<PAGE>
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 (FEE REQUIRED)
For the fiscal year ended April 30, 1995 or
--------------
____
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ----
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
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 (Zip Code)
offices)
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.
The aggregate market value of 464,946 shares of voting stock held by non-
affiliates of the Registrant was approximately $1,278,602 based on the last
reported sale price of the Registrant's Common Stock on July 7, 1995. (Only
shares beneficially owned by directors of the Registrant were excluded as shares
held by affiliates. By including or excluding shares owned by anyone, Registrant
does not admit for any other purpose that any person is or is not an affiliate
of the Registrant.)
As of July 7, 1995, the Registrant had outstanding 2,366,717 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,
1995, and of the proxy statement for use in connection with Kewaunee Scientific
Corporation's annual meeting of stockholders to be held on August 30, 1995,
described in the cross-reference sheet appearing on pages 2 and 3 of this
report, are incorporated by reference into Parts I, II and III hereof.
1
<PAGE>
Table of Contents and Cross-Reference Sheet
-------------------------------------------
<TABLE>
<CAPTION>
Page or Reference
-----------------
<S> <C> <C>
PART I.................................... 4
Item 1. Business.................. 4
Item 2. Properties................ 5
Item 3. Legal Proceedings......... 6
Item 4. Submission of Matters to a
Vote of Security Holders. 6
Executive Officers................... 6
PART II................................... 7
Item 5. Market for Registrant's
Common Equity and Related
Stockholder Matters....... Annual Report, p. 20,*
"Range of Market Prices,"
and "Quarterly Financial
Data"
Item 6. Selected Financial Data... Annual Report,
pp. 18-19,*
"Summary of Selected
Financial Data"
Item 7. Management's Discussion and
Analysis of Financial Condition
and Results of Operations Annual Report, pp. 6-8,*
"Management's Discussion
and Analysis"
Item 8. Financial Statements and
Supplementary Data....... Annual Report, pp. 9-20,*
Item 9. Changes in and Disagreements
with Accountants on Accounting
and Financial Disclosure.. 7
</TABLE>
____________________
* Matters incorporated by reference from Kewaunee Scientific Corporation's
annual report to stockholders for the fiscal year ended April 30, 1995
("Annual Report").
2
<PAGE>
<TABLE>
<CAPTION>
Page or Reference
-----------------
<S> <C>
PART III................................. 8
Item 10. Directors and Executive
Officers of the Registrant Proxy Statement, pp. 1-3,*
"Election of Directors"
Item 11. Executive Compensation.... Proxy Statement, pp. 4-5,*
"Executive Compensation,"
pp. 6-7,* "Compensation
Committee Report on Executive
Compensation," and p. 9,*
"Agreements with Certain
Executives"
Item 12. Security Ownership of
Certain Beneficial Owners
and Management............ Proxy Statement, pp. 10-12,*
"Security Ownership of Directors
and Executive Officers" and
"Security Ownership of Certain
Beneficial Owners"
Item 13. Security Relationships
and Related Transactions.. Proxy Statement, pp. 1-3,*
"Election of Directors"
PART IV.................................. 10
Item 14. Exhibits, Financial
Statement Schedules, and
Reports on Form 8-K....... 10
SIGNATURES............................... S-1
</TABLE>
____________________
* Matters incorporated by reference from the proxy statement of Kewaunee
Scientific Corporation for use in connection with its annual meeting of
stockholders to be held on August 30, 1995 ("Proxy Statement").
3
<PAGE>
PART I
Item 1. Business
- ------------------
General
-------
The principal business of the Registrant is the manufacture and sale
of scientific laboratory and technical workstations and equipment for
professionals, including wood and metal furniture for use in chemistry, physics,
biology and other general science laboratories, and benches for electronic light
assembly and testing. Other products for laboratory use include fume hoods and
accessories, apparatus benches, work surfaces, sinks and sink assemblies, and
glove boxes.
Scientific laboratory and technical workstations and equipment and
related installation accounted for 100 percent of the Registrant's sales in each
of the fiscal years ended April 30, 1995, 1994 and 1993.
The scientific laboratory and technical workstations and equipment
produced by the Registrant include general science workstations for use in
chemistry, physics and biology laboratories, fume hoods, apparatus benches, work
surfaces, sinks and sink assemblies. These products are sold principally to
industrial and commercial research laboratories, educational institutions,
health-care institutions and governmental entities. The Registrant's products
are primarily sold through purchase orders and contracts submitted by customers,
through Registrant's commissioned dealers, through a national distributor and
through competitive bids submitted by the Registrant. It is common in the
scientific 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 further delayed delivery dates. 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 products which the Registrant manufactures and
installs are received over longer periods of time and require greater working
capital than for manufacturers of most products. In addition, payment terms of
some building projects allow for a percentage retention amount which extends the
collection period of accounts receivable, thus requiring more 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 scientific laboratory and technical workstation and
equipment business is neither cyclical nor seasonal, nor is it dependent on any
one or a few customers. However, sales to VWR Corporation ("VWR Scientific")
represented 17 percent, 13 percent, and 15 percent of the Registrant's total
sales, for fiscal years 1995, 1994 and 1993, respectively. VWR Scientific is a
distributor of the Registrant's products. In the event that VWR Scientific
were not a sales channel, the Registrant would distribute these products through
its other sales agents, dealers, and direct sales force or through another
outside distributor or distributors.
4
<PAGE>
The Registrant's sales backlog as of April 30, 1995 was $24.1 million
compared to $25.3 million and $27.9 million as of April 30, 1994 and 1993,
respectively. In the Registrant's business, planning for purchases frequently
commences several years before installation; therefore, increases and decreases
in the business activities of the Registrant usually trail the normal economic
cycle. It is expected that the amount of the backlog as of the beginning of the
fiscal year, together with orders received for current delivery, will be
sufficient to permit the Registrant to operate at satisfactory levels during the
current year. All but $1.2 million of the backlog as of the beginning of the
current fiscal year is scheduled for shipment during the year; however, it may
reasonably be expected that delays in shipments will occur because of customer
rescheduling or delay in completion of buildings in which the Registrant's
products are to be installed. Based on past experience, the Registrant expects
that more than 90 percent of its backlog scheduled for shipment in the current
fiscal year will be shipped in the current fiscal year.
Competition
-----------
The scientific laboratory and technical workstation and equipment
industry is highly competitive. The Registrant believes that the principal
competitive factors in the scientific laboratory and technical workstation and
equipment industry are price, product performance, and customer service. A
substantial 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, 1995 on
company-sponsored research and development activities related to new products or
services or improvement of existing products or services was $527,647. The
amounts spent for similar purposes in the fiscal years ended April 30, 1994 and
1993 were $490,481 and $440,580, respectively. Six professional employees were
engaged in such research at April 30, 1995.
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, 1995 was
575.
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 scientific laboratory and technical workstations and equipment.
The plants in Statesville, North Carolina are located in three
separate adjacent buildings which contain manufacturing facilities. Office,
engineering and drafting personnel and facilities are located in two 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, the
Registrant leases a warehouse of 22,000 square feet in Statesville, North
Carolina.
5
<PAGE>
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.
At April 30, 1995, the Registrant's land and buildings were pledged as
collateral securing borrowings and letters of credit outstanding under a
revolving credit facility. The Registrant believes its facilities are suitable
for their respective uses and are adequate for its current needs.
Item 3. Legal Proceedings
- ---------------------------
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders
- -------------------------------------------------------------
Not Applicable.
Executive Officers
- ------------------
Information regarding the executive officers of the Registrant is
contained in Part III of this report, Item 10(b), and is incorporated into Part
I of this report in reliance on General Instruction G(3) to Form 10-K, by
reference.
6
<PAGE>
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, 1995, page 20, sections
entitled "Range of Market Prices" and "Quarterly Financial Data". As of July 7,
1995, the Registrant estimates there were approximately 1,400 stockholders of
Kewaunee common shares, of which 439 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, 1995, pages 18-19, 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, 1995, pages 6-8, section
entitled "Management's Discussion and Analysis".
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, 1995, pages 9-20.
Item 9. Changes in and Disagreements with Accountants on
- ----------------------------------------------------------
Accounting and Financial Disclosure
-----------------------------------
Not Applicable.
7
<PAGE>
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 30, 1995, pages 1-3, 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
---- --- --------
Eli Manchester, Jr. 64 President and Chief Executive Officer
Robert M. Cecchini 61 Vice President-Finance; Treasurer;
Secretary; and Chief Financial Officer
T. Ronald Gewin 52 Vice President-Manufacturing
William A. Shumaker 46 Vice President-Sales and Marketing
Eli Manchester, Jr. was elected a director of the Registrant in
November 1990. He was elected President and Chief Executive Officer of the
Registrant on July 11, 1990. For eighteen years prior thereto, he was President
and Chief Executive Officer of BIW Cables Systems, Inc., a manufacturer of
electrical and electronic components.
Robert M. Cecchini was elected Vice President of Finance, Chief
Financial Officer, Secretary and Treasurer in November 1990. Mr. Cecchini
joined the Registrant in July 1989 as Corporate Director of Operational
Accounting and Costs. Mr. Cecchini has elected to retire, effective July 31,
1995.
T. Ronald Gewin joined the Registrant in December 1992 as Vice
President of Manufacturing. Prior to joining the Registrant, Mr. Gewin was
General Manager of a Division of the Grinnell Corporation from 1990 to 1992. He
was a Vice President of Manufacturing for a division of White Consolidated
Industries from 1987 to 1990.
William A. Shumaker joined the Registrant in December 1993 as Vice
President of Sales and Marketing. Prior to joining the Registrant, Mr. Shumaker
was with the St. Charles Companies of St. Charles, Illinois, where he served as
Vice President of Sales and Marketing with their Institutional Division from
1989 to 1993, and as National Sales Manager with another division from 1984 to
1988. He held various other sales and customer service positions with The St.
Charles Companies from 1969 through 1984.
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
30, 1995, pages 4-5, section entitled "Executive Compensation," pages 6-7,
section entitled "Compensation Committee Report on Executive Compensation," and
page 9, section entitled "Agreements with Certain Executives".
Item 12. Security Ownership of Certain Beneficial Owners
- ---------------------------------------------------------
8
<PAGE>
and Management
--------------
Incorporated by reference from the Registrant's proxy statement for
use in connection with its annual meeting of stockholders to be held on August
30, 1995, pages 10-12, sections entitled "Security Ownership of Directors and
Executive Officers" and "Security Ownership of Certain Beneficial Owners".
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
30, 1995, pages 1-3, section entitled "Election of Directors".
9
<PAGE>
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:
<TABLE>
<CAPTION>
<S> <C> <C>
Page or
(a)(1) Financial Statements Reference
-------------------- ---------
Statements of Operations and Retained Earnings -
Years ended April 30, 1995, 1994 and 1993 9*
Balance Sheets - April 30, 1995 and 1994 10*
Statements of Cash Flows - Years ended
April 30, 1995, 1994 and 1993 11*
Notes to Financial Statements 12-16*
(a)(2) Financial Statement Schedule
----------------------------
Independent Auditors' Report -
Deloitte & Touche LLP 11
Schedule II - Valuation and Qualifying Accounts 12
</TABLE>
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 S-2 through S-4 and which is
incorporated herein by reference.
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the fourth quarter of the
Registrant's fiscal year ended April 30, 1995.
____________________
* Matters incorporated by reference from the Registrant's annual
report to stockholders for the year ended April 30, 1995.
10
<PAGE>
[LETTERHEAD OF DELOITTE & TOUCHE LLP]
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Board of Directors
Kewaunee Scientific Corporation
Statesville, North Carolina
We have audited the balance sheets of Kewaunee Scientific Corporation as of
April 30, 1995 and 1994, and the related statements of operations, retained
earnings, and cash flows for each of the three years in the period ended April
30, 1995; such financial statements are included in your 1995 Annual Report to
Stockholders. Our audits also included the financial statement schedule listed
in the Index at Item 14(a)(2). These financial statements and financial
statement schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on the financial statements and
financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Kewaunee Scientific Corporation as of April
30, 1995 and 1994, and the results of its operations and its cash flows for each
of the three years in the period ended April 30, 1995 in conformity with
generally accepted accounting principles. Also, in our opinion, such financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.
/s/ Deloitte & Touche LLP
June 2, 1995
[LOGO OF DELOITTE TOUCHE TOHMATSU INTERNATIONAL]
11
<PAGE>
Schedule II
Kewaunee Scientific Corporation
Valuation and Qualifying Accounts
($ in thousands)
<TABLE>
<CAPTION>
Charged
Balance at (Credited) Balance at
Beginning to Costs End
Description of Period and Expenses Deductions* of Period
- ------------- ---------- ------------ ----------- ----------
<S> <C> <C> <C> <C>
Year ended April 30, 1995
Allowance for doubtful accounts $628 $ 125 $(129) $624
==== ====== ====== ====
Year ended April 30, 1994
Allowance for doubtful accounts $800 $ (67) $(105) $628
==== ====== ====== ====
Year ended April 30, 1993
Allowance for doubtful accounts $914 $ 15 $(129) $800
==== ====== ====== ====
</TABLE>
* Uncollectible accounts written off, net of recoveries.
12
<PAGE>
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/ Eli Manchester, Jr.
--------------------------------------
Eli Manchester, Jr.
President and Chief Executive Officer
Date: July 26, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
(i) Principal Executive Officer )
)
)
/s/ Eli Manchester, Jr. )
------------------------------- )
Eli Manchester, Jr., President )
and Chief Executive Officer )
)
(ii) Principal Financial and Accounting Officer )
)
)
/s/ R. M. Cecchini )
------------------------------- )
R. M. Cecchini, )
Vice President-Finance, Treasurer )
)
(iii) A majority of the Board of Directors: ) July 26, 1995
)
)
/s/ Margaret B. Bruemmer /s/ Eli Manchester, Jr. )
- ------------------------- -------------------------- )
Margaret B. Bruemmer Eli Manchester, Jr. )
)
)
/s/ W. N. Caldwell /s/ James T. Rhind )
- ------------------------- -------------------------- )
W. N. Caldwell James T. Rhind )
)
)
/s/ John C. Campbell, Jr. /s/ Thomas F. Pyle )
- ------------------------- -------------------------- )
John C. Campbell, Jr. Thomas F. Pyle )
)
)
/s/ Kingman Douglass )
- ------------------------- )
Kingman Douglass )
S-1
<PAGE>
KEWAUNEE SCIENTIFIC CORPORATION
Exhibit Index
-------------
<TABLE>
<CAPTION>
Page Number
Number Description of Exhibit (or Reference)
- ------ ---------------------- --------------
<S> <C> <C>
3 Articles of incorporation and by-laws
3.1 Restated Certificate of incorporation (as amended) (3)
3.2 By-Laws (as amended as of August 28, 1991) (9)
10 Material Contracts
10.2 Kewaunee Scientific Corporation 1982 Incentive Stock Option Plan (5)
10.2A Amendment dated February 24, 1988 to 1982 Incentive Stock Option Plan (6)
10.7 Amended and Restated Incentive Savings Plan for Salaried Employees of
Kewaunee Scientific Corporation (10)
10.9 Kewaunee Scientific Corporation Supplemental Retirement Plan (4)
10.12 Employee Stock Ownership Plan of 1985 for Salaried Employees and Hourly
Employees of Kewaunee Scientific Corporation (2)
10.13 Kewaunee Scientific Corporation 1985 Re-Established Retirement Plan for
Salaried Employees (2)
10.14 Kewaunee Scientific Corporation 1985 Re-Established Retirement Plan for
Hourly Employees (2)
10.15 Employment Agreement dated as of December 11, 1990 between Eli Manchester, Jr.
and the Registrant (7)
10.19 Kewaunee Scientific Corporation 1991 Key Employee Stock Option Plan (8)
10.20 Agreement between Kewaunee Scientific Corporation and Coronet Insurance Company,
dated July 2, 1991 (9)
10.21 Kewaunee Scientific Corporation Executive Deferred Compensation Plan (9)
10.22 Agreement dated as of June 8, 1993 between Robert M. Cecchini and the Registrant (10)
</TABLE>
S-2
- ---------------
All footnotes located on page S-4.
<PAGE>
<TABLE>
<CAPTION>
Page Number
Number Description of Exhibit (or Reference)
- ------ ---------------------- --------------
<S> <C> <C>
10.23 Employment Agreement dated as of December 8, 1992 between T. Ronald Gewin
and the Registrant (10)
10.24 Fiscal Year 1996 Incentive Bonus Plan (1)
10.25 Employment Agreement dated as of December 7, 1993 between William A. Shumaker
and the Registrant (12)
10.26 Kewaunee Scientific Corporation Stock Option Plan for Directors (11)
10.27 Agreement dated as of December 14, 1994 between T. Ronald Gewin
and the Registrant (1)
10.28 Accounts Receivable Financing Agreement dated as of January 6, 1995 between the
CIT Group/Business Credit, Inc. and the Registrant (1)
10.29 Accounts Receivable Financing Agreement Supplement Inventory dated as of
January 6, 1995 between The CIT Group/Business Credit, Inc. and the Registrant (1)
10.30 Security Agreement (Equipment & Machinery) dated as of January 6, 1995 between
The CIT Group/Business Credit, Inc. and the Registrant (1)
13 Annual Report to Stockholders for the fiscal year ended April 30, 1995 (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)
27 Financial Data Schedule (1)
</TABLE>
(All other exhibits are either inapplicable or not required.)
S-3
- ---------------
All footnotes located on page S-4.
<PAGE>
<TABLE>
<CAPTION>
Footnotes
---------
<C> <S>
(1) Attached to Form 10-K filed 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 30, 1982, 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, 1989, and incorporated herein by reference.
(7) 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, 1991, and incorporated herein by reference.
(8) Filed as an exhibit to the Kewaunee Scientific Corporation Proxy Statement dated July 26, 1991, and incorporated herein
by reference.
(9) 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.
(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. 05286) for the fiscal year ended April 30, 1993, and incorporated herein by reference.
(11) Filed as an exhibit to the Kewaunee Scientific Corporation Proxy Statement dated July 23, 1993, 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. 05286) for the fiscal year ended April 30, 1994, and incorporated herein by reference.
</TABLE>
S-4
<PAGE>
Exhibit 10.24
KEWAUNEE SCIENTIFIC CORPORATION
FISCAL YEAR 1996
APPROVED INCENTIVE BONUS PLAN
The Fiscal Year 1996 Incentive Bonus Plan will provide for a bonus pool based
upon achievement of various levels of pre-tax earnings, as they compare to
projected pre-tax earnings for the year in Kewaunee's Fiscal Year 1996 Operating
Plan as approved by the Board of Directors. The plan is proposed as a one-year
plan for Fiscal Year 1996.
The provisions of the plan are:
1. Eligibility of Participants to Share in the Bonus Pool
------------------------------------------------------
a. Eligible participants for the plan will be nominated by the CEO and
approved by the Board of Directors. The recommended bonus maximums for
each participant for Fiscal Year 1996 will also be approved by the
Board of Directors.
b. Each participant will be eligible to share in the pool up to the
specified maximum percentage of his or her May 1, 1995 salary.
c. In addition to the direct reports to the President and CEO, it is
proposed that managers fulfilling the following criteria participate
in the Bonus Plan, with a 15% maximum bonus potential.
1. 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 and CEO.
<PAGE>
2. Building of a Bonus Pool
------------------------
A pool will start accruing once pre-tax earnings reach $1,000,000 for
Fiscal Year 1996.
3. Bonus Payouts
-------------
The following provisions will govern potential incentive bonus payouts:
a. Participants will be awarded bonuses based on achievement of the
corporate financial goals, with five percentage points added to, or
subtracted from, their total bonus potential percentage, that is one-
half of a 10% payout and one-sixth of a 30% payout, based on the
discretion of the Board, taking into account both positive and
negative performance of the participants. For those participants with
a 15% maximum bonus potential, the discretionary portion is 100% of a
5% payout and one-third of a 15% payout.
b. Each participant's maximum bonus potential will change at the same
rate as the bonus pool accrues in relation to the pre-tax earnings
percent to plan achievement.
c. Bonuses will be paid to participants within 10 days after the specific
bonus awards for all participants are determined by the Compensation
Committee.
d. Bonus payout conditions:
. If the corporation achieves less than $1,000,000 in pre-tax
earnings, no awards will be paid to any bonus participant except at
the discretion of the Board of Directors, upon recommendation of
the Compensation Committee.
. Any portion of the bonus pool not awarded to participants will be
retained by the corporation.
. 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
<PAGE>
Board of Directors and the incentive plan accrual criteria may be
appropriately adjusted as decided by the Board of Directors.
. A participant must be an employee of the Company on the day of the
bonus payout to be eligible to receive a bonus. In unusual
circumstances, however, the Board of Directors, upon recommendation
of the Compensation Committee, may grant a discretionary bonus.
. The Board of Directors, upon recommendation of the Compensation
Committee, may approve the pro rata participation of a participant
who joins the corporation or who is appointed to a key position
within the corporation after the outset of the bonus period, with a
pro rata increase in the bonus pool.
4. The plan may be amended at any time by the Board of Directors.
<PAGE>
Exhibit 10.27
ELI MANCHESTER, JR.
PRESIDENT
CHIEF EXECUTIVE OFFICER
[LOGO]
KEWAUNEE
SCIENTIFIC
CORPORATION
December 15, 1994
Mr. T. Ronald Gewin
1357 Radio Road
Indian Ridge
Statesville, NC 28677
Re: Employment Security Agreement
Dear Ron:
Recently, you had expressed concern about your job security, in the event of
Kewaunee being acquired by another company. You have asked for special
consideration because, when companies are acquired, the acquired company
frequently does not need "duplicate" positions such as yours.
Further, we recognize that Kewaunee's continued success depends, to a
significant degree, on the skill and competence of key managers such as
yourself.
Therefore, in consideration of your request for job security and your continued
employment, the Board of Directors has approved this employment agreement as
follows:
If the Company is acquired, and you are terminated without cause within two
years after the acquisition, the Company will pay you separation pay equal to
your then current base salary, for twelve months. If you should obtain income
from another employer while receiving separation payments, any such payments
from Kewaunee will be reduced in like amount.
After any termination of employment, the separation payments will not continue
the employment relationship. However, as long as you are receiving separation
payments, your health care coverage will continue per the plan document.
<PAGE>
Mr. T. Ronald Gewin
Page 2
December 15, 1994
If you agree with the above employment security agreement, please sign below.
Sincerely,
/s/ Eli Manchester, Jr.
- -----------------------
Eli Manchester, Jr.
President, Chief Executive Officer
pml
Accepted: /s/ T. Ronald Gewin
--------------------------
T. Ronald Gewin
Date: 12/22/94
----------
<PAGE>
Exhibit 10.28
ACCOUNTS RECEIVABLE FINANCING AGREEMENT
From: Kewaunee Scientific Corporation
2700 West Front Street
Statesville, North Carolina 28677
To: The CIT Group/Business Credit, Inc.
P.O. Box 30337
Charlotte, North Carolina 28231
Gentlemen:
We hereby apply to you for loans and other financial accommodations and, in
consideration of your extending the same on one or more occasions, in your sole
discretion in each instance, the following shall constitute the accounts
receivable financing agreement between us.
I. DEFINITIONS
1.1 All terms defined in Articles 1 or 9 of the Uniform Commercial Code
shall have the meanings given therein unless otherwise defined herein.
1.2 "Receivables" shall mean and include all of our accounts, instruments,
documents, chattel paper and general intangibles, whether secured or unsecured,
whether now existing or hereafter created or arising, and whether or not
specifically sold or assigned to you hereunder.
1.3 "Eligible Receivables" shall mean such Receivables arising in the
ordinary course of our business and which you, in your sole credit judgment,
deem to be Eligible Receivables. To be an Eligible Receivable, such Receivable
must be subject to your perfected security interest and no other lien or
security interest, and must be evidenced by an invoice or other documentary
evidence satisfactory to Lender. In addition, no Receivable shall be an Eligible
Receivable if:
(i) it arises out of a sale made by us to an affiliate of ours or to a
person controlled by an Affiliate of ours; or
(ii) it is due or unpaid more than ninety (90) days after the original
invoice date; or
<PAGE>
(iii) fifty percent (50%) or more of the Receivables from the Account
Debtor are not deemed Eligible Receivables (due to any of the reasons
set forth in (i) through (iv). Such percentage may, in your sole
discretion be increased or decreased from time to time; or
(iv) any covenant, representation or warranty contained in this Agreement
with respect to such Receivable has been breached; or
(v) the Account Debtor is also our creditor or supplier (unless prior to
your acceptance, a non-offset letter has been received by and is, in
your sole opinion, accepted by you), or the Account Debtor has
disputed liability, or the Account Debtor has made any claim with
respect to any other Receivable due from such Account Debtor to us,
or the Receivable otherwise is or may become subject to any right of
setoff by the Account Debtor; or
(vi) the Account Debtor has commenced a voluntary case under the federal
bankruptcy laws, as now constituted or hereafter amended, or made an
assignment for the benefit of creditors, or if a decree or order for
relief has been entered by a court having jurisdiction in the
premises in respect of the Account Debtor in an involuntary case
under the federal bankruptcy laws, as now constituted or hereafter
amended, or if any other petition or other application for relief
under the federal bankruptcy laws has been filed against the Account
Debtor, or if the Account Debtor has failed, suspended business,
ceased to be solvent, or consented to or suffered a receiver,
trustee, liquidator or custodian to be appointed for it or for all or
a significant portion of its assets or affairs; or
(vii) the sale is to an Account Debtor outside the continental United
States, unless the sale is on letter of credit, guaranty or
acceptance terms in each case acceptable to you in its sole
discretion; or
(viii) the sale to the Account Debtor is on a bill-and-hold (unless bill-
and-hold documentation satisfactory to you has been executed),
guaranteed sale, sale-and-return,
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sale on approval, consignment or any other repurchase or return
basis or is evidenced by chattel paper; or
(ix) you believe, in your sole judgment, that collection of such Receivable
is insecure or that such Receivable may not be paid by reason of the
Account Debtor's financial inability to pay; or
(x) the Account Debtor is the United States of America or any department,
agency or instrumentality thereof, unless we assign our right to
payment of such Receivable to you pursuant to the Assignment of Claims
Act of 1940, as amended; or
(xi) the goods giving rise to such Receivable have not been shipped and
delivered to and accepted by the Account Debtor or the services giving
rise to such Receivable have not been performed by us and accepted by
the Account Debtor or the Receivable otherwise does not represent a
final sale; or
(xii) the Receivables of the Account Debtor exceed a credit limit determined
by you, in your sole discretion, to the extent such Receivable exceeds
such limit; or
(xiii) the Receivable is subject to any offset, deduction, defense, dispute,
or counterclaim or if the Receivable is contingent in any respect or
for any reason; or
(xiv) we have made any agreement with any Account Debtor for any deduction
therefrom, except for discounts or allowances made in the ordinary
course of business for prompt payment, all of which discounts or
allowances are reflected in the calculation of the face value of each
respective invoice related thereto; or
(xv) the Receivable represents a retention amount due from the Account
Debtor, such retention amount will not be an Eligible Receivable; or
(xvi) the Receivable is covered under a bonding arrangement by a bonding
company on behalf of an Account Debtor.
1.4 "Net Amount of Eligible Receivables" shall mean and include the gross
amount of Eligible Receivables less returns,
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<PAGE>
discounts, claims, credits and allowances of any nature at any time issued,
owing, granted, outstanding, available or claimed.
1.5 "Collateral" shall mean and include: (a) all of our Receivables and
any other items of real or personal property in which we have granted or may in
the future grant a security interest to you hereunder, in any supplement hereto
or otherwise; (b) all of our right, title and interest in and to the goods or
other property represented by, or which by sale have resulted in, or securing
any of the Receivables, including, without limitation, all returned, reclaimed
or repossessed goods or other property; (c) all of our rights and remedies as an
unpaid vendor or lienor, including stoppage in transit, replevin, repossession
and reclamation; (d) all additional amounts due to us from any Customer,
irrespective of whether such additional amounts have been specifically assigned
to you; (e) all of our rights, title and interest in and to, and all of our
rights, remedies, security interests and liens under, guaranties or other
contracts of suretyship, security agreements or mortgages on real or personal
property, deposits, leases or other agreements or property securing or relating
to any of the items referred to in subparagraph (a) hereof, or acquired for the
purpose of securing and enforcing any of such items; (f) all moneys, securities
and other property and the proceeds thereof, now or hereafter held or received
by, or in transit to you from or for us, whether for safekeeping, pledge,
custody, transmission, collection or otherwise, and all of our deposits (general
or special), balances, sum and credits with, and all of our claims against, you
at any time existing; (g) all books, records, ledger cards and other property
and general intangibles at any time evidencing or relating to Receivables
("Records"); and (h) all proceeds of any of the foregoing in whatever form,
including, without limitation, any claim against third parties for loss or
damage to or destruction of any or all of the foregoing and cash, negotiable
instruments and other instruments for the payment of money, chattel paper,
security agreements or other documents.
1.6 "Customer" shall mean and include each Account Debtor or obligor in
any way obligated on or in connection with any Receivable.
1.7 "Obligation" shall mean and include any and all of our indebtedness,
liabilities and obligations to you of every kind, nature and description, direct
or indirect, secured or unsecured, joint or several, absolute or contingent, due
or to become due,
4
<PAGE>
now existing or hereafter arising, regardless of how they arise or were acquired
or by what agreement or instrument they may be evidenced or whether evidenced by
any agreement or instrument, including but not limited to all amounts owing by
us to you by reason of purchases made by us from other concerns, factored or
financed by you, and all amounts of charges, commissions, interest, costs,
expenses and attorneys' fees chargeable in connection with all of the foregoing
(all of which amounts, whether or not matured and whether or not disputed, may
be charged to our account hereunder, without prior notice to us), and all
obligations to perform acts or refrain from taking any action.
1.8 "Chemical Rate" shall mean the per annum rate of interest publicly
announced by Chemical Bank in New York, New York, from time to time as its prime
rate. (The prime rate is not intended to be the lowest rate of interest charged
by Chemical Bank to its borrowers.)
1.9 "Business Day" means a day upon which bank referred to in paragraph
5.1 below is open for the general transaction of business.
II. GRANT OF SECURITY INTEREST
2.1 To secure the prompt payment, performance and observance in full of
all Obligations, we hereby pledge, transfer, set over and assign to you, and
grant to you a continuing general security interest in, a lien upon and a right
of setoff against, all of our Collateral. Records shall, until delivered to or
removed by you, be kept by us in trust for you and without cost to you in
appropriate containers in safe places. Each confirmatory assignment schedule or
other form of assignment at any time executed by us shall be deemed to include
the foregoing whether or not same appears therein. However, you agree that you
will, when notified in writing and acknowledged by you, subordinate your rights
in accounts receivable that are covered under a bonding arrangement to the
respective bonding company.
2.2 We will, upon the creation of each Receivable, or at such intervals as
you may from time to time require, provide you with: (a) confirmatory
assignment schedules; (b) copies of all documents evidencing the sale and
delivery of goods or the performance of services which created any Receivables,
including but not limited to contracts, orders, invoices, bills of lading,
5
<PAGE>
warehouse receipts, delivery tickets and shipping receipts; and (c) such further
schedules and/or information as you may reasonably require. The items to be
provided under this paragraph are to be in form satisfactory to you and are
executed and delivered to you from time to time solely for your convenience in
maintaining records of the Collateral; our failure to give any of such items to
you or to otherwise comply with the provisions hereof shall not affect,
terminate, modify or otherwise limit your lien or security interest in the
Collateral, or our representations, warranties or covenants under this
Agreement.
III. ADVANCES AND INTEREST
3. Subject to the terms and conditions of this Agreement, including those
pertaining to the discretionary nature of advances hereunder, you agree to make
a Maximum Credit Facility of up to $8,500,000 available for our request
therefor, as follows:
3.1 You will make revolving credit advances to us, at your discretion, in
amounts up to the sum of (a) eighty percent (80%) of the amount of our Net
Amount of Eligible Receivables, plus (b) fifty percent (50%) of the value of our
Eligible Inventory calculated on the basis of the lower of cost or market, with
cost calculated on a first in first out basis. In no event shall advances
against Eligible Inventory exceed $2,500,000 nor shall the aggregate revolving
credit advances and letters of credit issued or guaranteed in accordance with
Section 3.2 exceed $8,500,000 from time to time outstanding. You may, in the
exercise of your discretion, at any time and from time to time, increase or
decrease the amount of the total facility, and/or the advance percentages to be
applied to our Eligible Receivables hereinbefore set forth, and, in the event
such amounts, or percentages are decreased, such decrease shall become effective
immediately for the purpose of calculating the amount which you may be willing
to advance or to allow to remaining outstanding against Eligible Receivables and
Inventory.
3.2 You will, at your discretion, issue your letters of credit for the
account of us or guarantee the payment of or performance by us under letters of
credit not exceeding $1,500,000 in aggregate face amount at any time
outstanding. Credit extended under this provision will be deducted from credit
available under Section 3.1 above.
6
<PAGE>
3.3 All loans and advances by you to us under this Agreement shall
constitute one obligation of ours, secured by your security interest in all of
the Collateral granted hereunder, and by all other security interests, liens,
claims and encumbrances heretofore, now or at any time or times hereafter
granted by us to you. All loans or advances shall be disbursed by you from your
office specified above, shall be charged to our account on your books, and shall
be payable on demand at such office or at such other place as you may from time
to time designate.
3.4 Interest shall be payable by us upon the greater of a minimum loan of
$3,000,000 or the average of the actual daily loan balance outstanding during
each calendar month at a rate (computed on the basis of the actual number of
days elapsed over a year of 360 days) of 1.00% per annum in excess of the
"Chemical Rate" but in no event less than 8.00% per annum. ("Chemical Rate" is
defined as the per annum rate of interest publicly announced by Chemical Bank to
its borrowers.) Any change in the rate of interest hereunder due to a change in
said Chemical Rate shall take effect on the day such change in the Chemical Rate
becomes effective. Interest shall be charged on: all advances, all charges
hereunder, and any debit balance in our account. You shall be entitled to
charge our account at the rate provided for herein until all Obligations have
been paid in full. All such interest shall be due and payable on the first day
of each month in arrears and shall be charged by you to our account and shall be
included in each monthly statement of our account. Such interest shall be
deemed paid by the first amounts subsequently credited to our account.
3.5 Examination fees of $500.00 per month will be charged by you plus
actual examination costs incurred during the periodic examinations of our
Lockhart, Texas location and paid by us. Such fees shall be due and payable on
the first day of each month and shall be charged by you to our account as of
such first day of each month. Such examination fees shall be deemed to be
earned in full on the date when due and shall not be subject to rebate of or
proration for any reason. The number of examinations conducted will be in your
sole discretion.
3.6 A Letter of Credit Guaranty Fee of .25% per month times the maximum
total amount of Letter of Credit Guarantees outstanding during the month will be
charged by you and paid by us. Such fees shall be due and payable on the first
day of each
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<PAGE>
month and shall be charged by you to our account as of such first day of the
month.
3.7 A facility fee equal to $60,000 shall be deemed payable by us to you
on the effective date of this Agreement and on each anniversary date thereof.
Such facility fee shall be deemed earned when due and shall not be subject to
rebate or proration for any reason.
3.8 A loan closing fee of $5,000 would be charged by you and paid by us on
the effective date of this Agreement to offset your costs for preparing,
closing, and recording the security agreements and documents required for the
Credit Facility.
3.9 In addition to the Loan Closing Fee and other fees set forth above we
shall pay any additional costs, fees or expenses incurred by you including,
without limitation, all out-of-pocket expenses paid or incurred by you in
connection with the negotiation, preparation, execution, administration,
modification or enforcement of this Agreement or any of the transactions
contemplated thereby (including, without limitation, reasonable attorneys' fees
and expenses, search and filing fees, wire transfer fees, appraisal fees and
travel and living expenses). All such expenses shall be paid by us to you
within ten days following your request.
3.10 You will render to us each month a statement of our account which
shall be deemed to be correct and accepted by and binding upon us as an account
stated except to the extent that you receive a written statement of our specific
exceptions within thirty (30) days after such statement has been rendered to us.
IV. REPRESENTATIONS, COVENANTS AND WARRANTIES
We hereby make the following representations, covenants and warranties
which shall survive the execution and delivery of this Agreement, shall be
deemed to be incorporated by reference in each confirmatory assignment schedule
or other form of assignment submitted by us to you and shall be deemed repeated
and confirmed with respect to each item of Collateral as it is created or
otherwise acquired by us.
4.1 The execution, delivery and performance hereof are within our
corporate powers, have been duly authorized, are not in contravention of law or
the terms of our certificate of incorporation or bylaws, or of any indenture,
agreement or
8
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undertaking to which we are a party or by which we or our properties are bound.
4.2 With respect to each item of Collateral at the time your security
interest attaches thereto: (a) we shall be the sole owner, free and clear of all
liens, claims, security interests and encumbrances except in your favor (or in
favor of the respective bonding companies as released by you upon written
notification from us and acknowledged by you with respect to accounts receivable
that are covered under a bonding arrangement), and fully authorized to sell,
transfer, pledge and grant a security interest in, such item of Collateral; (b)
each Receivable shall be a valid and legally enforceable account representing an
undisputed bona fide indebtedness incurred by the Customer therein named, for a
fixed sum as set forth in the invoice relating thereto with respect to an
absolute sale and delivery upon the specified terms of goods sold by us, or
rendition of services rendered by us; (c) no Receivable is or shall be subject
to any defense, offset, counterclaim, discount or allowance except as may be
stated in the copy of the invoice delivered by us to you; (d) no agreement under
which any deduction, discount, credit or allowance of any kind may be granted or
allowed shall have been or shall thereafter be made by us with any Customer
except in keeping with our ordinary course of business which practices have been
made known to you and as indicated in writing to you at or before the time such
agreement is made; (e) all statements made and all unpaid balances appearing in
the invoices, documents and agreements relating to each Receivable shall be true
and correct in all respects what they purport to be; (f) all signatures and
endorsements that appear thereon shall be genuine and all signatories and
endorsers shall have full capacity to contract; and (g) none of the transactions
underlying or giving rise to any item of Collateral shall violate any applicable
state or federal laws or regulations, and all documents relating to such item of
Collateral shall be legally sufficient under such laws or regulations and shall
be legally enforceable in accordance with their terms.
4.3 All recording, filing and other requirements of giving public notice
under any applicable law or ordinance have been duly complied with by us. We
will from time to time, at our expense, perform all acts and execute all
documents requested by you, including the obtaining, executing, delivering or
filing financing statements, landlord's or mortgagee's waivers, and
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other notices, and amendments and renewals thereof, in order to create, perfect,
maintain and enforce a valid first lien upon, pledge of, or security interest in
all of the Collateral in your favor. You are authorized to file financing
statements without our signature as specified by the Uniform Commercial Code to
perfect or maintain your security interest in all of the Collateral. All
charges, expenses and fees you may incur in obtaining or filing any of the
foregoing shall be charged to our account and added to the Obligations.
4.4 We shall not pledge, sell, assign, transfer, create or suffer to exist
any security interest in or other lien or encumbrance on any part of the
Collateral or grant or suffer to exist any security interest in or other lien or
encumbrance on any of our inventory or other assets to anyone other than you,
without your prior written consent. We hereby agree to defend the same against
any and all persons whatsoever.
4.5 Each customer, guarantor or endorser is to the best of our knowledge
solvent and will continue to be fully able to pay all Receivables on which he is
obligated in full when due.
4.6 We shall maintain our books, records and accounts in accordance with
generally accepted accounting principles consistently applied. We shall, at any
time and from time to time, furnish to you such balance sheets, earnings
statements, financial statements and other reasonable information regarding our
business affairs and financial condition, including, without limitation,
schedules, agings and reports, as you may request and in any event we shall
furnish you: (i) as soon as possible, but not later than ninety (90) days after
the close of each of our fiscal years, our and our consolidated subsidiaries
audited financial statements as of the end of such year, on a consolidated and
consolidating basis; audited by a firm of independent certified public
accountants of recognized standing, selected by us and acceptable to you and;
(ii) as soon as possible, but not later than thirty (30) days after the end of
each month hereafter, our and our consolidated subsidiaries unaudited interim
consolidated financial statements as of the end of such month and of the portion
of our fiscal year then elapsed, on a consolidated and consolidating basis,
certified by our principal financial officer prepared in accordance with
generally accepted accounting principles and fairly presenting the consolidated
financial position and results of our and our consolidated subsidiaries
operations for such month and period.
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All such financial statements do or shall fairly present our financial
condition as of the dates thereof or the results of our operations for the
periods for which the same are furnished. All such other information is or
shall be, at the time the same is so furnished, accurate and correct in all
material respects and complete insofar as completeness may be necessary to give
you a true and accurate knowledge of the subject matter thereof.
4.7 We hereby irrevocably authorize and direct all accountants and
auditors employed by us at any time prior to or during the term of this
Agreement to exhibit and deliver to you, upon your request, copies of any of our
financial statements, trial balances or other accounting records of any sort in
their possession, and to disclose to you an information they may have concerning
our financial condition and business operations.
4.8 Our Records and chief executive office shall be kept at our address as
it appears at the head of this Agreement. We shall immediately notify you of
any change in our name, place of business, or corporate structure.
4.9 We shall from time to time make such payments to you as you shall
request so that the aggregate balance in our loan account shall not at any time
exceed the applicable percentage of the Net Amount of Eligible Receivables plus
Net Amount of Eligible Inventory at such time.
V. CUSTODY, INSPECTION, COLLECTION AND HANDLING
OF COLLATERAL AND RECORDS
5.1 Until our authority to do so is curtailed or terminated (which you may
do at any time when you in your sole discretion may deem it to be in your best
interests to do so), we will, at our own cost and expense but on your behalf and
for your account, collect and otherwise enforce as your property and in trust
for you, all remittances and all amounts unpaid on Receivables, and shall not
commingle such collections with our own funds or use the same for any purpose.
We will open a Lock Box at a Bank approved by you pursuant to an agreement
acceptable to you, and which is titled to reflect your ownership of the fund in
order to receive all payments from our customers reported to you by us and which
are confirmed by a collection report promptly forwarded by us to you. Payments
received into the Lock Box will be immediately deposited into your account at
this Bank. This Lock Box arrangement shall be maintained at our sole cost and
expense.
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As to all such collections, including all prepayments by Customers, we shall
receive in trust, and deliver to you in original form, duly endorsed by us for
deposit with you, and on the date of receipt thereof, all checks, drafts, notes,
money orders, acceptances, cash and other evidences of indebtedness. All
amounts received by you in payment of Receivables shall be credited to our
account for availability, pursuant to the terms set forth in this Agreement, on
the business day reported to you as received by us, which we will confirm by a
collection report, forwarded to you within five (5) business days. However, you
shall be permitted to charge our account for (3) Business Days interest for
collection and clearance of any such amounts. We understand that a payment to
us is at all times conditional upon final payment to you. At any such
curtailment or termination of our authority, or at any other time and without
any cause or notice thereof to us, you shall have the right to send notice of
assignment or notice of your security interest to any Customers or any other
persons obligated on, holding or otherwise concerned with any of the Collateral,
and thereafter you shall have the sole right to collect the Receivables and/or
take possession of the Collateral and the Records and all other books and
records relating thereto. Any and all of your collection expenses, including
but not limited to attorneys' fees, stationery and postage, telephone and
telegraph, secretarial and clerical expenses.
5.2 We shall keep and maintain, at our cost and expense, books and records
pertaining to the Collateral in such detail, form and scope as you shall from
time to time require. We will mark our Records with appropriate notations
satisfactory to you, disclosing that such Collateral has been pledged, sold,
assigned, mortgaged and transferred to you and that we have granted to you a
security interest therein.
5.3 At all reasonable times, you shall have full access to, and the right
to check, inspect, examine and make abstracts and copies from, our Records and
all other books, records, audits, correspondence and papers relating to the
Collateral, the right to confirm and verify all Receivables and the right to do
whatever you may deem necessary to preserve or protect your interests in the
Obligations and the Collateral, and, in furtherance thereof, you may without
cost or expense to you use such of our personnel, supplies and space as may be
reasonably necessary. You or your agents may enter upon any of our premises at
any time and from time to time during business hours for the
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purpose of inspecting the Collateral and any and all records pertaining thereto.
At any time you may take possession of and remove or require us to deliver any
or all such records.
5.4 We shall, immediately upon obtaining knowledge thereof, report to you:
any reclamation, return or repossession of goods; any claim or dispute asserted
by any Customer or other obligor; any loss or destruction of, or substantial
damage to, any of the Collateral; and any other matter affecting the value,
enforceability or collectibility of any of the Collateral. Except in the normal
course of business and consistent with our historical practices, we shall not,
without your consent, settle, compromise or adjust any Receivable (or extend the
time for payment thereof) or grant any additional discounts, allowances or
credits thereon.
5.5 We hereby constitute you and any agent and designee, as our attorney-
in-fact, at our own cost and expense, to exercise at any time all or any of the
following powers, which being coupled with an interest, shall be irrevocable
until all Obligations have been paid in full: to receive, take, endorse, assign,
deliver, accept and deposit, in your name or ours, any and all checks, notes,
remittances, drafts and other documents and instruments and documents relating
to the Collateral; to receive, open and dispose of all mail addressed to us and
relating to the Collateral and to notify postal authorities to change the
address for delivery of mail to such address as you may designate; to transmit
to Customers notice of your interest in the Receivables and to request from
Customers at any time, in your name or ours or that of your designee,
information concerning the Receivables; to notify Customers to make payment
directly to you; to execute in our name and on our behalf any financing
statements or amendments thereto; and to take or bring, in your name or ours,
all steps, actions or proceedings deemed by you necessary or desirable to effect
collection of the Collateral or to preserve, protect or enforce your interest
therein. You and said attorney, agent or designee shall not be liable for any
acts of omission or commission, nor for any error of judgment or mistake of fact
or law.
5.6 Nothing herein contained shall be construed to constitute us as your
agent for any purpose whatsoever. You shall not be responsible nor liable for
any shortage, discrepancy, damage, loss or destruction of any Collateral
wherever the same may be located and regardless of the cause thereof. You shall
13
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not, under any circumstances or in any event whatsoever, have any liability for
an error or omission or delay of any kind occurring in the settlement,
collection or payment of any of the Receivables or any instrument received in
payment thereof or for any damage resulting therefrom. You may, without notice
to or consent from us, sue upon or otherwise collect, extend the time of payment
of, or compromise or settle for cash, credit or otherwise upon any terms, any of
the Receivables or any securities, instruments or insurance applicable thereto
and release the obligor thereon. You are authorized and empowered to accept the
return of goods represented by any of the Receivables, without notice to or
consent by us, all without discharging or in any way affecting our liability
hereunder. You do not, by anything herein or in any assignment or otherwise,
assume any of our obligations under any contract or agreement assigned to you,
and you shall not be responsible in any way for the performance by us of any of
the terms and conditions thereof.
5.7 We shall pay when due all premiums on any life insurance policies
assigned to you as Collateral and on all other insurance policies required to be
maintained by us under this Agreement, any supplement hereto, or otherwise. We
shall also pay when due and discharge all taxes, assessments, contributions and
other charges upon or against us or our properties or assets, including the
Collateral. If any such premium, tax, assessment, contribution or other charge
remain unpaid after the date fixed for the payment of same, or if any lien shall
be claimed, you may without notice to us pay such premium, tax, assessment,
contribution, charge or claim, and the amount thereof shall be payable on demand
and, until paid by us, shall be charged to our account and added to and deemed
part of the Obligations.
5.8 We shall be liable for any tax or penalty imposed upon any transaction
under this Agreement or giving rise to the Receivables or which you may be
required to withhold or pay for any reason and we agree to indemnify and hold
you harmless with respect thereto, and to repay to you on demand the amount
thereof, and until paid by us shall be added to and deemed part of the
Obligations. If any Receivable includes a charge for any tax payable to any
governmental tax authority, you are hereby authorized in your discretion to pay
the amount thereof to the proper taxing authority for our account and to charge
our account therefor. We shall notify you if any Receivable includes any tax
due to any such taxing authority and in the absence of our
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notice, you shall have the right to retain the full proceeds of such Receivable.
5.9 We shall comply with all laws, rules, regulations and orders of any
legislative, administrative or judicial body or official, applicable to our
properties and assets, including the Collateral, or to the operation of our
business.
5.10 You have the right at any time and from time to time to employ and
have present on any of our premises one or more custodians selected by you each
of whom shall have the right to exercise any and all of your rights hereunder.
We hereby agree to cooperate with any such custodian and to do whatever you may
reasonably request by way of leasing warehouses or otherwise preserving the
Collateral. All expenses incurred by you by reason of the employment of the
custodian shall be payable on demand and, until paid by us, shall be charged to
our account and added to and deemed part of the Obligations.
5.11 You shall be entitled to charge our account with, and add to and deem
part of the Obligations, all costs and expenses incurred by you in connection
with the preparation, execution, administration and enforcement of this
Agreement (and all related instruments and documents), and all costs and
expenses incurred by you in connection with the protection, maintenance,
preservation and enforcement of the Obligations, the Collateral or the pledges,
liens and security interests granted to you hereunder. The foregoing costs and
expenses shall include, without limitation, all reasonable fees and expenses of
your attorneys (both internal and external), all search fees, the cost of all
public record filings and wire transfer charges.
VI. EVENTS OF DEFAULT ACCELERATION
6.1 All Obligations shall, at your option and notwithstanding any time or
credit allowed by any instrument evidencing or representing same, be immediately
due and payable without notice or demand upon the occurrence of any one or more
of the following events of default ("Default"): (a) default in the payment or
performance, when due or payable, of any of the Obligations including
specifically, but without limitation, our failure to pay to you any Obligation
due on demand when such demand is made; (b) default by any guarantor, endorser
or other person liable on the Obligations under any guarantee, endorsement or
other agreement of such person with, or in favor of, you; (c)
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our making any misrepresentation, orally or in writing, to you whether for the
purpose of obtaining credit or an extension of credit, or otherwise; (d) any
representation, warranty, or statement of fact made to you at any time by us or
on our behalf being false or misleading in any material respect; (e) the
discontinuance or suspension of the operation of our present business, our
becoming insolvent, or our becoming unable to meet our debts as they mature, or
our calling any meeting of creditors, or having a creditors' committee
appointed, the commencement by or against us of any action, case or proceeding
for relief under any provision of the Federal bankruptcy laws or any other
applicable Federal or State bankruptcy, insolvency or other similar law, the
rendition, issuance or filing of any injunction, attachment, judgment or lien
against us or any of our property, or the appointment of a receiver, custodian
or trustee of an kind for us or any of our property; (f) any change in our
condition or affairs (financial or otherwise) or that of any endorser, guarantor
or other person liable on the Obligations, that in your opinion impairs your
security or increases your risk; or (g) failure to provide adequate and timely
financial reports as provided in Paragraph 4.6 hereof.
VII. RIGHTS AND REMEDIES AFTER DEFAULT
7.1 Upon the occurrence of any Default and at any time thereafter if such
or any other Default shall then be continuing you shall have the right (in
addition to any other rights you may have under this Agreement or otherwise)
without further notice to us, to appropriate, set off and apply to the payment
of any or all of the Obligations, any or all Collateral, in such manner as you
shall in your sole discretion determine, to enforce payment of the Obligations
or any Collateral, to settle, compromise or release, in whole or in part, any
amounts owing on the Collateral, to prosecute any action, suit or proceeding
with respect to the Collateral, to extend the time of payment of any and all
Collateral, to make allowances and adjustments with respect thereto, to issue
credits in your or our name, to sell, assign and deliver the Collateral (or any
part thereof), at public or private sale, for cash, upon credit or otherwise, at
your sole option and discretion, and you may bid or become purchaser at any such
sale, if public, free from any right of redemption which is hereby expressly
waived. We agree that the giving of five (5) days notice by you, oral or sent
by certified mail, return receipt requested, postage prepaid, to our address set
forth below, designating the place and time of any public
16
<PAGE>
sale or of the time after which any private sale or other intended disposition
of the Collateral is to be made, shall be deemed to be reasonable notice thereof
and we waive any other notice with respect thereto. The net cash proceeds
resulting from the exercise of any of the foregoing rights or remedies shall be
applied by you to the payment of the Obligations in such order as you may elect,
and we shall remain liable to you for any deficiency.
7.2 You shall have the right in your sole discretion to determine which
rights or remedies, and in which order any of the same, are to be exercised, and
you may at any time pursue, relinquish, subordinate, modify or take any other
action with respect thereto, without in any way modifying or affecting any of
them. You may, at all times, proceed directly against us to enforce payment of
the Obligations and shall not be required to take any action of any kind to
preserve, collect or protect your or our rights in the Collateral.
7.3 The enumeration of the foregoing rights and remedies is not intended
to be exclusive, and such rights and remedies are in addition to, and not by way
of limitation of, any other rights or remedies you may have under applicable law
including the Uniform Commercial Code. The exercise of any right or remedy
shall not preclude the exercise of any other right or remedy, all of which shall
be cumulative and not alternative.
VIII. WAIVERS
8.1 We hereby waive notice of dishonor, demand, presentment, protest and
notice of protest with respect to any and all instruments included in or
evidencing any of the Obligations or the Collateral, notice of acceptance
hereof, notice of loans or advances made, credit extended, Obligations incurred,
Collateral received or delivered, or any other action taken in reliance hereon,
and any and all other demands and notices of any description, except such as are
expressly provided for herein.
8.2 No act, delay or omission on your part in exercising any right or
remedy shall operate as a waiver of such or any other right or remedy. No
single or partial waiver by you of any provision of this Agreement, or breach or
default hereunder, or of any right or remedy shall operate as a waiver of such
or any
17
<PAGE>
other provision, breach, default, right or remedy on a future occasion.
IX. EFFECTIVE DATE AND TERMINATION; APPLICABLE LAW
AND WAIVER OF JURY TRIAL; MISCELLANEOUS
9.1 This Agreement shall become effective upon acceptance by you and shall
continue in full force and effect until two (2) years from the date of such
acceptance (the "Initial Term"), and from year to year thereafter, unless sooner
terminated as herein provided. We may terminate this Agreement as of the
anniversary of its effective date in any year after the Initial Term by giving
you at least sixty (60) days' prior written notice, and may terminate during the
Initial Term by giving you sixty (60) days written notice and paying to you, in
addition to the then outstanding principal, accrued interest and any other
charges due under this Agreement, (i) during the first year of the Initial Term,
a termination charge in an amount equal to two percent (2%) of the Maximum
Credit Facility, (ii) during the second year of the Initial Term, a termination
charge in an amount equal to one percent (1%) of the Maximum Credit Facility.
You shall have the right to terminate this Agreement at any time on ninety (90)
days' notice, or immediately at any time upon the occurrence or during the
continuance of a Default.
9.2 No termination of this Agreement shall affect any rights of either of
us, or any obligation of either of us to the other, under this Agreement, and
the provisions hereof shall continue to be fully operative until all Obligations
have been fully paid. Your security interest in, lien on and rights in the
Collateral shall continue in full force and effect, notwithstanding any
termination of this Agreement or the fact that our account may from time to time
be temporarily in a credit position, until all Obligations have been paid in
full. All representations, warranties, covenants, waivers and agreements
contained herein shall survive any termination hereof.
9.3 This Agreement together with any written and duly executed supplement,
contains the entire understanding between us with respect to the subject matter
hereof. Neither this Agreement nor any portion or provision hereof may be
changed, modified, amended, waived, supplemented, discharged, cancelled or
terminated orally or by any course of conduct, or in any manner other than by an
agreement in writing, expressly referring hereto and signed by the party to be
charged. The Section Titles
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contained in this Agreement shall be without substantive meaning and are not a
part of the agreement between the parties. We, if two or more in number, shall
be jointly and severally bound hereunder.
9.4 Except as otherwise provided herein, all notices, requests and demands
hereunder shall be: (a) addressed to the party to be served at the address shown
at the head hereof, or to such other address as either party may designate by
written notice to the other in accordance with this provision; and (b) deemed to
have been given or made: if by hand, immediately upon delivery; if by telex,
telegram or telecopy, immediately upon sending; if by overnight delivery
service, one day after dispatch; and if by ordinary mail or certified mail-
return receipt requested, three (3) days after mailing.
9.5 If any provision of this Agreement, including, without limitation, any
provision relating to charges constituting interest payable by you under this
Agreement, is contrary to, prohibited by, or deemed invalid under applicable
laws or regulations, such provision shall be inapplicable and deemed omitted to
the extent so contrary, prohibited or invalid, but the remainder hereof shall
not be invalidated thereby and shall be given effect so far as possible.
9.6 This Agreement shall be binding upon and inure to the benefit of each
of the parties hereto and their respective successors and assigns, except that
any obligation we may have under this Agreement shall not be assignable nor
inure to any of your successors and assigns.
9.7 This Agreement has been negotiated, executed and delivered at and
shall be deemed to have been made at Charlotte, North Carolina. The loans
provided for herein are to be funded and repaid, and this Agreement is otherwise
to be performed at Charlotte, North Carolina. This Agreement shall be
interpreted, and the rights and liabilities of the parties hereto determined in
accordance with the laws of the State of North Carolina. As part of the
consideration for new value this day received, we hereby consent to the
jurisdiction of any state or federal court located within the State of North
Carolina and waive personal service of any and all process upon us, and consent
that all such service of process be made by registered mail directed to us at
the address shown on the execution page hereof or at such other address as may
be designated by written notice to you and service
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so made shall be deemed to be completed upon actual receipt thereof. TO THE
EXTENT PERMITTED BY LAW, WE WHEREBY MUTUALLY WAIVE ANY RIGHT TO A TRIAL BY JURY
IN ANY ACTION OR PROCEEDING ARISING OUT OF THIS ARRANGEMENT OR ANY OTHER
AGREEMENTS OR TRANSACTIONS BETWEEN US. Nothing contained herein shall affect
your right to serve legal process in any other manner permitted by law or affect
your right to bring any action or proceeding against us or our property in the
courts of any other jurisdiction.
Very truly yours,
ATTEST: KEWAUNEE SCIENTIFIC CORPORATION
/s/ Robert M. Cecchini By: /s/ Eli Manchester, Jr.
- ----------------------------- -----------------------------
Secretary
Its: President & CEO
----------------------------
(Corporate Seal)
Address:
----------------------------
Accepted at Charlotte, North Carolina
this 6th day of January, 1995.
ATTEST: THE CIT GROUP/BUSINESS CREDIT, INC.
By: /s/ Jerry N. Jones
- ----------------------------- ------------------------------
Secretary
Its: Sr. V.P.
-----------------------------
(Corporate Seal)
No. 2639L
(05/11/94)
F105
20
<PAGE>
Exhibit 10.29
ACCOUNTS RECEIVABLE FINANCE AGREEMENT SUPPLEMENT INVENTORY
From: Kewaunee Scientific Corporation
2700 West Front Street
Statesville, N.C. 28677
The CIT Group/Business Credit, Inc.
Post Office Box 30531
Charlotte, North Carolina 28230
Gentlemen:
This is a supplement to our underlying agreement with you signed and
accepted by you on the 6th day of January, 1995. It is hereby incorporated into
said agreement (hereinafter sometimes called "the Agreement"), and is a part
thereof.
1. In addition to your other security, we hereby pledge to you and grant
you a continuing general lien on and security interest in all Inventory now and
hereafter owned by us. The term "Inventory" means and includes all merchandise
intended for sale by us and all raw materials, goods in process, finished goods,
materials and supplies of every nature used or usable in connection with the
manufacture, packing, shipping, advertising or sale of such merchandise. We
warrant that all Inventory is and will be owned by us, free of all other liens,
security interest and encumbrances, and that we are the owners of the Inventory
at wholesale and are not a mercantile establishment selling at retail. All of
such Inventory will be kept at our address shown above and at 1902 Clayton
Street, Statesville, North Carolina, 901 Farm Road 20, Lockhart, Texas, and 2343
West Front Street, Statesville, North Carolina, and in the event of any change
in locations, we will immediately notify you; but your lien and security
interest will be maintained despite the locations of the Inventory. We will, at
our expense, defend the Inventory against any claims or demands adverse to your
interest therein, and will promptly pay, when due, all taxes or assessments
levied against us on the Inventory. In the event we fail to pay such taxes and
assessments, or fail to keep the Inventory free from any other lien or security
interest, you may make expenditures for such purposes and any amount so expended
shall be secured hereby and will be repaid with interest on demand.
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<PAGE>
2. Your lien and security interest shall extend and attach to Inventory
which is presently in existence and which is owned by us or in which we have an
interest, and all Inventory which we purchase or in which we may acquire an
interest at any time and from time to time in the future, whether such Inventory
is in transit or in our constructive, actual or exclusive occupancy or
possession or not, or held by us or others for your account and wherever the
same may be located, including, but without limiting the generality of the
foregoing, all Inventory which may be located on our premises or upon the
premises of any carriers, forwarding agents, truckers, warehousemen, vendors,
selling agents, finishers, converters or other third parties who may have
possession of the collateral.
3. Your lien on the Inventory shall continue through all stages of
manufacture and shall, without further act, attach to goods in process, to the
finished goods, to the accounts receivable or other proceeds resulting from the
sale or other disposition thereof and to all such Inventory as may be returned
to us by customers. Forthwith and from time to time hereafter, we shall provide
you with one or more separate written statements, dated and signed by us,
describing, designating, identifying and evaluating all Inventory now and
hereafter owned by us, confirming your lien and security interest. Upon the
sale, exchange, or other disposition of the Inventory, the security interest and
lien created and provided for herein shall without break in continuity and
without further formality or act continue in and attach to the instruments for
the payment of money, accounts, contract rights, documents of titles, shipping
documents, chattel paper and all other cash and noncash proceeds of such sale,
exchange or disposition, including Inventory returned or rejected by customers
or repossessed by either of us. As to any such sale, exchange or disposition,
you shall have all of the rights of an unpaid seller, including stoppage in
transit, replevin and reclamation.
4. The Inventory shall be additional security for all Obligations to you
under, and as defined in, the Agreement as originally existing and as hereby and
at any time heretofore or hereafter supplemented or amended as well as for all
other loans and advances to us or for our account for you, whether now existing
or hereafter arising, and for all commissions, obligations, indebtedness,
interest charges and expenses chargeable to our account or due from us from time
to time, however created and however arising, whether or not evidenced by
2
<PAGE>
notes or other instruments, including any and all obligations and indebtedness
of any subsidiary or affiliate (including any parent company) of ours, and
including officers of such, to you or your subsidiaries and affiliates
(including any parent company) all hereinafter called the "Obligations". With
respect to all Inventory as well as all accounts, receivables, and other
security, you shall be entitled to all of the rights and remedies set forth in
the Agreement.
5. Upon our request, you may make Advances to us prior to our sale of
Inventory, and if you so require, we will execute a note or notes or other
instruments of indebtedness in form satisfactory to you evidencing any loans or
advances to us. Any such Advances will be made at your sole discretion, will be
charged by you to us and will bear interest payable in the manner and at the
rate specified in the Agreement, unless such advance is evidenced by a note or
an instrument of indebtedness, in which event the terms thereof shall be
controlling. All such Advances shall be payable by us on demand (unless
otherwise provided in a note or instrument of indebtedness) and recourse to the
security therefor will not be required at any time. The amount of all such
loans and advances and the relation thereof to the value of the Inventory will
be determined by you alone.
6. We shall be obligated to maintain a ratio of at least two (2) times the
amount of Eligible Inventory to the amount of the loan on Inventory at all
times. "Eligible Inventory" is defined as Inventory acceptable to you valued at
cost or market, whichever is lower, excluding all obsolete Inventory.
7. Except for sales made in the regular course of our business, we shall
not sell, encumber or dispose of or permit the sale, encumbrance or disposal of
any Inventory without your prior written consent. As sales are made in the
regular course of business, we shall, in accordance with the provisions of the
Agreement, immediately execute and deliver to you schedules and assignments of
all Receivables created by us. Any collateral assigned to you under the
Agreement or this supplement shall be additional security for the payment of all
sums owing by us to you for loans or advances pursuant to this supplement. If
sales are made for cash, we shall immediately deliver to you the identical
checks, cash or other forms of payment which we receive. All payments received
by you on account of cash sales of Inventory, as well as on account of
Receivables, will be credited
3
<PAGE>
to our account in accordance with the provisions of the Agreement.
8. If any Inventory remains in the possession or control of any of our
agents or processors, we shall notify such agents or processors of your lien,
and upon request shall instruct them to hold all such Inventory for your account
and subject to your instructions. We agree to maintain books and records
pertaining to the Inventory in such detail, form and scope as you shall require,
and we agree to notify you promptly of any change in our name, mailing address,
principal place of business or location of the Inventory. We will also advise
you promptly, in sufficient detail, of any substantial change relating to the
type, quantity or quality of the Inventory, or any event which would have a
material effect on the value of the Inventory or on the lien and security
interest granted to you herein. A physical listing of all Inventory, wherever
located, shall be taken by us whenever requested by you, and a copy of each such
physical listing shall be supplied to you. You may examine and inspect the
Inventory at any time. We will execute and deliver to you from time to time,
upon demand, such supplemental agreements or documents relating to Inventory, or
instruments of indebtedness, in order that the full intent and purpose of this
agreement may be carried into effect.
9. We warrant and represent that we have not and will not during the
period that we are indebted to you for any loans, advances or Obligations, enter
into any agreement of any kind, the effect of which will create any prior or
superior rights, security interests or liens upon any of our assets in which you
have a security interest (except as set forth in the Agreement) in favor of any
person, firm or corporation.
10. We shall have the Inventory insured in our name against loss or damage
by fire, theft, burglary, pilferage, loss in transportation and such other
hazards as you shall specify, by insurers approved by you, in amounts
satisfactory to you and under policies containing loss payable clauses to you as
your interest may appear. If we fail to do so, you may procure such insurance
and the cost of such insurance shall be secured hereby and will be payable to
you with interest on demand. Any insurance policies or certificates will be
deposited with you, if you so require. We agree that the avails of all such
insurance, if any loss should occur, may be applied to the payment of any or all
of the indebtedness hereby secured or to the replacement of any of
4
<PAGE>
the Inventory damaged or destroyed, as you may elect or direct. You shall have
the right, in our name or in your name, to file claims under any insurance
policies, to receive, receipt and give acquittance for any payments that may be
made thereunder, and to execute any and all endorsements, receipts, releases,
assignments, reassignments or other documents that may be necessary to effect
the collection, compromise or settlement of any claims under any such insurance
policies.
11. If we should default in the payment of any Obligation due to you
hereunder or otherwise, or in the performance of any provision of the Agreement
(including, without limitation, this supplement and any other supplements
thereto), or if a petition under the Bankruptcy laws of the United States is
filed by or against us, or action in receivership instituted, or if we make an
assignment for benefit of creditors, suspend business or become insolvent, or if
an attachment be levied or tax lien be filed against any of the Inventory, or if
you deem yourself or your security insecure, then you may declare this agreement
in default and all amounts owing under the Agreement (including, without
limitation, this supplement and any other supplements thereto) and all other
Obligations owing by us to you shall, without demand or notice, immediately
become due and payable (notwithstanding that the maturity date or dates
expressed in any evidence of such indebtedness may be otherwise) and you may
foreclose your lien or security interest in the Inventory in any way permitted
by law, and shall have, without limitation, the remedies of a secured party
under the Uniform Commercial Code. You may thereupon enter our premises without
legal process and without incurring liability to us remove the same to such
place as you may deem advisable, or you may require us to assemble and make the
Inventory available to you at a convenient place, or take and maintain
possession on our premises and, with or without having the Inventory at the time
or place of sale, you may sell or otherwise dispose of all or any part of the
Inventory whether in its then condition or after further preparation or
processing, either at public or private sale or at any broker's board, in lots
or in bulk, for cash or for credit, at any time or place, in one or more sales,
and upon such terms and conditions as you may elect. At any such sale you may be
the purchaser. If any Inventory shall require rebuilding, repairing,
maintenance, preparation, or is in process or other unfinished state, you shall
have the right, at your option, to do such rebuilding, repairing, preparation,
processing or completion of manufacturing, for the purpose of putting the
Inventory in such
5
<PAGE>
saleable form as you shall deem appropriate. IF YOU USE LEGAL PROCESS,
CONTRACTUAL OR OTHER REMEDY TO OBTAIN POSSESSION OF THE INVENTORY, WE WAIVE ANY
RIGHT TO ANY NOTICE OF HEARING AND/OR HEARING TO WHICH WE MIGHT OTHERWISE BE
ENTITLED PRIOR TO RECOVERY OF THE INVENTORY.
12. In the event of any public or other sale of the Inventory, the
proceeds from any sale shall first be applied to any costs and expenses in
securing possession of the Inventory, storing, repairing and finishing for sale,
and to any expenses in connection with the sale. The net proceeds will be
applied toward the payment of any and all Obligations to you under the
Agreement, this Supplement or any other supplements thereto, and otherwise,
including interest, attorney's fees, which we hereby expressly agree to pay in
the event of any default hereunder and your referral to an attorney, and all
other costs and expenses. Application of the net proceeds as to particular
Obligations or as to principal or interest shall be in your absolute discretion.
Any deficiency will be paid to you forthwith upon demand and any surplus will be
paid to us if we are not indebted to you under any other Obligation. The
enumeration of the foregoing rights is not intended to be exhaustive and the
exercise of any right shall not preclude the exercise of any other rights, all
of which shall be cumulative.
13. To the extent that any of our obligations to you are now or hereafter
secured by property other than the Inventory or by the guaranty, endorsement or
property of any other person, firm or corporation, then you shall have the right
to proceed against such other property, guarantor, or endorser upon our default
in the payment of any obligation or in any of the terms, covenants or conditions
contained herein, and you shall have the right in your sole discretion to
determine which rights, security, liens, security interests or remedies you
shall at any time pursue, relinquish, subordinate, modify or take any other
action with respect thereto, without in any way modifying or affecting any of
them or any of your rights hereunder.
14. The lien, rights and security interest granted to you hereunder are to
continue in full force and effect, notwithstanding the termination of the
Agreement or the fact that the principal account maintained in our name on your
books may from time to time be temporarily in a credit position, until the final
payment to you in full of all obligations and indebtedness due you by us,
together with interest thereon, and your delay or
6
<PAGE>
omission to exercise any right shall not be deemed a waiver thereof or of any
other right, unless such waiver be in writing. A waiver on one occasion shall
not be construed as a bar to or waiver of any other rights or remedies on any
future occasion.
15. This Supplement, which is subject to modification only in writing, is
supplementary to and is to be considered as a part of the Agreement and shall
take effect when accepted in Charlotte, North Carolina by one of your officers.
This Supplement shall be interpreted according to the laws of the State of North
Carolina and shall inure to the benefit of and be binding upon the parties
hereto, their successors and assigns.
Very truly yours,
ATTEST: KEWAUNEE SCIENTIFIC CORPORATION
/s/ Robert M. Cecchini By: /s/ Eli Manchester, Jr.
- -------------------------- ------------------------------------
Secretary
Its: President & CEO
-----------------------------------
(Seal)
On:
-------------------------------------
Accepted at Charlotte,
North Carolina, on the 6th
day of January, 1995
ATTEST: THE CIT GROUP/BUSINESS CREDIT, INC.
By: /s/ Jerry N. Jones
- -------------------------- -------------------------------------
Secretary
30781 Its: Sr. V.P.
039289 (2784) ------------------------------------
F106
7
<PAGE>
Exhibit 10.30
SECURITY AGREEMENT
(EQUIPMENT & MACHINERY)
January 6, 1995
Kewaunee Scientific Corporation, 2700 West Front Street, Iredell County,
Statesville, North Carolina (hereinafter called "Debtor"), for valuable
consideration, receipt of which is hereby acknowledged, hereby grants to The CIT
Group/Business Credit, Inc., 201 South Tryon Street, Charlotte, North Carolina
(hereinafter called "Secured Party"), a security interest in all forms and kinds
of equipment and machinery (including any classified as fixtures) now owned or
hereafter acquired by the Debtor, wherever located and including the proceeds
and products thereof and any and all additions, accessions, replacements and
substitutions thereto or therefor (all hereinafter called the "Collateral") to
secure all obligations of Debtor to Secured Party under the Accounts Receivable
Financing Agreement and the Accounts Receivable Finance Agreement Supplement -
Inventory.
This agreement and the Collateral also secure any and all other obligations
or liabilities, direct or indirect, absolute or contingent, now existing or
hereafter arising, of Debtor (including any parent, subsidiary or affiliate of
Debtor) to Secured Party (including any parent, subsidiary or affiliate of
Secured Party), all, including those referenced specifically above, hereinafter
called the "Obligations", including, without limitation, any future advances
made by Secured Party to Debtor or any extensions, revision, deferment or
refinancing of the balance owing on the above mentioned note or other
Obligations. However, Secured Party will not prohibit a commercially reasonable
sale of the Collateral located in Lockhart, Texas, provided that the proceeds
from such sale are remitted directly to Secured Party to reduce any indebtedness
owed by the Debtor to Secured Party whether owed directly or indirectly and from
whatever source whatsoever.
The security interest granted and created in the Collateral shall extend
and attach to the entire Collateral presently in existence and which is owned by
Debtor or in which Debtor has an interest, and to all Collateral which Debtor
may purchase or in which Debtor may acquire an interest at any time and from
time to time in the future.
<PAGE>
The Debtor hereby warrants and covenants that:
1. The Collateral is presently located (unless a different address is
stated herein) and shall be kept at 2700 West Front Street, Iredell County,
Statesville, North Carolina, 901 Farm Road 20, Caldwell County, Lockhart, Texas,
and 1902 Clayton Street, Statesville, North Carolina.
2. The Collateral will be used primarily for business purposes.
3. If the Collateral is to be attached to real estate, the name of the
record owner of the real estate and a description of the real estate is attached
hereto and made a part here as Exhibit A and if the Collateral is attached or is
to be attached to real estate, the Debtor, on demand of the Secured Party, shall
furnish the latter with a disclaimer or disclaimers, signed by all persons
having an interest in the real estate, of any interest in the Collateral which
is prior to the Secured Party's interest. The Debtor agrees to notify the
Secured Party in writing of any intended sale, mortgage or conveyance of the
realty and to give written notice of the terms and conditions of this contract
to any prospective purchaser, mortgagee or grantee of said realty and a copy of
such notice to the Secured Party.
4. If certificates of title are issued or outstanding in respect to any of
the Collateral, Debtor shall cause the interest of the Secured Party to be
properly noted thereon.
5. The Debtor shall not sell or offer to sell or otherwise transfer or
encumber the Collateral or any interest therein without the prior written
consent of the Secured Party.
6. No financing statement covering any of the Collateral or any proceeds
thereof is on file in any public office, except as may be specifically set forth
on Exhibit B (if none show "none" on Exhibit B). The Debtor shall immediately
notify the Secured Party in writing of any change in address from that shown in
this agreement and shall also upon demand furnish to the Secured Party such
further information and shall execute and deliver to the Secured Party such
financing statements and other papers and shall do all such acts and things as
the Secured Party may at any time or from time to time reasonably request or as
may be necessary or appropriate to establish and maintain a perfected security
interest in the Collateral as security for the
2
<PAGE>
Obligations, subject to no prior liens or encumbrances, except as may be
specifically set forth on an attached schedule.
7. The Debtor shall keep the Collateral at all times insured against risks
of loss or damage by fire (including so-called extended coverage), theft and
such other casualties as the Secured Party may reasonably require, including
collision in the case of any motor vehicle, all in such amounts, under such
forms of policies, upon such terms, for such periods and written by such
companies or underwriters as the Secured Party may approve, losses in all cases
to be payable to the Secured Party and the Debtor as their interests may appear.
All policies of insurance shall provide for at least ten days prior written
notice of cancellation to the Secured Party; and the Debtor shall furnish the
Secured Party with certificates of such insurance or other evidence satisfactory
to the Secured Party as to compliance with the provisions of this paragraph. It
is agreed that the avails of all such insurance, if any loss should occur, may
be applied by the Secured Party to the payment of the Obligations hereby secured
or to the replacement of any of the Collateral damaged or destroyed, as Secured
Party may elect or direct. The Secured Party may act as attorney for the Debtor
in making, adjusting and settling claims under and canceling such insurance and
endorsing the Debtor's name on any drafts drawn by insurers of the Collateral.
8. Except to the extent disclosed in accordance with paragraph 6 above,
the Debtor shall keep the Collateral free from any adverse lien, security
interest or encumbrance and in good order and repair, shall not waste or destroy
the goods or any part thereof and shall not use the Collateral in violation of
any applicable statute, ordinance or policy of insurance thereon. The Secured
Party may examine and inspect the Collateral at any reasonable time or times
wherever located.
9. The Debtor shall pay promptly when due all taxes and assessments upon
the Collateral or for its use or operation or upon this agreement.
10. The Debtor authorizes the Secured Party in its discretion to discharge
taxes, liens or security interests, or other encumbrances at any time levied or
placed on the Collateral, to place and pay for insurance thereon, to order and
pay for the repair, maintenance and preservation thereof, and to pay any
necessary filing or recording fees. Any amount so
3
<PAGE>
expended by the Secured Party pursuant to the foregoing authorization shall
become additional indebtedness bearing interest at the rate set forth on the
front hereof, or if no rate is set forth, at the highest rate being paid by
Debtor to Secured Party under any agreement secured hereby, and shall be payable
upon the demand of the Secured Party. Also, if at any time or times hereafter
Secured Party employs counsel for advice with respect to this agreement, or to
intervene, file a petition, answer, motion or other pleadings in any suit or
proceeding relating to this agreement or the Collateral, or to represent Secured
Party in any pending or threatened litigation with respect to payment of
Debtor's obligations, then in any of such events, all of the reasonable
attorney's fees arising from such services, and any expenses relating thereto,
will be an additional indebtedness owing hereunder by Debtor to Secured Party,
bearing interest as in this paragraph set forth. Until default, the Debtor may
have possession of the Collateral and use the same in any lawful and reasonable
manner not inconsistent with this agreement.
11. If Debtor and Secured Party hereunder are parties to a factoring
agreement or accounts receivable financing agreement, whether entered into prior
to, subsequent to or contemporaneously with this agreement, and said factoring
agreement or accounts receivable financing agreement is terminated for any
reason by either party thereto, then the Obligations secured hereby shall become
due immediately upon demand and at the option of Secured Party, and failure to
pay said Obligations on demand shall constitute an event of default hereunder.
12. Upon the occurrence of any of the following events or conditions,
namely (a) default in the payment or performance of any of the Obligations or of
any covenant or liability contained or referred to herein; (b) any warranty,
representation or statement made or furnished to the Secured Party by or on
behalf of the Debtor in connection with this agreement proving to have been
false in any material respect when made or furnished; (c) loss, theft,
substantial damage, or destruction of Secured Party's Collateral, which is not,
in Secured Party's sole opinion, adequately insured; or Secured Party, in its
sole opinion, does not believe that it will receive adequate compensation as
loss payee under any applicable insurance policy pertaining to said Collateral;
(d) sale or encumbrance to, or of, any of the Collateral, or the making of any
levy, seizure or attachment thereof or thereon; (e) if the Secured Party deems
4
<PAGE>
itself insecure; and (f) death, dissolution, termination of existence,
insolvency, business failure, appointment of a receiver of any part of the
property of, assignment for the benefit of creditors by, or the commencement of
any proceeding under any bankruptcy or insolvency laws by or against the Debtor
or any guarantor or surety for the Debtor; thereupon, or at any time thereafter
(such default not having previously been cured) the Secured Party at its option
may declare all of the Obligations to be immediately due and payable and shall
then have the remedies of a Secured Party under the Uniform Commercial Code,
including without limitation thereto the right to take possession of the
Collateral and for that purpose the Secured Party may, so far as the Debtor can
give authority therefor, enter upon any premises on which the Collateral or any
part thereof may be situated and take possession of, assemble and remove the
same therefrom. The Secured Party may require the Debtor to assemble and make
the Collateral available to the Secured Party at a place to be designated by the
Secured Party which is reasonably convenient to both parties. Unless the
Collateral is perishable or threatens to decline speedily in value or is of a
type customarily sold on a recognized market, the Secured Party shall give the
Debtor at least seven days prior written notice of the time and place of any
public sale thereof or of the time after which any private sale or any other
intended disposition thereof is to be made. Expenses of retaking, holding,
preparing for sale, selling or the like shall include the Secured Party's
reasonable attorney's fees and legal expenses (15% of the balance, if permitted
by law).
13. This agreement and the security interest in the Collateral created
hereby shall terminate when the Obligations have been paid in full. No waiver
by the Secured Party of any default shall be effective unless in writing nor
operate as a waiver of any other default or of the same default on a future
occasion. All rights of the Secured Party hereunder shall inure to the benefit
of its successors and assigns; and all Obligations of the Debtor shall bind the
heirs, legal representatives, successors and assigns of the Debtor. If there be
more than one Debtor, their Obligations hereunder shall be joint and several.
This agreement shall take effect as a sealed instrument.
14. If and to the extent that applicable laws confer any rights or impose
any duties inconsistent with or in addition to any of the provisions of this
agreement, the affected provisions
5
<PAGE>
shall be considered amended to conform thereto, but all other provisions hereof
shall remain in full force and effect.
IF SECURED PARTY USES LEGAL PROCESS, CONTRACTUAL OR OTHER REMEDY TO OBTAIN
POSSESSION OF THE COLLATERAL, DEBTOR HEREBY VOLUNTARILY, INTELLIGENTLY AND
KNOWINGLY WAIVES ANY RIGHT TO ANY NOTICE OF HEARING AND/OR HEARING TO WHICH
DEBTOR MIGHT OTHERWISE BE ENTITLED PRIOR TO RECOVERY OF COLLATERAL BY SECURED
PARTY.
IN WITNESS WHEREOF, the Debtor and the Secured Party have executed this
agreement the year and day above shown, and the Debtor hereby acknowledges
receipt of a fully completed copy.
KEWAUNEE SCIENTIFIC CORPORATION
ATTEST: (Debtor)
/s/ Robert M. Cecchini By: /s/ Eli Manchester, Jr.
- ---------------------------- -----------------------------
Secretary
Its: President & CEO
(Corporate Seal) -----------------------------
Accepted at Charlotte, North Carolina
this 6th day of January, 1995.
THE CIT GROUP/BUSINESS CREDIT, INC.
By: /s/ Jerry N. Jones
-----------------------
Its: Sr. V.P.
-----------------------
6
<PAGE>
Exhibit 13
(LOGO)
KEWAUNEE
Scientific
Corporation
(PHOTO OF KEWAUNEE PRODUCT)
1995
Annual
Report
<PAGE>
CORPORATE Kewaunee Scientific Corporation provides innovative products of
PROFILE high quality to the laboratory furniture marketplace. The Company's
corporate headquarters are located in Statesville, North Carolina.
Manufacturing facilities for steel and wood casework, fume hoods
and worksurfaces are also based in Statesville. Operations in
Lockhart, Texas produce technical workstations, workbenches for
light electronic assembly and testing, fume hoods and related
equipment.
For over 89 years, the Company has been a recognized leader in the
design, manufacture, and installation of laboratory furniture.
Kewaunee products are utilized in laboratories worldwide,
encouraging new discovery.
TABLE OF 1 "Pride in Kewaunee" Program
CONTENTS 2 Letter to our Stockholders
4 . . . ENCOURAGING NEW DISCOVERY
6 Management's Discussion and Analysis
9 Financial Statements and Notes
17 Reports of Independent Auditors and Management
18 Summary of Selected Financial Data
20 Quarterly Financial Data
20 Stockholder Information
Corporate Information (Inside Back Cover)
<PAGE>
PRIDE IN
KEWAUNEE
A profit and quality
improvement program was
launched at the Statesville
operations during fiscal year
1995 -- "Pride in Kewaunee."
A team approach to problem
solving was introduced to over
sixty employees throughout the
office and plants. Seven teams
were formed and trained in
proven methods of problem
analysis and solution
implementation.
(PHOTO OF KEWAUNEE EMPLOYEES WITH
BANNER CAPTIONED "PRIDE IN KEWAUNEE") Active projects address
improving manufacturing methods
in the steel and wood plants,
developing new epoxy resin
products, streamlining
procurement functions, updating
communications technology,
optimizing links between CAD
and information systems, and
strengthening methods of
internal problem solving.
Several of the teams have
achieved early results, with
documented cost savings. Their
success is the impetus for a
"Pride in Kewaunee" program
being initiated at the
Company's Lockhart facility
during fiscal year 1996.
Page 1
<PAGE>
LETTER TO OUR Sales for the year ended April 30, 1995 were $62.5 million,
STOCKHOLDERS down 5.4% from fiscal year 1994 sales of $66.1 million. A net
loss of $1,097,000, or $.46 per share, was reported for the
year, as compared to a fiscal year 1994 net loss of $203,000,
or $.09 per share. Lower contract-bid furniture sales volume
and lower selling prices during the year were partially offset
by a $1.9 million, or 14.7%, reduction in operating expenses.
In addition, reductions in inventory levels resulted in
favorable pre-tax LIFO adjustments of $291,000 for fiscal year
1995, compared to $925,000 for fiscal year 1994.
Sales for the fourth quarter of fiscal year 1995 were $15.2
million, down 2.8% from sales of $15.6 million for the
comparable period of the prior year. A net profit of $145,000,
or $.06 per share, was reported for the quarter, compared to a
net loss of $56,000, or $.02 per share, in the comparable
period of the prior year. For the fourth quarter, the
unfavorable effect of lower selling prices of contract-bid
furniture was more than offset by a reduction of $757,000, or
25.3%, in operating expenses compared to the fourth quarter of
the prior year. A favorable pre-tax LIFO adjustment of $291,000
was recorded for the fourth quarter, compared to a favorable
pre-tax adjustment of $725,000 for the fourth quarter of fiscal
year 1994.
Our optimism for an improved marketplace in fiscal year 1995
did not materialize. Uncertainty by pharmaceutical customers
regarding their future research needs and intense competition
in our industry affected sales volume, and as laboratory
furniture manufacturers competed for reduced contract-bid
furniture orders, selling prices dropped, in some cases
markedly. On the positive side, we were able to improve our
sales networks and strengthen our partnership with VWR
Corporation, the Company's stocking distributor, allowing us to
increase slightly our end-user product sales for the year. In
addition, we were able to take corrective actions during the
year, including substantial reductions in fixed costs, which
allowed the Company to operate at a small profit in each of the
last two quarters.
To compete successfully in today's environment, we must
continually look for ways to reduce costs and improve
manufacturing operations. Significant progress was made on
these fronts during fiscal year 1995 through improvements in
manufacturing techniques, increased use of computerized
manufacturing machinery, and redesigns of existing products to
allow more efficient production. We plan to accelerate our
progress in these areas during fiscal year 1996, with an
emphasis on increased investment in computerized manufacturing
machinery.
We are particularly pleased with the progress made during the
past year at our Lockhart operation which manufactures our
technical products lines and many of our fume hoods. Overhead
costs were significantly reduced at this operation during the
year and manufacturing performance was greatly improved at much
lower costs.
During fiscal year 1995, the Company launched an important new
cost-reduction, problem-solving, quality-improvement program
called "Pride in Kewaunee." Seven teams comprised of employees
throughout the organization are addressing such issues as
streamlining the Company's procurement process, improving
manufacturing operations, improving communications, and
expanding the Company's use of computer-aided-design systems.
Efforts of the teams have already begun to produce excellent
results.
Page 2
<PAGE>
We continue to place emphasis on the development of new product lines and
improvements of existing products. We introduced several new product lines at
the annual industry show in New Orleans in March 1995. The highlights were a
new Supreme-Air Series Fume Hood, a new Signature Wood Series, and a new
reagent rack system. Also during the year, the Lockhart operation introduced a
new model of their Evolution(Register mark) product line made specifically for
local area networks, which already has experienced good demand.
In January 1995, the Company entered into a credit arrangement with a new
lender and retired the Company's existing obligations under its Industrial
Development Revenue Bonds and bank line of credit. The increased borrowing
capacity and flexibility under this new credit arrangement should provide the
funds necessary to implement several important strategies involving new product
lines, new manufacturing techniques, and sales and marketing
initiatives.
After serving 49 years as a director of the Company, John L. Bruemmer
retired in February 1995. Mr. Bruemmer made many valuable contributions to the
Company during his tenure, and he will be missed. We are pleased to report
that your Board elected Margaret Barr Bruemmer to fill Mr. Bruemmer's seat.
Mrs. Bruemmer currently engages in the private practice of law in Milwaukee,
Wisconsin.
We enter fiscal year 1996 anticipating improved profitability. We are now a
more efficient Company, as we are producing better products and providing
better customer service with reduced costs throughout the Company. These
accomplishments provide us with the increased flexibility needed to compete
successfully in today's environment. In addition, we have implemented a new
bidding strategy for contract-bid laboratory furniture that should yield
increased profits from lower sales volumes of these products.
We would like to thank our dedicated employees and professional sales
network for their hard work and loyalty this past year under difficult
conditions. We thank you for your continued support.
Sincerely,
/s/ Eli Manchester, Jr.
Eli Manchester, Jr.
President/CEO
July 1995
[PHOTO APPEARS HERE]
Corporate Executive Officers:
(left to right) T. Ronald Gewin;
William A. Shumaker; Eli Manchester, Jr.;
Robert M. Cecchini.
Page 3
<PAGE>
(PHOTO OF KEWAUNEE EMPLOYEE ON THE JOB)
. . .encouraging new discovery
Kewaunee's strategy is to offer innovative
products that continue to meet customers'
changing needs. Pictured are some of the
major product lines that were introduced (PHOTO OF KEWAUNEE PRODUCT)
or enhanced during the year, as well as a
few of the employees involved in their
development.
The result of creative design and sound
engineering principles, Supreme-Air Series
fume hoods are the newest generation in a
long history of Kewaunee fume hood
research and development. These hoods
offer comprehensive option packages that
are unparalleled in the industry.
Kewaunee's modified epoxy resin liner, (PHOTO OF KEWAUNEE PRODUCT)
KMER, is standard with Supreme-Air fume
hoods. This new and exclusive product
provides superior chemical resistance.
The new Signature Series wood laboratory
furniture is the result of sophisticated
design and engineering, utilizing modern
materials and manufacturing
(PHOTO OF KEWAUNEE EMPLOYEE ON THE JOB)
Page 4
<PAGE>
(PHOTO OF KEWAUNEE EMPLOYEES ON THE JOB)
technology. This product line is extremely
flexible in style and functional
applications.
(PHOTO OF KEWAUNEE PRODUCT) The Evolution line is manufactured and
marketed by the Lockhart operation. This
aesthetically pleasing, modular
workstation system is designed to be
reconfigured from assembly to management
stations in a matter of seconds as the job
requires. Designers recently introduced a
version of Evolution to specifically
accommodate local area network
applications.
Statesville's product development team was
challenged to develop a line of cabinets
that not only self-close, but also self-
latch for added safety. As a result of
their efforts, Kewaunee now offers a
cabinet that features full access swinging
doors with hydraulic closures and a
(PHOTO OF KEWAUNEE PRODUCT) synchronized mechanism to assure the doors
always close and latch.
Kewaunee continues a tradition of
excellence in product development that
encourages new discovery in laboratories
worldwide.
(PHOTO OF KEWAUNEE EMPLOYEE ON THE JOB)
Page 5
<PAGE>
MANAGEMENT'S RESULTS OF OPERATIONS
DISCUSSION AND
ANALYSIS Sales for the year ended April 30, 1995 were $62.5 million,
down 5.4% from fiscal year 1994 sales of $66.1 million. The
decrease in sales was primarily attributable to lower sales
volumes and lower selling prices of contract-bid laboratory
furniture. Uncertainty by pharmaceutical customers regarding
their future research needs and intense competition in the
laboratory furniture industry affected sales volume, and as
laboratory furniture manufacturers competed for reduced
contract-bid furniture orders, selling prices dropped, in
some cases markedly. Sales of end-user products for fiscal
year 1995 were slightly above fiscal year 1994 levels. Fiscal
year 1994 sales decreased 1.4% from fiscal year 1993 sales of
$67.0 million. The fiscal year 1994 sales decrease was
primarily attributable to lower sales volumes and lower
selling prices of contract-bid laboratory furniture,
partially offset by increased sales of end-user products.
The Company's unfilled sales order backlog was $24.1 million
at April 30, 1995, as compared to $25.3 million at April 30,
1994 and $27.9 million at April 30, 1993.
Gross profit represented 16.2% of sales in fiscal year 1995,
19.3% of sales in fiscal year 1994 and 15.9% of sales in
fiscal year 1993. As compared to fiscal year 1994, the fiscal
year 1995 gross profit margin was unfavorably affected by the
lower sales volume and lower selling prices of contract-bid
furniture. Gross profit margins were increased by LIFO
adjustments of $291,000 in fiscal year 1995 and $925,000 in
fiscal year 1994 as a result of reductions in inventories
during these years. As compared to fiscal year 1993, the
fiscal year 1994 gross profit margin was favorably affected
by a $2.5 million reduction in manufacturing cost variances,
the $925,000 LIFO adjustment, and increased sales of higher-
margin end-user products. The favorable impact of these
factors in fiscal year 1994 was partially offset by lower
selling prices in many of the Company's markets and above-
inflation cost increases for many of the Company's raw
materials during the year.
Operating expenses decreased to $10.9 million in fiscal year
1995, from $12.8 million in fiscal year 1994 and $13.6
million in 1993. As a percent of sales, these expenses were
17.4%, 19.4%, and 20.4% in fiscal years 1995, 1994 and 1993,
respectively. The 14.7% reduction in operating expenses in
fiscal year 1995 resulted from a variety of actions
including, in particular, reductions in management and
administrative personnel during the year.
Other income, net was $230,000, $88,000 and $166,000 for
fiscal years 1995, 1994 and 1993, respectively. The increase
in fiscal year 1995 was primarily attributable to a cash
settlement received related to an investment that was
written-down in a prior year. Interest expense of $554,000,
$291,000 and $300,000 was recorded in fiscal years 1995, 1994
and 1993, respectively. The increase in interest expense in
fiscal year 1995 resulted from higher levels of debt, higher
interest rates, and costs associated with a debt
restructuring during the year.
Page 6
<PAGE>
No tax benefit has been recorded for the loss from operations for the fiscal
year ended April 30, 1995. Income tax benefits of $44,000 and $693,000 were
recorded in fiscal year 1994 and 1993, respectively, related to the operating
losses reported for these years. Because of the Company's recent operating
losses, the Company has provided valuation allowances of $1,225,000 at April
30, 1995 and $815,000 at April 30, 1994 to reduce deferred tax assets to an
amount which is more likely than not to be realized.
The Company had a net loss of $1,097,000, or $.46 per share, for fiscal year
1995. This compares to a net loss of $203,000, or $.09 per share for fiscal
year 1994, and a net loss of $2,468,000, or $1.04 per share, for fiscal year
1993.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company's principal sources of liquidity have been funds
generated from operations, supplemented as needed by short-term borrowings.
The Company believes that these sources will be sufficient to support ongoing
business levels, including capital expenditures and debt service requirements.
The Company had working capital of $6.7 million at April 30, 1995, as
compared to $7.1 million at April 30, 1994. The ratio of current assets to
current liabilities was 1.6-to-1 at April 30, 1995, unchanged from April 30,
1994. The debt-to-equity ratio was .39-to-1 at April 30, 1995, as compared to
.32-to-1 at April 30, 1994.
In January 1995, the Company entered into a credit arrangement with a new
lender and borrowings under this revolving credit facility (the facility) were
used to retire the Company's remaining obligations under its Industrial
Development Revenue Bonds and repay all amounts outstanding under its bank line
of credit. The facility allows the Company to borrow the lesser of $8,500,000,
or that available under certain eligibility formulas using qualifying
receivables and inventories, as defined under the credit arrangement. At April
30, 1995, borrowings outstanding under the facility were $5,239,000 and letters
of credit issued and outstanding under the facility were $750,000, leaving
$2,058,000 of unused credit available as of that date. The facility extends
through January 1997 and requires a minimum loan amount of $3,000,000. Due
to this minimum loan requirement and the facility's maturity date,
$3,000,000 of borrowings outstanding under the facility at April 30, 1995 were
classified as long-term debt in the financial statements, with the remaining
$2,239,000 classified as short-term borrowings.
Page 7
<PAGE>
The Company's operations used cash of $329,000 in fiscal year 1995,
primarily to fund the operating losses for the year, an increase in
receivables, and decreases in accounts payable and accrued expenses. The
Company's operations provided cash of $1.9 million in fiscal year 1994 and $1.0
million in fiscal year 1993.
Capital expenditures were $840,000 in fiscal year 1995, $771,000 in fiscal
year 1994, and $1,316,000 in fiscal year 1993. Capital expenditures of
approximately $1.7 million are planned for fiscal year 1996, primarily for the
purchase of production machinery. It is anticipated that these expenditures
will be funded by cash flows from operations and, to a lesser extent, long-term
lease arrangements.
The Company did not pay any dividends during fiscal years 1995 and 1994.
The Company paid quarterly dividends of four cents per share during the first
two quarters of fiscal year 1993. Dividends paid during fiscal year 1993 were
$189,000.
Page 8
<PAGE>
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
YEARS ENDED APRIL 30
KEWAUNEE SCIENTIFIC CORPORATION
<TABLE>
<CAPTION>
$ and shares in thousands, except
per share data 1995 1994 1993
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $62,475 $66,068 $66,984
Costs of products sold (Note 2) 52,347 53,325 56,364
- ----------------------------------------------------------------------------
Gross profit 10,128 12,743 10,620
Operating expenses 10,901 12,787 13,647
- ----------------------------------------------------------------------------
Operating loss (773) (44) (3,027)
Other income, net 230 88 166
Interest expense (554) (291) (300)
- ----------------------------------------------------------------------------
Loss before income taxes (1,097) (247) (3,161)
Income tax benefit (Note 4) - (44) (693)
- ----------------------------------------------------------------------------
Net loss (1,097) (203) (2,468)
Retained earnings
at beginning of year 10,097 10,300 12,957
Dividends paid ($.08 per share) -- -- (189)
- ----------------------------------------------------------------------------
Retained earnings at end of year $ 9,000 $10,097 $10,300
============================================================================
Net loss per share $ (0.46) $ (0.09) $ (1.04)
============================================================================
Weighted average number of common
shares outstanding 2,367 2,368 2,368
============================================================================
</TABLE>
See accompanying notes to financial statements.
Page 9
<PAGE>
Balance Sheets
April 30
Kewaunee
Scientific
Corporation
<TABLE>
<CAPTION>
ASSETS (Note 3) $ and shares in thousands 1995 1994
--------------------------------------------------------------------------------
<S> <C> <C>
Current Assets
Cash $ 58 $ 162
Short-term investments 350 805
Receivables, less allowance - $624 (1995); $628 (1994) 15,571 15,127
Inventories (Note 2) 1,336 1,546
Prepaid expenses and other current assets (Note 4) 1,115 1,369
--------------------------------------------------------------------------------
Total current assets 18,430 19,009
--------------------------------------------------------------------------------
Property, Plant and Equipment
Land 97 97
Buildings and improvements 13,048 12,881
Machinery and equipment 12,088 11,909
--------------------------------------------------------------------------------
Property, plant and equipment, at cost 25,233 24,887
Accumulated depreciation (14,113) (12,814)
--------------------------------------------------------------------------------
Net property, plant and equipment 11,120 12,073
--------------------------------------------------------------------------------
Other Assets 524 484
--------------------------------------------------------------------------------
$ 30,074 $ 31,566
================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
--------------------------------------------------------------------------------
Current Liabilities
Short-term borrowings (Note 3) $ 2,239 $ 1,200
Current portion of long-term debt 111 635
Accounts payable 5,494 5,144
Employee compensation and amounts withheld 1,378 1,756
Accrued insurance costs 1,026 1,165
Other accrued expenses 1,454 2,014
--------------------------------------------------------------------------------
Total current liabilities 11,702 11,914
--------------------------------------------------------------------------------
Long-Term Debt (Note 3) 3,206 3,111
--------------------------------------------------------------------------------
Deferred Income Taxes and Other Non-Current
Liabilities (Notes 4 and 6) 1,012 1,304
--------------------------------------------------------------------------------
Commitments (Note 7)
Stockholders' Equity (Note 5)
Common stock, $2.50 par value
Authorized - 5,000 shares
Issued - 2,620 shares 6,550 6,550
Additional paid-in-capital 116 116
Retained earnings 9,000 10,097
Common stock in treasury, at cost (253 shares) (1,512) (1,512)
Unearned stock compensation -- (14)
--------------------------------------------------------------------------------
Total stockholders' equity 14,154 15,237
--------------------------------------------------------------------------------
$30,074 $ 31,566
================================================================================
</TABLE>
See accompanying notes to financial statements.
Page 10
<PAGE>
Statements of Cash Flows
Years Ended April 30
Kewaunee Scientific Corporation
<TABLE>
<CAPTION>
$ in thousands 1995 1994 1993
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net loss $(1,097) $ (203) $(2,468)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation and amortization 1,793 1,760 1,630
Bad debt provision (credit) 125 (67) 15
Deferred income tax benefit (412) (192) (505)
(Increase)decrease in receivables (569) (257) 3,768
Decrease in inventories 210 695 46
Increase (decrease) in accounts payable and accrued expenses (727) 350 (969)
Other, net 348 (144) (535)
- ------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities (329) 1,942 982
- ------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities
Capital expenditures (840) (771) (1,316)
Net (increase) decrease in short-term investments 455 (305) (500)
- ------------------------------------------------------------------------------------------------------
Net cash used in investing activities (385) (1,076) (1,816)
- ------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities
Common stock dividends -- -- (189)
Net increase in short-term borrowings 1,039 200 1,000
Proceeds from revolving credit facility classified as long-term 3,000 -- --
Repayment of long-term debt (including current maturities) (3,429) (1,071) (854)
- ------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 610 (871) (43)
- ------------------------------------------------------------------------------------------------------
Decrease in Cash (104) (5) (877)
Cash at Beginning of Year 162 167 1,044
- ------------------------------------------------------------------------------------------------------
Cash at End of Year $ 58 $ 162 $ 167
======================================================================================================
Supplemental Disclosure of Cash Flow Information
Interest paid $ 575 $ 313 $ 264
Income taxes paid (refunded), net $ (94) $ (29) $ 361
======================================================================================================
Supplemental Disclosure of Noncash Investing and Financing Activities
Assets acquired under capital leases -- $ 162 --
======================================================================================================
</TABLE>
See accompanying notes to financial statements.
Page 11
<PAGE>
Notes to Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies is presented to assist the
reader in understanding and evaluating the financial statements. These
policies are in conformity with generally accepted accounting principles
and have been applied consistently in all material respects.
Cash. Cash includes highly liquid investments with original maturities of
three months or less. Cash excludes short-term investments consisting of
bank certificates of deposits which are recorded at cost.
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. 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.
Sales Recognition and Installation Services. Sales are generally recognized
at the date of shipment and, at that time, provision is made for the cost
to complete installations of products sold.
Income Taxes. The Company adopted Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes," effective May 1,
1993. The adoption of this statement had no cumulative effect on the
Company's financial statements. Under this statement, 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. If it is more likely than not that
some portion or all of a deferred tax asset will not be realized, the
statement requires that a valuation allowance be provided. Income taxes for
fiscal year 1993 were calculated on the basis of SFAS No. 96.
Industry Segment Data. The principal business of the Company is the
manufacture and sale of scientific laboratory and technical furniture which
is considered one industry segment for financial reporting purposes. Sales
to one customer represented 17 percent, 13 percent and 15 percent of the
Company's fiscal year 1995, 1994, and 1993 sales, respectively.
2. INVENTORIES
Inventories consisted of the following at April 30:
<TABLE>
<CAPTION>
$ in thousands 1995 1994
--------------------------------------------------------------
<S> <C> <C>
Finished goods $ 280 $ 558
Work-in-process 345 498
Materials and components 711 490
--------------------------------------------------------------
Total inventories $1,336 $1,546
==============================================================
</TABLE>
If inventories had been determined using the first-in, first-out (FIFO)
method at April 30, 1995 and 1994, reported inventories would have been
$2.2 million and $2.5 million greater, respectively.
Reductions in LIFO inventory values in fiscal years 1995 and 1994 increased
operating earnings by $291,000 and $925,000, respectively.
Page 12
<PAGE>
3. LONG-TERM DEBT AND OTHER CREDIT ARRANGEMENTS
Long-term debt consisted of the following at April 30:
$ in thousands 1995 1994
--------------------------------------------------------------
Borrowings under revolving credit
facility classified as long-term $3,000 --
Industrial Development Revenue Bonds -- $3,333
Capital lease obligations 317 413
--------------------------------------------------------------
Total long-term debt 3,317 3,746
Less - current portion (111) (635)
--------------------------------------------------------------
Long-term portion $3,206 $3,111
==============================================================
In January 1995, the Company entered into a credit arrangement with a new
lender and borrowings under this revolving credit facility (the facility) were
used to retire the Company's remaining obligations under its Industrial
Development Revenue Bonds and repay all amounts outstanding under its bank line
of credit.
The facility allows the Company to borrow the lesser of $8,500,000, or that
available under certain eligibility formulas using qualifying receivables and
inventories, as defined under the credit arrangement. At April 30, 1995,
borrowings outstanding under the facility were $5,239,000 and letters of credit
issued and outstanding under the facility were $750,000, leaving $2,058,000 of
unused credit available as of that date.
Under the facility, which extends through January 1997, the Company makes
monthly interest payments at a rate of the greater of 8%, or 1% over the
lender's prime rate, calculated on the greater of the minimum required loan of
$3,000,000 under the facility, or the average of the actual daily loan balance
outstanding during each month. The prime rate was 9.0% at April 30, 1995. The
Company's receivables, inventories, and property, plant and equipment are
pledged to the lender as collateral securing borrowings under the facility.
Due to the facility's maturity date and minimum loan requirement, $3,000,000 of
borrowings outstanding under the facility at April 30, 1995 were classified as
long-term debt with the remaining $2,239,000 classified as short-term
borrowings.
In addition to the letters of credit referred to above, the Company had one
letter of credit outstanding in the amount of $350,000 with another bank that
was collateralized by the Company's short-term investments. These letters of
credit are guarantees for the Company's insurance programs.
Capital Leases
The Company has entered into two lease agreements for machinery and
equipment that are classified as capital leases for financial reporting
purposes. These leases provide the Company with certain early cancellation
rights, as well as renewal and purchase options. Under the terms of the
agreements, future minimum lease payments for years ended April 30 and the
present value of such payments as of April 30, 1995 are as follows:
$ in thousands Amount
--------------------------------------------------------------
1996 $ 136
1997 136
1998 33
1999 33
2000 33
--------------------------------------------------------------
Total minimum lease payments 371
Less - amount representing interest (54)
--------------------------------------------------------------
Present value of net minimum lease payments 317
Less - current portion (111)
--------------------------------------------------------------
Long-term portion $ 206
==============================================================
Page 13
<PAGE>
4. INCOME TAXES
Income tax expense (benefit) consisted of the following:
<TABLE>
<CAPTION>
$ in thousands 1995 1994 1993
------------------------------------------------------------------------
<S> <C> <C> <C>
Current tax expense (benefit) $ 2 $ 99 $(188)
Deferred tax benefit (412) (192) (505)
Adjustment to valuation allowance 410 49 --
------------------------------------------------------------------------
Income tax benefit -- $ (44) $(693)
========================================================================
</TABLE>
The reasons for the differences between the above income tax benefits and the
benefits computed by applying the statutory federal income tax rates to
losses before income taxes are as follows:
<TABLE>
<CAPTION>
$ in thousands 1995 1994 1993
------------------------------------------------------------------------
<S> <C> <C> <C>
Income tax benefit at statutory rate $(373) $(91) $(1,074)
State and local taxes, net of federal income
tax benefit (43) (11) --
Increase in valuation allowance on deferred
tax assets 410 49 --
Increase in financial statement credit
carryforwards -- -- 420
Other 6 9 (39)
------------------------------------------------------------------------
Income tax benefit -- $(44) $ (693)
========================================================================
</TABLE>
As of April 30, 1995, the Company had general tax credit carryforwards of
$473,000 and alternative minimum tax credit carryforwards of $420,000
available to offset future taxes payable. The general tax credit
carryforwards expire in 2002.
Significant items comprising the Company's deferred tax assets and
liabilities as of April 30 were as follows:
<TABLE>
<CAPTION>
$ in thousands 1995 1994
-----------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Tax credit carryforwards $ 893 $ 729
Accrued retirement plans expense 376 506
Accrued insurance plans expense 423 480
Allowance for doubtful accounts 241 187
Inventory obsolescence reserves 184 189
Net operating loss carryforwards 70 --
Other 195 416
-----------------------------------------------------------------------
2,382 2,507
Valuation allowance (1,225) (815)
-----------------------------------------------------------------------
Total deferred tax assets 1,157 1,692
-----------------------------------------------------------------------
Deferred tax liabilities:
Difference between book and tax basis
of property, plant and equipment (964) (1,108)
Tax lease benefits (115) (439)
Other (29) (48)
-----------------------------------------------------------------------
Total deferred tax liabilities (1,108) (1,595)
-----------------------------------------------------------------------
Net deferred tax assets $ 49 $ 97
=======================================================================
</TABLE>
Page 14
<PAGE>
5. STOCKHOLDERS' EQUITY
Stock Option Plans
During fiscal year 1992, stockholders approved the 1991 Key Employee Stock
Option Plan, which replaced the expiring 1982 Incentive Stock Option Plan.
This plan allows the Company to grant options on 130,000 shares of the
Company's common stock to officers and other key employees. 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 ten years) and
at such times as the Board of Directors may determine at the time of the
grant. At April 30, 1995, there were 75,500 shares available for future
grants under the plan.
During fiscal year 1994, the stockholders approved the 1993 Stock Option
Plan for Directors. This plan allows the Company to grant options on 40,000
shares of the Company's common stock. Each non-employee director of the
Company is eligible to receive an option to purchase 5,000 shares of the
Company'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 date of grant. Options
are granted at the fair market value at the date of the grant. At April 30,
1995, there were 15,000 shares available for future grants under the plan.
Stock option activity is summarized as follows:
1995 1994 1993
--------------------------------------------------------------
Grants outstanding at
beginning of year* 162,500 94,500 94,500
Granted 2,000 81,000 25,000
Canceled (34,500) (13,000) (25,000)
--------------------------------------------------------------
Grants outstanding at
end of year* 130,000 162,500 94,500
==============================================================
Exercisable at end of year 54,750 15,625 10,000
==============================================================
Exercise price range per
share of options outstanding
at end of year $3.25 $3.75 $3.75
to $6.50 to $6.50 to $6.50
==============================================================
*Includes grants under the expired 1982 Plan.
Stock Compensation
During fiscal year 1991, 50,000 shares of restricted common stock of the
Company were granted to an officer. The 50,000 shares granted were recorded
as a charge to unearned stock compensation expense based on the market value
of the common stock at the date of the grant, and the unearned stock
compensation expense was amortized on a straight-line basis over the four-
year vesting period. Amortization expense was $14,000 for fiscal year 1995
and $72,000 for each of the fiscal years 1994 and 1993.
6. 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 years of
service and each employee's average annual compensation during their 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 quarterly contributions to fund the
plans during the participant's working lifetime. The quarterly contributions
have met ERISA's funding requirements. Plan assets consist primarily of
common stocks, government securities and fixed-income funds.
Page 15
<PAGE>
The components of net pension expense consisted of the following:
<TABLE>
<CAPTION>
$ in thousands 1995 1994 1993
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost for the benefits earned during the year $ 298 $ 324 $ 318
Interest cost on projected benefit obligations 356 317 285
Investment return on plan assets (178) (176) (121)
Net amortization and deferral (137) (98) (143)
-------------------------------------------------------------------------------------------------
Net pension expense $ 339 $ 367 $ 339
=================================================================================================
</TABLE>
Accumulated plan benefits, projected benefit obligations, plan net assets
and funded status as of April 30 were as follows:
<TABLE>
<CAPTION>
$ in thousands 1995 1994 1993
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Actuarial present value of accumulated benefit obligations
(assumes no future salary increases):
Vested $ 3,453 $ 2,947 $ 2,298
Non-vested 279 271 374
-------------------------------------------------------------------------------------------------
Accumulated plan benefits $ 3,732 $ 3,218 $ 2,672
=================================================================================================
Actuarial present value of projected benefit obligations for
service provided to date (assumes future salary increases): $ 5,045 $ 4,574 $ 4,141
Transition gain 160 192 224
Unrecognized net loss (902) (754) (710)
Plan net assets at fair value (3,751) (3,128) (2,721)
-------------------------------------------------------------------------------------------------
Accrued pension cost $ 552 $ 884 $ 934
=================================================================================================
</TABLE>
The weighted average discount rate and the rate of increase in future
compensation utilized in determining the actuarial present value of the
projected benefit obligations are 8% and 5%, respectively. The assumed
rate of return on plan assets is 9%.
The Company also had an unfunded supplemental executive retirement program
which was terminated in fiscal year 1990. This was a nonqualified plan
that provided certain retired officers with defined pension benefits. At
April 30, 1995, 1994 and 1993, the projected benefit obligations recorded
in the balance sheets for this plan totaled $154,107, $173,062, and
$384,000, respectively. Expenses for the plan were not material for the
periods presented.
7. COMMITMENTS
The Company has entered into various operating lease agreements for
machinery and equipment. Under the terms of these agreements, future
minimum lease payments for the years ended April 30 are as follows:
<TABLE>
<CAPTION>
$ in thousands Amount
-------------------------------------------------------------------------------------------------
<S> <C>
1996 $ 199
1997 198
1998 189
1999 194
2000 182
Thereafter 84
-------------------------------------------------------------------------------------------------
Total minimum lease payments $1,046
=================================================================================================
</TABLE>
Most leases provide the Company with certain early cancellation rights, as
well as renewal and purchase options. Rent expense under all operating
leases for machinery and equipment was $244,000, $169,000, and $27,000 in
fiscal years 1995, 1994, and 1993, respectively.
Page 16
<PAGE>
Report of Independent Auditors
To the Stockholders and Board of Directors
Kewaunee Scientific Corporation
We have audited the accompanying balance sheets of Kewaunee Scientific
Corporation as of April 30, 1995 and 1994, and the related statements of
operations and retained earnings and of cash flows for each of the three years
in the period ended April 30, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Kewaunee Scientific Corporation as of April
30, 1995 and 1994, and the results of its operations and its cash flows for
each of the three years in the period ended April 30, 1995 in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Charlotte, North Carolina
June 2, 1995
Management's Report on Financial Statements
The 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 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 financial statements have been audited by independent auditors
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.
Robert M. Cecchini
Vice President, Finance
Chief Financial Officer
Page 17
<PAGE>
Summary of Selected Financial Data
Kewaunee Scientific Corporation
<TABLE>
<CAPTION>
$ and shares in thousands, except per share data 1995 1994 1993
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Statement Data:
Net sales $62,475 $66,068 $66,984
Costs of products sold 52,347 53,325 56,364
- --------------------------------------------------------------------------------------------
Gross profit 10,128 12,743 10,620
Operating expenses 10,901 12,787 13,647
- --------------------------------------------------------------------------------------------
Operating earnings (loss) (773) (44) (3,027)
Other income, net 230 88 166
Interest expense (554) (291) (300)
- --------------------------------------------------------------------------------------------
Earnings (loss) before income taxes (1,097) (247) (3,161)
Income tax expense (benefit) -- (44) (693)
- --------------------------------------------------------------------------------------------
Net earnings (loss) $(1,097) $ (203) $(2,468)
============================================================================================
Average shares outstanding 2,367 2,368 2,368
============================================================================================
Per Share Data:
Net earnings (loss) $ (0.46) $ (0.09) $ (1.04)
Cash dividends -- -- 0.08
Year-end book value 5.98 6.43 6.49
============================================================================================
Balance Sheet Data:
Current assets $18,430 $19,009 $18,334
Current liabilities 11,702 11,914 11,777
Net working capital 6,728 7,095 6,557
Net property, plant and equipment 11,120 12,073 12,900
Total assets 30,074 31,566 31,776
Long-term debt 3,206 3,111 3,607
Stockholders' equity 14,154 15,237 15,372
============================================================================================
Other Data:
Capital expenditures $ 840 $ 933(d) $ 1,316
Year-end stockholders of record 439 458 480
Year-end employees 575 595 636
Net sales per employee $ 109 $ 111 $ 105
============================================================================================
</TABLE>
(a) Operating expense for fiscal year 1991 includes a restructuring charge in
the amount of $1.1 million.
(b) Income tax expense for fiscal year 1989 includes a $106,000 charge
representing the cumulative effect of the Company's change in accounting
for income taxes. Prior years' financial statements have not been restated
for this accounting change.
(c) Income tax expense for fiscal year 1988 includes a $331,000 extraordinary
credit resulting from the utilization of operating loss carryforwards.
(d) Capital expenditures for fiscal years 1994 and 1992 include assets acquired
under capital leases.
Page 18
<PAGE>
[Summary of Selected Financial Data -- continued]
<TABLE>
<CAPTION>
1992 1991 1990 1989 1988 1987 1986
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$74,944 $71,104 $74,023 $68,895 $68,578 $ 59,450 $58,707
59,538 55,029 58,087 50,606 49,111 50,701 46,379
- --------------------------------------------------------------------------------
15,406 16,075 15,936 18,289 19,467 8,749 12,328
14,396 15,876(a) 15,161 15,744 18,151 19,436 18,066
- --------------------------------------------------------------------------------
1,010 199 775 2,545 1,316 (10,687) (5,738)
475 499 489 261 276 124 2,930
(330) (473) (575) (643) (740) (703) (292)
- --------------------------------------------------------------------------------
1,155 225 689 2,163 852 (11,266) (3,100)
354 145 217 566(b) 66(c) (3,531) (2,300)
- --------------------------------------------------------------------------------
$ 801 $ 80 $ 472 $ 1,597 $ 786 $ (7,735) $ (800)
================================================================================
2,412 2,591 2,586 2,587 2,587 2,573 2,559
================================================================================
$ 0.33 $ 0.03 $ 0.18 $ 0.62 $ 0.30 $ (3.01) $ (0.31)
0.16 0.16 0.16 0.04 -- 0.275 0.44
7.44 7.24 7.48 7.46 6.88 6.62 10.00
================================================================================
$22,344 $24,693 $23,191 $22,880 $20,294 $22,874 $28,275
11,943 12,318 11,651 11,510 11,104 15,892 10,088
10,401 12,375 11,540 11,370 9,190 6,982 18,187
13,214 12,383 14,902 15,280 16,181 17,915 18,034
36,066 37,593 38,193 38,925 37,256 42,175 47,268
4,657 5,090 5,873 6,656 7,439 8,222 9,104
17,955 18,979 19,355 19,297 17,808 17,022 25,594
================================================================================
================================================================================
$ 2,189(d) $ 2,279 $ 521 $ 791 $ 384 $ 2,031 $10,822
492 512 519 560 600 603 683
747 722 784 826 828 820 898
$ 100 $ 98 $ 94 $ 83 $ 83 $ 73 $ 65
================================================================================
</TABLE>
Page 19
<PAGE>
QUARTERLY FINANCIAL DATA
(UNAUDITED)
Selected quarterly financial data for fiscal years 1995 and 1994 were as
follows:
<TABLE>
<CAPTION>
$ in thousands, First Second Third Fourth
except per share data Quarter Quarter Quarter* Quarter*
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995
Net sales $16,383 $15,043 $15,877 $15,172
Gross profit 2,825 2,041 2,700 2,562
Net earnings (loss) (111) (1,201) 70 145
Net earnings (loss) per share (0.05) (0.51) 0.03 0.06
- ------------------------------------------------------------------------------
1994
Net sales $18,561 $18,059 $13,843 $15,605
Gross profit 3,751 3,797 2,211 2,984
Net earnings (loss) 221 245 (613) (56)
Net earnings (loss) per share 0.09 0.10 (0.26) (0.02)
- ------------------------------------------------------------------------------
</TABLE>
* Reductions in LIFO inventory values increased gross profits by $291,000
in the fourth quarter of fiscal year 1995 and by $200,000 and $725,000 in the
third and fourth quarters of fiscal year 1994, respectively.
RANGE OF MARKET PRICES
Kewaunee's common stock is traded in the NASDAQ/Over-the-Counter Market,
under the symbol KEQU. The following table sets forth the quarterly high and
low prices reported on the NASDAQ National Market System.
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1995 High 3-5/8 3-7/8 2-7/8 2-5/8
Low 3-1/4 2-3/4 2 2-1/8
Close 3-5/8 2-7/8 2-5/16 2-1/2
- -----------------------------------------------------------------------------
1994 High 4-3/8 4-3/4 4-5/8 4
Low 3-3/4 4-1/8 3-5/8 3-1/4
Close 4-3/8 4-3/8 3-7/8 3-1/2
- -----------------------------------------------------------------------------
</TABLE>
STOCKHOLDER INFORMATION
FORM 10-K
This detailed 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.
NOTICE OF ANNUAL MEETING
The Annual Meeting of Stockholders of Kewaunee Scientific Corporation will
be held in the 37th floor Annual Meeting Room at the Harris Trust & Savings
Bank, Chicago, IL on August 30, 1995 at 10:00 a.m. Central Daylight Time.
TRANSFER AGENT AND REGISTRAR
All shareholder inquiries, including transfer-related matters, should be
directed to:
Mellon Securities Trust Company
85 Challenger Road
Ridgefield, NJ 07660
800-288-9541
CORPORATE OFFICES
2700 West Front Street
P.O. Box 1842
Statesville, NC 28687-1842
Telephone: 704-873-7202
INDEPENDENT AUDITORS
Deloitte & Touche LLP
Charlotte, NC
Page 20
<PAGE>
CORPORATE INFORMATION
BOARD OF DIRECTORS EXECUTIVE OFFICERS
MARGARET B. BRUEMMER (1)(2)(3) ELI MANCHESTER, JR.
Attorney President and Chief Executive
Milwaukee, WI Officer
WILEY N. CALDWELL (3)(4) ROBERT M. CECCHINI
Retired President Vice President, Finance,
W.W. Grainger, Inc. Chief Financial Officer,
Skokie, IL Treasurer, Secretary
JOHN C. CAMPBELL, JR. (1)(2) T. RONALD GEWIN
Private Consultant Vice President, Manufacturing
Arlington, TX
WILLIAM A. SHUMAKER
KINGMAN DOUGLASS (2)(3)(4) Vice President, Sales & Marketing
Corporate Counselor
Chicago, IL
ELI MANCHESTER, JR. (1)(3)
President/CEO
Kewaunee Scientific Corporation
Statesville, NC
THOMAS F. PYLE (3)(4)
Chairman, President, CEO
RAYOVAC Corporation
Madison, WI
JAMES T. RHIND (1)(4)
Counsel to Bell, Boyd & Lloyd
Attorneys
Chicago, IL
(1) Executive Committee
(2) Audit Committee
(3) Financial/Planning Committee
(4) Compensation Committee
CAREER OPPORTUNITIES
People interested in exploring careers with Kewaunee in management, sales
and other areas should contact the Director of Human Resources, Kewaunee
Scientific Corporation, P.O. Box 1842, Statesville, NC 28687-1842. Kewaunee
Scientific Corporation is an equal opportunity employer.
PRODUCT INFORMATION
Kewaunee Scientific Corporation products are available through a network of
sales representatives and a national stocking distributor. For more
information, please contact our Marketing Services Department in Statesville,
North Carolina.
BasikBench, Evolution, FlexTech, Kemresin, Kemrock, Kemshield, Silhouette,
Sturdilite, TechStat and Visionaire are registered trademarks of Kewaunee
Scientific Corporation.
<PAGE>
(LOGO)
KEWAUNEE
Scientific
Corporation
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED APRIL 30, 1995 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1995
<PERIOD-END> APR-30-1995
<CASH> 58
<SECURITIES> 350
<RECEIVABLES> 16,195
<ALLOWANCES> 624
<INVENTORY> 1,336
<CURRENT-ASSETS> 18,430
<PP&E> 25,233
<DEPRECIATION> 14,113
<TOTAL-ASSETS> 30,074
<CURRENT-LIABILITIES> 11,702
<BONDS> 0
<COMMON> 6,550
0
0
<OTHER-SE> 7,604
<TOTAL-LIABILITY-AND-EQUITY> 30,074
<SALES> 62,475
<TOTAL-REVENUES> 62,705
<CGS> 52,347
<TOTAL-COSTS> 52,347
<OTHER-EXPENSES> 10,901
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