<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, 1996 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 1,817,515 shares of voting stock held by non-
affiliates of the Registrant was approximately $6,134,113 based on the last
reported sale price of the Registrant's Common Stock on July 12, 1996. (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 12, 1996, 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,
1996, and of the proxy statement for use in connection with Kewaunee Scientific
Corporation's annual meeting of stockholders to be held on August 28, 1996,
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..................... 6
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. 6-7,*
"Management's Discussion
and Analysis"
Item 8. Financial Statements and
Supplementary Data............. Annual Report, pp. 8-20,*
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, 1996
("Annual Report").
2
<PAGE>
<TABLE>
<CAPTION>
Page or Reference
-----------------
<S> <C> <C>
PART III...................................... 8
Item 10. Directors and Executive
Officers of the Registrant..... Proxy Statement, pp. 1-4,*
"Election of Directors"
Item 11. Executive Compensation......... Proxy Statement, p. 5,*
"Executive Compensation,"
p. 6,* "Option Grants in
Last Fiscal Year," p. 6,*
"Aggregate Option Exercises
in Last Fiscal Year and
Option Values at Fiscal
Year-End," pp. 8-9,*
"Compensation Committee
Report on Executive
Compensation," and p. 14,*
"Agreements with Certain
Executives"
Item 12. Security Ownership of
Certain Beneficial Owners
and Management................. Proxy Statement, pp. 15-16,*
"Security Ownership of
Directors and Executive
Officers" and "Security
Ownership of Certain
Beneficial Owners"
Item 13. Certain Relationships and
Related Transactions........... Proxy Statement, pp. 1-4,*
"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 28, 1996 ("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 steel 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, worksurfaces, 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, 1996, 1995, and 1994.
The Registrant's products are sold principally to industrial and
commercial research laboratories, educational institutions, health-care
institutions and governmental entities. These products are primarily sold
through purchase orders and contracts submitted by customers, through the
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.
4
<PAGE>
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 14 percent, 17 percent, and 13 percent of the Registrant's total
sales, for fiscal years 1996, 1995, and 1994, 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.
The Registrant's sales backlog as of April 30, 1996 was $23.2 million
compared to $24.1 million and $25.3 million as of April 30, 1995 and 1994,
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 $281,000 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, 1996 on
company-sponsored research and development activities related to new products or
services or improvement of existing products or services was $591,972. The
amounts spent for similar purposes in the fiscal years ended April 30, 1995 and
1994 were $527,647 and $490,481, respectively. Six professional employees were
engaged in such research at April 30, 1996.
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.
5
<PAGE>
EMPLOYEES
The number of persons employed by the Registrant at April 30, 1996
was 499.
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.
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, 1996, 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.
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, 1996, page 20, sections
entitled "Range of Market Prices" and "Quarterly Financial Data". As of July 12,
1996, the Registrant estimates there were approximately 1,400 stockholders of
Kewaunee common shares, of which 407 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, 1996, 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, 1996, pages 6-7, 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, 1996, pages 8-20.
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 28, 1996, pages 1-4, section entitled "Election of Directors".
(b) The names and ages of the Registrant's executive officers and
their business experience during the past five years are set forth below:
Executive Officers of the Registrant
------------------------------------
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Eli Manchester, Jr. 65 President and Chief Executive Officer
T. Ronald Gewin 53 Vice President-Operations Technical
Products Group
D. Michael Parker 44 Vice President-Finance, Chief
Financial Officer, Treasurer and
Secretary
Ronald D. Popiel 54 Vice President-Manufacturing
James J. Rossi 54 Vice President-Human Resources
William A. Shumaker 47 Vice President-Sales and Marketing
</TABLE>
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.
T. Ronald Gewin joined the Registrant in December 1992 as Vice
President of Manufacturing and has served as Vice President of Operations for
the Technical Products Group since January 1996. Prior to joining the
Registrant, Mr. Gewin was General Manager of a Division of the Grinnell
Corporation from 1990 to 1992.
D. Michael Parker joined the Registrant in November 1990 as Director
of Financial Reporting and Accounting and was promoted to Corporate Controller
in November 1991. Mr. Parker has served as Vice President of Finance, Chief
Financial Officer, Treasurer and Secretary since August 1995.
Ronald D. Popiel joined the Registrant in June 1993 as a plant manager
and was promoted to Director of Manufacturing in August 1995. Mr. Popiel has
served as Vice President of Manufacturing since January 1996. Prior to joining
the Registrant, Mr. Popiel was with Arvin Industries where he served as Vice
President of Manufacturing from 1977 to 1993.
8
<PAGE>
James J. Rossi joined the Registrant in March 1984 as Corporate
Director of Human Resources and has served as Vice President of Human Resources
since January 1996.
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 held various other sales and customer service positions from
1969 through 1989.
ITEM 11. EXECUTIVE COMPENSATION
- --------------------------------
Incorporated by reference from the Registrant's proxy statement for
use in connection with its annual meeting of stockholders to be held on August
28, 1996, page 5, section entitled "Executive Compensation," page 6, section
entitled "Option Grants in Last Fiscal Year," page 6, section entitled
"Aggregate Option Exercises in Last Fiscal Year and Option Values at Fiscal
Year-End," pages 8-9, section entitled "Compensation Committee Report on
Executive Compensation," and page 14, section entitled "Agreements with Certain
Executives".
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS 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
28, 1996, pages 15-16, 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
28, 1996, pages 1-4, 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>
Page or
(a)(1) Financial Statements Reference
-------------------- ---------
<C> <S> <C>
Statements of Operations and Retained Earnings -
Years ended April 30, 1996, 1995, and 1994 8.
Balance Sheets - April 30, 1996 and 1995 9.
Statements of Cash Flows - Years ended
April 30, 1996, 1995 and 1994 10.
Notes to Financial Statements 11-16.
Report of Independent Auditors 17.
(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, 1996.
____________________
. Matters incorporated by reference from the Registrant's annual report to
stockholders for the year ended April 30, 1996.
10
<PAGE>
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, 1996 and 1995, 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, 1996; such financial statements are included in your 1996 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, 1996 and 1995, and the results of its operations and its cash flows for each
of the three years in the period ended April 30, 1996 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, presents fairly in all material respects the
information set forth therein.
Deloitte & Touche LLP
May 31, 1996
11
<PAGE>
Schedule II
Kewaunee Scientific Corporation
Valuation and Qualifying Accounts
($ in thousands)
<TABLE>
<CAPTION>
Charged
Balance (Credited)
at to Costs Balance
Beginning and at End
Description of Period Expenses Deductions* of Period
- ------------------ --------- -------- ---------- ---------
<S> <C> <C> <C> <C>
Year ended April 30, 1996
Allowance for doubtful accounts $624 $ 186 $(249) $561
==== ====== ====== ====
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
==== ====== ====== ====
</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
--------------------------------------
Eli Manchester, Jr.
President and Chief Executive Officer
Date: July 24, 1996
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/ D. Michael Parker )
-------------------------------------- )
D. Michael Parker )
Vice President-Finance, Chief Financial Officer )
Treasurer and Secretary )
)
(iii) A majority of the Board of Directors: ) July 24, 1996
)
<TABLE> )
<S> <C> )
/s/ Margaret Barr Bruemmer /s/ Eli Manchester, Jr. )
- ---------------------------- ------------------------ )
Margaret Barr Bruemmer Eli Manchester, Jr. )
)
)
/s/ Wiley N. Caldwell /s/ James T. Rhind )
- ---------------------------- ------------------------ )
Wiley 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 )
</TABLE>
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)
10.9 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)
</TABLE>
S-2
_________________
All footnotes located on page S-5
<PAGE>
<TABLE>
<CAPTION>
Page Number
Number Description of Exhibit (or Reference)
- ------ ---------------------- --------------
<S> <C> <C>
10.21 Kewaunee Scientific Corporation
Executive Deferred Compensation Plan (9)
10.23 Employment Agreement dated as of
December 8, 1992 between T. Ronald
Gewin and the Registrant (10)
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 (11)
Plan for Directors
10.27 Agreement dated as of December 14, 1994
between T. Ronald Gewin and the Registrant (13)
10.28 Accounts Receivable Financing Agreement dated
as of January 6, 1995 between the CIT Group/
Business Credit, Inc. and the Registrant (13)
10.29 Accounts Receivable Financing Agreement
Supplement Inventory dated as of
January 6, 1995 between The CIT Group/
Business Credit, Inc. and the Registrant (13)
10.30 Security Agreement (Equipment & Machinery)
dated as of January 6, 1995 between The
CIT Group/Business Credit, Inc. and the
Registrant (13)
10.31 Employment Agreement dated April 22, 1996
Between Ronald D. Popiel and the Registrant (1)
10.32 Fiscal Year 1997 Incentive Bonus Plan (1)
10.33 Trademark and Service Mark Security Agreement
Dated October 6, 1995 between The CIT Group/
Business Credit, Inc. and the Registrant. (1)
</TABLE>
S-3
__________________
All footnotes located on page S-5
<PAGE>
<TABLE>
<CAPTION>
Page Number
Number Description of Exhibit (or Reference)
- ------ ---------------------- --------------
<S> <C> <C>
10.34 Amended and Merged Incentive Savings Plan
For Salaried and Hourly Employees of
Kewaunee Scientific Corporation (1)
13 Annual Report to Stockholders for the fiscal year
ended April 30, 1996 (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)
</TABLE>
(All other exhibits are either inapplicable or not required.)
S-4
__________________
All footnotes located on page S-5
<PAGE>
Footnotes
---------
(1) Appearing only in the manually signed, original 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. 0-5286) 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. 0-5286) for the fiscal year ended April 30,
1994, and incorporated herein by reference.
(13) 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,
1995, and incorporated herein by reference.
S-5
<PAGE>
EXHIBIT 10.31
CONFIDENTIAL MEMORANDUM April 22, 1996
- -----------------------
TO: Ron Popiel
c: Jim Rossi
FROM: Eli Manchester, Jr.
RE: Compensation Agreement
Dear Ron:
I am pleased to confirm in writing the agreement we have been discussing
concerning your compensation as Kewaunee's Vice President of Manufacturing.
1. Beginning with FY 1997, which commences May 1, 1996, your compensation
will be a minimum of $140,000.
2. During fiscal year 1997, this compensation will be reached through the
following:
A. You will be paid a base salary at a minimum of $115,000.
B. You will be paid a bonus at the end of the fiscal year 1996 of a
minimum of $10,000.
C. During fiscal year 1997, you will be offered the opportunity to earn
$15,000 through three projects which are to be completed during the
year, each worth $5,000. The specific projects will be designated by
the President of the Company. This opportunity will exist only for
fiscal year 1997.
3. Your base salary will be increased, effective January 1, 1997, in an
amount to be determined by the Board of Directors.
4. In subsequent fiscal years, the $140,000 will be reachable through a
combination of base salary, bonuses, and earned projects.
5. You are granted 10,000 shares of the Company's common stock, at $3.875 per
share, per our stock option program. Jim Rossi will provide you with the
proper form.
6. As to security, in the event that you are dismissed from the Company for
other than cause, your salary and benefits will continue for one year
thereafter as then in effect, but reduced by income earned and benefits
provided from other employment during the one-year period; provided that
during the one-year period you will not be eligible to accrue further
pension vesting or to continue to participate in the 401K savings plan.
I am very pleased to reach these agreements and I believe that you will have
many successful and happy years with Kewaunee. I look forward to working with
you and stand ready to help at every turn.
Eli Manchester, Jr.
pml
<PAGE>
EXHIBIT 10.32
KEWAUNEE SCIENTIFIC CORPORATION
FISCAL YEAR 1997
APPROVED INCENTIVE BONUS PLAN
The Fiscal Year 1997 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 1997 Operating
Plan as approved by the Board of Directors. The Plan is proposed as a one-year
plan for Fiscal Year 1997.
The provisions of the Plan are:
1. ELIGIBILITY OF PARTICIPANTS TO SHARE IN THE BONDS POOL
------------------------------------------------------
a. Eligible participants for the Plan will be nominated by the President
and approved by the Board of Directors. The recommended bonus maximums
for each participant for Fiscal Year 1997 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, 1996 salary.
c. In addition to the direct reports to the President, it is proposed
that managers fulfilling the following criteria (those listed as Group
B in Schedule I) 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, or is
a manager recommended by the President.
2. BUILDING OF A BONUS POOL
------------------------
A pool will start accruing once pre-tax earnings (after bonus accruals)
reach $1,000,000 for Fiscal Year 1997.
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
<PAGE>
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 Board of
Directors, upon recommendation of the Compensation Committee.
d. Bonus payout conditions:
o 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.
o Any portion of the bonus pool not awarded to participants will be
retained by the corporation.
o Positive or negative financial adjustments outside the control of
management (such as, but not limited to, proceeds from insurance
claims, gains or losses from the sale of capital assets, adoption
of new generally accepted accounting pronouncements, etc.), will
be assessed by the Board of Directors and the incentive plan
accrual criteria may be appropriately adjusted as decided by the
Board of Directors.
o 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.
o 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.
2
<PAGE>
EXHIBIT 10.33
TRADEMARK AND SERVICE MARK SECURITY AGREEMENT
---------------------------------------------
Kewaunee Scientific Corporation, a Delaware corporation having its place of
business at Statesville, North Carolina (the "Debtor"), to secure the payment
and performance of all obligations of the Debtor to The CIT Group/Business
Credit, Inc. , a New York corporation with a place of business at Charlotte,
North Carolina (the "Creditor"), under an Accounts Receivable Financing
Agreement between the Debtor and the Creditor dated January 6, 1995, whether
such obligations are direct or indirect, absolute or contingent, due or to
become due, now existing or hereinafter arising (hereinafter collectively
referred to as "Obligations") hereby grants a security interest to Creditor in
all right, title, and interest of Debtor in and to the trademarks, servicemarks,
and tradenames, including registrations thereof, set forth on the attached
Exhibit A, and all right, title and interest of Debtor in and to all trademarks,
servicemarks, tradenames, and registrations which Debtor may hereafter acquire
(collectively the "Trademarks"), together with the goodwill of the business
connected with the use of and symbolized by the said Trademarks, as well as all
rights to damages or profits due or accrued arising out of past infringement of
the Trademarks or injury to said goodwill, together with the right (but not the
obligation) to sue or recover the same in the Creditor's name.
The Debtor represents and warrants and agrees with the Creditor as follows:
1. To the best of its knowledge, the Debtor is the owner of the entire
right, title, and interest in and to the Trademarks and has adopted, has used,
on anticipates using, and shall continue using in interstate commerce the
Trademarks, and has duly and properly registered in the U.S. Patent and
trademark Office those of the Trademarks set forth on Exhibit A as having been
registered (the "Registered Trademarks").
2. To the best of its knowledge, there has been no decision adverse to
its claim of ownership of any of such Trademarks for its goods or services or to
its right to register the same, or to keep and maintain the Registered
Trademarks on the Trademark Register, and there is no proceeding involving said
rights threatened or pending in the U.S. Patent and Trademark office or in any
Court.
3. To the best of its knowledge, Debtor has the right to the exclusive
use in the United States of the Registered Trademarks on goods and services set
forth in the registrations thereof, free and clear of the claims and rights of
any other party.
4. Debtor shall provide and certify as to the existence of the Trademarks
as included in Exhibit A. Debtor agrees to maintain these Trademarks in a secure
location at its headquarters in Statesville, North Carolina. Debtor further
agrees to allow a periodic verification of these Trademarks by CIT or its
representative.
5. The Creditor shall not have the right to use and enforce the
Trademarks unless and until an event of default, as defined in paragraph 12,
shall have occurred and Creditor shall have requested a transfer of the
Trademarks as provided in paragraph 13.
<PAGE>
6. Debtor shall use its best efforts to employ the Trademarks on the
goods and services in the same or similar manner as it has in the past; to
employ each Registered Trademark with the appropriate notice of trademark
registration; not to use any other trademark on goods bearing a Trademark
without the permission of the Creditor, or to adopt or use any trademark which
is confusingly similar or a colorable imitation of a Trademark, unless such
other marks are subject to a security interest hereunder.
7. Debtor shall, in order to protect the goodwill associated with the
Trademarks, and in order to prevent any deception to the public, operate its
business in accordance with the requirements of production and service in
relationship to the goods and services, bearing the Trademark, as in the past,
and agrees to maintain the quality of the goods and services sold under the
Trademarks commensurate with the prior quality and business position of Debtor.
8. In the event that the Credit believes that the quality of the goods or
services under the Trademarks is not being maintained in accordance with
paragraph 7, it will so advise Debtor, and Debtor shall promptly take the
necessary corrective action to maintain the quality of the goods and services in
a manner consistent with its obligations herein.
9. The Debtor agrees to the best of its ability to maintain each
Trademark registration in full force and effect by taking any action which it
believes necessary, through attorneys of its choice, all at the expense of
Debtor. The Debtor shall render to the Creditor, at least yearly, a written
report setting forth each trademark or service mark registration and application
covered by this Agreement, and the status thereof, and shall, within one (1)
month after the filing of additional applications, advise the Creditor of the
filing of such additional applications, and furnish suitable documents granting
the Creditor a security interest therein as heretofore stated, in such form as
may be required by the Creditor.
10. In the event that a Trademark is infringed by a third party in a
jurisdiction in which such Trademark is then used by Debtor, and said event
becomes known to the Debtor, Debtor shall promptly notify the Credit and shall
take appropriate action to stop the infringement and to recover and retain any
and all damages from such infringement. In the event that Debtor refuses or
fails to take appropriate action to stop the infringement, it shall notify the
Credit within one (1) month after the date of original notice to the Creditor of
such infringement and, thereafter, the Credit shall have the right (but not the
obligation) to take action to stop the infringement, at Debtor's cost and
expense, and obtain directly all damages recovered therefrom as further security
for the Obligations.
11. Debtor shall not assign this Agreement or any rights, duties, and
obligations hereunder without prior written permission of the Creditor. This
Agreement and the rights of the Creditor hereunder may be assignable by the
Credit to any other holder of the indebtedness secured by the Obligations.
12. The occurrence of any one or more of the following events shall
constitute an event of default by the Debtor ("Default"): (a) default in the
payment or performance, when due or payable, of any of the Obligations
including, without limitation, Debtor's failure to pay to the Creditor any
Obligation due on demand when such demand is made; (b) default by an guarantor,
2
<PAGE>
endorser or other person liable on the Obligations under any guarantee,
endorsement, suretyship agreement or other agreement of such person with, or in
favor of Creditor; (c) Debtor making any misrepresentation, orally or in
writing, to Creditor, whether for the purpose of obtaining credit or an
extension of credit, or otherwise; (d) any representation, warranty, or
statement of fact made to Creditor at any time by Debtor or on Debtor's behalf
being false or misleading in any material respect; (e) the discontinuance or
suspension of the operation of Debtor's present business, Debtor becoming
insolvent, or Debtor becoming unable to meet Debtor's debts as they mature, or
Debtor calling any meeting of creditors, or having a creditors' committee
appointed, the commencement by or against Debtor 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,
or the rendition, issuance or filing of any injunction, attachment, trustee of
any kind for Debtor or any of Debtor's property; (f) any change in Debtor's
condition or affairs (financial or otherwise) or that of any endorser, guarantor
or other person liable on the Obligations, that in Creditor's opinion impairs
Creditor's security or increases Creditor's risk; or (g) failure to provide
adequate and timely financial reports.
13. Upon Default by Debtor, at Creditor's request Debtor shall, and hereby
does, transfer and set over to Creditor, Debtor's entire right, title and
interest in and to all Trademarks, and the registration of them, including the
official Certificates of Registration, to be held by Creditor with all the
rights and remedies of a secured party under the Uniform Commerce Code of the
State of North Carolina.
14. Upon transfer of the Trademarks to Creditor upon Default pursuant to
paragraphs 12 and 13, the Debtor shall immediately cease and desist in the use
of the Trademarks or any colorable imitation thereof, and deliver to the
Creditor all unused goods, advertising, and promotional materials bearing the
Trademarks. The provisions of this paragraph may be enforced at law or in
equity.
15. The Creditor shall, on payment and performance by Debtor of all the
Obligations, execute any and all releases and other documents deemed necessary
or advisable by Debtor to release and discharge from the security interest
hereunder the Trademarks and the registrations thereof, and the goodwill
symbolized by the Trademarks, including releases and termination statements in
form suitable for recording by Debtor in the U.S. Patent and Trademark Office.
Upon such release of the Trademarks to Debtor, this Agreement shall be
terminated.
16. Debtor agrees to execute, acknowledge, and deliver all further
instruments and documents and take all such further reasonable action which may
be necessary in order to carry out the intentions and purposes of this
Agreement.
17. Debtor shall hold the Credit harmless from any and all costs, damages,
and expense arising in any fashion from this grant and assignment of a security
interest or any matters relating thereto. Debtor shall cause the Credit to be
named as additional insured with respect to any policy of product liability
insurance maintained by Debtor.
18. This Agreement shall be governed, interpreted, and enforced in
accordance with the laws of the State of North Carolina.
3
<PAGE>
IN WITNESS WHEREOF, Debtor and Creditor have caused this Agreement to be
executed by their duly authorized officers as of this 28th day of September,
1995.
ATTEST: KEWAUNEE SCIENTIFIC CORPORATION
/s/ Authorized Signatory By: D. Michael Parker
- ------------------------- ----------------------------------
Assistant Secretary Its: Vice President, Finance/CFO
--------------------------------
(Corporate Seal)
Accepted at Charlotte, North Carolina
this 6th day of October, 1995.
ATTEST: THE CIT GROUP/BUSINESS CREDIT, INC.
/s/ Authorized Signatory By: /s/ Authorized Signatory
- ------------------------- --------------------------------
Assistant Secretary Its: Vice President
--------------------------------
(Corporate Seal)
4
<PAGE>
EXHIBIT A
KEWAUNEE SCIENTIFIC CORPORATION
<TABLE>
<CAPTION>
Trademarks, Service Marks, Trade Names U.S. Registration No.
- -------------------------------------- ----------------------------
<S> <C>
VISIONAIRE 1,551,674
VERSALAB 1,504,875
SILHOUETTE 1,657,211
INSTALAB 1,585,144
KEMSHIELD and DESIGN 947,230
KEMROCK and DESIGN 939,845
KEMRESIN and DESIGN 746,113
KEM-PONENT (Stylized) 863,121
KEM METAL (Stylized) 800,659
KEM-FLEX 893,725
KEMCRAFT -------
KEM SATIN 917,641
KEMPURE (Stylized) 887,157
KEMTRON 1,232,784
KEMWOOD -------
MOD-U-FLEX -------
EVOLUTION 1,798,714
STURDILITE 1,332,207
TECH STAT 1,673,010
BASIKBENCH 1,846,231
FLEXTECH 1,541,564
</TABLE>
5
<PAGE>
SUMMARY PLAN DESCRIPTION
401(k) Incentive Savings Plan for Salaried and
Hourly Employees of Kewaunee Scientific
Corporation
[logo]
07/22/96
<PAGE>
<TABLE>
401(k) INCENTIVE SAVINGS PLAN FOR SALARIED AND HOURLY EMPLOYEES OF KEWAUNEE
SCIENTIFIC CORPORATION
TABLE OF CONTENTS
<C> <S> <C>
I. Basic Plan Information.................................................. 2
A. Account.............................................................. 2
B. Employer............................................................. 2
C. Participant.......................................................... 2
D. Plan Administrator................................................... 2
E. Plan Number.......................................................... 2
F. Plan Qualification................................................... 2
G. Plan Year............................................................ 2
H. Service of Process................................................... 2
I. Trust Fund........................................................... 3
J. Trustee.............................................................. 3
II. Participation........................................................... 4
A. Eligibility' Requirements............................................ 4
B. Service.............................................................. 4
III. Contributions........................................................... 5
A. Employee Pretax Contributions........................................ 5
B. Employee After-Tax Contributions..................................... 5
C. Employer Matching Contributions...................................... 5
D. Limit on Contributions............................................... 6
E. Rollover Contributions............................................... 6
IV. Investments............................................................. 7
A. Investments.......................................................... 7
B. Statement of Account................................................. 8
V. Vesting................................................................. 9
A. Forfeiture and Re-employment......................................... 9
VI. Participant Loans.......................................................11
A. Loans................................................................11
VII. Hardship Withdrawals....................................................13
VIII. In-Service Withdrawals..................................................14
A. Withdrawals of Rollover Contributions................................14
IX. Total Distribution of Benefits..........................................15
A. Benefit on Termination of Employment.................................15
B. Death Benefit........................................................15
C. Disability Retirement Benefit........................................15
D. Retirement Benefit...................................................15
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
E. Payment and Form of Benefits.........................................15
X. Miscellaneous Information...............................................19
A. Benefits Not Insured by PBGC.........................................19
B. Nontransferable Account..............................................19
C. Plan Amendment.......................................................19
D. Plan Termination.....................................................19
E. Interpretation of Plan...............................................19
XI. Internal Revenue Service Tests..........................................20
A. Non-Discrimination Tests.............................................20
B. Top Heavy Test.......................................................20
XII. Participant Rights......................................................21
A. Claims...............................................................21
B. Statement of ERISA Rights............................................21
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
SUMMARY PLAN DESCRIPTION
401(k) INCENTIVE SAVINGS PLAN FOR SALARIED AND HOURLY EMPLOYEES OF KEWAUNEE
SCIENTIFIC CORPORATION
- --------------------------------------------------------------------------------
The 401 (k) Incentive Savings Plan for Salaried and Hourly Employees of Kewaunee
Scientific Corporation (the 'Plan') of Kewaunee Scientific Corporation (the
"Employer") has been amended as of April 1, 1996 (the "Effective Date"). This
Plan is intended to be a qualified retirement plan under the Internal Revenue
Code.
The purpose of the Plan is to enable eligible Employees to save for retirement.
It may also provide certain benefits in the event of death, disability, or other
termination of employment. The Plan is for the exclusive benefit of eligible
Employees and their beneficiaries.
This booklet is called a Summary Plan Description (SPD) and it contains a
summary in understandable language of your rights and benefits under the Plan.
If you have difficult understanding any part of this SPD, you should contact the
Plan Administrator identified on page two during normal business hours for
assistance.
This SPD is a brief description of the Plan and Trust Agreement (Plan Document).
It is not meant to interpret, extend or change the Plan Document in any way. A
copy of the Plan Document is on file with the Plan Administrator and may be read
by any Employee at any reasonable time. The Plan Document shall govern in the
event of any discrepancy between this SPD and the actual provisions of the Plan.
- --------------------------------------------------------------------------------
401(k) Incentive Savings Plan for Salaried and Hourly Employees of Kewaunee
Scientific Corporation 1
<PAGE>
- --------------------------------------------------------------------------------
I. BASIC PLAN INFORMATION
- --------------------------------------------------------------------------------
A. ACCOUNT
This is an Account established by the Trustee for the purpose of recording
contributions made on your behalf and any income, expenses, gains or losses
thereon. It may also be referred to as "Account balance.
B. EMPLOYER
The name, address and business telephone number of the Employer is:
Kewaunee Scientific Corporation
P.O. Box 1842
Statesville, NC 28687-1842
(704) 873-7202
The Employer's Identification Number is 38-0715562.
C. PARTICIPANT
A participant is an eligible Employee who has satisfied the eligibility and
entry date requirements and is eligible to participate in the Plan.
D. PLAN ADMINISTRATOR
The Plan Administrator is responsible for the administration of the Plan. The
Plan Administrator's duties are specifically identified in the Plan Document.
The name, address and business telephone number of the Plan Administrator is:
Kewaunee Scientific Corporation
P.O. Box 1842
Statesville, NC 28687-18~2
(704) 873-7202
E. PLAN NUMBER
The Plan number is 006.
F. PLAN QUALIFICATION
The Employer intends to request an individual Determination Letter from the
Internal Revenue Service for the qualification of the Plan.
G. PLAN YEAR
The Plan Year is the twelve-month period ending on the last day of December.
H. SERVICE OF PROCESS
The Plan's agent for service of legal process is the Plan Administrator.
- --------------------------------------------------------------------------------
401(k) Incentive Savings Plan for Salaried and Hourly Employees of Kewaunee
Scientific Corporation 2
<PAGE>
I. Trust Fund
The Plan is administered under a trust fund arrangement. There is a written
Plan and Trust Agreement entered into between the Trustee and the Employer.
J. Trustee
The trustee is responsible for holding the Plan assets. The trustee's duties are
specifically identified in the Plan Document and relate only to the assets in
its possession. The name and address of the Plan's Trustee is:
Fidelity Management Trust Company
82 Devonshire Street, L1OA
Boston, MA 02109.
- --------------------------------------------------------------------------------
401(k) Incentive Savings Plan for Salaried and Hourly Employees of Kewaunee
Scientific Corporation 3
<PAGE>
- -------------------------------------------------------------------------------
II. Participation
- -------------------------------------------------------------------------------
A. Eligibility Requirements
You are eligible to participate in the Plan if you are an Employee of the
Employer and are not covered by a collective bargaining agreement for which
retirement benefits have been the subject of good faith negotiations, a leased
employee, a nonresident alien with no U.S. source income and meet the
requirements identified in this paragraph. The Plan requires you to complete one
year of service with the Employer and attain the age of 21. Upon satisfying
these requirements you will become eligible to participate in the Plan on the
following January 1 or July 1.
B. Service
You will be credited with a year of service for eligibility purposes for each
twelve month period during which you have completed 1,000 hours. Your date of
hire and each anniversary of your date of hire will be the starting point for
measuring the number of hours you worked during each twelve month period.
- --------------------------------------------------------------------------------
401(k) Incentive Savings Plan for Salaried and Hourly Employees of Kewaunee
Scientific Corporation 4
<PAGE>
- -------------------------------------------------------------------------------
III. Contributions
- -------------------------------------------------------------------------------
For purposes of computing contributions under the Plan, as listed below, your
Employer must first define 'compensation'. Eligible compensation generally
means the taxable compensation for a Plan Year reportable by your Employer on
your IRS Form W-2 for a Plan Year, excluding the taxable value of a qualified or
non-qualified stock option. Your compensation will also include any Employee
pretax contributions you made under the Plan and any salary reductions you made
under your Employer's cafeteria plan, 401(k) plan or other similar plan, if any.
Compensation does not include any taxable fringe benefits or taxable Employee
moving and other expense reimbursements reportable on your annual IRS Form W-2.
Compensation for your first year of eligible Plan participation will be measured
only for that portion of your initial Plan Year that you are eligible. Tax laws
limit the amount of compensation that may be taken into account each Plan Year
and the maximum amount for the 1996 Plan Year is $150,000 (this amount is
subject to adjustment each year).
A. Employee Pretax Contributions
You may elect to contribute a percentage of your eligible compensation into the
Plan after you satisfy the Plan's eligibility requirements. The percentage of
your compensation you elect will be withheld from each payroll by the percentage
you have elected on a pretax basis and contributed to the Plan on your behalf.
You may defer, in whole percentages, up to an annual maximum of the lesser of 8%
of eligible compensation or $9,500 in a calendar year (in 1996 and thereafter as
adjusted by the Secretary of the Treasury). Your Employee pretax contributions
belong to you and cannot be forfeited for any reason. However, there are special
Internal Revenue Code rules which must be satisfied and may require that the
amount of your contributions be reduced. If a reduction in your contribution is
necessary, you will be notified by the Plan Administrator. You may increase or
decrease the amount you contribute as of April 1, 1996 and thereafter January 1
of each Plan Year. You may completely suspend your contributions with sufficient
notice to the Plan Administrator. Thereafter, if you want to resume your
Employee pretax contributions as of any date after the passage of six months
following such prior revocation, you must complete a new election form.
B. Employee After-Tax Contributions
After you satisfy the Plan's eligibility requirements, you may elect to
contribute a percentage of your compensation into the Plan on an after-tax
basis. You may contribute, in whole percentages, up to an annual maximum of 10%
of eligible compensation. However, there are special Internal Revenue Code rules
which must be satisfied and the maximum may be a lower percentage. If a
reduction in your contribution is necessary, you will be notified by the Plan
Administrator. The Employer may refuse to accept your after-tax contributions
if they will have an adverse effect on the Plan's Non-Discrimination Tests.
Your after-tax contributions belong to you and cannot be forfeited for any
reason.
C. Employer Matching Contributions
Each Plan Year the Employer may make discretionary matching contributions of a
percent, if any, to be determined annually based on a percentage of your
Employee pretax contributions. You must be employed as of the last day of the
Plan Year to be eligible for any matching contributions that may be made for
that Plan Year. The Employer will communicate the amount of any annual
discretionary matching contribution.
- --------------------------------------------------------------------------------
401(k) Incentive Savings Plan for Salaried and Hourly Employees of Kewaunee
Scientific Corporation 5
<PAGE>
D. Limit on Contributions
Federal law requires that amounts contributed by you and on your behalf by your
Employer for a given limitation year generally may not exceed the lesser of:
. $30,000 (or such amount as may be prescribed by the Secretary of
the Treasury); or
. 25% of your annual compensation, excluding any salary reductions to
an employer sponsored cafeteria plan, a 401(k) plan, a simplified
employee pension or a tax-deferred annuity.
Contributions under this Plan along with the Employer contribution under any
other Employer-sponsored defined contribution plan may not exceed the above
limits. If this does occur then excess contributions in your Account may be
forfeited or refunded to you. Income tax consequences may apply to you on any
refund. You will be notified by the Plan Administrator if you will be subject
to reduced contributions on your behalf.
The limitation year for purposes of applying the above limits is the twelve
month period ending December 31. Rollover contributions are not included in the
limits on Employee and Employer contributions.
E. Rollover Contributions
You can rollover part or all of an 'eligible rollover distribution' you received
from a prior employer's qualified plan, if allowed by the Plan Administrator.
(The Plan Administrator reserves the right to refuse to accept any rollover
contribution.) Alternatively, you may rollover a distribution you received from
a rollover Individual Retirement Account (IRA) which consisted solely of an
eligible rollover distribution and earnings thereon. If the rollover to the Plan
is not a direct rollover (i.e. you received a cash distribution from your prior
employer's plan or from your rollover IRA), then it must be received by the
Trustee within 60 days of your receipt of the distribution.
You may make a rollover contribution to the Plan before becoming a Participant.
However, you will not become a Participant entitled to make Employee pretax
contributions until you have met the Plan's eligibility and entry date
requirements. Your rollover contribution Account will be subject to the terms
of this Plan and will always be fully vested and nonforfeitable.
- --------------------------------------------------------------------------------
401(k) Incentive Savings Plan for Salaried and Hourly Employees of Kewaunee
Scientific Corporation 6
<PAGE>
- -------------------------------------------------------------------------------
IV. Investments
- -------------------------------------------------------------------------------
A. Investments
The Employee Retirement Income Security Act of 1974 (ERISA) imposes certain
duties on the parties who are responsible for the operation of the plan These
parties, called fiduciaries have a duty to invest plan assets in a prudent
manner However, an exception exists for plans which comply with ERISA Section
404(c) and permit a participant to exercise control over the assets in his/her
Account and choose from a broad range of investment alternatives This Plan is
intended to be a Section 404(c) plan This means that you and not the Plan
fiduciaries are responsible for the investment decisions relating to the assets
in your individual Account under the Plan.
You will have the opportunity to direct the investments of your Account among
the following Fidelity Investments Funds (the Fidelity Fund Number assigned to
each fund is identified in parentheses).
1. Fidelity Retirement Money Market Portfolio (0630)
Objective: Seeks a high current income, preservation of capital, and
liquidity from money market instruments.
2. Fidelity Intermediate Bond Fund (0032)
Objective: Seeks a high level of current income, through investment
in high- and medium-grade, fixed income obligations.
3. Fidelity Equity-Income II Fund (0319)
Objective: Seeks income by investing primarily in income-producing
equity securities considering the potential for capital
appreciation. Seeks yield exceeding the S&P 500.
4. Fidelity Puritan Fund (0004)
Objective: Seeks as much income as possible, consistent with the
preservation of capital, by investing in a broadly
diversified portfolio of high-yielding bonds, common
stocks and preferred stocks.
5. Fidelity Blue Chip Growth Fund (0312)
Objective: Seeks growth of capital over the long-term by investing
in common stocks of more well-known established
companies.
6. Fidelity Magellan Fund (0021)
Objective: Seeks growth of capital through investments in common
stocks or securities convertible into common stocks.
- --------------------------------------------------------------------------------
401(k) Incentive Savings Plan for Salaried and Hourly Employees of Kewaunee
Scientific Corporation 7
<PAGE>
7. Fidelity U.S: Equity Index Portfolio (0650)
Objective: Seeks investment results that correspond to the total
return performance of the Standard and Poor's 500 Index
by duplicating the investment composition.
You may obtain a prospectus or financial response for each of the above mutual
funds by calling Fidelity at 1-800-544-8888. You may redirect the investment of
your future contributions or exchange your existing Account balance among the
above Fidelity mutual funds by calling 1-800-835-5097 on any business day
between 8:30 AM (ET) and 8:00 PM (ET). You may call this same number 24 hours
per day seven days per week to check Account balances, prices or yields. All
telephone calls will be recorded. You have the right to vote any mutual funds
proxies based on the number of shares you own.
Exchanges requested before 4:00 PM (ET) will be processed on that same business
day based on the closing price of the mutual fund. Exchanges requested after
4:00 PM (ET) will be processed based on the next business day's closing price
of the mutual fund. The minimum exchange is the lesser of $250 or 100% of your
Account balance in the mutual fund. If your exchange is less than $250 then it
may only be exchanged into one mutual fund. A written confirmation of your
exchange will be mailed to you within seven business days. A sales load will
apply to your investment in the Magellan mutual fund. Fidelity reserves the
right to change, restrict, or terminate participant exchange procedures to
protect mutual fund shareholders.
B. STATEMENT OF ACCOUNT
Your Account will be updated each business day to reflect any investment
earnings or losses on each Fidelity Investments mutual fund. A quarterly
statement disclosing the value of your Account will be mailed to you within 20
days of the following dates: February 28, May 31, August 31 and November 30.
- --------------------------------------------------------------------------------
401(k) Incentive Savings Plan for Salaried and Hourly Employees of Kewaunee
Scientific Corporation 8
<PAGE>
- -------------------------------------------------------------------------------
V. VESTING
- -------------------------------------------------------------------------------
The term "vesting" refers to your nonforfeitable right to the money in your
Account. You receive vesting credit for the number of year(s) that you have
worked for the Employer and any other legally related Employer. If you terminate
your employment with the Employer, then you may be able to receive a portion or
all of your Account based on your vested percentage. You are always 100% vested
in your own Employee pretax Account, after-tax Account, rollover Account and
earnings thereon.
Employer matching contributions and earnings will be vested in accordance with
the following schedule:
<TABLE>
<CAPTION>
Years of Service for Vesting Percentage
less than 2 0
<S> <C>
2 20
3 40
4 60
5 80
6 100
</TABLE>
Vesting under the Plan is based upon the "elapsed time" method. Hours under this
method are not counted but rather 'periods of service' are computed. A period
of service starts with your date of employment and, generally, ends on your date
of termination. Only your whole years of service with the Employer will be
counted to compute your years of service for vesting purposes. For example, if
you work three years and ten months then for vesting purposes you will receive
credit for three years of service.
A. FORFEITURE AND RE-EMPLOYMENT
If you terminate your employment with your Employer and are less than 100%
vested in your Employer Account then you may forfeit the non-vested portion of
your Employer Account. A forfeiture will occur in the Plan Year that you
receive a distribution of your entire vested Account or if you do not receive a
distribution after five consecutive one year breaks in service. Forfeitures
are retained in the Plan and used to reduce future Employer contributions.
Example: (This example is for illustration purposes only.) You
terminate your employment in 1996 with the following Account:
<TABLE>
<CAPTION>
Source Amount Vested Percentage Vested Amount
------ ------ ------------------ -------------
<S> <C> <C> <C>
Employee $2,000 100%+ $2,000
Employee $1,000 80% $ 800
------ ------
Total $3,000 $2,800
</TABLE>
You received a $2,800 distribution in 1996 from the Plan. This
represented a complete distribution of your Account. A $200 ($3,000-
$2,800) forfeiture will occur in 1996.
+You are always 100% vested in your own employee pretax contributions
and earnings in the Plan.
- --------------------------------------------------------------------------------
401(k) Incentive Savings Plan for Salaried and Hourly Employees of Kewaunee
Scientific Corporation 9
<PAGE>
A one-year break in service occurs when you work less than one hour in a twelve
consecutive month period. A break in service starts with the date you stop
working for your Employer If you are absent from work due to maternity or
paternity reasons, then the break period will not start until after the first
anniversary year of your absence.
If you were a participant when you terminated your employment and are re-
employed by your Employer then you will again become a participant on the date
you complete one hour of service. Your period of employment before you were
rehired is referred to as your pre-break service. Your period of employment
after you were rehired is referred to as your post-break service. If you are re-
employed after incurring five consecutive one-year breaks in service then your
post-break service will not count in determining your vesting percentage in your
pre-break Account balance. Your post-break service will count in determining
your vesting percentage in your pre-break Account balance and any forfeited
amounts will be restored to your Account if
(1) You are re-employed by the Employer before you incur five
consecutive one-year breaks in service, and
(2) If you received distribution of your vested Account, you repay
the full amount of the distribution before the end of the five-
year period that begins on the date you are re-employed.
Example: Assume you terminate employment with your Employer in 1996
with an Account balance of $10,000, of which $6,000 is vested. You
elect to receive a lump sum distribution of your vested Account
balance. The remainder, or $4,000, is forfeited in 1996. If you are
rehired on January 1, 1998 and repay the $6,000 distribution prior to
January 1, 2003, the $4,000 previously forfeited will be restored to
your Account. Additionally, your service after January 1, 1998 is
counted towards vesting your pre-break Account balance of $10,000.
You should check with the Plan Administrator for further details.
- --------------------------------------------------------------------------------
401(k) Incentive Savings Plan for Salaried and Hourly Employees of Kewaunee
Scientific Corporation 10
<PAGE>
- --------------------------------------------------------------------------------
VI. PARTICIPANT LOANS
- --------------------------------------------------------------------------------
A. LOANS
Loans from the Plan may be available, if approved by the Plan Administrator, on
amounts in your Account based upon the following procedures:
(1). LOAN APPLICATION
----------------
All Plan loans shall be administered by the Plan Administrator. Application
for loans shall be made to the Plan Administrator on forms available from
the Plan Administrator. You may only apply for one loan each Plan Year. If
you are a married Participant, spousal consent for a Plan loan will be
required on the Promissory Note and must be witnessed by a Plan
representative or a Notary Public. The Plan Administrator is responsible
for approving or den-Nina participant loans. Loans ``ill be allowed for any
purpose. You N ill incur a set-up f-`and annual maintenance fee for your
loan.
(2). LOAN AMOUNT
-----------
The minimum loan is $1,000. The maximum amount is the lesser of one-half of
your vested Account balance or $50,000 reduced by the highest outstanding
loan balance in your Account during the prior twelve month period. Your
vested Account balance will be used as collateral for any loan.
(3). NUMBER OF LOANS
---------------
You may only have one loan outstanding at any given time. If you have an
existing loan you may not apply for another loan until the existing loan is
paid in full. You may not refinance an existing loan or obtain a second
loan for the purpose of paying off the existing loan.
(4). INTEREST RATE
-------------
All loans shall bear a reasonable rate of interest as determined by the
Plan Administrator based on the prevailing interest rates charged by
persons in the business of lending money for loans which would be made
under similar circumstances.
(5). MATURITY OF LOAN
----------------
All loans must be repaid in level payments on at least a quarterly basis
over a five year period unless it is for the purchase of your principal
residence. Then the loan may be repaid over a ten year period.
(6). SOURCE OF LOAN PROCEEDS
-----------------------
Loan proceeds will be withdrawn from available contribution sources and
investment options in the order established by the Trustee. Consult your
Plan Administrator for more information.
- --------------------------------------------------------------------------------
401(k) Incentive Savings Plan for Salaried and Hourly Employees of Kewaunee
Scientific Corporation 11
<PAGE>
(7). DEFAULT OR TERMINATION OF EMPLOYMENT
------------------------------------
The Plan Administrator shall treat a loan in default if any scheduled
repayment remains unpaid more than 90 days or there is an outstanding
principal existing on a loan after the last scheduled repayment date. Upon
default, death, disability or termination of employment. The entire
outstanding principal and accrued interest shall be immediately due and
payable. Additionally, you will be deemed to have received a taxable
distribution from the Plan.
- --------------------------------------------------------------------------------
401(k) Incentive Savings Plan for Salaried and Hourly Employees of Kewaunee
Scientific Corporation 12
<PAGE>
- --------------------------------------------------------------------------------
VII. HARDSHIP WITHDRAWALS
- --------------------------------------------------------------------------------
If approved by the Plan Administrator, you may withdraw your Employee pretax
contributions, and rollover contributions if applicable, to satisfy any of the
following immediate and heavy financial needs (1) unreimbursed medical expenses
for you, your spouse, children or dependents; (2) the purchase of your principal
residence; (3) to prevent your eviction from or foreclosure on your principal
residence: or ( ~ ) to pay for post-secondary education expenses for you, your
spouse, children or dependents for the next twelve months.
In accordance with Internal Revenue Service regulations you must first withdraw
your Employee after-tax contributions Account and exhaust all other assets
available to you prior to obtaining a hardship withdrawal. This includes
obtaining a withdrawal of any Employee after-tax contribution in your Account
and a loan from this Plan and any other qualified plan maintained by your
Employer. Your Employee pretax contributions to this Plan and any other
Employer-sponsored qualified or non-qualified plan will be suspended for twelve
months after your receipt of the hardship withdrawal. If you are married your
spouse's consent will be required on the hardship withdrawal form. Your spouse's
consent must be witnessed by a Plan representative or a Notary Public. The
minimum hardship withdrawal is $1,000.
The Plan Administrator will provide you with the appropriate form upon request.
Hardship withdrawal also will be withdrawn from available investment options in
the order established by the Trustee. Consult your Plan Administrator for more
information.
You will be taxed on the amount of any hardship withdrawal under Internal
Revenue Code rules and a 10% IRS premature distribution penalty tax may also be
imposed on your withdrawal. Your hardship withdrawal will also be subject to the
mandatory 20% Federal income tax withholding. You should refer to the 'Total
Distribution of Benefits' section of this SPD.
- --------------------------------------------------------------------------------
401(k) Incentive Savings Plan for Salaried and Hourly Employees of Kewaunee
Scientific Corporation
13
<PAGE>
- --------------------------------------------------------------------------------
VIII. IN-SERVICE WITHDRAWALS
- --------------------------------------------------------------------------------
A. WITHDRAWALS OF ROLLOVER CONTRIBUTIONS
If you were an Employee in the Plan as of April 1, 1996 with a Rollover
contributions Account balance then you may elect while you are employed by your
Employer to withdraw all or a portion of it. You may only request 1 withdrawal
each Plan Year. The Plan Administrator will provide you with the appropriate
form upon request.
- --------------------------------------------------------------------------------
401(k) Incentive Savings Plan for Salaried and Hourly Employees of Kewaunee
Scientific Corporation 14
<PAGE>
- --------------------------------------------------------------------------------
IX. TOTAL DISTRIBUTION OF BENEFITS
- --------------------------------------------------------------------------------
A. BENEFIT ON TERMINATION OF EMPLOYMENT
If you terminate your employment with your Employer, then you may elect to
receive a distribution of our vested Account balance from the Plan. You should
contact the Plan Administrator to obtain the appropriate form to complete to
request a distribution.
B. DEATH BENEFIT
If, you die while a Participant in the Plan or before any or all benefits are
paid to you, then your beneficiary or beneficiaries will be entitled to receive
your Account balance. You will automatically become 100% vested in your Account
balance upon your death. You may designate a beneficiary or beneficiaries on a
designation form. The completed beneficiary designation form must be filed with
the Plan Administrator. If you are married and want to designate someone other
than your spouse as your primary beneficiary. then your spouse must consent to
this designation by signing the form. His/her signature must be witnessed by a
Plan representative or a Notary Public. You should contact the Plan
Administrator to obtain a beneficiary designation form.
C. DISABILITY RETIREMENT BENEFIT
If you become totally and permanently disabled while you are employed by the
Employer, so that you are determined disabled by a physician selected by the
Plan Administrator, the full value of your Account balance may be distributed to
you upon request. You will automatically become 100% vested in your Account
balance.
D. RETIREMENT BENEFIT
You do not have to terminate your employment with your Employer just because you
reached the retirement age under the Plan. When you attain your normal
retirement age of 65 you will automatically become 100% vested in your Account
balance.
E. PAYMENT AND FORM OF BENEFITS
The Plan is designed to provide you with benefits at the time of your
retirement. However. if your employment with your Employer is terminated
because of death, disability, retirement, or for any other reason, then you may
request a distribution of your vested Account balance upon proper written
direction delivered to the Plan Administrator. You should contact the Plan
Administrator to obtain the appropriate form to request a distribution and a
cop! of the "Special Tax" Notice Regarding Plan Payments'. Even if your
employment with the Employer has not terminated, the Plan Administrator will
direct the Trustee to begin distributions to you no later than April 1 of the
calendar year after you attain the age of 70 1/2.
The Plan Administrator will direct the Trustee to make a lump sum distribution
to you if you terminate your employment and your vested Account balance is less
than $3,500 regardless of whether you request the distribution. Your written
consent and your spouse's written consent will be required for any distribution
before age 65 if your vested Account balance is greater than $3,500. Properly
authorized distribution requests will be processed by the Trustee on a monthly
basis. The following forms of benefits are available under the Plan:
- --------------------------------------------------------------------------------
401(k) Incentive Savings Plan for Salaried and Hourly Employees of Kewaunee
Scientific Corporation 15
<PAGE>
. LUMP SUM DISTRIBUTIONS
----------------------
Your entire vested Account balance will be paid to you within one
calendar year. If your vested Account balance is greater than $3,500
and you are a married Participant, spousal consent for a lump sum
distribution will be required on the Payout Request Form. The consent
must be witnessed by a Plan representative or a Notary Public.
. INSTALLMENT DISTRIBUTIONS
-------------------------
Your vested Account balance will be paid to you in periodic payments
if your Account balance is greater than $3,500. If you are a married
Participant, spousal consent for an installment distribution will be
required on the Payout Request Form and must be witnessed by a Plan
representative or a Notary Public.
. PURCHASE OF AN ANNUITY
----------------------
The normal form of payment under this Plan is an annuity. This means
that your vested Account balance as of your annuity starting date will
be used to purchase a life annuity contract from an insurance company
if you are single, or a qualified joint and survivor annuity if you
are married. (The annuity starting date is the date that is ninety
days prior to the initial annuity payment.) The insurance company will
make monthly payments to you for your life based upon the type of
annuity purchased. Upon your death, your spouse, if he/she is still
living at, your death. will receive 50% of the monthly amount you
received. The annuity will stop once your spouse dies and all payments
will cease.
You may choose a form of payment other than the annuity only upon
proper election by you and your spouse, if applicable. Any election to
waive the qualified joint and survivor annuity must be made in writing
by you and your spouse. Your spouse's signature must be witnessed by
a Plan representative or a Notary Public. You may obtain the
appropriate waiver election form from the Plan Administrator.
If you are 35 or older and die while you are still employed by the
Employer then your surviving spouse will be entitled to a qualified
pre-retirement survivor annuity. Your Account balance may be used to
purchase an annuity contract from an insurance company. Monthly
payments will then be made from the insurance company directly to your
spouse for his/her lifetime. You and your spouse may waive the
qualified pre-retirement survivor annuity upon proper election and
choose another form of payment or another beneficiary. Any waiver
must be made in writing by you and your spouse. Your spouse's
signature must be witnessed by a Plan representative or a Notary
Public. You can obtain the appropriate waiver election form from the
Plan Administrator.
Lump sum distributions and in certain situations installment distributions will
be subject to the following rules:
(1). CASH DISTRIBUTION
-----------------
Any taxable distribution paid by the Trustee directly to you will be
subject to mandatory Federal income tax withholding of 20% of the requested
distribution. You will receive 80% of the taxable distribution and the
other 20% will be sent to the IRS as Federal income tax withholding
- --------------------------------------------------------------------------------
401(k) Incentive Savings Plan for Salaried and Hourly Employees of Kewaunee
Scientific Corporation 16
<PAGE>
for that year. You cannot elect out of this tax withholding. This
withholding is not a penalty but rather a prepayment of your Federal income
taxes.
You may rollover the taxable distribution you receive to an IRA or your new
employer's qualified Plan, if it accepts rollover contributions. However
you must rollover this distribution within 60 days after receipt. You will
not be taxed on any amounts rolled over directly into the IRA or your new
employer's qualified Plan until those amounts are later distributed to you.
(2). DIRECT ROLLOVER DISTRIBUTION
----------------------------
As an alternative to a cash distribution you may request that your entire
distribution be rolled directly into a Fidelity IRA a non-Fidelity IRA or
to your new employer's qualified plan if it accepts rollover contributions
Federal income taxes will not be withheld on any direct rollover
distribution
(a) Rollover to a Fidelity IRA - You must complete a Fidelity "SEE"
Rollover IRA application Attach this application to the completed
Payout form. After authorizing your distribution the Plan
Administrator will forward this material to the Trustee. Your vested
Account balance will be transferred to a Fidelity Rollover IRA.
(b) Rollover to a Non-Fidelity IRA - You must complete a Payout form and
indicate the name and address of the custodian or trustee and Account
number for your IRA. After authorizing your distribution, the Plan
Administrator will forward the form to the Trustee. A check will be
issued by the Trustee payable to the IRA custodian or trustee for your
benefit. The check will contain the notation "Direct Rollover" and it
will be mailed directly to you. You will be responsible for
forwarding it on to the custodian or trustee. You must provide the
Plan Administrator with complete information to facilitate your direct
rollover distribution.
(c) Rollover to your New Employer's Qualified Plan - You should check with
your new employer to determine if its plan will accept rollover
contributions. If allowed, then you must complete a Payout form and
indicate the name address and plan number of your new employer's
qualified plan. After authorizing your distribution the Plan
Administrator will forward the form to the Trustee. A check will be
issued by the Trustee payable to the trustee of your new employer's
qualified plan. The check will contain the notation Direct Rollover'
and it will be mailed directly to you. You will be responsible for
forwarding it on to the new trustee. You must provide the Plan
Administrator with complete information to facilitate your direct
rollover distribution.
(3) COMBINATION CASH DISTRIBUTION AND DIRECT ROLLOVER DISTRIBUTION
--------------------------------------------------------------
You may request that part of your distribution be paid directly to you
and the balance to be rolled into an IRA or your new employer's
qualified Plan Any cash distribution you receive will be subject to
the Federal income tax withholding rules referred to in (1). Any
direct rollover distribution will be made in accordance with (2).
You will pay income tax on the amount of any taxable distribution you
receive from the Plan unless it is rolled into an IRA or your new
employer's qualified Plan. A 10% IRS premature distribution penalty
tax may also apply to your taxable distribution unless it is
- --------------------------------------------------------------------------------
401(k) Incentive Savings Plan for Salaried and Hourly Employees of Kewaunee
Scientific Corporation 17
<PAGE>
rolled into an IRA or another qualified plan. The 20% Federal income tax
withheld under this section may not cover your entire income tax liability.
Consult with your tax advisor for further details
- --------------------------------------------------------------------------------
401(k) Incentive Savings Plan for Salaried and Hourly Employees of Kewaunee
Scientific Corporation 18
<PAGE>
- -------------------------------------------------------------------------------
X. Miscellaneous Information
- -------------------------------------------------------------------------------
A. Benefits Not Insured by PBGC
Benefits provided by the Plan are not insured or guaranteed by the Pension
Benefit Guaranty Corporation (PBGC) under Title IV of the Employee Retirement
Income Security Act of 1974 (ERISA) because the insurance provisions under ERISA
are not applicable to this particular Plan. You will only be entitled to the
vested benefits in your Account based upon the provisions of the Plan.
B. Nontransferable Account
Your Account may not be transferred, assigned or used as collateral for a loan
outside of this Plan except to the extent required by law. Creditors may not
attach, garnish or otherwise interfere with your Account balance except in the
case of a Qualified Domestic Relations Order (QDRO). A QDRO is a special order
issued by the court in a divorce, child support or similar proceeding. In this
situation, your spouse (or former spouse) or someone other than you or your
beneficiary, may be entitled to a portion or all of your Account balance.
C. Plan Amendment
Certain provisions of the Plan are subject to amendment by the Employer that may
directly or indirectly modify certain Plan rights and benefits. Any amendment
changing the vesting schedule cannot reduce the existing vested percentage of
your Account balance derived from Employer contributions. If you have three or
more years of service with the Employer and the vesting schedule is amended then
you will be given a choice to have the vested percentage of future Employer
contributions made to your Account computed under the new or the old vesting
schedule. The Plan Administrator will provide you with the appropriate
information to make an informed decision if the Plan's vesting schedule is
amended.
D. Plan Termination
The Employer has no legal or contractual obligation to make annual contributions
to or to continue the Plan. With the approval of the Board of Directors, the
Employer may at any time reduce or suspend its contributions, if applicable. In
the event the Plan should terminate, the Plan Administrator will facilitate the
distribution of Account balances under the provisions of the Plan and Trust
Agreement until all assets have been distributed by the Trustee. Each
participant in the Plan upon Plan termination will automatically become 100%
vested in your Account balance. While the Employer intends to continue the
Plan, it reserves the right to change or terminate the Plan at any time as
circumstances may dictate.
E. Interpretation of Plan
The Plan Administrator has the power and discretionary authority to construe the
terms of the Plan and to determine all questions that arise under it. Such power
and authority include, for example, the administrative discretion necessary to
resolve issues with respect to an Employee's eligibility for benefits credited
services, disability, and retirement, or to interpret any other term contained
in Plan documents. The Plan Administrator's interpretations and determinations
are binding on all participants, employees, former employees, and their
beneficiaries.
- --------------------------------------------------------------------------------
401(k) Incentive Savings Plan for Salaried and Hourly Employees of Kewaunee
Scientific Corporation 19
<PAGE>
- -------------------------------------------------------------------------------
XI. Internal Revenue Service Tests
- -------------------------------------------------------------------------------
A. Non-Discrimination Tests
Your Plan is intended to qualify under Sections 101(k) and 401(m), of the
Internal Revenue Code. The Internal Revenue Service requires the Plan to meet
special non-discrimination tests as of the last day of each Plan Year. These
tests are intended to ensure that there is a fair level of participation by all
eligible participants.
In order to meet the tests, the Employer encourages participation from all
eligible Employees. Depending upon the results of the tests, the Plan
Administrator may have to refund Employee pretax contributions contributed to
the Plan and vested matching contributions to certain highly compensated
employees, as determined under Internal Revenue Service regulations. Employee
pretax or Employer matching contributions will be refunded on a prorate basis
from each investment option. You will be notified by the Plan Administrator if
any of your contributions will be refunded to you.
B. Top Heavy Test
The Plan is subject to strict Internal Revenue Service rules. One of these rules
involves a 'Top-Heavy' test. Each Plan Year, the Plan Administrator tests this
Plan together with all other Employer-sponsored qualified plans to make sure
that no more than 60% of the benefits are for "Key" Employees. If this Plan is
Top-Heavy, then the Employer may be required to make minimum annual
contributions to this Plan for you if you are employed as of Plan Year-end.
- --------------------------------------------------------------------------------
401(k) Incentive Savings Plan for Salaried and Hourly Employees of Kewaunee
Scientific Corporation 20
<PAGE>
- --------------------------------------------------------------------------------
XII. PARTICIPANT RIGHTS
- --------------------------------------------------------------------------------
A. CLAIMS
(1). CLAIM PROCEDURE
---------------
You or your Beneficiary should make a request to obtain any benefits
you are entitled to under the Plan in the event of your termination of
employment. The Plan Administrator \\ill provide you with a request
form to complete. Your request will be considered a claim and will be
subject to a full and fair review by the Plan Administrator. If your
claim is holly or partially denied by the Plan Administrator then
you may appeal it in accordance with the claim review procedure.
(2). CLAIM REVIEW PROCEDURE
----------------------
You or your Beneficiary may file a claim for benefits under the Plan
with the Plan Administrator on a form supplied by the Employer. The
Plan Administrator will provide you with written notice of the
disposition of your claim within 90 days after it has been filed (or,
in certain circumstances, within 180 days). In the event the claim is
denied then the reasons shall be disclosed and/or provisions of the
Plan shall be cited as appropriate.
You or your Beneficiary upon request to the Plan Administrator may
appeal the denial of your claim. If you wish further consideration of
your position then you must provide the Plan Administrator with a
written request for a hearing. You must also provide a detailed
written statement of your position for your claim and file it with the
Plan Administrator no later than 60 days after requesting a hearing.
The Plan Administrator shall make a decision on your claim and it will
be communicated to you in writing within 60 days (or, in certain
circumstances, within 120 days). It will advise you if you have any
right to appeal the decision.
B. STATEMENT OF ERISA RIGHTS
As a participant in this Plan you are entitled to certain rights and protections
under ERISA that provides that all Plan Participants shall be entitled to the
following:
. Examine, without charge. at the Plan Administrator's office and at
other specified location such as work sites and union halls, all Plan
Documents, including insurance contracts, collective bargaining
agreements and copies of all documents filed by the Plan with the U.S.
Department of Labor, such as detailed annual reports and Plan
descriptions.
. Obtain copies of all Plan Documents and other Plan information upon
written request to the Plan Administrator; the Plan Administrator may
make a reasonable charge for the copies.
. Receive a summary of the Plan's annual financial report. The Plan
Administrator is required by law to furnish you with a copy of this
summary annual report.
- --------------------------------------------------------------------------------
401(k) Incentive Savings Plan for Salaried and Hourly Employees of Kewaunee
Scientific Corporation 21
<PAGE>
. Obtain a statement of your Account under the Plan. You must direct
this request in rising to the Plan Administrator. You may request a
statement only once a year and the Plan must provide the statement
free of charge.
In addition to creating rights for Plan Participants, ERISA imposes duties upon
the people who are responsible for the operation of the employee benefit plan.
The people who operate your Plan, called "fiduciaries" of the Plan, have a duty
to do so prudently and in the interest of you and other Plan Participants and
beneficiaries. No one. including your Employer. your union. or any other
person, may fire you or otherwise discriminate against you in any way to prevent
you from obtaining a pension benefit or exercising your rights under ERISA.
If your claim for a benefit is denied, in whole or in part, you must receive a
written explanation of the reason for the denial. You have the right to have
the Plan Administrator review and reconsider your claim. Under ERISA, there are
steps you can take to enforce the above rights. For instance, if you request
materials from the Plan and do not receive them within 30 days, you may file
suit in a federal court. In such a case, the court may require the Plan
Administrator to provide the materials and pay you up to $100 a day until you
receive the materials, unless the materials were not sent for reasons beyond the
control of the Plan Administrator.
If you have a claim for benefits which is denied or ignored, in whole or in
part, you may file suit in a state or federal court. If it should happen that
Plan fiduciaries misuse the Plan's money, or if you are discriminated against
for asserting your rights, you may seek assistance from the U.S. Department of
Labor, or you may file suit in a federal court. If you are successful, the
court may order the person you have sued to pay these costs and fees. If you
lose, the court may order you to pay these costs and fees; for example, if it
finds your claim frivolous. If you have any questions about your Plan, you
should contact the Plan Administrator. If you have any questions about your
rights under ERISA, you should contact the nearest area office of the U.S.
Labor-Management Services Administration, Department of Labor.
- --------------------------------------------------------------------------------
401(k) Incentive Savings Plan for Salaried and Hourly Employees of Kewaunee
Scientific Corporation 22
<PAGE>
EXHIBIT 13
[LOGO OF KEWAUNEE SCIENTIFIC CORPORATION APPEARS HERE]
CELEBRATING
90
YEARS
of
SERVICE
1906-1996
1996 ANNUAL REPORT
________________________________________________________________________________
<PAGE>
CORPORATE PROFILE
Kewaunee Scientific Corporation provides innovative products of 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 and workbenches for
light electronic assembly and testing.
The Company is celebrating 90 years as a recognized leader in the design,
manufacture, and installation of laboratory furniture. Kewaunee products are
utilized in laboratories worldwide,... encouraging new discovery.
TABLE OF CONTENTS
2 Letter to our Stockholders 18 Summary of Selected
Financial Data
4 Celebrating 90 Years of Service 20 Quaterly Financial Data
6 Management's Discussion and Analysis 20 Stockholder Information
8 Financial Statements and Notes Corporate Information
17 Reports of Independent Auditors (Inside Back Cover)
and Management
[PICTURE OF THE COMPANY'S PRODUCTS] [PICTURE OF THE COMPANY'S PRODUCTS]
Page 1
<PAGE>
LETTER TO OUR STOCKHOLDERS
We are pleased to report good progress in fiscal year 1996 over 1995. Earnings
for the year were $361,000, or $.15 per share, which compares to a net loss of
$1.1 million, or $.46 per share, for the prior year.
Our sales for the year were $57.6 million, down 7.9% from $62.5 million in the
prior year. Substantially all of the sales decline for the year occurred in the
low-margin contract-bid business. This was consistent with our strategy during
the year intended to increase the profit margins on this business.
We continued our major emphasis on the development of new products and
enhancements to existing products. The Supreme Air Series fume hood line was
introduced, which allowed us to consolidate all fume hood products into one
offering. This fume hood line was designed to provide a variety of models and
options so that customers easily can select features and accessories to meet
their needs.
Our wood product line was updated, adding three new styles. Buyers now may
select from a choice of four styles to create an attractive working environment.
Our new solvent storage cabinet recently received the UL mark of safety, one of
the very few such cabinets afforded this designation.
We made excellent progress during the year in strengthening and expanding our
sales network. Fourteen new sales organizations or representatives were added as
part of an on-going effort to upgrade the quality of our agencies and
representatives in all regions of the country.
The Lockhart facility reported excellent financial results for the year, and we
are proud of their performance. Technical Products Group sales were up 10.6%
from the prior year. We expect continued improvement from this group as new
products for local area networks are accepted in the marketplace.
We constantly are striving throughout the organization to reduce costs and
realize higher operating efficiencies. Significant progress was made this past
year as improvements in manufacturing costs were attained as a result of
increased usage of computerized manufacturing machinery in the factories. Cost
reductions were realized in the last half of the year by moving the majority of
our fume hood production from the Lockhart facility to Statesville. These
efforts, together with realizing the full impact of operating expense reductions
made the previous year, resulted in an operating expense reduction of $1.1
million, or 9.9%.
We must compliment our financial organization for strengthening our balance
sheet during the year. Cash generated from collections was used to repay debt,
which was reduced to $2.8 million at year-end, from $5.6 million the previous
year. Receivables were reduced to $13.2 million at year-end, from $15.6 million
at the end of last year. Unused credit available under our bank revolving credit
facility was $4.0 million at year-end.
Several key management changes were made during the year. D. Michael Parker was
elected Vice President of Finance/CFO, Secretary and Treasurer, succeeding
Robert M. Cecchini who retired; Ronald D. Popiel was promoted to Vice President
of Manufacturing, replacing T. Ronald Gewin, who relocated to Texas to serve as
Vice President of Operations for the Technical Products Group; and James J.
Rossi was promoted to Vice President of Human Resources.
Page 2
<PAGE>
During the coming year, we expect to continue our established momentum. We will
maintain our pricing strategies for the contract-bid business, continue with the
introduction of several new products, continue strong emphasis on investment in
our factories and, most importantly, continue with our focus on customer
satisfaction in everything that we do.
Your Company has a proud heritage of providing products and services of the
highest quality to the laboratory furniture marketplace. As we begin our 91st
year, our entire team stands committed to continue our traditions. We thank you,
our valued stockholders, for your continuing confidence and support.
Sincerely,
/s/ ELI MANCHESTER, JR.
- -----------------------
Eli Manchester, Jr.
President/CEO
July 1996
[PICTURE OF EXECUTIVE OFFICERS OF THE COMPANY]
Page 3
<PAGE>
CELEBRATING 90 YEARS OF SERVICE: 1906...
[PICTURES OF VINTAGE COMPANY CATALOGS]
Shortly after the turn of the century, Kewaunee's founders recognized that
equipment needs of an emerging scientific community far exceeded products
available in the marketplace. The first catalog depicting our laboratory
furniture stated that the designs "considered quality of material and
construction, elegance of appearance, stability and careful attention to
detail." Using those principles as a foundation, Kewaunee has continued as the
leader in meeting the changing needs of the laboratory furniture industry. The
photographs on these pages illustrate how catalog and product designs have
changed with technology.
[PICTURE OF VINTAGE LABORATORY] [PICTURE OF VINTAGE LABORATORY EQUIPMENT]
<PAGE>
[PICTURE OF CURRENT COMPANY CATALOGS]
Laboratories of today must comply with new standards and regulations being
implemented to protect the worker. The Company's newest line of Supreme Air fume
hoods and Signature Series wood satisfy these safety corners as well as address
customer demand for innovative products and accessories. During the past year,
we developed an extensive literature program to market these products, using the
theme, ...encouraging new discovery. This expresses Kewaunee's continued
commitment to develop products and provide services that enhance the ability of
our customers to achieve their objectives.
[PICTURE OF MODERN LABORATORY] [PICTURE OF MODERN LABORATORY EQUIPMENT]
Page 5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Sales for the year ended April 30, 1996 were $57.6 million, down 7.9% from
fiscal year 1995 sales of $62.5 million. Substantially all of the sales decline
occurred in the low-margin contract-bid laboratory furniture business,
consistent with the Company's bidding strategy to increase the profitability of
this business. Fiscal year 1995 sales decreased 5.4% from fiscal year 1994
sales of $66.1 million. The 1995 sales decrease was primarily attributable to
the lower sales volume 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 $23.2 million at April 30, 1996,
as compared to $24.1 million at April 30, 1995 and $25.3 million at April 30,
1994.
Gross profit represented 18.6% of sales in fiscal year 1996, 16.2% of sales in
fiscal year 1995 and 19.3% of sales in fiscal year 1994. As compared to fiscal
year 1995, the fiscal year 1996 gross profit margin was favorably affected by
several factors, including increased profit margins on contract-bid laboratory
furniture sales and continuing cost improvement programs. As compared to fiscal
year 1994, the fiscal year 1995 gross profit margin was unfavorably affected by
the lower sales volume and lower profit margins on contract-bid laboratory
furniture sales. Gross profit margins were increased by LIFO adjustments of
$56,000 in fiscal year 1996, $291,000 in fiscal year 1995, and $925,000 in
fiscal year 1994, as a result of reductions in inventories during these years.
Operating expenses decreased to $9.8 million in fiscal year 1996, from $10.9
million in fiscal year 1995 and $12.8 million in 1994. As a percent of sales,
these expenses were 17.1%, 17.4%, and 19.4% in fiscal years 1996, 1995 and 1994,
respectively. The reductions in operating expenses in fiscal years 1996 and
1995 resulted from a variety of cost improvement actions, including in
particular, significant reductions in management and administrative personnel
which occurred in the second quarter of fiscal year 1995.
Other income was $158,000, $230,000 and $88,000 in fiscal years 1996, 1995 and
1994, respectively. Other income in fiscal year 1996 was primarily attributable
to life insurance proceeds received in connection with one of the Company's
employee benefit plans. Other income in fiscal year 1995 was primarily
attributable to a cash settlement received related to an investment that had
been written-down in a prior year. Interest expense was $694,000, $554,000 and
$291,000 in fiscal years 1996, 1995 and 1994, respectively. The increase in
interest expense in fiscal year 1996 resulted from higher levels of debt during
the first half of the year. The significant increase in interest expense in
fiscal year 1995, as compared to fiscal year 1994, resulted from higher levels
of debt and higher interest rates, as well as costs associated with a debt
restructuring during the year.
No income tax expense or benefit was recorded for fiscal years 1996 or 1995. An
income tax benefit of $44,000 was recorded in fiscal year 1994 related to the
operating loss reported for that year. The effective tax rate for each of these
years differs from the related statutory rates primarily due to adjustments to
the deferred tax valuation allowance. Because of the Company's prior years'
operating losses, valuation allowances of $1.0 million, $1.2 million, and
$815,000 were provided at April 30, 1996, 1995, and 1994, respectively, to
reduce deferred tax assets at these dates to an amount which was considered more
likely than not to be realized.
The Company had net earnings of $361,000, or 15 cents per share, for fiscal year
1996. This compares to a net loss of $1,097,000, or 46 cents per share, for
fiscal year 1995, and a net loss of $203,000, or 9 cents per share, for fiscal
year 1994.
Page 6
<PAGE>
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 $5.0 million at April 30, 1996, as compared
to $6.7 million at April 30, 1995. This reduction occurred as cash generated
from collections of receivables was used to repay long-term debt. The ratio of
current assets to current liabilities was 1.5-to-1 at April 30, 1996, slightly
below the April 30, 1995 ratio of 1.6-to-1. The debt-to-equity ratio was .19-to-
1 at April 30, 1996, as compared to .39-to-1 at April 30, 1995.
At April 30, 1996, the Company had unused credit available of $4.0 million under
a revolving credit facility which extends through January 1997. Management
anticipates this facility will be renewed or replaced in fiscal year 1997.
The Company's operations provided cash of $3.1 million in fiscal year 1996,
primarily from operating earnings and a decrease in customer receivables. The
Company's operations used cash of $329,000 in fiscal year 1995 and provided cash
of $1.9 million in fiscal year 1994.
Capital expenditures were $812,000 in fiscal year 1996, $840,000 in fiscal year
1995, and $933,000 in fiscal year 1994. Capital expenditures of approximately
$1.6 million are planned for fiscal year 1997, 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, leasing or financing
arrangements.
The Company did not pay any dividends during fiscal years 1996, 1995, and 1994.
The payment of such dividends in the future will be evaluated by the Company's
Board of Directors on a periodic basis, giving consideration to the Company's
actual and anticipated future operating results.
RECENT ACCOUNTING STANDARDS
In March 1995, the FASB issued Statement No.121, Accounting for the Impairment
of Long-lived Assets and for Long-lived Assets to be Disposed Of. This
statement requires long-lived assets and certain identifiable intangibles to be
evaluated for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. The Company will
adopt SFAS No. 121 in fiscal year 1997 and does not believe that the
implementation of this Statement will have a material impact on the Company's
financial condition or results of operations.
Page 7
<PAGE>
STATEMENTS OF OPERATIONS
AND RETAINED EARNINGS
KEWAUNEE SCIENTIFIC CORPORATION YEARS ENDED APRIL 30
<TABLE>
<CAPTION>
$ and shares in thousands, except per share data 1996 1995 1994
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales (Note 1) $57,559 $62,475 $66,068
- ------------------------------------------------------------------------------------------
Costs of products sold (Note 2) 46,835 52,347 53,325
- ------------------------------------------------------------------------------------------
Gross profit 10,724 10,128 12,743
- ------------------------------------------------------------------------------------------
Operating expenses 9,827 10,901 12,787
- ------------------------------------------------------------------------------------------
Operating earnings (loss) 897 ( 773) ( 44)
- ------------------------------------------------------------------------------------------
Other income, net 158 230 88
- ------------------------------------------------------------------------------------------
Interest expense 694) 554) ( 291)
- ------------------------------------------------------------------------------------------
Earnings (loss) before income taxes 361 (1,097) ( 247)
- ------------------------------------------------------------------------------------------
Income tax benefit (Note 4) - - ( 44)
- ------------------------------------------------------------------------------------------
Net earnings (loss) 361 (1,097) (203)
- ------------------------------------------------------------------------------------------
Retained earnings at beginning of year 9,000 10,097 10,300
- ------------------------------------------------------------------------------------------
Retained earnings at end of year $ 9,361 $ 9,000 $10,097
==========================================================================================
Net earnings (loss) per share $0.15 $( 0.46) $( 0.09)
==========================================================================================
Weighted average number of
common shares outstanding 2,367 2,367 2,368
==========================================================================================
</TABLE>
See accompanying notes to financial statements.
Page 8
<PAGE>
BALANCE SHEETS
KEWAUNEE SCIENTIFIC CORPORATION APRIL 30
<TABLE>
<CAPTION>
ASSETS (Note 3) $ and shares in thousands 1996 1995
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 16 $ 58
Short-term investments - 350
Receivables, less allowance - $561 (1996); $624 (1995) 13,212 15,571
Inventories (Note 2) 1,213 1,336
Prepaid expenses and other current assets (Note 4) 1,205 1,115
- ---------------------------------------------------------------------------------------------------
Total current assets 15,646 18,430
- ---------------------------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT
Land 109 97
Buildings and improvements 13,383 13,048
Machinery and equipment 12,348 12,088
- ---------------------------------------------------------------------------------------------------
Property, plant and equipment, at cost 25,840 25,233
Accumulated depreciation (15,532) (14,113)
- ---------------------------------------------------------------------------------------------------
Net property, plant and equipment 10,308 11,120
- ---------------------------------------------------------------------------------------------------
OTHER ASSETS 550 524
- ---------------------------------------------------------------------------------------------------
$ 26,504 $ 30,074
===================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
- ---------------------------------------------------------------------------------------------------
CURRENT LIABILITIES
Short-term borrowings (Note 3) $ 2,320 $ 2,239
Current portion of long-term debt 180 111
Accounts payable 4,505 5,494
Employee compensation and amounts withheld 1,182 1,378
Accrued insurance costs 605 1,026
Other accrued expenses 1,807 1,454
- ---------------------------------------------------------------------------------------------------
Total current liabilities 10,599 11,702
- ---------------------------------------------------------------------------------------------------
LONG-TERM DEBT (Note 3) 328 3,206
- ---------------------------------------------------------------------------------------------------
DEFERRED INCOME TAXES AND OTHER NON-CURRENT
LIABILITIES (Notes 4 and 6) 1,062 1,012
- ---------------------------------------------------------------------------------------------------
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 9,361 9,000
Common stock in treasury, at cost (253 shares)) ( 1,512) ( 1,512)
- ---------------------------------------------------------------------------------------------------
Total stockholders' equity 14,515 14,154
- ---------------------------------------------------------------------------------------------------
$ 26,504 $ 30,074
===================================================================================================
</TABLE>
See accompanying notes to financial statements.
Page 9
<PAGE>
STATEMENTS OF CASH FLOWS
KEWAUNEE SCIENTIFIC CORPORATION YEARS ENDED APRIL 30
<TABLE>
<CAPTION>
$ in thousands 1996 1995 1994
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss) $ 361 $(1,097) $( 203)
Adjustments to reconcile net earnings
(loss) to net cash provided by (used in)
operating activities:
Depreciation and amortization 1,624 1,793 1,760
Bad debt provision (credit) 39 125 ( 67)
Deferred income tax benefit ( 71) ( 2) ( 143)
Decrease (increase) in receivables 2,320 ( 569) ( 257)
Decrease in inventories 123 210 695
(Decrease) increase in accounts
payable and accrued expenses (1,253) ( 727) 350
Other, net 5 ( 62) ( 193)
- --------------------------------------------------------------------------------------------------
Net cash provided by (used in)
operating activities 3,148 ( 329) 1,942
- --------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures ( 474) ( 840) ( 771)
Net decrease (increase) in
short-term investments 350 455 ( 305)
- --------------------------------------------------------------------------------------------------
Net cash used in investing activities ( 124) ( 385) (1,076)
- --------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in short-term borrowings 81 1,039 200
Proceeds from revolving credit facility
classified as long-term - 3,000 -
Repayment of long-term debt
(including current maturities) (3,147) (3,429) (1,071)
- --------------------------------------------------------------------------------------------------
Net cash (used in) provided by
financing activities (3,066) 610 ( 871)
- --------------------------------------------------------------------------------------------------
DECREASE IN CASH ( 42) ( 104) ( 5)
CASH AT BEGINNING OF YEAR 58 162 167
- --------------------------------------------------------------------------------------------------
CASH AT END OF YEAR $ 16 $ 58 $ 162
==================================================================================================
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
Interest paid $ 760 $ 575) $ 313
Income taxes refunded, net $( 4) $( 94) $( 29)
==================================================================================================
SUPPLEMENTAL DISCLOSURE OF NONCASH
INVESTING AND FINANCING ACTIVITIES
Assets acquired under capital leases
and equipment financing $ 338 $ - $ 162
==================================================================================================
</TABLE>
See accompanying notes to financial statements.
Page 10
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations. Kenwaunee Scientific Corporation (the "Company") is a
manufacturer of scientific and technical workstations including wood and
steel furniture, fume hoods, worksurface, sinks and other accessories. Sales
are made through purchase orders and contracts submitted by customers, the
Company's commissioned dealers, competitive bids submitted by the Company and
a national distributor. The majority of the Company's products are sold to
customers located in North America, Primarily within the United States. The
company's products are used in chemistry, physics, biology, and other general
science laboratories in the industrial, commercial, educational, governmental
and health-care markets.
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.
Use of Estimates. The presentation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from these
estimates. Significant estimates impacting the accompanying financial
statements relate to the allowance for uncollectible accounts receivable and
the valuation allowance for deferred tax assets.
Fair Value of Financial Instruments. The Company's financial instruments
include cash, short-term investments, long-term debt, accounts receivable and
accounts payable. The carrying value of the cash and long-term debt
approximates their estimated fair values based upon quoted market prices. The
carrying amount of short-term investments, accounts receivable and accounts
payable approximates fair value due to the short maturities of these
instruments.
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. 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, a valuation allowance must be provided.
Customer Concentration. Sales to the Company's national distributor
represented 14%, 17% and 13% of the Company's fiscal years 1996, 1995, and
1994 sales, respectively.
Advertising Costs. The Company expenses advertising costs as incurred,
including trade shows, training materials, sales samples, catalogs, and other
related expenses. Advertising costs for the years ended April 30, 1996, 1995,
and 1994 were $587,000, $340,000, and $781,000, respectively.
Page 11
<PAGE>
Stock-Based Compensation. In October 1995, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards (SFAS) No.123,
Accounting for Stock-Based Compensation, which will be effective for the
Company beginning May 1, 1996. SFAS No.123 requires expanded disclosures of
stock-based compensation arrangements with employees and encourages (but does
not require) compensation cost to be measured based on the fair value of the
equity instrument awarded. Companies are permitted, however, to continue to
apply APB Opinion No.25, which recognizes compensation cost based on the
intrinsic value of the equity instrument awarded. The Company will continue
to apply APB Opinion No.25 to its stock based compensation awards to
employees and will disclose the required pro forma effect on net income and
earnings per share.
Recent Accounting Pronouncements. In March 1995, the FASB issued Statement
No.121, Accounting for the Impairment of Long-lived Assets and for Long-
lived Assets to be Disposed Of. This statement requires long-lived assets and
certain identifiable intangibles to be evaluated for impairment whenever
events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. The Company will adopt SFAS No. 121 in fiscal
year 1997 and does not believe that the implementation of this Statement will
have a material impact on the Company's financial condition or results of
operations.
2. INVENTORIES
Inventories consisted of the following at April 30:
<TABLE>
<CAPTION>
$ in thousands 1996 1995
-------------------------------------------
<S> <C> <C>
Finished goods $ 253 $ 280
Work-in-process 280 345
Materials and components 680 711
-------------------------------------------
Total inventories $1,213 $1,336
===========================================
</TABLE>
If inventories had been determined using the first-in, first-out (FIFO)
method at April 30, 1996 and 1995, reported inventories would have been $2.2
million greater in both years.
Reductions in LIFO inventory values in fiscal years 1996 and 1995 increased
operating earnings by $56,000 and $291,000, respectively.
Page 12
<PAGE>
3. LONG-TERM DEBT AND OTHER CREDIT ARRANGEMENTS
Long-term debt consisted of the following at April 30:
<TABLE>
<CAPTION>
$ in thousands 1996 1995
-----------------------------------------------------------------------
<S> <C> <C>
Borrowings under revolving credit facility
classified as long-term $ - $3,000
Equipment financing, 10.5% payable in
monthly installments through the year 2000 302 -
Capital lease obligations 206 317
-----------------------------------------------------------------------
Total long-term debt 508 3,317
Less: current portion (180) ( 111)
-----------------------------------------------------------------------
Long-term portion $ 328 $3,206
======================================================================
</TABLE>
The revolving credit facility ("the facility") allows the Company to borrow
the lesser of $8.5 million, or that available under certain eligibility
formulas using qualifying receivables and inventories, as defined under the
credit arrangement. At April 30, 1996, borrowings outstanding under the
facility were $2.3 million and letters of credit issued and outstanding under
the facility were $500,000, leaving $4.0 million of unused credit available
as of that date.
Under the facility, 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 $3.0 million or the average loan balance outstanding during each
month. The prime rate was 8.25% at April 30, 1996. The Company's receivables,
inventories, and property, plant and equipment are pledged to the lender as
collateral securing borrowings under the facility.
The facility extends through January 1997. Management anticipates this
facility will be renewed or replaced in fiscal year 1997. Due to the
facility's maturity date, all borrowings outstanding under the facility at
April 30, 1996 were classified as short-term borrowings.
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, 1996 are as follows:
<TABLE>
<CAPTION>
$ in thousands Amount
---------------------------------------------------
<S> <C>
1997 $ 136
1998 33
1999 33
2000 33
---------------------------------------------------
Total minimum lease payments 235
Less - amount representing interest ( 29)
---------------------------------------------------
Present value of net minimum lease payments 206)
Less: current portion (122)
---------------------------------------------------
Long-term portion $ 84)
===================================================
</TABLE>
Page 13
<PAGE>
4. INCOME TAXES
Income tax expense (benefit) consisted of the following:
<TABLE>
<CAPTION>
$ in thousands 1996 1995 1994
-------------------------------------------------------------------------
<S> <C> <C> <C>
Current tax expense $ 71) $ 2) $ 99)
Deferred tax expense (benefit) 140) ( 412) ( 192)
Increase (decrease) in valuation allowance
on deferred tax assets ( 211) 410 49
-------------------------------------------------------------------------
Net income tax benefit $ - $ - $( 44)
=========================================================================
</TABLE>
The reasons for the differences between the above net income tax benefit and
the amounts computed by applying the statutory federal income tax rates to
earnings (loss) before income taxes are as follows:
<TABLE>
<CAPTION>
$ in thousands 1996 1995 1994
--------------------------------------------------------------------------
<S> <C> <C> <C>
Income tax expense (benefit) at statutory rate $ 123 $( 373) $ ( 91)
State and local taxes, net of federal
income tax expense (benefit) 24 ( 43) ( 11)
Increase (decrease) in valuation allowance
on deferred tax assets ( 211) 410 49
Other 64 6 9
--------------------------------------------------------------------------
Net income tax benefit $ - $ - $ ( 44)
==========================================================================
</TABLE>
As of April 30, 1996, the Company had general tax credit carryforwards of
$448,000 and alternative minimum tax credit carryforwards of $338,000
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 1996 1995
------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Tax credit carryforwards $ 786 $ 893
Accrued retirement plans expense 434 376
Accrued insurance plans expense 280 423
Allowance for doubtful accounts 233 241
Inventory reserves and capitalized costs 181 184
Net operating loss carryforwards 67 70
Other 147 195
------------------------------------------------------------------
2,128 2,382
Valuation allowance (1,014) (1,225)
------------------------------------------------------------------
Total deferred tax assets 1,114 1,157
------------------------------------------------------------------
Deferred tax liabilities:
Difference between book and tax basis
of property, plant and equipment ( 916) ( 964)
Tax lease benefits ( 66) 115
Other ( 12) ( 29)
------------------------------------------------------------------
Total deferred tax liabilities ( 994) (1,108)
------------------------------------------------------------------
Net deferred tax assets $ 120 $ 49
==================================================================
</TABLE>
Page 14
<PAGE>
5. STOCK OPTIONS
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, 1996, there were 28,500 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 to non-employee
directors on 40,000 shares of the Company's common stock. Each such 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,
1996, there were 10,000 shares available for future grants under the plan.
Stock option activity is summarized as follows:
<TABLE>
<CAPTION>
1996 1995 1994
--------------------------------------------------------------------------
<S> <C> <C> <C>
Grants outstanding at beginning of year 130,000 162,500 94,500
Granted 63,000 2,000 81,000
Canceled ( 16,500) ( 34,500) ( 13,000)
--------------------------------------------------------------------------
Grants outstanding at end of year* 176,500 130,000 162,500
==========================================================================
Exercisable at end of year 41,625 54,750 15,625
==========================================================================
Exercise price range per share of
options outstanding at end of year $2.313 $3.25 $3.75
to $ 6.50 to $6.50 to $6.50
==========================================================================
</TABLE>
*Includes an option on 45,000 shares under the 1982 Incentive Stock Option
Plan which was unexercisable at April 30, 1996 and will expire in February
1997.
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 each
employee's years of service and average annual compensation during the last
10 consecutive calendar years of employment. The benefit plan for hourly
employees provides benefits at stated amounts based on years of service. The
Company's funding policy is to make 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 1996 1995 1994
------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost for the benefits earned
during the year $ 266 $ 298 $ 324
Interest cost on projected benefit obligations 384 356 317
Investment return on plan assets (308) (178) ( 176)
Net amortization and deferral ( 57) (137) ( 98)
-------------------------------------------------------------------------
Net pension expense $ 285 $ 339 $ 367
=========================================================================
</TABLE>
Accumulated plan benefits, projected benefit obligations, plan net assets and
funded status as of April 30 were as follows:
<TABLE>
<CAPTION>
$ in thousands 1996 1995 1994
------------------------------------------------------------------------
<S> <C> <C> <C>
Actuarial present value of accumulated benefit obligations
(assumes no future salary increases):
Vested $3,962 $3,453 $ 2,947
Non-vested 186 11279 271
------------------------------------------------------------------------
Accumulated plan benefits $4,148 $3,732 $3,218
========================================================================
Actuarial present value of projected benefit
obligations for service provided to date
(assumes future salary increases): $5,378 $5,045 $4,574
Transition gain 128 160 192
Unrecognized net loss ( 523) ( 902) ( 754)
Plan net assets at fair value (4,416) (3,751) (3,128)
------------------------------------------------------------------------
Accrued pension cost $ 567) $ 552) $ 884)
========================================================================
</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,
1996, 1995 and 1994, the projected benefit obligations recorded in the
balance sheets for this plan totaled $132,907, $154,107, and $173,062,
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>
1997 $ 434
1998 413
1999 404
2000 393
2001 165
Thereafter 14
------------------------------------------------------------------
Total minimum lease payments $1,823
==================================================================
</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 $530,000, $455,000 and $448,000 in fiscal
years 1996, 1995, and 1994, 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, 1996 and 1995, 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, 1996. 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, 1996 and 1995, and the results of its operations and its cash flows for each
of the three years in the period ended April 30, 1996 in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Charlotte, North Carolina
May 31, 1996
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 information in this annual report is consistent with the financial
statements.
Management maintains internal accounting control systems and related policies
and procedures designed to provide reasonable assurance that assets are
safeguarded, that transactions are properly recorded and executed in accordance
with management's authorization and that accounting records may be relied upon
for the preparation of financial statements and other financial information.
The design, monitoring, and revision of internal accounting control systems
involve, among other things, management's judgment with respect to the relative
cost and expected benefits of specific control measures.
The Company's 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.
D. Michael Parker
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 1996 1995 1994
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING STATEMENT DATA:
Net sales $57,559 $62,475 $66,068
Costs of products sold 46,835 52,347 53,325
- ------------------------------------------------------------------------------------------------
Gross profit 10,724 10,128 12,743
Operating expenses 9,827 10,901 12,787
- ------------------------------------------------------------------------------------------------
Operating earnings (loss) 897 ( 773) ( 44)
Other income, net 158 230 88
Interest expense ( 694) ( 554) ( 291)
- ------------------------------------------------------------------------------------------------
Earnings (loss) before income taxes 361 (1,097) ( 247)
Income tax expense (benefit) - - ( 44)
- ------------------------------------------------------------------------------------------------
Net earnings (loss) $ 361 $(1,097) $( 203)
================================================================================================
Average shares outstanding 2,367 2,367 2,368
================================================================================================
PER SHARE DATA:
Net earnings (loss) $ 0.15 $( 0.46) $( 0.09)
Cash dividends - - -
Year-end book value 6.13 5.98 6.43
================================================================================================
BALANCE SHEET DATA:
Current assets $15,646 $18,430 $19,009
Current liabilities 10,599 11,702 11,914
Net working capital 5,047 6,728 7,095
Net property, plant and equipment 10,308 11,120 12,073
Total assets 26,504 30,074 31,566
Long-term debt 328 3,206 3,111
Stockholders' equity 14,515 14,154 15,237
================================================================================================
OTHER DATA:
Capital expenditures $ 812 $ 840 $ 933(d)
Year-end stockholders of record 409 439 458
Year-end employees 499 575 595
================================================================================================
</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 1996, 1994, and 1992 include assets
acquired under capital leases and equipment financing.
Page 18
<PAGE>
<TABLE>
<CAPTION>
1993 1992 1991 1990 1989 1988 1987
- ---------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$ 66,984 $74,944 $71,104 $74,023 $68,895 $68,578 $ 59,450
56,364 59,538 55,029 58,087 50,606 49,111 50,701
- ---------------------------------------------------------------------------------------------------------------
10,620 15,406 16,075 15,936 18,289 19,467 8,749
13,647 14,396 15,876 (a) 15,161 15,744 18,151 19,436
- ---------------------------------------------------------------------------------------------------------------
(3,027) 1,010 199 775 2,545 1,316 (10,687)
166 475 499 489 261 276 124
( 300) ( 330) ( 473) ( 575) ( 643) ( 740) ( 703)
- ---------------------------------------------------------------------------------------------------------------
(3,161) 1,155 225 689 2,163 852 (11,266)
( 693) 354 145 217 566(b) 66(c) ( 3,531)
- ---------------------------------------------------------------------------------------------------------------
$ (2,468) $ 801 $ 80 $ 472 $ 1,597 $ 786 ($7,735)
===============================================================================================================
2,368 2,412 2,591 2,586 2,587 2,587 2,573
===============================================================================================================
$ (1.04) $0.33 $0.03 $0.18 $0.62 $0.30 ($3.01
0.08 0.16 0.16 0.16 0.04 NN 0.275
6.49 7.44 7.24 7.48 7.46 6.88 6.62
===============================================================================================================
$ 18,334 $22,344 $24,693 $23,191 $22,880 $20,294 $ 22,874
11,777 11,943 12,318 11,651 11,510 11,104 15,892
6,557 10,401 12,375 11,540 11,370 9,190 6,982
12,900 13,214 12,383 14,902 15,280 16,181 17,915
31,776 36,066 37,593 38,193 38,925 37,256 42,175
3,607 4,657 5,090 5,873 6,656 7,439 8,222
15,372 17,955 18,979 19,355 19,297 17,808 17,022
===============================================================================================================
$ 1,316 $ 2,189(d) $ 2,279 $ 521 $ 791 $ 384 $ 2,031
480 492 512 519 560 600 603
636 747 722 784 826 828 820
===============================================================================================================
</TABLE>
<PAGE>
QUARTERLY FINANCIAL DATA (UNAUDITED)
Selected quarterly financial data for fiscal years 1996 and 1995 were as
follows:
<TABLE>
<CAPTION>
$ in thousands, First Second Third Fourth
except per share data Quarter Quarter Quarter Quarter*
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996
Net sales $15,548) $ 15,385) $12,719 $13,907
Gross profit 2,673) 2,996) 2,428 2,627
Net earnings 70) 148) 87 56
Net earnings per share 0.03) 0.06) 0.04 0.02
-----------------------------------------------------------------------
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
-----------------------------------------------------------------------
</TABLE>
*Reductions in LIFO inventory values increased gross profits by $56,000 and
$291,000 in the fourth quarter of fiscal years 1996 and 1995, 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>
---------------------------------------------------------------------------
1996 High 31/8 31/2 35/8 41/4
Low 21/8 21/4 25/8 35/8
Close 25/16 37/8 35/8 35/8
---------------------------------------------------------------------------
1995 High 35/8 37/8 27/8 25/8
Low 31/4 23/4 27/8 21/8
Close 35/8 27/8 25/16 21/2
---------------------------------------------------------------------------
</TABLE>
STOCKHOLDER INFORMATION
CORPORATE OFFICES
2700 West Front Street
P.O. Box 1842
Statesville, NC 28687-1842
Telephone: 704-873-7202
NOTICE OF ANNUAL MEETING
The Annual Meeting of Stockholders of Kewaunee Scientific Corporation will be
held in the 37th floor Annual Meeting Room at Harris Trust & Savings Bank,
Chicago, IL on August 28, 1996 at 10:00 a.m. Central Daylight Time.
TRANSFER AGENT AND REGISTRAR
All shareholder inquiries, including transfer-related matters, should be
directed to:
ChaseMellon Shareholder Services, L.L.C.
Overpeck Centre
85 Challenger Road
Ridgefield Park, NJ 07660
800-288-9541
INDEPENDENT AUDITORS
Deloitte & Touche LLP
Charlotte, NC
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.
Page 20
<PAGE>
CORPORATE INFORMATION
BOARD OF DIRECTORS EXECUTIVE OFFICERS
MARGARET BARR BRUEMMER (1)(2)(3) ELI MANCHESTER, JR.
Attorney President and Chief Executive
Madison, WI Officer
T. RONALD GEWIN
WILEY N. CALDWELL (3)(4) Vice President, Operations
Retired President Technical Products Group
W. W. Grainger, Inc.
Skokie, IL D. MICHAEL PARKER
Vice President, Finance,
JOHN C. CAMPBELL, JR. (1)(2) Chief Financial Officer,
Private Consultant Treasurer, Secretary
Arlington, TX
RONALD D. POPIEL
KINGMAN DOUGLASS (2)(3)(4) Vice President, Manufacturing
Corporate Counselor
Summerland, CA JAMES J. ROSSI
Vice President, Human Resources
ELI MANCHESTER, JR. (1)(3)
President/CEO WILLIAM A. SHUMAKER
Kewaunee Scientific Corporation Vice President, Sales & Marketing
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 Vice President 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.
Telephone: 704-873-7202
TRADEMARKS
BasikBench, Evolution, FlexTech, Instalab, Kemresin, Kemrock, Kemshield,
Silhouette, Sturdilite, TechStat, Versalab and Visionaire are registered
trademarks of Kewaunee Scientific Corporation.
<PAGE>
[LOGO OF KEWAUNEE SCIENTIFIC CORPORATION APPEARS HERE]
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> APR-30-1996 APR-30-1995
<PERIOD-START> MAY-01-1995 MAY-01-1994
<PERIOD-END> APR-30-1996 APR-30-1995
<CASH> 16 58
<SECURITIES> 0 350
<RECEIVABLES> 13,773 16,195
<ALLOWANCES> 561 624
<INVENTORY> 1,213 1,336
<CURRENT-ASSETS> 15,646 18,430
<PP&E> 25,840 25,233
<DEPRECIATION> 15,532 14,113
<TOTAL-ASSETS> 26,504 30,074
<CURRENT-LIABILITIES> 10,599 11,702
<BONDS> 328 3,206
<COMMON> 6,550 6,550
0 0
0 0
<OTHER-SE> 7,965 7,604
<TOTAL-LIABILITY-AND-EQUITY> 14,515 14,154
<SALES> 57,559 62,475
<TOTAL-REVENUES> 57,717 62,705
<CGS> 46,835 52,347
<TOTAL-COSTS> 9,827 10,901
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 694 554
<INCOME-PRETAX> 361 (1,097)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 361 (1,097)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 361 (1,097)
<EPS-PRIMARY> 0.15 (0.46)
<EPS-DILUTED> 0.15 (0.46)
</TABLE>
