profit 3,541 1,451 (181) 4,811 Segment assets 30,867 6,320 2,129 39,316 Expenditures for segment fixed assets 3,210 139 3 3,352 Net sales to customers in foreign countries 2,399 277 -- 2,676 ========================================================================================================
Revenues from one customer of the Company represented 12%, 13%, and 11% of the Company's total sales in fiscal years 2002, 2001, and 2000, respectively. 25 REPORT OF INDEPENDENT ACCOUNTANTS TO THE STOCKHOLDERS AND BOARD OF DIRECTORS OF KEWAUNEE SCIENTIFIC CORPORATION In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, of stockholders' equity and of cash flows present fairly, in all material respects, the financial position of Kewaunee Scientific Corporation and its subsidiaries (the "Company") at April 30, 2002 and 2001 and the results of its operations and its cash flows for each of the three years in the period ended April 30, 2002, in conformity with accounting principles generally accepted in the United States of America. 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 of these statements in accordance with auditing standards generally accepted in the United States of America, which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. PRICEWATERHOUSECOOPERS LLP Charlotte, North Carolina June 3, 2002 MANAGEMENT'S REPORT OF CONSOLIDATED FINANCIAL STATEMENTS TO THE STOCKHOLDERS AND BOARD OF DIRECTORS OF KEWAUNEE SCIENTIFIC CORPORATION The consolidated financial statements and accompanying notes were prepared by management, which is responsible for their integrity and objectivity. Management believes the financial statements, which include amounts based on judgments and estimates, fairly reflect the Company's financial position and operating results, in accordance with generally accepted accounting principles. All financial information in this annual report is consistent with the financial statements. Management maintains internal accounting control systems and related policies and procedures designed to provide reasonable assurance that assets are safeguarded, that transactions are properly recorded and executed in accordance with management's authorization, and that accounting records may be relied upon for the preparation of financial statements and other financial information. The design, monitoring, and revision of internal accounting control systems involve, among other things, management's judgment with respect to the relative cost and expected benefits of specific control measures. The Company's consolidated financial statements have been audited by independent accountants who have expressed their opinion with respect to the fairness of those statements. Their audits included consideration of the Company's internal accounting control systems and related policies and procedures. They advise management and the Audit Committee of significant matters resulting from their audits. D. Michael Parker Senior Vice President, Finance Chief Financial Officer 26 SUMMARY OF SELECTED FINANCIAL DATA KEWAUNEE SCIENTIFIC CORPORATION
$ and shares in thousands, except per share amounts 2002 2001 2000 1999 1998 - ------------------------------------------------------------------------------------------------------------------------- OPERATING STATEMENT DATA: Net sales $ 84,849 $ 77,059 $ 74,798 $ 77,478 $ 73,037 Costs of products sold 70,143 62,543 57,715 59,782 55,600 - ------------------------------------------------------------------------------------------------------------------------- Gross profit 14,706 14,516 17,083 17,696 17,437 Operating expenses 11,801 12,156 12,429 12,315 13,096 - ------------------------------------------------------------------------------------------------------------------------- Operating earnings 2,905 2,360 4,654 5,381 4,341 Other (expense) income (6) (276) 326 325 45 Interest expense (206) (246) (169) (96) (149) - ------------------------------------------------------------------------------------------------------------------------- Earnings before income taxes 2,693 1,838 4,811 5,610 4,237 Income tax expense 793 561 1,250 2,214 1,674 - ------------------------------------------------------------------------------------------------------------------------- Net earnings $ 1,900 $ 1,277 $ 3,561 $ 3,396 $ 2,563 - ------------------------------------------------------------------------------------------------------------------------- Weighted average shares outstanding: Basic 2,468 2,467 2,456 2,432 2,386 Diluted 2,481 2,490 2,478 2,464 2,423 - ------------------------------------------------------------------------------------------------------------------------- PER SHARE DATA: Net earnings: Basic $ 0.77 $ 0.52 $ 1.45 $ 1.40 $ 1.07 Diluted 0.77 0.51 1.44 1.38 1.06 Cash dividends 0.28 0.28 0.26 0.22 0.18 Year-end book value 10.90 10.42 10.19 9.04 7.89 - ------------------------------------------------------------------------------------------------------------------------- BALANCE SHEET DATA: Current assets $ 25,426 $ 24,658 $ 23,032 $ 21,831 $ 20,853 Current liabilities 10,609 9,973 11,560 11,672 11,287 Net working capital 14,817 14,685 11,472 10,159 9,566 Net property, plant and equipment 12,811 12,919 13,506 12,125 10,034 Total assets 42,190 40,869 39,316 36,035 31,866 Total borrowings/long-term debt 2,611 2,997 2,555 939 -- Stockholders' equity 26,912 25,761 25,135 22,032 19,039 - ------------------------------------------------------------------------------------------------------------------------- OTHER DATA: Capital expenditures $ 2,065 $ 1,678 $ 3,352 $ 3,678 $ 1,520 Year-end stockholders of record 289 322 334 349 365 Year-end employees 609 593 606 643 619 - ------------------------------------------------------------------------------------------------------------------------- 27
QUARTERLY FINANCIAL DATA (UNAUDITED) Selected quarterly financial data for fiscal years 2002 and 2001 were as follows:
$ in thousands, First Second Third Fourth except per share amounts Quarter Quarter Quarter Quarter - --------------------------------------------------------------------------------------------------- 2002 Net sales $19,740 $22,525 $20,798 $21,786 Gross profit 3,207 3,934 3,685 3,880 Net earnings 293 638 416 553 Net earnings per share Basic 0.12 0.26 0.17 0.22 Diluted 0.12 0.26 0.17 0.22 Cash dividends per share 0.07 0.07 0.07 0.07 =================================================================================================== 2001 Net sales $19,370 $21,416 $17,632 $18,641 Gross profit 3,678 4,316 3,005 3,517 Net earnings (loss) 214 782 (198) 479 Net earnings (loss) per share Basic 0.09 0.32 (0.08) 0.19 Diluted 0.09 0.31 (0.08) 0.19 Cash dividends per share 0.07 0.07 0.07 0.07 ===================================================================================================
RANGE OF MARKET PRICES Kewaunee's common stock is traded in the NASDAQ National Market System, under the symbol KEQU. The following table sets forth the quarterly high and low prices reported on the NASDAQ Market System.
First Second Third Fourth Quarter Quarter Quarter Quarter - ----------------------------------------------------------------------------------------------------- 2002 High $10.17 $ 9.95 $ 9.66 $11.00 Low $ 8.90 $ 7.00 $ 7.81 $ 9.55 Close $ 9.65 $ 8.00 $ 9.66 $10.60 ===================================================================================================== 2001 High $15.50 $15.00 $13.31 $10.50 Low $11.13 $ 9.50 $10.00 $ 7.75 Close $12.75 $11.06 $10.50 $ 8.65 =====================================================================================================
28 CORPORATE INFORMATION
BOARD OF DIRECTORS EXECUTIVE OFFICES Margaret Barr Bruemmer (1)(3)(4) William A. Shumaker Attorney President, Milwaukee, WI Chief Executive Officier Wiley N. Caldwell (3)(4) D. Michael Parker Retired President Senior Vice President, Finance, W. W. Grainger, Inc. Chief Financial Officer, Kenilworth, IL Treasurer, Secretary John C. Campbell, Jr. (1)(2) Roger L. Eggena Private Consultant Vice President, Manufacturing Arlington, TX Kurt P. Rindoks Silas Keehn (2)(3)(4) Vice President, Engineering Retired President and Product Development Federal Reserve Bank of Chicago Winnetka, IL James J. Rossi Vice President, Human Resources Eli Manchester, Jr. (1)(3) Chairman of the Board Kenneth E. Sparks Kewaunee Scientific Corporation Vice President, General Manager Statesville, NC Technical Furniture Group James T, Rhind (1)(2)(4) Counsel to Bell, Boyd & Lloyd LLC CORPORATE OFFICES Attorneys 2700 West Front Street Chicago, IL Statesville, NC 28677-2927 P.O. Box 1842, Statesville, NC 28687-1842 Telephone: 704-873-7202 Facsimile: 704-873-1275 William A. Shumaker (1)(3) Resident/CEO Kewaunee Scientific Corporation Statesville, NC (1) Executive Committee EMPLOYMENT OPPORTUNITIES (2) Audit Committee Individuals interested in employment with (3) Financial/Planning Committee Kewaunee Scientific Corporation should contact (4) Compensation Committee the Vice President of Human Resources, Kewaunee Scientific Corporation, P.O. Box 1842, Statesville, [LOGO] NC 28687-1842. Employment opportunities are also KEQU listed on the Internet at http://www.kewaunee.com. - ------ Kewaunee Scientific Corporation is an equal NASDAQ opportunity employer. LISTED
29 STOCKHOLDER INFORMATION FINANCIAL INFORMATION The Company's Form 10-K financial report, filed annually with the Securities and Exchange Commission, may be obtained by stockholders without charge by writing the Secretary of the Company, Kewaunee Scientific Corporation, P.O. Box 1842, Statesville, NC 28687-1842. Recent financial information is available on the Internet at http://www.kewaunee.com. INDEPENDENT ACCOUNTANTS PricewaterhouseCoopers LLP Charlotte, NC NOTICE OF ANNUAL MEETING The Annual Meeting of Stockholders of Kewaunee Scientific Corporation will be held in the 37th floor Annual Meeting Room at Harris Trust & Savings Bank, Chicago, IL on August 28, 2002 at 10:00 a.m. Central Daylight Time. TRANSFER AGENT AND REGISTRAR All stockholder inquiries, including transfer-related matters, should be directed to: Mellon Investor Services, LLC Overpeck Centre 85 Challenger Road Ridgefield Park, NJ 07660 Telephone: 800-288-9541 Internet at http://www.melloninvestor.com PRODUCT INFORMATION Kewaunee Scientific Corporation products are available through a network of sales representatives and a national stocking distributor. For more information on the Company's laboratory furniture, contact the Marketing Services Department in Statesville, NC; telephone: 704-873-7202; on the Internet at http://www.kewaunee.com; e-mail: marketing@kewaunee.com. For more information on the Company's technical furniture, contact the Customer Service Department in Lockhart, TX; telephone: 512-398-5292; on the Internet at http://www.kewaunee.com; e-mail: marketing-tfg@kewaunee.com. TRADEMARKS ADJUSTABENCH, Advantage, Alpha, BasikBench, CFHS, Discovery, Evolution, Explorer, FlexTech, Kemresin, Kemrock, Kemshield, Kewaunee, Research Collection, Signature, Silhouette, Sturdilite, SturdiKwik, Supreme Air, TechStat, Trademark, Versalab, and Visionaire are registered trademarks of Kewaunee Scientific Corporation. 30 [PHOTO DEPICTING LABORATORY] [PHOTO DEPICTING LABORATORY] [PHOTO DEPICTING WORKSTATIONS] [LOGO] KEWAUNEE Scientific Corporation EX-23 11 dex23.txt CONSENT INDEPENDENT AUDITORS Exhibit 23 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-18417) of Kewaunee Scientific Corporation of our report dated June 3, 2002 relating to the financial statements, which appear in the Annual Report to Shareholders, which is incorporated in this Annual Report on Form 10-K. We also consent to the incorporation by reference of our report dated June 3, 2002 relating to the financial statement schedule, which appears in this Form 10-K. /s/ PricewaterhouseCoopers LLP Charlotte, North Carolina July 17, 2002 -----END PRIVACY-ENHANCED MESSAGE-----